TMI Blog2017 (5) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. This ground No. 1 of the appeal of the Revenue is rejected. Capitalization of professional charges - Held that:- We find that the learned Commissioner of Income-tax (Appeals) has analysed the party-wise list of expenses of ₹ 76,43,892 treated by the Assessing Officer as capital expenditure and concluded that only ₹ 15,27,790 was claimed by the assessee as professional charges in the profit and loss account and the balance expenses out of ₹ 76,43,892 were treated by the assessee as capital expenditure and, thus, cannot be disallowed again as the same has not been claimed as revenue expenditure. In respect of the expenses of ₹ 15,27,790, the learned Commissioner of Income-tax (Appeals) has held the same are incurred for running and operation of the assessee's business and accordingly he allowed the amount of ₹ 15,27,790 as revenue expenditure. The order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is comprehensive and well reasoned and thus no interference on our part is required - Decided against revenue TDS u/s 195 - treating the payment of International Private Leased Circuit (IPLC) to M/s. Kick Communication I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rship rights. The assessee was not concerned with any of the process involved in transmission or connectivity of call data. The only concern of the assessee was transmission of call data beyond the boundaries of India to the person in the USA to whom call was made. Thus we hold that the payments made by the assessee are not in the nature of royalty either under the domestic law or relevant DTAA. No disallowance could have been made under section 40(a)(i) of the Act for non-deduction of tax on the payments to non-resident parties, namely, M/s. Kick Communication and M/s. IGTL Solutions. Accordingly, ground No. 1 of the appeal is allowed. Payments in the nature of fee for technical services (FTS) - Held that:- For service of transmission of call data from end of the Indian territory to the person in the USA to whom call is made the payment in question cannot be considered as fee for technical services (FTS) in terms of section 9(1)(vii) read with Explanation 2 of the Act. Since in the call connectivity and transmission from end of the Indian territory at Mumbai to the termination of call in the USA, no technical knowledge has been made available to the assessee, respectfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f to disallowing the expenditure claimed under the head 'professional charges' but had taken all such expenditure which were in the nature of professional charges and which were incurred in lieu of professional services. 3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. The grounds of the assessee's appeal in I.T.A. No. 1927/Del/2008 for the assessment year 2002-03 are as under : 1. That on the law, facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in confirming the disallowance made by the learned Assessing Officer in respect of international private leased circuit (IPLC) charges paid to M/s. Kick Communication Inc. USA and connectivity charges paid to M/s. IGTL Solution Inc. USA amounting to ₹ 15,98,596 and ₹ 40,29,614 respectively on the ground that no tax was deducted at source under section 195 of the Income-tax Act, 1961 before making such payment. 1.1 On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) erred in upholding the action of the Assessing Officer in treating the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above table and sustained the additions at serial Nos. 2 and 3 of the above table. Aggrieved with the order of the learned Commissioner of Income-tax (Appeals), both the Revenue and the assessee are in appeal before the Tribunal, raising the grounds as reproduced above. 6. In ground No. 1 of the appeal, the addition of ₹ 95,33,520 on account of deferred revenue expenditure deleted by the learned Commissioner of Income-tax (Appeals), has been challenged. The facts in respect of issue in dispute are that in the computation of income, the Assessing Officer observed the claim of the deferred revenue expenditure amounting to ₹ 95,33,520. The Assessing Officer further observed that in the books of account maintained for the purpose of the Companies Act, the assessee amortised the above sum for a period of 36 months. It was contended by the assessee that the deferred revenue expenditure which was allocable to fixed asset, incurred during the pre-commencement period was capitalised and which was not applicable to the fixed asset directly or indirectly, was written off or amortised to be written off in the financial books of the company over a period of 36 months. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the asses see has written off the expenditure in its books of account over a period of five years, it must be allowed in entirety in the year in which it is incurred, if it is a revenue expenditure and if it is wholly and exclusively incurred for the purpose of business; (iv) that once the business is set up and ready for commencement of business operations, whatever expenditure is incurred after setting up but before commencement of business operations and commercial sale, is an allowable expenditure; (v) that the international call centre commenced business operation on December 20, 2001 and yielded loss for the period under consideration relevant to the assessment year 2002-03 but it does not mean that deferred revenue expenditure not directly allocable to fixed assets would be treated as dead expenditure and expenditure incurred for the purpose of business of the company, be it after setting of the business but before commencement of its business operation on commercial scale, is to be construed as allowable expenditure under the Act; and (vi) that the expenditure was treated as deferred revenue expenditure in the financial books over a period of 36 months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se their services was in place, set up was complete. In view of the submissions, the learned counsel requested to uphold the finding of the learned Commissioner of Income-tax (Appeals) on the issue in dispute. 6.7 We have heard the rival submissions and perused the relevant material on record including the order of the lower authorities on the issue in dispute. We find that the expenses in dispute are in the nature of salaries, staff and welfare expenses, miscellaneous expenses etc. In the books of account, the assessee has amortised the expenses and spread the claim over a period of three years, whereas for the purpose of Income-tax, the assessee claimed the entire expenses in the year under consideration. The Assessing Officer has not disputed the nature of the expenses as revenue. The objection of the Assessing Officer is that the business of the assessee was commenced on December 20, 2001 i.e. during the year under consideration and, therefore, any expenses which are revenue in nature and incurred prior to the commencement of the business, can either be claimed under section 35A to section 35E of the Act or cannot be allowed under the provisions of the Income-tax Act. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is reproduced as under (page 8) : This brings us to the moot question : whether the business of the BPO (business process outsourcing) had been set up by the respondent-assessee on April 1, 2004 or was it set up only on June 1, 2004 ? We have already quoted factual position elucidated in the assessment order to the effect that the appellant had employed several employees and salary and wages were paid to them. However, these employees were given training in the months of April and May, 2004 and expenditure was incurred on various heads, during the months of April and May, 2004, the actual BPO services to the parent company were not rendered. When the said services actually were rendered or the assessee did start rendering of services to a third party, the business commenced. This, according to us, does not mean that business had not been set up by the appellant-assessee. In order to determine whether business had been set up or not, we have to look at the factual matrix of the case, especially, the nature and character of the business activity with the activities actually undertaken. The appellant-assessee had entered into an agreement with their sister concern, M/s. Agilis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ology like software development/consultancy, business process management and electronic banking schemes. The claim of the assessee therein was that business of software development was set up the moment they had employed 30 40 employees in the relevant previous year. This claim was accepted by the High Court after noticing that the assessee had certain infrastructure facilities at the relevant time. 6.7.3 Further, in paragraph 20 of the decision, the Hon ble High Court held that training of the employees was part and parcel of the business activity. The relevant paragraph is reproduced as under (page 13 of 369 ITR) : Upon recruitment of employees, the factum that expenditure under the different heads, as noticed above, was incurred is indicative that business was set up. Training to the employees was given to ensure that when the work was undertaken and performed, there were no glitches, trouble or problems. It is not indicative of the fact that necessary infrastructure was not there and actual business could not have commenced or was not set up. Training was post set up as the employees were recruited. In the case of service industry, training and upgradation of skills o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he immediately preceding year the assessee has incurred expenses on training of employees amounting to ₹ 6,24,669. We have also seen that the assessee entered into agreement with Videsh Sanchar Nigam Limited (for short VSNL ) for international private leased line service on December 20, 2000, which also falls in the immediately preceding year. 6.7.6 In view of the above facts, respectfully following the decision of the Hon ble High Court in the case of Omniglobe Information Tech India P. Ltd. (supra), we are of the opinion that the business of the assessee was set up in the immediately preceding year. Further, in view of the decision of the Hon ble High Court in the case of CIT v. Samsung India Electronics Ltd. the expenses incurred after set up of the business and before the actual commencement of the business are allowable. Accordingly, we hold that the expenses claimed by the assessee are revenue in nature and incurred after setting of the business and before actual commencement of the business, hence, allowable under section 37 of the Act. This ground No. 1 of the appeal of the Revenue is rejected. 7. In ground No. 2 of the appeal, the Revenue has raised that whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional charges. 7.3 The learned counsel, on the other hand, referred to page 56 of the paper book and submitted that in schedule 10 of the profit and loss account, under the head administrative expenses , the assessee only claimed the professional charges of ₹ 15,27,790 and, therefore, disallowance of ₹ 76,43,892 holding the same as capital expenditure was totally incorrect on the part of the Assessing Officer. He further submitted that the learned Commissioner of Income-tax (Appeals), after taking into account the fact that other than the expenses of ₹ 15,27,790, all the expenses included under ₹ 76,43,892 were already treated by the assessee as capital expenditure and the expenses of ₹ 15,27,790 being revenue in nature, he deleted the addition made by the Assessing Officer in respect of the professional charges. He, accordingly, submitted that the action of the learned Commissioner of Income-tax (Appeals) was justified and required to be upheld. 7.4 We have heard the rival submissions and perused the relevant material on record. We find that the learned Commissioner of Income-tax (Appeals) has analysed the party-wise list of expenses of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remaining amount of ₹ 15,27,790 under professional charges has been considered as expenditure in the profit and loss account. The Assessing Officer's action in treating an amount of ₹ 76,43,892 as capital expenditure from out of a claim of ₹ 15,27,790 under that head in the profit and loss account is actuated by the fact that many of the accounts under professional charges have either been not mentioned in the order reported or the amount against an individual party being represented differently by the Assessing Officer. Thus whereas the Assessing Officer has not considered payments to Unicon Consulting, S. R. Wadhwa, Leading Edge Consultants, Jerath Electronic and Allied Industries, Charan Gupta Enterprises, the counsellor, S. K. Sharma and Co. Ravi Parkash Jerath, Sushil Jeetpuria and Co., although those names appear in the accounts under professional charges, the Assessing Officer has in turn referred to payments by the appellant to Fonet Consultancy Pvt. Ltd. Nest 4 India Ltd., North Star Call Centre College, Main Stream and Shardha India. Those latter parties do not figure under professional charges as per the appellant's claim. Moreover the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred for the running and operation of the appellant's business has alone been claimed in the accounts. I hold therefore that the disallowance and treatment of a sum of ₹ 76,43,892 as capital expenditure, whereas the appellant's professional charges amounted to ₹ 15,27,790 is not in order. Since incurred for the purposes of business, I hold that the expenditure is interalia allowable under section 37(1) of the Act. The ground is allowed. 7.4.1 In our opinion, the order of the learned Commissioner of Income-tax (Appeals) on the issue in dispute is comprehensive and well reasoned and thus no interference on our part is required on the finding of the learned Commissioner of Income-tax (Appeals), accordingly, we uphold the same. Ground No. 2 of the appeal of the Revenue is rejected. 8. In the result, the appeal of the Revenue is dismissed. I. T. A. No. 1927/Del/2008 for the assessment year 2002-03 9. In the ground No. 1 raised in its appeal, the assessee has challenged the finding of the learned Commissioner of Income-tax (Appeals) in upholding the action of the Assessing Officer in treating the payment of International Private Leased Circuit (IPLC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k Communications ) is a reseller of AT and T USA. The assessee paid the International Private Leased Circuit (IPLC) charges to M/s. VSNL and to M/s. Kick Communication for the use of dedicated private bandwidth in underwater sea cable. 9.3 The assessee deducted TDS on payments made to VSNL, however, no tax was deducted on payments amounting to ₹ 15,98,526 made to M/s. Kick Communication. 9.4 It was explained by the assessee that M/s. Kick Communication is a non-resident party, which has not rendered any services in India as the cable on which bandwidth was made available was lying outside India. 9.5 According to the Assessing Officer, the authorised representative of the assessee took the physical existence of the cable for establishing its case of services rendered outside India by a non-resident entity. However, the Assessing Officer was of the view that service was not in the physical sense but it was a service provided on a physical cable. M/s. Kick Communication was also given the responsibility of rectifying the connectivity problems. The Assessing Officer referred to paragraphs 2 and 3 of service level agreement between the assessee and M/s. Kick Communication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection between the two parties and the payments were made for using the facilities of M/s. Kick Communication by the assessee from India. The Assessing Officer further stated that Explanation 2 to section 9(1)(vi) of the Act was applicable in the case of the assessee, according to which royalty include consideration for imparting of any information concerning technical, industrial, commercial or scientific knowledge or experience or a skill. The Assessing Officer was of the view that the right to use the bandwidth and technical services in the nature of maintenance fall within the definition of royalty and thus the tax was required to be deducted. Further the Assessing Officer stated that article 12 of the Double Tax Avoidance Agreement (DTAA) between India and the USA deals with royalties and fees for included services and the term royalty has been defined in clause 3(b) as payment of any kind received as consideration for use of, or the right to use, any industrial, commercial or scientific equipment and therefore the term royalty has been defined on similar lines as per section 9 of the Act. The Assessing Officer held that income deemed to accrue or arise in India within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Commissioner of Income-tax (Appeals) after considering the submissions made a gist of agreements with both the parties, which is reproduced as under : 2.3.1 I have considered the submissions of the appellant, findings of the Assessing Officer and the facts on record. The gist of agreements in question runs as under : (a) The agreement with Kick Communication Inc. is dated August 9, 2001. The agreement is towards rendering of services by way of bandwidth capacity lease. The appellant as per the agreement is responsible for establishing each service interconnection and shall bear the cost of the service interconnection, has the responsibility of installation, testing, operation of and cost associated with the facility, services and equipment at the Miami co-location other than those specifically to be provided by Kick Communication and shall include any co-ordination with VSNL at Mumbai, and T-1 at the US end. In the event that the appellant believes that a condition has occurred effecting service, the appellant would immediately contact Kick Communication's designated network operating centre to open a report and thereafter Kick Communication which takes steps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the exhibit to the agreement. The obligations of the IGTL are to provide connectivity in accordance with service, level agreement and in case of discontinuation of connectivity facility due to non-on working or faults in CRM software, it shall immediately inform the appellant about such fault and make the equipment available to the appellant or its software vendor. As regards the appellant's obligations, it shall endeavour that all the equipment, circuit and CRN software loaded on the equipment in IGTL node necessary for using IGTL connectivity are in working condition. In accordance with clause 10 of the agreement, the recitals and the information contained in the agreement have been treated as confidential. 9.9.1 In the light of the facts of the case, the learned Commissioner of Income-tax (Appeals) held that the decisions relied upon by the assessee were either not applicable over the facts of the case or distinguishable. 9.9.2 The learned Commissioner of Income-tax (Appeals) relied on the decision of the Tribunal in the case of Asia Satellite Telecommunications Company Ltd. v. Deputy CIT [2003] 85 ITD 478 (Delhi), wherein it was held that lease rent payments by T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd access charges to BSNL without deduction of tax at source under section 194J of the Act, it was held in Hutchison Telecom East Ltd. v. Asst. CIT [2007] 16 SOT 404 (Kol), that since the services provided by BSNL were based on technology and the assessee without technical services by BSNL would not be able to continue its business to transmit call/voice and signal to recipients, payments made by the assessee to BSNL with regard to port charges (interconnectivity charges) and access charges was in the nature of technical services subject to TDS under section 194J. Fees for technical services for the purposes of TDS under section 194J is as per the definition given in Explanation 2 to section 9(1)(vii). Going by the citation above and aligning to the facts under appeal, the appellant has paid for connectivity charges to non-residents. The appellant is a resident. The charges were not payable with respect of services utilised in the business by the appellant outside India. The amount was also not paid for the purpose of making or earning any income from any source outside India. Article 12 of the DTAA between India and the USA provides that fees for included services arising in any C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which can be utilised for the purpose of transmitting signals to the customer. There was no use of 'process' by the television channels. (ii) In the case of the present assessee also the dedicated band width have been utilised by the assessee in the undersea water cables and the network in the USA and call transfer/connectivity charges have only been paid to the non-resident parties and therefore the same does not fall under the category of royalty either under Explanation 2 to section 9(1)(vi) of the Act or article 12 of the DTAA between the USA and India. (iii) The payments made for bandwidth charges for completion of the international leg of the call to non-resident companies was neither royalty nor fee for technical services as held by the Authority for Advance Rulings in the case of Cable and Wireless Networks India Private Ltd., In re [2009] 315 ITR 72 (AAR) (AAR No. 786 of 2008). The special leave petition filed by the Revenue against the decision of the Authority for Advance Rulings was dismissed in SLP No. 6392 of 2010. In support of the contention, the assessee also relied on the decision of the Authority for Advance Rulings in the case of Dell Internat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign telecom operators was not income deemed to accrue or arise in India as fee for technical services (FTS) either in terms of section 9(1)(vii) read with Explanation 2 of the Act or under the articles of the respective DTAA. The Tribunal also held that such payment of interconnectivity charges was not in the nature of royalty as the foreign telecom operators had no exclusive ownership rights in respect of the process embedded in their network which is usually a standard facility to render telecommunication services to the subscriber as well as the interconnecting telecom operators and therefore the payment of interconnectivity charges made to the foreign telecom operators do not fall within the ambit of royalty under section 9(1)(vi) of the Act as well as the term 'royalty' under the DTAA. Further it is held that the change in domestic law cannot be read into the treaties as long as there is no change in the wording of the treaties. In the case of the assessee also the payment has been made for connecting the domestic leg of the call with the international leg of the call. (vii) That retrospective amendment in law cannot have retrospective effect to the TDS provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian territory at Mumbai was transmitted by the VSNL. We may call it as domestic leg of the call trans mission. Further, the call data was transmitted from the last point in the Indian territory at Mumbai to the entry point in the USA at Miami through the undersea cable by M/s. Kick Communication. The data from the entry point at Miami in the USA to the person connected to the call was trans mitted by M/s. IGTL Solutions. We may call these both the part of the call transmission as the international leg of the call transmission. From the analysis of the agreements with both the non-resident parties by the learned Commissioner of Income-tax (Appeals), we find that M/s. Kick Communication was not only responsible for providing smooth transmission of call data, it was also responsible for managing the faults arising in the transmission of calls and providing all information to the assessee in respect of the transmission of call data. Similarly, M/s. IGTL Solutions was responsible for smooth transmission and management of call data from the entry point in the USA to the person to whom the call was made. The lower authorities have not raised any issue of rendering service by the non- resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (d) through or from transfer of capital asset situated in India. 9.12.5 Further the business connection has been defined in Explanation 2 below sub-section 9(1)(i) as under : Explanation 2.-For the removal of doubts, it is hereby declared that 'business connection' shall include any business activity carried out through a person who, acting on behalf of the non-resident,- (a) has and habitually exercises in India, an authority to conclude contracts on behalf of the non-resident, unless his activities are limited to the purchase of goods or merchandise for the non- resident; or (b) has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident; or (c) habitually secures orders in India, mainly or wholly for the non-resident or for that non-resident and other non-residents controlling, controlled by, or subject to the same common control, as that non-resident : Provided that such business connection shall not include any business activity carried out through a broker, general commission agent or any other agent having an independent stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific situations : 1. Non-resident exporter selling goods from abroad to Indian importer. (i) No liability will arise on accrual basis to the non-resident on the profits made by him where the transactions of sale between the two parties are on a principal to principal basis. In all cases, the real relationship between the parties has to be looked into on the basis of an agreement existing between them but where : (a) the purchases made by the resident are outright on his own account, (b) the transactions between the resident and the non-resident are made at arm's length and at prices which would be normally chargeable to other customers, (c) the non-resident exercises no control over the business of the resident and sales are made by the latter on his own account, or (d) the payment to the non-resident is made on delivery of documents and is not dependent in any way of the sales to be effected by the resident. It can be inferred that the transactions are on the basis of principal to principal. (ii) A question may arise in the above type of cases whether there is any liability of the non-resident under section 5(1) of the Income-tax Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritory ? Under the agreement with television channels, the role attributed to the appellant can be paraphrased in the following steps : (i) The programmes are uplinked by the television channels (admittedly not from India). (ii) After receipt of the programmes at the satellite (at the locations not situated in India airspace), these are amplified through complicated process. (iii) The programmes so amplified are relayed in the footprint area including India where the cable operators catch the waves and pass them over to the Indian population. The accepted position is that the first two steps are not carried out in India and the entire thrust of the Revenue is limited to the third step and the argument is that the relaying of the programmes in India amounted to the operations carried out in India. Whether this argument is sustainable ? Answer is emphatic no ! Merely because the footprint area includes India and the programmers by ultimate consumers/viewers are watching the programmes in India, even when they are uplinked and relayed outside India, would not mean that the appellant is carrying out its business operations in India. The Tribunal has rightly emphasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is invoked by the lower authorities, is reproduced as under : Explanation 2.-For the purposes of this clause, 'royalty' means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head 'Capital gains') for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill; (iva) the use or right to use, any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10.3 The above terms and conditions of the agreement makes it evident that M/s. Kick Communication agreed for rendering services of transmission of call data and its effective management and there was no agreement for use or right to use any industrial, commercial or scientific equipment between the non-resident and the assessee and thus the said clause of Explanation 2 was not applicable over the facts of the instant case. 10.7 Further, the learned Commissioner of Income-tax (Appeals) has invoked clause (iii) and clause (iv) of Explanation 2 for holding that the consideration to non-resident was in the nature of royalty. 10.7.1 The learned Commissioner of Income-tax (Appeals) has referred to consideration for use of the process of transmission of data as royalty. In our opinion, in Explanation 2, the process referred, is the patentable process and the consideration received for allowing use of such patentable process for manufacturing or any other use has been termed as royalty. For earning royalty, the person should have exclusive rights in respect of the process embedded. But in the case of the assessee, we do not find any mention in the agreement for the use of any proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 10.10.2 Further, we now examine whether the consideration paid by the assessee falls in the definition of the royalty in the hands of the recipient as per the DTAA between the USA and India. The term royalty has been defined under the DTAA between India and the USA in article 12(3) of the treaty as under ([1991] 187 ITR (St.) 102, 115) : 3. The term 'royalties' as used in this article means : (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof; and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced as under (page 377) : Keeping in view the aforesaid principles, we now embark upon the interpretative process in defining the ambit and scope of the term 'royalty' appearing in Explanation 2 to clause (vi) of section 9(1) of the Act. Clause (i) deals with the transfer of all or any rights (including the granting of a licence) in respect of a patent, etc. Thus, what this clause envisages is the transfer of 'rights in respect of property' and not transfer of 'right in the property'. The two transfers are distinct and have different legal effects. In the first category, the rights are purchased which enable the use of those rights, while in the second category, no purchase is involved, only right to use has been granted. Ownership denotes the relationship between a person and an object forming the subject-matter of his ownership. It consists of a bundle of rights, all of which are rights in rem, being good against the entire world and not merely against a specific person and such rights are indeterminate in duration and residuary in character as held by the Supreme Court in the case of Swadesh Ranjan Sinha v. Haradeb Banerjee, AIR 1992 SC 1590. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding India. This is held that the television channels in entire cycle of relaying the programmes in India were using the process provided by the assessee and, therefore, it is liable to be taxed as royalty income. We have to test the rationality of the aforesaid reasoning and consider the attack thereupon by the appellants in their arguments recorded above. Before that, we may take note of a few judgments relevant to the context. In the case of CIT v. Datacons (P.) Ltd. [1985] 155 ITR 66 (Karn); [1985] 47 CTR (Karn) 162, the company was engaged in processing the data supplied by its customers by using IBM unit record machine computer. The assessee received vouchers and statements of accounts from its customers and converted them into balance-sheets, stock accounts, sales analyses etc. They were printed as per the requirement of the customers. The Karnataka High Court held that in all these activities, the assessee had to play an active role by co-ordinating the activities and collecting the information. Such activities amounted to processing of goods. In the case of N. V. Philips v. CIT (No. 1) [1988] 172 ITR 521 (Cal), the assessee received the amount for providing specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of ISRO Satellite Centre [ISAC], Inre [2008] 307 ITR 59 (AAR), the Authority for Advance Rulings has narrated in detail the process of the operation of a satellite and the role played by the transponder therein. The following features of the agreement entered into by the appellant with its clients need to be highlighted at this stage : (a) The appellant is a foreign company incorporated in Hong Kong and carries business of providing satellite communications and broadcasting facilities. (b) The clients with whom the appellant has entered into agreement are not the residents of India. (c) The appellant has launched its satellites in the orbit footprint on which it is extended over four continents including Asia and, thus, covers India. (d) The agreement signed with the customers which are television channels, the appellant provides facility of transponder capacity available on its satellite to enable these television channels to relay their signals. These customers have their own relaying facilities, which are situated outside India. From this facility, the signals are beamed in space where they are received by a transponder located in the appellant& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contract document, the technical report and other facts furnished by the applicant. The first article in the contract makes it clear that the payment is for the 'lease of navigation transponder segment capacity'. From the designated transponder (L1 and L5) of Inmarsat satellite, this capacity at a particular frequency is made available to the applicant through INLUS (Navigation Land Uplink Station) which is set up and operated by the applicant. The capacity is meant to be used for the purpose of providing an augmentation to global satellite navigation system. The capacity will be utilised through data commands issued from the ground station (INLUS). Undeniably, the applicant will not be able to operate the transponder in space but it will be transmitting/uplinking the augmented data to the navigation transponder. Access to the transponder's space capacity is established through the applicant's operations at the ground station (INLUS) pursuant to which the transponder transmits signals/data received from INLUS from the geostationary orbits. The Inmarsat satellite carries many transponders out of which the transponder for navigation purposes will provide the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves the use of bandwidth, that is to say, a particular bandwidth in the trans ponder meant exclusively for navigational purposes is linked to the earth station (INLUS). The expression use of space segment capacity of transponder has no reference to any operations performed by means of the transponder. The use or operation of transponder as such is not at all contemplated under the contract. What really happens is that the augmented data sent by INLUS reaches the trans ponder and it is transmitted back to the earth and the same is accessed by SBAS user receivers in the coverage area. In response to a query, the applicant specifically clarified that the transponder does not perform any operation with reference to the data uplinked and downlinked and there is no on-board data storage .' It is worthwhile to note that the contention of the Department that there was use of transponder by the applicant was specifically rejected in the following terms (page 68) : 'It is contended by the Revenue that in substance, there is use of equipment i.e. transponder by the applicant. The exclusive capacity of specific transponder is kept entirely at the disposal of the applicant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authority for Advance Rulings before answering the same. The Authority for Advance Rulings expressed this as under (page 67) : 'The crucial question that needs to be addressed, therefore, is whether the payment made to IGL under the aforementioned contract constitutes consideration for the use of or right to use equipment of IGL. To answer this question, we have to discern the substance and essence of the contract as revealed from the terms of the contract document, the technical report and other facts furnished by the applicant.' On the aforesaid poser, the Authority for Advance Rulings discussed the issue and held that the transponder and the process therein are actually utilised for the satellite user for rendering the services to the customer and further that it cannot be said that the transponder or process employed therein are used by the customer. It needs to be emphasised that a satellite is not a mere carrier, nor is the transponder something which is distinct and separable from the satellite as such. It was explained that the transponder is in fact an inseverable part of the satellite and cannot function without the continuous support of variou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the present case, we find that the transponder is not an equipment in itself. In other words, it is not capable of performing any activity when divorced from the satellite. It was fairly conceded by the learned authorised representative that the transponder in itself without other parts of satellite is not capable of performing any function. Rightly so because satellite is not plotted at a fixed place. It rotates in the same direction and speed as the earth. If it had been fixed at a particular place or the speed or direction had been different from that of earth, it could not have produced the desired results. The transponder is part of the satellite, which is fixed in the satellite and is neither moving in itself nor assisting the satellite to and the transponder, namely, a part of it, playing howsoever important role, cannot be termed as equipment.' Even after stating so, the Tribunal did not take the aforesaid view to its logical conclusion, viz., the process carried on in the trans ponder in receiving signals and retransmitting the same, is an inseparable part of the process of the satellite and that process is utilised only by the appellant who is in control t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration used by the Andhra Pradesh High Court in the case of Rashtriya Ispat Nigam Ltd. v. CTO [1990] 77 STC 182 (AP). Illustration : (i) A customer engages a carrier (transport operator) to transport one consignment (a full lorry load) from place A to B, for an agreed consideration which is called freight charges or lorry hire. The carrier sends its lorry to the customer's depot, picks up the consignment and proceeds to the destination for delivery of the consignment. The lorry is used exclusively for the customer's consignment from the time of loading, to the time of unloading at destination. Can it be said that right to use of the lorry has been transferred by the carrier to the customer ? The answer is obviously in the negative, as there is no transfer of the use of the lorry for the following reasons : (i) The lorry is never in the control, let alone effective control of the customer; (ii) the carrier decides how, when and where the lorry moves to the destination, and continues to be in effective control of the lorry; (iii) the carrier can at any point (of time or place) transfer the consignment in the lorry to another lorry; or the carrier may unload the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. This aspect now stands concluded by the Supreme Court in the case of Ishikawajima-Harima Heavy Industries Ltd. v. DIT [2007] 288 ITR 408. In that case, the appellant, a non- resident company incorporated in Japan, along with five other enterprises formed a consortium. The consortium was awarded by Petronet a turnkey project for setting up a liquefied natural gas (LNG) receiving, storage and regasification facility in Gujarat. The contract specified the role and responsibility of each member of the consortium and the consideration to be paid separately for the respective work of each member. The appellant was to develop, design, engineer, procure equipment, materials and supplies to erect and construct storage tanks including marine facility (jetty and island breakwater) for transmission and supply of LNG to purchasers, to test and commission the facilities, etc. The contract involved : (i) offshore supply, (ii) offshore services, (iii) onshore supply, (iv) onshore services, and (v) construction and erection. The price for offshore supply and offshore services was payable in US dollars, that for onshore supply and onshore services and construction and erection partly in U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offshore supply through business connection in India and some operations of the business were carried out in India. Profits were deemed to accrue/arise in India would be only such part of the profits as was reasonably attributable to the operation carried out in India. (ii) That having regard to article 7(1) of the Convention for Avoidance of Double Taxation and Fiscal Evasion with respect to taxes on income between India and Japan [1990] 182 ITR (St.) 380, 407 read with paragraph 6 of the protocol supply of equipment or machinery (sale of which was completed around, the order having been placed directly by the overseas office of the enterprise) would be within the meaning of the phrase 'directly or indirectly attributable to that permanent establishment' and, therefore, so much of the amount received or receivable by the appellant as was directly or indirectly attributable to the permanent establishment as postulated in paragraph 6 of the protocol would be taxable in India. The price of the offshore services would be deemed to accrue or arise under section9(1)(vii) of the Income-tax Act, 1961. And inasmuch as fees for technical services were specifically provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Convention the taxation liability in respect of overseas services would not arise in India. Section 9 spelled out the extent to which the income of a non- resident would be liable to tax in India. Section 9 had a direct territorial nexus. Relief under a Double Taxation Avoidance Treaty, having regard to the provisions contained in section 90(2), would arise only in the event taxable income of the assessee arose in one Contracting State on the basis of accrual of income in another Contracting State on the basis of resident. So far as accrual of income in India was concerned, taxability must be read in terms of section 4(2) read with section 9, whereupon the question of seeking assessment of such income in India on the basis of the Double Taxation Treaty would arise. Paragraph 6 of the protocol to the Convention was not applicable, because, for the profits to be 'attributable directly or indirectly', the permanent establishment must be involved in the activity giving rise to the profits. . . . (vi) That where different severable parts of a composite contract were performed in different places, as in this case, the principle of apportionment could be applied to determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the money which is received from the cable operators by the telecast operators is treated as income by these telecast operators which has accrued in India and they have offered and paid tax. Thus, the income which is generated in India has been duly subjected to tax in India. It is the payment which is made by the telecast operators who are situated abroad to the appellant which is also a non-resident, i.e., sought to be brought within the tax net. 10.14 In the case of instant assessee, the control of equipment was with the non-resident parties and they have not leased the equipment, i.e. the undersea cable etc. to the assessee. The equipment were owned and used by the non-resident parties only and therefore it cannot be said that the consideration paid was for use of equipment by the assessee. Similarly the non-resident parties have not provided use of any process to the asses see, which are of patentable nature having exclusive ownership rights. The assessee was not concerned with any of the process involved in transmission or connectivity of call data. The only concern of the assessee was transmission of call data beyond the boundaries of India to the person in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already been held that non-resident operator has provided technical services to the appellant as is the case made by the Assessing Officer, consequently it cannot be said that payments made by the appellant are for 'use of process' and hence in nature of 'royalty'. The appellant has further contended that reliance placed by the Assessing Officer on decision in the case of Verizon Communications Singapore Pte Ltd. v. ITO (International Taxation) [2014] 2 ITR (Trib)-OL 51 45 SOT 263 (Chennai) is misplaced. I have carefully gone through the facts of the case law. In that case, the Indian payer company had obtained 'leased lines' on hire basis under a contract from non-resident Verizon Communications. This is a vital fact which makes all the difference. When an Indian company takes leased line on hire, then it can be said that it had 'used' it. In the present appeal under consideration, the appellant has neither been leased nor been given on hire network of foreign operator, then it cannot be said that the appellant has 'used' the network belonging to foreign operator. Therefore, reliance of the Assessing Officer on the said case law is misp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic law and relevant Double Taxation Avoidance Agreement. This disposes of ground of Appeal No. 19 which is accordingly allowed. 10.16 Further the assessee in support of the proposition that the amendment under section 9(1)(vi) of the Act by the Finance Act, 2012, has no bearing on the provisions of the DTAA has relied on the decision of the Hon ble Delhi High Court in the case of DIT v. New Skies Satellite BV [2016] 382 ITR 114 (Delhi) (I.T.A. No. 473 of 2012). In the instant case also the assessment year involved is 2002-03, and thus the Explanations 5 and 6 and Memorandum of explanation cannot be brought into action as there has not been any corresponding change in the definition of the term royalty in the DTAA between India and the USA. Accordingly, we are of the opinion that under the DTAA, the restricted meaning of the term royalty shall continue to operate despite the amendment in law. 10.17 As far as the assessee is concerned, in case of difference between provisions of the Act and an agreement under section 90 i.e. (DTAA), the provisions of the agreement shall prevail over the provisions of the Act. 10.18 In view of our discussion above, we hold that the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 2 below section 9(1)(vii), which is reproduced as under : Explanation 2.-For the purposes of this clause, 'fees for technical services' means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head 'Salaries'. 16. In the instant case, the Commissioner of Income-tax (Appeals) has alleged that the non-resident parties have rendered services of transmission of call beyond the Indian territory, which are technical services. We find that the Hon ble Delhi High Court in the case of CIT v. Bharti Cellular Ltd. [2009] 319 ITR 139 (Delhi); [2008] 175 Taxman 573 (Delhi) as held that technical services must be rendered by human element and it does not include any service provided by machine or robots. The call connectivity and transmission services have been held as not involving human element by the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service in question should make available technical knowledge, experience, skill, know-how or process, or consist of the development and transfer of a technical plan or technical design (emphasis supplied). From the description of service presented before us, we do not find that the requirements of clause (c) are fulfilled here. First, no technical service is rendered and secondly, there is no transfer of technology. The Revenue also concedes that this is not a case of payment of fees for technical services. 17. We find that in the case of Bharti Airtel Ltd. v. ITO (TDS) [2016] 47 ITR (Trib) 418 (Delhi) the Tribunal, Delhi Bench has decided the identical issue of payment made for carrying calls from outside India and terminating such calls in India. The relevant part of the decision is reproduced as under (page 454) : A perusal of the above extracted paragraphs leads to the following conclusions : 'The assessee, as part of its ILD telecom services business, is responsible for providing services to its subscribers in respect of calls originated/terminated outside India. Thus, for the provisions of ILD services, the assessee is required to obtain the services of F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Explanation 2 to section 9(1)(vii). In the said Explanation, the expression fees for technical services means any consideration for rendering any managerial, technical or consultancy services . The word technical is preceded by the word managerial and succeeded by the word consultancy . Since the expression technical services is in doubt and is unclear, the rule of noscitur a sociis is clearly applicable. This would mean that the word technical would take colour from the words managerial and consultancy , between which it is sandwiched. A managerial service would be one which pertains to or has the characteristic of a manager. It is obvious that the expression manager and consequently managerial service has a definite human element attached to it. To put it bluntly, a machine cannot be a manager. The service of consultancy also necessarily entails human intervention. The consultant, who provides consultancy service, has to be a human being. A machine cannot be regarded as a consultant. From the above discussion, it is apparent that both the words managerial and consultancy involve a human element. And, both, managerial service and consultancy service, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagerial' and 'consultancy', between which it is sandwiched. Both managerial service and consultancy service are provided by humans. Consequently, applying the rule of noscitur a sociis, the word 'technical' as appearing in Explanation 2 to section 9(1)(vii) would also have to be construed as involving a human element. The expression 'technical service' would have reference to only technical service rendered by a human. MTNL or other companies do not provide any assistance to the assessee in managing, operating, setting up their infrastructure and networks. No doubt, such a facility is 'technical' in the sense that it involves sophisticated technology and may even be construed as 'communication service' but while interpreting the entire expression 'technical service', the individual meanings of the words 'technical' and 'service' have to be shed and only the meaning of the whole expression 'technical services' has to be seen. The services rendered qua interconnection/port access do not involve any human interface and, therefore, the same cannot be regarded as 'tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise vice versa in a given case. During the traffic of such calls whether there is any manual intervention, is one of the points which requires expert evidence. Similarly, on what basis is the capacity of each service provider fixed when interconnect agreements are arrived at ? For example, we are informed that each service provider is allot ted a certain capacity . On what basis such capacity is allotted and what happens if a situation arises where a service provider's allotted capacity gets exhausted and it wants, on an urgent basis, additional capacity ? Whether at that stage, any human intervention is involved is required to be examined, which again needs a technical data. We are only highlighting these facts to emphasise that these types of matters cannot be decided without any technical assistance available on record. There is one more aspect that requires to be gone into. It is the contention of respondent No. 1 herein that interconnect agreement between, let us say, M/s. Bharti Cellular Limited and BSNL in these cases is based on obligations and counter obligations, which is called a revenue sharing contract . According to respondent No. 1, section194J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court examined witness on oath and also gave the assessee the opportunity to cross-examine them. He also re-examined the expert witness. Our decision will be based on the evidence so collected by the Assessing Officer on this aspect of human intervention in the services rendered. It held that the word 'technical services' have got to be read in the narrower sense by applying the rule of noscitur a sociis, particularly, because the words 'technical services' in section 9(1)(vii) read with Explanation 2 comes in between the words 'managerial and consultancy services'. Hence, there should be involvement/presence of human element for coming to a conclusion that 'technical services' can be said to have been rendered in terms of Explanation 2 to section 9(1)(vii) of the Act. In our view the Hon ble Supreme Court of India has approved the proposition laid down by the Hon ble High Court, that this is a service and that it would be FTS as defined under section 9(1)(vii) if there is human interference in such communication service. Hence the issue to be considered is narrow and based on evidence collected by the Revenue post the Hon ble Supreme Court j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'We have heard the rival contentions of both the parties and perused the material available on the record. After going through the order of the Assessing Officer, the learned Commissioner of Income- tax (Appeals); submissions of the assessee as well as going through the process of providing roaming services; examination of technical experts by the Assistant Commissioner of Income-tax TDS, New Delhi, in the case of Bharti Cellular Ltd.; thereafter cross-examination made by M/s. Bharti Cellular Ltd. also the opinion of the Hon ble the then Chief Justice of India Mr. S. H. Kapadia dated September 3, 2013, and also various judgments given by the Income-tax Appellate Tribunal, Ahmedabad Bench, in the case of Canara Bank v. ITO [2008] 305 ITR (AT) 189 (Ahd) on MICR and the Pune Bench decision in iGate Computer Systems Ltd. v. Deputy CIT (TDS) [2015] 5 ITR (Trib)-OL 50 (Pune) on data link services. We find that for installation/setting up/repairing/servicing/maintenance capacity augmentation requires human intervention but after completing this process mere interconnection between the operators is automatic and does not require any human intervention. The term interconnecting user c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the above judgment of the apex court, the Department obtained an expert opinion from the sub-divisional engineer of BSNL. The sub-divisional engineer clarified that human intervention is required for establishing the physical connectivity between two operators for doing necessary system configurations. After necessary configuration for providing roaming services, human intervention is not required. Once human intervention is not required as found by the apex court, the service provided by the other service provider cannot be considered to be a technical service. It is common knowledge that, when one of the subscribers in the assessee's circle travels to the jurisdiction of another circle, the call gets connected automatically without any human intervention. It is due to configuration of software system in the respective service provider's place. In fact, the sub-divisional engineer of BSNL has explained as follows in response to question No. 23 : Regarding roaming services as explained to question No. 21. Regarding interconnectivity, initial human intervention is required for establishing the physical connectivity and also for doing the required configuration. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation with the traffic of call. Thus it is clear that in the process of actual calls, no manual intervention is required. The finding of the Revenue authorities that interconnection is a composite process, involving several processes which require human intervention is erroneous. The test laid down by the Hon ble Supreme Court of India in its order when the case was remanded to the Assessing Officer is to find out as to whether 'during traffic of calls, is there was any manual intervention ?'. There is no reference to the issues of set up, installation or operation maintenance or repair of network as explained by the learned Commissioner of Income-tax (Appeals). These decisions of the various Benches of the Income-tax Appellate Tribunal, when read with the judgment of the Hon ble Delhi High Court as well as the Hon ble Supreme Court, would settle this matter in favour of the assessee. But as a number of other decisions have been relied upon, we examine the same. The Hon ble Madras High Court in the case of Skycell Communications Ltd. v. Deputy CIT [2001] 251 ITR 53 (Mad) has held that call charges received from the telecom operators from firms and companies subscribi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use of telecommunication services i.e. telephone charges, link charges and bandwidth charges as fee for technical services under section 9(1)(vii)-Commissioner of Income-tax (Appeals)) reversed findings of Assessing Officer-Held, payments were made to MTNL and BSNL etc. for providing space for transmission of data for carriage of voice and for availing service of inter-communication, port access for which no human intervention was necessary-Payment cannot be characterised as fee for technical services -Thus, assessee cannot be held to be in default for non-deduction of tax at source from payment of telecommunication charges in terms of section 194J-Revenue's ground dismissed.' The Bangalore Income-tax Appellate Tribunal in the case of Wipro Ltd. v. ITO [2003] 80 TTJ (Bang) 191 held as follows : 'Income deemed to accrue or arise in India-Fees for technical services/royalty-Payment for transmission of data and software through uplink and downlink services-Assessee engaged, interalia, in the business of development of software providing online software services through customer based circuits with the help of VSNL and foreign telecom companies outside India-As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the payment is not fee for technical services under the Act, it would be an academic exercise to examine whether the payment in question would be fee for technical services under the Double Taxation Avoidance Agreements. Suffice to say wherever treaties contain 'making available' clause, then in terms of the judgment of the Hon ble Karnataka High Court in the case of CIT v. De Beers India Minerals Pvt. Ltd. [2012] 346 ITR 467 (Karn) the payment cannot be treated as fees for technical services under the Double Taxation Avoidance Agreement as there is no imparting as contemplated in the Treaties. Similar are the propositions on the issue of 'make available' in the decisions in the case of Mahindra and Mahindra Ltd. v. Deputy CIT [2009] 313 ITR (AT) 263 (Mum) [SB]; Raymond Ltd. v. Deputy CIT [2003] 86 ITD 791 (Mumbai); Cable and Wireless Networks India P. Ltd., In re [2009] 315 ITR 72 (AAR). 20. We find that in the DTAA between India and the USA the make available clause is in existence. Article 12(4) of the treaty is reproduced as under ([1991] 187 ITR (St.) 102, 116) : For purposes of this article, 'fees for included services' means payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication expenses paid to M/s. GNG Solutions Inc. USA, International Private Leased Circuit (IPLC) charges paid to M/s. World Com Data International Services USA and connectivity charges paid to M/s. IGTL Solution Inc. USA amounting to ₹ 1,99,67,349, ₹ 41,83,437 and ₹ 57,24,230 respectively on the ground that no tax was deducted at source under section 195 of the Income-tax Act, 1961 before making such payments. 1.1 Upholding the action of the Assessing Officer in treating the payment of telecommunication charges, IPLC charges and connectivity charges as chargeable to tax in India under section 9(1)(vii) read with article 12(2) and 12(4) of the DTAA between the USA and India. 2. That all the above grounds and sub-grounds have to be read conjunctively and also independent of each other. 3. That the above ground(s) of appeal are to be considered separately and without prejudice to one another. 4. That the appellant-assessee craves, leave to add, alter, amend, substitute, withdraw or forgo any of the ground(s) of appeal before or at the time of hearing. 5. That the order of the learned Commissioner of Income-tax (Appeals) is bad in law and wro ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
