TMI Blog2023 (2) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the assessee has furnished various other material on record, including invoices raised for reimbursement of cost. Thus, in our view, the Revenue has failed in proving that the make available condition is satisfied. Therefore, applying the restricted meaning of FTS as per India Portugal and India Canada DTAAs, we hold that the amounts received by the assessee from providing SAP and IT support services are not in the nature of FTS, hence, not taxable in India in absence of a Permanent Establishment (PE). At this stage, for the sake of completeness, we must observed, learned Departmental Representative has submitted that in absence of specific notification by the Government implementing the Protocol to India Israel DTAA the restrictive meaning in other DTAAs cannot be applied to India Israel DTAA. Though, the aforesaid contention of learned DR is unsustainable at the threshold considering the fact that learned DRP has given the benefit of Protocol to Indian Israel DTAA, however, we deem it appropriate to address the issue. In case of Steria (India) Ltd. [ 2016 (8) TMI 166 - DELHI HIGH COURT ] while dealing with similar contention raised by the Revenue, has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by technical or other personal. However, he submitted, as per the protocol to India Israel Treaty, if India enters into a DTAA with any other country after 01.01.1995 and in the said treaty the scope of FTS is more restricted, then the restricted terms of that treaty will apply to India Israel DTAA. In this regard, the assessee submitted that as per India Portugal and India Canada DTAAs the definition of FTS is more restricted as it imposes make available condition. He submitted, only when technical knowledge, skill, knowhow, etc. is made available to the recipient of service, the payments received will fall within the definition of FTS. The Assessing Officer, however, did not accept assessee s contention. He observed, since, Article 13 of India Israel DTAA does not speak of any make available condition, it cannot be imported to the treaty. Accordingly, he proceeded to treat the amounts received towards provision of IT and SAP support services as FTS under Article 13 of the India Israel DTAA. Accordingly, he added back the amounts of Rs.1,07,03,993/- and Rs.1,06,93,808/- in assessment years 2010-11 and 2011-12 respectively. Against the additions so made, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Exxon Mobil Company India (P.) Ltd. Vs. Addl.CIT, (2018) 92 taxmann.com 5 (Mumbai Trib.) 4. Autotech Oyg. Vs. DDIT (2016) 76 taxmann.com 33 (Kol) 5. DDIT Vs. Bureau Veritas India Division, ITA No.3377/2010, dated 28th September, 2011 (Bombay HC) 5. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned DRP. Further, he submitted, the Most Favoured Nation (MFN) clause as per the Protocol to India Israel DTAA for applying a more restrictive meaning to FTS as per a treaty between India and a third country cannot be made applicable unless a specific notification regarding applicability of MFN clause is issued by the Government. Thus, he submitted, there is no reason to interfere with the decision of learned DRP. 6. We have considered rival submissions and perused the materials on record. We have also applied our mind to judicial precedents cited at the bar. On perusal of the agreement between the assessee and NIIPL for provision of SAP and other IT services, it is noticed that the following services are envisaged: i. Helpdesk, network , SAP basis and management, ii. SAP infrastructure support, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or agreement between India or any third State, which came into force after 01.01.1995, India limits its rights on taxation at source or royalty or FTS or interest or dividend to a rate lower or a scope more restricted than the rate or scope provided for in this conventions, same rate or scope as provided for in that convention or agreement will also apply to India Israel DTAA. Taking benefit of the Protocol to India Israel DTAA, the assessee has claimed that more restrictive meaning of FTS as provided under India Portugal DTAA or India Canada DTAA, where make available condition has to be satisfied, is to be applied to India Israel DTAA for considering a particular payment, whether comes within the ambit of FTS or not. It is to be noted, though, the Assessing Officer has rejected applicability of make available condition of other treaties to India Israel DTAA and proceeded to apply the more wide meaning of FTS under Article 13 of India Israel DTAA, however, learned DRP, apparently has accepted assessee s claim of applicability of make available condition. Therefore, we need to examine, whether the make available condition as per the definition of FTS in India P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record to prove such fact. The allegation of the departmental authorities that they are taking such position in absence of material/evidence furnished by the assessee to establish its claim, in our view, is not borne out from record. Not only the agreement mentions in detail the nature of services to be provided by the assessee, but the assessee has furnished various other material on record, including invoices raised for reimbursement of cost. Thus, in our view, the Revenue has failed in proving that the make available condition is satisfied. Therefore, applying the restricted meaning of FTS as per India Portugal and India Canada DTAAs, we hold that the amounts received by the assessee from providing SAP and IT support services are not in the nature of FTS, hence, not taxable in India in absence of a Permanent Establishment (PE). At this stage, for the sake of completeness, we must observed, learned Departmental Representative has submitted that in absence of specific notification by the Government implementing the Protocol to India Israel DTAA the restrictive meaning in other DTAAs cannot be applied to India Israel DTAA. Though, the aforesaid contention of learned DR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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