TMI Blog2016 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and therefore, the services provided to the appellant by the non-resident parties of USA and Canada did not fall within the purview of 'included services' under Article 12(4)(b) and hence there was no liability on the appellant to deduct TDS u/s. 195 of the I.T. Act, while making payment for such bio-analytical services rendered to it. - Decided against the revenue. - I.T.A. No.3106/Ahd/2011 - - - Dated:- 30-11-2015 - SHRI G.D. AGARWAL,VICE PRESIDENT (AZ) And SHRI KUL BHARAT, JUDICIAL MEMBER For The Appellant : Shri Rakesh Jha, Sr.DR For The Respondent : Shri Jigar M. Patel ORDER PER SHRI KUL BHARAT, JUDICIAL MEMBER : This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-Gandhinagar [ CIT(A) in short] dated 02/09/2011 pertaining to Assessment Year (AY) 2010-11. The Revenue has raised the following grounds of appeal:- 1. The Ld.CIT(A) has erred in law and on facts in holding that the services were not made available, in the light of the provisions of article 12(4)(a) and 12(4)(b) of DTAA as well as the protocol to the DTAA which specifically includes such services under article 12(4)(b). 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khardt Ltd. vs. Asst.CIT reported at [2010] 10 Taxmann.com 208 (Mum.). Aggrieved by the order of the ld.CIT(A), now the Revenue is in appeal before us. 3. The only effective ground in this appeal is against in holding that the service were not made available, in light of the provisions of article 12(4)(a) and 12(4)(b) of DTAA as well as the protocol to the DTAA which specifically includes such services under article 12(4)(b). The ld.Sr.DR vehemently argued that the ld.CIT(A) was not justified in deleting the addition. He submitted that the assessee was liable to deduct the tax on the payments made in consideration of the technical services rendered to the assessee and such technical services are liable to tax as per the provisions of Income Tax Act. 3.1. On the contrary, ld.counsel for the assessee submitted that the issue is squarely covered by the judgements/decisions of various judicial pronouncements. The ld.counsel for the assessee relied upon the following decisions:- (i) Decision of ITAT Ahmedabad Bench D -in the case of ITO (Intnl.Taxation), vs. Denial Measurement Solutions (P.) Ltd. reported at [2014] 52 Taxmann.com 443 (Ahmedabad Trib.). (ii) Decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces Inc. (USA), who are residents of USA and Canada for providing analytical services and testing charges. The non-resident companies had no PE in India. These services were undisputedly provided outside India, but were utilized for earning income from source in India which is manufacturing of drugs in India and subsequent sales. Now, coming to the first issue, i.e. whether the payments made to the non residents are income deemed to accrue or arise in India under the provisions of section 9(2)(vii) as being 'fees for technical services'. The services are definitely of the nature of technical services and as the services are utilized for earning income from source in India, these are not exempted u/s.9(2)(vii)(b). The appellant has pleaded that even after the introduction of the Explanation to Sec. 9(2) inserted by the Finance Act 2007 w.e.f. 1.6.1976, the ratio of the Supreme Court decision in the case of 'Ishikawajima-Harima Heavy Industries Ltd. v/s. DIT, 158 Taxman 259 (SC)' is applicable. The appellant had placed reliance on the decision of Jindal Thermal Power Company Limited v. DOT [2009] 225 CTR 220f, wherein it has been clearly held that the criter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 305 JTR 394 squarely applies to the facts of the appellant's case, since it related to rendering of Bio-Analytical services by the non-resident applicant and under the framework of the same language of Article 12(4)(b) of the Canada-India DTAA, which is pari-materia with the U.S.-India DTAA as well: Payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. In the present case, the applicant renders Bio-analytical services which, no doubt, are very sophisticated in nature, but the applicant does not reveal to its clients as to how it conducts those tests or the inputs that have gone into it, so as to enable them to carry out those tests themselves in future. A broad description or indication of the type of test carried out to reach this conclusion does not enable the applicant's client to derive requisite knowledge to conduct the tests or to develop the technique by itself. Therefore, the services provided to the appellant by the non-resident parties of USA and Canada did not fall within the purview of 'inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on his own. We are in full agreement of the above view of the ld.CIT(A). In the present case, the assessee had sent samples to the experts outside India and those experts submitted their report. There is nothing on record suggesting that the services rendered to the assessee were made available to the assessee and also the assessee was able to apply the same of his own. In the absence of the same, such service would not false within the ambit of the included service in the light of decision of the Authority for Advance Rulings (Income-tax), New Delhi in the case of Anapharm Inc., In re(supra), the decision of the Coordinate Bench in the case of Wockhardt Ltd. vs. ACIT(supra) and the decision of Hon ble High Court of Karnataka in the case of CIT vs. De Bers India Minerals (P.) Ltd.(supra). The Revenue has not placed any material on record to rebut the findings of the ld.CIT(A) that the services were actually made available to the assessee and would be taxable. Under these facts, we do not see any reason to interfere with the findings of the ld.CIT(A), same is hereby upheld. Thus, ground raised by the Revenue is rejected. 5. In the result, appeal of the Revenue is dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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