TaxTMI 
TaxTMI 
2008 (8) TMI 395
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.... rate of 15 per cent and not 20 per cent as applied by the Assessing Officer in terms of section 115A of the Act. 3. The assessee is a company engaged in the business of providing consultancy for infrastructure projects. During the financial year, the assessee has executed two contracts with National Highway Authority of India (NHAI) to undertake and provide technical services for upgradation of National Highway-5 and National Highway-2. The scope of services for NH-5 includes preparation of detailed project report, which covers detailed design for rehabilitation/strengthening of the existing carriageways and required structures. It also includes study of environmental, resettlement and rehabilitation needs as per guidelines of Government of India. Technical drawings and reports were to be provided to NHAI for them to use this technology for its infrastructure project. The scope of services of NH-2 contract requires providing detailed project report as per guidelines of World Bank and National Highway Authority of India. The scope of work would be to carry out detailed project report. As a consultant, the assessee has to investigate the availability and viability of various mode....
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....cluding structures thereon and design of new carriageways and required structures. It would include design of bridges and cross drainage structures and grade separated structures including interchanges, design of service roads, parking areas/rest areas, toll collection plazas, weighing stations, telephone system, quantities of various items, detailed working drawings, detailed cost estimates and pre-qualifications and tender documents in suitable contract packages for execution of civil works. The work shall include study of environmental and resettlement & rehabilitation needs as per guidelines of Government of India. The consultant shall obtain all types of project clearances, from concerned department of Central/State Government (e.g. Rlys., Environment, Forests, Irrigation etc.) which matter for implementing civil works." Summarizing from the agreement Shri Puri submitted that the assessee was to provide engineering drawing and designs for the construction of highways. The construction of highway was to be carried out by NHAI but the nature of work and the scope of services are : (i) Engineering services in the field of civil and mechanical engineering. (ii....
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....le, still it will fall under Article 12 of the DTAA and hence, taxable only at the rate of 15 per cent. He also submitted that Article 12(4) as operating in Indo-Canada treaty is identical worded in respect of Indo-US treaty also. In the Indo-US treaty, at the end of treaty even certain examples are cited to understand whether the payments falls under Article 12 or not. He invited our attention to Example 2 therein wherein it was mentioned that all services that generally involve either the development and transfer of technical plans or technical designs or making technology available and such category of service includes engineering services, architectural service, computer software development etc. He also invited our attention to Example 6 in the Indo-US treaty wherein it was opined as under: "Facts: An Indian vegetable oil manufacturing company wants to produce a cholesterol-free oil from a plant which produces oil normally containing cholesterol. An American company has developed a process for refining the cholesterol out of the oil. The Indian company contracts with the U.S. company to modify the formulas which it uses so as to eliminate the cholesterol, and....
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....ot part of Indo-Canadian treaty, the examples given therein cannot be applied. He accordingly pleaded that the order of CIT(A) be upheld. 7. We have carefully considered relevant facts, arguments advanced and the decision cited. From the scope of services, it is clear that the assessee was required to furnish project report so as to cover detailed design for rehabilitation/strengthening of the existing carriageways and design new carriageways and required structures. The assessee was required to furnish detailed working drawings and also to include study of environments and rehabilitation needs. This was to facilitate widening of the existing two lane highways to 4/6 lane highways. Accordingly, the assessee made suitable proposal for further widening the highway and strengthening of the carriageways because of such drawings and designs, NHAI was capable of carrying out the desired work. There is no dispute to the fact that the same falls within the meaning of "fees for technical services" as defined in Explanation 2 below sub-section 9(1)(vii) of the Act. As per said Explanation 2, "fees for technical services" means any consideration for the rendering of any managerial, technic....
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....td. (supra) interpreting Article 12 of DTAA between India and USA (which is identical worded in Indo-Canada treaty) held as under: "For deciding the issue under article 12(4) it is not material as to whether the assessee acquired on outright basis any technical knowledge, know-how, technical plan or design. The said article 12(4) is attracted the moment a person resident of one State (country) makes available technical knowledge, experience or transfers a technical plan or technical design to the person of other Contracting State (country). From the agreement between the assessee and the non-resident company it was apparent that the later was to deliver the technical drawings and designs to the former for its own use and benefit in India. The term 'transfer' as used in article 12(4) does not refer to the absolute transfer of rights of ownership. It refers to the transfer of technical drawing or designs to be effected by the resident of one State to the resident of other state which is to be used by or for the benefit of resident of other State. The said article 12(4)(b), does not contemplate transfer of all rights, title and interest in such technical design or pla....
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....tted that Hon'ble Uttaranchal High Court, which is the jurisdictional High Court in this case, have held in the case of CIT v. Halliburton Offshore Services Inc. [2004] 271 ITR 395 that section 191 does not get overridden by sections 192, 208, 209(1)(d). Thus, in the said case the interest was held not leviable because of the fact that at the relevant time there were conflicting decisions of the Tribunal and in such a situation, the assessee could not estimate his current income correctly. However, the High Court did not have the occasion to refer to the judgment of Hon'ble Supreme Court in the case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1 wherein it has been held that interest under section 234B is mandatory. He also submitted that ITAT Delhi in the case of DDI International Cell v. DMJM Harris Inc. after considering the decision of the Special Bench of Tribunal in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269 (Delhi) came to conclusion that interest under section 234B is not to be charged only in respect of amount which has been deducted at source. In that view of the matter, since the tax payable by the assessee was more than the tax deducted at source, th....