9911796707
TMI Blog2022 (11) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... any, i.e. Nalco Water India Limited (NWIL), consisting of Rs.3,16,29,519/- towards Headquarter common expenses incurred by it; and Rs.21,17,36,766/- towards Regional Management Assistance and Services provided by its Asia-Pacific (Singapore) entity. The assessee claimed that the amount was exempt under the provisions of the Double Taxation Avoidance Agreement between India and the USA (hereinafter referred to as DTAA). The AO, after going through the relevant parts of the concerned Agreements, came to hold that the amount was in the nature of 'FTS' chargeable to tax u/s.9(1)(vii) of the Act and also 'Fees for Included Services' under Article 12 of the DTAA. The assessee approached the Dispute Resolution Panel (DRP), which countenanced the view point of the AO by noting that similar view was canvassed by it in earlier years. In the final assessment order, an addition of Rs.24.33 crore was made treating the amount received from Indian entity as 'FTS' under the Act as well as 'Fees for Included Services' under the DTAA. Aggrieved thereby, the assessee has come up in appeal before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design." 6. The focus of the ld. AR was on the argument that the services provided by the assessee did not `make available' any technical know-how etc. to the Indian entity. Undoubtedly, the term 'make available' has been interpreted by the Hon'ble Karnataka High Court in CIT Vs. De Beers India Minerals Pvt. Ltd. (2012) 346 ITR 467 (Kar.) holding that the payer of the services should be able to utilize the acquired knowledge or know-how at his own in future without the aid of its provider. Thus, it becomes palpable that in order to `make available' such services, it is sine qua non that the recipient of the services must acquire such technical know-how etc. which he himself can use in future without any assistance of the provider and the same should not be anything which vanishes or disappears with its provision by the payee itself. 7. However, it is significant to note the command of para (b) of Article 12(4) of the India-USA DTAA, which says that fees for included services means consideration for rendering any technical or consultancy servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucidation of the nature of such services. This Agreement was amended in the year 2009. A copy of the Addendum is available in the paper book, which has added some mark-up to the costs incurred. It also has certain other relevant clauses regarding the duty of the assessee to maintain proper accounts qua the services rendered to NWIL, which we will discuss infra at the appropriate stage. The second Agreement between the Singapore entity and the NWIL, against which the assessee received the amount, is dated 01-01-2012. A copy of this Agreement has been placed in the paper book. This Agreement refers to providing certain services, including, Financial, Accounting, Administrative, Managerial and Legal Services. This Agreement also, apart from naming the services, does not precisely throw any light on their nature. On going through the above Agreements read with the Addendum, it can be seen that they only name the services but do not specify their nature. For example, though the Agreement talks of "Information Technology" service, but does not precisely point out the nature of service as to whether it was only some Support service; or providing access to the IT facility set up by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that around 80% of the costs charged by the assessee to NWIL are towards Information Technology only. This Report again unfortunately does not discuss the nature of services but only gives broad heads, such as, Regional IT, HR etc. 10. At this juncture, it would be pertinent to note clause 3 of the Agreement between the assessee and NWIL which provides that: "Parent agrees to provide Affiliate with Services that are necessary or appropriate to the business of the Affiliate. As required, Parent will send necessary personnel to Affiliate's facilities to provide management expertise and knowledge to assist with specific issues as necessary. Parent may at its own option hire outside experts or consultants to provide such assistance." This clause reveals that the assessee will send necessary personnel to NWIL's facilities to provide management expertise and knowledge to assist with specific issues as necessary. This manifests that the assessee was not only providing some services but also deputing its personnel to its Indian entity for providing expertise and knowledge to assist with specific issues as necessary. 11. The ld. AR placed on record certain additional documents, which adm ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
