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TMI Blog2020 (12) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... Treaty. It is engaged in the business of manufacturing of train control and signaling systems for mass transit system. 2.1. The return of income was filed declaring an income of Rs. 53,49,38,090/-. Thereafter, the return of income was revised declaring income of Rs. 52,87,88,420/-. The case was selected for scrutiny and since during the year under consideration, the assessee had entered into international transactions with its Associated Enterprises ('AE'), the case was referred to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price ('ALP') under section 92CA(1) of the Act. The TPO, vide order dated 18.12.2015, drew no adverse inference with respect to the international transactions entered into by the assessee and, therefore, no adjustment to taxable income was made in this regard. 2.2. Further, during the course of assessment proceedings, it was noticed that the assessee had entered into contracts with Delhi Metro Rail Corporation Limited ('DMRC') and Bombardier Transportation India Limited ("BTIN"). It was observed by the Assessing Officer that consortium consisting of the assessee along with BTIN has entered into a contract BS 02 on 12.10.2007 with DMR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to explain why these revenues may not be taxed in India as Fee for Technical Services ('FTS') like in the immediately preceding year. It was the assessee's submission before the Assessing Officer that the assessee was the HUB entity for the Rail Control Solutions businesses of Bombardier group and it housed functional heads for various functional areas like administration, procurement, engineering, quality, control program management and marketing, each catering to worldwide Rail Control Solutions business. It was also submitted, while referring to the agreement with BTIN, that there was no markup by the assessee in respect of the services rendered to BTIN. The assessee also claimed benefit of provision of Article 12 of India-Sweden Doubt Taxation Avoidance Agreement and submitted that in the instant case, rendering of intermediary services by the assessee does not 'make available' any technical knowledge, skill etc to BTIN and, therefore, FTS was not taxable in India. However, the Assessing Officer did not accept the contention of the assessee and proceeded to make addition of Rs. 1,44,09,831/- to the returned of income of the assessee on account of FTS. 2.4. Aggrieved, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That on the facts and in the circumstances of the case and in law, the order passed by the Commissioner of Income-tax (Appeals) ["CIT (A)"] under section 250 of the Income-tax Act, 1961 ("Act"), to the extent prejudicial to the Appellant, is bad in law and void ab-initio. Existence of an Association of Persons ("AOP") 2. That the Assessing Officer ("AO") grossly erred in law in concluding the existence of an AOP between the Appellant and Bombardier Transportation India Ltd. ("BTIN"), in respect of their contract with Delhi Metro Rail Corporation ("DMRC"). Re : BTIN forms a "Fixed Place Permanent Establishment" of the Appellant in India. 3. That the CIT (A) erred in upholding the action of the AO in treating BTIN as a "Fixed Place Permanent Establishment" ("Fixed Place PE") of the Appellant company under Article 5(1) of the Indo-Sweden DTAA. 4. That the AO/CIT (A) erred in concluding the existence of Fixed Place PE solely by relying upon the DRP Directions for AY 2011-12 and without independently analysing the facts for the year under consideration. 5. That the AO/CIT(A) failed to appreciate that the Appellant Company supplied the goods to DMRC outside India during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi). 16. That without prejudice, the AO/ CIT (A) erred in holding that there existed a PE of the Appellant in India given the conclusion of the AO that there existed an AOP of the Appellant in India and as such there could not be parallel findings of AOP and PE in absence of CIT(A) not adjudicating on the issue of existence of an AOP. Re: Consequential Grounds 17. That the AO has erred in initiating penalty proceedings under Section 271(l)(c) read with Section 274 of the Act. 3.0. At the outset, the Ld. Authorized Representatives submitted that both the issues stood covered in favour of the assessee by the order of this Tribunal for Assessment Year 2011-12 in ITA No.859/Del/2016 vide order dated 29.10.2020. He drew our attention to the relevant paragraphs of the order of the Tribunal in this regard. 4.0. Per contra, the Ld. CIT-DR fairly accepted that both the issues stood covered by the order of the Tribunal in principle. He further submitted that the assessee should also confirm that there was no employee sent to India and seconded for the work in contract BS02. 5.0. We have heard the rival submissions and have also perused the material on record and we agree with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout depending upon the provider. Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. 25. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service. In our considered view, 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. For this, we derive support from the decision of the Hon'ble Karnataka High Court in the case of De Beers India Minerals Private Limited 346 ITR 467. 26. In consideration of totality of facts, we are of the opinion that the intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the intermediary services provided by the appellant to BTIN do not tantamount to FTS and accordingly, shall not be taxable in India. Accordingly, Ground Nos. is 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lgetas the Lead Member *BT India will ptiis a local Indian member * Broadly identify parts of the Project to be undertaken by BT Sweden as the lead member under the Eligibility Criteria and those to be undertaken by BT India as local Indian member. / 2. Scope of work of BT Sweden and BT India The respective parts of Project to be undertaken by BT Sweden and BT India are as follows: Parts of Scope to be undertaken by BT Sweden 2.1 BT Sweden will be responsible for the 'off-shore' portion of the contract* 2.2 BT Sweden will supply; * Automatic Train Protection ('ATP")/(ATO) o Computer Based Interlocking * Parts of Coded Audio Frequency Track Circuits «Parts of Automatic Train Supervision ('ATS') * Main Line Point machines etc. 2.3 BT Sweden will undertake offshore training. Parts of Scope to be undertaken by BT India , 2.4 BT India shall be responsible for all'on-shore activities . 2.5 BT India will procure and supply other equipment available locally such as Cables, ATS work stations, servers, Mimic Panel, LEO Signals, Depot Point Machines, Audio Frequency Track Circuits for depot, Parts of coded Audio Frequency Track Circuits, wayside h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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