TMI Blog2007 (3) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of Article 12 of DTAA between India and Singapore. This order of the CIT(A) was not challenged and was accepted by the assessee. We are of the view that since the issue in dispute is quite complex and by now number of orders of the Tribunal are passed on the subject, this issue requires a fresh adjudication in the light of legal proposition laid down by the Tribunal through various orders. The principle of rule of consistency cannot be applied in this type of situation. Generally, a view taken in the earlier year should be followed in succeeding years, but, whenever the legal position is changed or re-interpreted, the legal issues should be decided afresh in the light of current interpretations of law. We, therefore, do not find any force in the arguments of the Revenue that following the rule of consistency, the Order of the CIT(A), deserves to be confirmed. Though the payment for consultancy services falls within the definition of fee for technical services in opening para, but, it would be subject to certain conditions enumerated in sub-clauses ( a ), ( b ) and ( c ). If the consultancy services does not have any technical knowledge, the fees paid for it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 2. In the facts and circumstances of the case and in law, the learned CIT(A) ought to have accepted the contention of the appellant that the reimbursement of actual expenses did not constitute payment towards income and hence such payments did not constitute payment towards income and hence such payments did not constitute income chargeable to tax. 3. In the facts and circumstances of the case and in law, the learned CIT(A) ought to have accepted contention of the appellant that reimbursement of actual expenses did not constitute payment towards income and hence such payments did not constitute income chargeable to tax. 4. The appellant prays that its claim for interest under section 244A be accepted in the event of refund becoming due to it. 5. The appellant craves leave to add to, amend, alter, delete and/or modify the above grounds of appeal on or before the final date of hearing." 3. The facts borne out from the record are that assessee is a Public Sector Undertaking under the administrative control of Ministry of Petroleum and Natural Gas, Government of India. It is engaged in the business of refining of crude oil and marketing of petroleum products. It e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals emanated from both the payments were decided by the CIT(A) in the light of provisions of Article 12 of DTAA between India and Singapore. While adjudicating these appeals, the CIT(A) took a note of the payments made by Bharat Oman Refineries Ltd. and the assessee to P G for similar type of services, rendered, in earlier years in which the BORL and the assessee itself has deducted the TDS and deposited the same with the Government, and was not convinced with the explanation of the assessee that the fees for services rendered by the P G, Singapore do not fall within the definition of fee for technical services defined in clause 4 of Article 12 of DTAA between India and Singapore. Relying upon the Order of his predecessor passed in the assessee s own case and the decision of the Authority for the Advanced Rulings in Advance Ruling Petition No. P-6/95 [1998] 100 Taxman 206 (AAR), the CIT(A) disallowed the claim of the assessee and has held that the consultancy fees paid by the assessee to P G, is chargeable to tax in India, as per the provisions of section 9 of Indian Income-tax Act and as well as for the provision of Article 12 of the DTAA between India and Singapore. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ween India and USA and was not taxable in India. Hence, no tax deductible under section 195. The phrase making available used in Article 12(4)( b ) was examined by the Tribunal in the case of Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791 (Mum.) and C.E.S.C. Ltd. v. Dy. CIT [2003] 87 ITD 653 (Cal.) (TM) and it was examined that the phrase making available has been understood to be rendering of services under the circumstances where the person availing the services is enabled to apply the services availed in his own right without recourse to the person providing the services. Such has been the clarification in the Protocol of India-USA Treaty. The learned counsel for the assessee further invited our attention to the language used in clause 4 of Article 12 of DTAA between India and Singapore and has submitted that though in the opening part of clause 4, the term fees for technical services is defined to be the payments of any kind to any person in consideration for services of managerial technical or consultancy in nature. But, it was subject to the other conditions which was envisaged in sub-clauses ( a ), ( b ) and ( c ). As per sub-clause ( b ) such services make available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res judicata are not applicable in the Income-tax Proceedings, but Rule of Consistency must be followed. Since similar type of payments were charged to tax in India in earlier years and the assessee has accepted its taxability in India, he has no right to challenge the same payment in the impugned assessment year. In the light of these facts, the order of the CIT(A), deserves to be sustained as he has decided the issue in the light of the Order of his predecessor and the Advance Ruling Petition No. P-6 of 1995, In re [1998] 100 Taxman 206 (AAR - New Delhi). 8. In rejoinder, the learned counsel for the assessee has submitted that every assessment year is an independent assessment year and the legal issues are required to be adjudicated in the light of legal provisions and not by following the Rule of Consistency. No doubt, the assessee did not challenged the Order of the CIT(A) in earlier year, but, it does not mean he has forgiven his right for ever though he is legally entitled for a claim. As such, the impugned issue should be adjudicated in the light of legal provisions and various Orders of the Tribunal passed on this subject. 9. Having heard the rival submissions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of current interpretations of law. We, therefore, do not find any force in the arguments of the Revenue that following the rule of consistency, the Order of the CIT(A), deserves to be confirmed. 10. In the case of Kotak Mahindra Primus Ltd. ( supra ), the Tribunal has examined the provisions of article 12(3)( c ) of the India-Australia Tax Treaty and the Ruling of the Authority for Advanced Rulings with regard to the definition of Royalty and the Tribunal has held that once payment is made not for supply of any knowledge or information, but, for processing of the information, the services cannot be treated as fees for technical services, as per provisions of Article 12 DTAA between the India and Australia. The relevant observation of the Tribunal in paras 16 and 17 is extracted hereunder : "16. We now come to the provisions of Article 12(3)( c ) of the India- Australia Tax Treaty. It provides that where the payment is for the supply of scientific, technical, industrial or commercial knowledge or information , the same shall be considered as royalty for the purpose of Article 12 of the treaty. By no stretch of logic, it could be said that the payment is made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority under section 245R will be binding only on the applicant who had sought it, in respect to the transaction in relation to which the ruling had been sought, on the Commissioner and the income-tax authorities subordinate to him, in respect to the applicant and the said transaction. It is, therefore, obvious that, apart from whatever its persuasive value, it would be of no help to us. We are not inclined to disturb our conclusions merely because the conclusions arrived at above, and in the light of detailed reasons set out earlier in the order, are at variance with the conclusions arrived at in the said ruling. We have carefully perused the esteemed views of the Hon ble Authority for Advance Ruling and with respect but without hesitation, we are not persuaded." 11. In the case of Boston Consulting Group Pte Ltd. ( supra ) the Tribunal has examined the DTAA between the India and the Singapore and its clause 12(4)( b ) and has observed that the nature of the assessee s activities was being engaged in the business of strategy consulting. Their consultancy services are non-technical in nature inasmuch as these services are in the nature of strategy and business consulting w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these services do not result in making available any technical knowledge, experience, skill, know-how or process to the assessee. This was essential before it could be said that the payments made by the assessee to the non-residents were fees for technical services rendered as the services involved making assessment survivalance for the purpose of ISO Certification, hence, not taxable in India. Likewise, in the case of Wipro Ltd. ( supra ) Tribunal has held that annual subscription paid to non-resident, an American Company for providing access to information available in data base located outside India through web to an Indian Company, is not covered by royalties under article 12(3)( a ) of the DTAA between India and USA, since the information made available is copy-righted information in the form of publications and consequently the said payments are not amenable to taxation in India. It was further examined in the case of CESC Ltd. ( supra ) by the Tribunal in the light of Memorandum of Understanding concerning fees for included services in article 12 appended to DTAA between India and USA and the Tribunal has observed that it is abundantly clear that the technology would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. For the purposes of ( b ) and ( c ) above, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person." 14. Though the payment for consultancy services falls within the definition of fee for technical services in opening para, but, it would be subject to certain conditions enumerated in sub-clauses ( a ), ( b ) and ( c ). Since the relevant clause is ( b ) with regard to issue in dispute, we confine ourselves with interpretation of this clause and according to this sub-clause, the consultancy services shall make available technical knowledge, experience, skill, know-how or process, which enabled the person acquiring the services to apply the technology contained therein. Meaning thereby, the consultancy services must have the element of technology which can be applied by the persons acquiring the services. If the consultancy services does not have any technical knowledge, the fees paid for it does not fall within the definition of fee for technical services as per clause (4) of article 12 of DTAA. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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