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TMI Blog2024 (3) TMI 717X X X X Extracts X X X X X X X X Extracts X X X X ..... shed. II. Validity of final assessment order passed in consequence of DRP directions. 2.1. The Ld. DRP erred in issuing the directions under section 1440(5) of the Act dated March 16, 2023, without a valid DIN, in contravention to the Circular No. 19 of 2019 dated August 14, 2019, issued by the Central Board of Direct Taxes ("CBDT"), deeming such a directions to be invalid and never to have been issued as per para 4 to the said Circular, and consequently the final assessment order dated April 28, 2023 passed under section 143(3) read with section 1440(13) of the Act (hereinafter referred to as the "Impugned Order") is invalid and is liable to be quashed. 2.2. The Ld. DRP issued directions to the Ld. AO with a prejudiced mindset to confirm the addition proposed by the Ld. AO and thereby directing the Ld. AO to put forward strong arguments on the merits of the grounds raised by the Appellant. Such directions are in violation of the powers provided under section 144C of the Act and therefore such directions and the final assessment order passed in consequence of such directions are incorrect, invalid and liable to be quashed. III. Non taxability of sub-contracting charges 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and circumstances of the case and in law, erred in concluding that the sales commission received towards marketing service is FIS under Article 12 of the India-US DTAA. 4.5 The lower authorities erred in concluding that the services were made available to the recipient, without appreciating the meaning of the term 'make available' as defined in the Memorandum of Understanding to India-USA DTAA and various judicial precedents. 4.6 Without prejudice to the above, the lower authorities, erred in adjudicating sales commission along with sub-contracting charges and therefore erred in not giving a separate direction/finding in respect of sales commission. Miscellaneous grounds V. Miscellaneous grounds 5.1 On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234A of the Act without appreciating that the return of income was filed within the due date specified under the provisions of the Act. 5.2 On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234B of the Ac 5.3 On the facts and circumstances of the case and in law, the Ld. AO erred in making an adjustment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the same as FIS under Article 12(4) of the India-USA DTAA without appreciating that the condition of 'make available' of technical knowledge is a prerequisite for determining whether an income falls under Article 12(4) of the India-USA DTAA. Further submitted that the lower authorities have erred in concluding that the sub-contracting services were made available to SPi India, without appreciating the meaning of the term 'make available' as defined in the Memorandum of Understanding to India-USA DTAA and various judicial precedents. Further, brought to our notice that the very same issue has been decided by the Coordinate Bench of the Tribunal in the Assessee's own case for A.Y.2019-20 in ITA No.1662/Del/2022. 7. The Ld. DR relied on the orders of the Lower Authorities but did not dispute the fact that similar issue has been decided by the Tribunal in A.Y 2019-20 in Assessee's own case. 8. We have heard the parties perused the material. The very same issue involved in Ground No. 3.3 & 3.4 has been decided by the Coordinate Bench of the Tribunal in Assessee's own case for A.Y 2019-20 in ITA No. 1662/Del/2022 dated 07/07/2023, wherein it is held as under:- "7. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical or consultancy services (including the provision of such services through technical or other personnel) if such services: (a) Are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or (b) make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design. " 7.4 In order to constitute FIS under Article 12(4) of the India-USA DTAA the services rendered must make available technical knowledge, experience, skill, know-how or processes to the person availing such services. The Memorandum of Understanding (MOU) to India-USA DTAA contains various instances explaining the meaning of the term 'make available'. The 'make available' clause is satisfied when the person acquiring the services is enabled to apply the technology independently in the future without the assistance of the service provider. The fact that the provision of the service may require technical/consultancy input by the person providing the service does not per se mean that technical knowledge, skills etc. are made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting charges are not taxable in India as per the India-USA DTAA as the make available clause is not satisfied. However, in the instant case in AY 2019-20 the Ld. DRP held that the sub-contracting charges are taxable as FIS since make available condition is satisfied. In holding so, the Ld. DRP failed to appreciate that the Ld. DRP in the case of LW US held that know how was made available only with respect to the issue of marketing fee and not sub-contracting fee. It is also contended by the assessee that the Ld. DRP misapplied the decision of the Chennai Bench of the Tribunal in the case of LW US for the AY 2015-16 to the present case as in the said decision the taxability of marketing fee were challenged and not sub-contracting charges which had already attained finality at DRP. We have perused the orders of the Ld. DRP and Chennai Bench of the Tribunal (supra) in the case of LW US for AY 2015-16 (at pages 92-109 of the Paper Book) and find that the contention of the assessee is correct. 7.8 In the light of the above factual matrix and the judicial precedents cited above, we are of the view that the sub-contracting charges received by the assessee does not satisfy the make avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPL, dated 31/12/2020, the due date for furnishing income tax return for the impugned AY 2020-21 was extended to February, 15, 2021, therefore, the AO erred in levying interest u/s 234A of the Act for the A.Y.2020-21 as the assessee has filed the return of income on February, 2021, which is well within the extended due date. Considering the submission made by the Ld. The Ld. the Assessee's Representative, we remand the issue to the file of the AO with a direction to verify the extended due date for filing the return and the actual date of return filed by the Assessee and pass appropriate order in accordance with law. According, the ground No.5.1 of the assessee is partly allowed for statistical purposes. 13. The Ld. Counsel for the assessee addressing ground No.5.2 which is regarding levying of interest u/s 234B of the Act, submitted that while computing the assessed income and the tax thereon, interest u/s 234B of the Act amounting to Rs. 18,91,995/- was erroneously levied by the Ld. AO in the computation sheet and sought for remanding the matter to the file of A.O. for re-computing. Considering the submission made by the AR, we deem it fit to remand the issue of levying inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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