TMI Blog2016 (11) TMI 1744X X X X Extracts X X X X X X X X Extracts X X X X ..... are made available to the person purchasing the service. As to what are the connotations of 'making the technology available to the recipient of technical services', as is appropriately summed up in protocol to Indo-US DTAA, generally speaking, technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. In the case before us, no services are made available in the sense that the recipient of service is enabled to apply the technology, and do the same work without recourse to the service provider. There is no transfer of technology here, and in that sense technical services are not made available. The authorities below were in error in holding that the receipts from Indian entities on account of connectivity charges, are taxable in India. We direct the Assessing Officer to delete the same - Decided in favour of assessee. - SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER For The Appellant : Shri Dhanesh Bafna and Shri Ravi Sawna For The Respondent : Shri Jasbir Chouhan ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeal has been filed by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred and relied upon the appellate order for the assessment year 2009-10. Thus, matter should be decided in accordance with the judicial precedence of the earlier year. 4. On the other hand, Ld. CIT DR, though admitted that the issue is covered by the order of the Tribunal in favour of the assessee, however, he strongly relied upon the order of the Assessing Officer and the Ld. CIT (A). 5. After considering the rival submissions and on perusal of the impugned order as well as Tribunal order for the earlier year, we find that, the main issue involved here is, whether the sum of ₹ 12,65,32,280/- received by the assessee from the Indian customers can be taxed as royalty in India or not. 6. The assessee company is engaged in the business of providing international communication network connectivity/ facility to various telecom operators around the world. It has earned revenue from the Indian customers, mainly from providing the Voice Services outside India. The Assessing Officer held that the assessee is not mainly providing port communication but it is providing usage of its facilities/ infrastructure enabling its customers to interconnect with each other. This in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interoute i.e. the appellant. The appellant is providing entire services to the Indian customers to make them effectively enable them to interconnect with the net work of Europe and USA. The entire services which has been provided by the appellant is highly technical and is in the nature of services which has been rendered by the appellant to the Indian customers and for that only such payments have been made. Having taken note of the Article of India-UK-DTAA on royalty and the fee for technical services and also to Sec. 9 of the Income-tax Act, I am in complete agreement with the AO s finding that these payments are in the nature of royalty or fee for technical services. Accordingly, I consider it proper and appropriate to hold that the reasoning assigned by the AO for taxability of such receipt in the hands of the appellant in India is completely justified and correct as per the provisions of law. Accordingly, the addition so made by the AO of ₹ 6,15,32,756/- is confirmed. The appellant s these grounds of appeal are dismissed. 8. Thus having taken note to may own order extracted as above, and also after having taken note of the AO s order wherein I find that similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) when it is a consideration for the use of, or the right to use, any industrial, commercial or scientific equipment . However, in order to understand whether the income in question will fit into any of the above descriptions, it is necessary to understand the nature of service provided by the assessee. By way of a diagram, this service can be described as follows: 9. Essentially, the role played by the interroute facility is connecting the call to the end operator, and, in that sense, it works like a clearing house. Similarly, in the case of incoming calls, calls originating from Europe and USA, which are to end in India, are routed to the respective operators. In the present fact situation, the payment made by the Indian entities can be held to be royalty only when it is payment for scientific work, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience. It is not for a payment for a scientific work nor there is ITA No. 2284/Mum/2014 Assessment year: 2009-10 any patent, trademark, design, plan or secret formula or process for which the payment is made. There can hardly be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical services', as is appropriately summed up in protocol to Indo-US DTAA, generally speaking, technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. In the case before us, no services are made available in the sense that the recipient of service is enabled to apply the technology, and do the same work without recourse to the service provider. There is no transfer of technology here, and in that sense technical services are not made available. Undoubtedly, the services rendered by the assessee I.T.A. No. 2284/Mum/2014 Assessment year: 2009-10 requires technical inputs, but that alone, as we have seen above, does not bring it in the ambit of fees for technical services taxable under article 13 of India UK tax treaty. 10. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the authorities below were in error in holding that the receipts of ₹ 6,15,32,756, from Indian entities on account of connectivity charges, are taxable in India. We direct the Assessing Officer to delete the same . Since similar facts and issues are involv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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