TMI Blog2017 (12) TMI 1833X X X X Extracts X X X X X X X X Extracts X X X X ..... lised racks space provided in Data Centre Racks owned and maintained by Cinenet Communications Inc USA. In case of technical issue, Cinenet Communications Inc appears to have provided basic support for use of racks. Moreover, payment made to Novatel Ltd. and Tata Communication (US) Inc, the assessee claims before the CIT(Appeals) that the service was utilised outside the country. Therefore, admittedly, the payment was made to the company in USA. In the case of Verizon Communications Singapore Pvt. Ltd.[ 2013 (11) TMI 1058 - MADRAS HIGH COURT] the payment was made to Singapore company. Therefore, here we have to examine the Double Taxation Avoidance Agreement between India and USA. Both the authorities had no occasion to examine the Doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the assessee, submitted that the Assessing Officer disallowed a sum of ₹ 46,99,302/- for nondeduction of tax. According to the Ld. counsel, the assessee has paid co-location charges of ₹ 23,02,515/-. The Ld.counsel clarified that co-location charges is nothing but charges paid by the assessee outside the country for storage of electronic data. According to the Ld. counsel, the assessee transferred the electronic data through cable network and such data could be stored outside the country for the use of customers outside the country. For the purpose of keeping the electronic data in a manner which can be retrived by the customers outside the country, the assessee has paid storage charges which is known as co-location cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, therefore, there cannot be any disallowance under Section 40(a)(ia) of the Act. 3. On the contrary, Shri AR.V. Sreenivasan, the Ld. Departmental Representative, submitted that the assessee has debited an amount of ₹ 62,88,522/- towards connectivity charges. The assessee clarified before the Assessing Officer that the co4 location charges was ₹ 23,02,515/- and international call charges was ₹ 23,93,863/-. The Ld. D.R. further submitted that the entire services and operations were made available by Cinenet Communications Inc. The Ld. D.R. further submitted that Novatel Ltd. provides international telecommunication services to the assessee. Referring to Explanation (vi) to Section 9(1) of the Act, the Ld. D.R. subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny permanent establishment in India or whether they have any business connection in India needs to be examined in the light of Double Taxation Avoidance Agreement between India and USA. Since such an exercise was not done by both the authorities below, this Tribunal is of the considered opinion that the matter needs to be re-examined. Accordingly, orders of both the authorities below are set aside and the entire issue raised by the assessee is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and the Double Taxation Avoidance Agreement between India and USA and decide the issue afresh in accordance with law, after giving a r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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