TMI Blog2013 (8) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... s 234B of the Act - Following decision of D.I (International Taxation) VS. NGC Network Asia Ltd [2009 (1) TMI 174 - BOMBAY HIGH COURT] - Decided against assessee. - ITA No.8986/Mum/2010 - - - Dated:- 24-7-2013 - Shri R. S. Syal, AM And Shri Vivek Varma, JM,JJ. For the Petitioner : Shri M. P. Lohia For the Respondent : Ms. Neeraja Pradhan ORDER Per R.S.Syal ( AM) : This appeal by the assessee arises out of the order passed by the Assessing Officer on 18.10.2010 u/s 144C(13) read with section 143(3) of the Income-tax Act, 1961 (hereinafter also called `the Act') in relation to the A.Y. 2007-08. 2. First ground of the appeal reads as under :- "The learned AO has erred in law and in fact, in holding that the services rendered by the Appellant to Larsen and Toubro Limited for review of designs and documents fall within the scope of `fees for included services' under Article 12 of the Double Taxation Avoidance Agreement between India and USA." 3. Briefly stated the facts of the case are that the assessee was incorporated in and is tax resident of USA. It is a consulting firm engaged in providing services to the power industry by providing diverse services such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as a 'fees for technical services'. The assessee is in appeal in the terms as set out in the ground above. 6. We have heard the rival submissions and pursed the relevant material on record. At the outset, we want to make it clear that the Assessing Officer held the amount as taxable u/s 9(i)(vii) of the Act as `fees for technical services' as well as falling within the scope of 'fees for included services' under Article 12 of the DTAA. From the very fact that the assessee has challenged the finding of the Assessing Officer only under Article 12 of the DTAA, it is manifest that the finding of the AO as regards the nature of services rendered by the assessee as technical services within the meaning of Section 9(i)(vii) of the Act has been accepted. The ld. AR also focused his attention on Article 12 of the DTAA by arguing that the services rendered by the assessee did not 'make available' any technical knowledge to L T. As such we are restricting ourselves only in examining as to whether the technical services so provided by the assessee resulted in 'making available' any technical or consultancy services to L T. 7. Before proceeding further it would be relevant to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the General review of project documents and scope determination, the assessee was assigned the job of evaluation of several aspects including Boiler and Auxiliaries, Determine plant configuration, Design criteria for Cimney with Reference Specification, Electrical Single Line Diagram, Design parameters and data sheets for major outdoor electrical equipments, so on and so forth. All the above activities, without any hesitation, are in the realm of technical services for setting up power project. It is worth mentioning that several thousand man hours were spent by several technical people of the assessee in doing the job assigned, which translated into payment amounting to Rs.2.22 crore and odd. Having determined the nature of services, now we need to decide as to whether the consideration for such services can be construed as fees for technical services? 10. We have earlier noticed that the inclusion of services in the 'fees for technical services' u/s 9(1)(vii) of the Act is rightly not under challenge before us. The only controversy is as to whether such technical services can fall within the scope of the DTAA. Article 12 of the DTAA, inter alia, deals with `fees for included ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to fortify his view that the amount in question cannot be considered as fees for included services as per Article 12 of the DTAA, the ld. AR relied on a decision dated 23.04.2009 of the Authority for advance ruling in Worly Paresons Services Privat -Ltd. in which it has been held that such technical services cannot be included within the scope of Article 12 as nothing is made available. In the opposition, the ld. DR relied on a later decision of the Authority for advance ruling in Perfetti Van Melle Holding B.V. Suffice to say both the decisions are based on their own facts. Sometimes even a minor significant factual variation makes one case distinguishable from the other, though both prima facie appear to be similar. The above decisions rendered by the Authority for advancing ruling are confined to their own facts and have no precedent value in other cases. As such, we will examine the facts of the present case for ascertaining as to whether the technical services were made available by the assessee to L T. 12. The expression 'make available' in the context of 'fees for technical services' contemplates that the services are of such a nature that the payer of the services come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igns, projects, etc. are nothing but blueprints of the technical side of mega power projects. Admittedly such services are rendered at a pre-bid stage. It is quite natural that such technical plans etc. are meant for use in future alone if and when L T takes up the bid for the installation of the power project. When the otherwise technical services provided by the assessee are of such a nature which are capable of use in future alone, we fail to comprehend as to how the same can be considered as not made available to L T. In our considered opinion, there is no infirmity in the impugned order holding that the assessee received consideration for `making available' technical services within the meaning of Article 12 of the DTAA. This ground is not allowed. 15. Second ground is about the levy of interest of Rs.9,10,458/- u/s 234B of the Act. We have noticed above that the assessee is tax resident of USA. Its entire income is liable for deduction of tax at source in India. In that view of the matter, it is obvious that there can be no chargeability of interest u/s 234B of the Act. The decision of the Hon'ble Bombay High Court in the case of D.I (International Taxation) VS. NGC Network ..... X X X X Extracts X X X X X X X X Extracts X X X X
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