TaxTMI 
TaxTMI 
2005 (6) TMI 484
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....ees paid by the appellant to S&P would also fall within the purview of the term 'royalty' as defined in Article 12 of the Indo-Australian Double Taxation Avoidance Agreement. 1.4The appellant submits that considering the facts and circumstances of it's case and the law on the subject the payment made by it to S&P is not in the nature of 'fees for technical services' nor in the nature of 'royalty' as defined in article 12 of the Indo-Australian Double Taxation Avoidance Agreement and hence not taxable in India and the CIT(A) ought to have directed the Assessing Officer to hold the same. 1.5The appellant further submits that considering the facts and circumstances of it's case the services rendered by S&P is a part of it's (S&P) normal business activities and operations and the payment so made would fall within the purview and scope of it's (S&P) 'business income' and the same is not taxable in India. 1.6The appellant submits that the Assessing Officer be directed to hold that the payment made by it to S&P is not taxable in India. 1.7Without prejudice to the foregoing the appellant submits that in case the payment made by it to S&P is considered as 'fees for technical services' a....
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.... and of DTAA held that such services were in the nature of services prescribed under article 12 of the DTAA; and accordingly, upheld the decision of the Assessing Officer. 5. Learned Authorised Representative of the assessee, besides reiterating the submissions made before the lower authorities, contended that the credit rating was given by S&P to the assessee based upon the information supplied by the assessee and hence, cannot be construed as technical services or consultancy services within the meaning of section 9(1)(vii) read with Explanation thereto of the Act. He further contended that the assessee obtained only opinion from S&P, which does not fall within the definition of 'Royalty' as per article 12 of DTAA. In support of his contention, he referred to the decision of the Tribunal in the matter of Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791 (Mum.), wherein the issue involved was the interpretation of scope of technical services as per article 13 of DTAA between India and UK and the Tribunal held that the word 'make available' implies a status where the user had all rights to use technical knowledge, experience etc. on its own and without any condition to revert back to the ....
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....n and they have developed certain models based upon the empirical research done by them. S&P's rating is greatly recognized in the global financial markets and on the basis of rating category the company's resource raising capacity is affected on the one hand and the cost of such resources is also affected on the other hand. Once, a credit rating certificate is issued by S&P they themselves disseminate and circulate the same amongst the capable and desiring investors. The company as well can utilize that credit rating certificate in raising resources independently. As per the agreement the company is required to pay annual surveillance fee to S&P because such rating certificate is issued by S&P for a specified period and during that period S&P keeps a track of all developments happening in that company and based upon such developments S&P reviews the credit rating assigned by S&P to the company. If S&P finds it necessary, S&P can withdraw or downgrade or upgrade the credit rating depending upon such developments subject to a prior information and dialogue with the client company. 8. It is a settled legal proposition that taxability of any sum payable by the assessee in India has t....
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....mercial information' has not been defined in the treaty and therefore it has to be interpreted as it is understood in general sense. In general, the term information means the act or process of informing, communication or reception of knowledge and any information which has got a commercial value for the user can be termed as 'commercial information'. It is not necessary that such commercial information by itself should be a immediate source of earning for the user. What is important is that the user of such information should derive some commercial benefit therefrom. The assessee has contended that services rendered by S&P are in the nature of professional services because credit rating exercise requires specialized knowledge and expertise. We do not dispute this but we have to consider the end result of such service and if the end result of this service is in the shape of supply of commercial information for the user then the transaction as a whole would be of supply of commercial information and not merely of rendering of professional services. In a given situation a particular commercial transaction or assignment may have elements both of professional services and supply of com....
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.... of commercial information irrespective of the fact professional skills and expertise are used by them in the preparation of research report. To sum up, for the purpose of determining the taxability of such transaction, the nature of transaction should be analysed and considered in totality having regard to facts and circumstances of each case. In the present case, no material has been placed that on record that obtaining of credit rating was required under some statute and payment was made to statutorily authorized organisation, and therefore such services, being taken for commercial objectives are in the nature of services for the supply of commercial information. 10. The assessee has also contended that it has taken only 'opinion' from S&P for the purposes of raising of resources for its business form international markets. This aspect also supports our view that credit rating certificate is a commercial information because the assessee wants to inform the prospective investors through such certificate, its financial status, capability and other credentials so that they may make investment in the assessee company. In the present scenario, the investors may even know nothing abo....
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....experience, skill, etc." 11. On the basis of above, it was contended by the learned Counsel for the assessee that the assessee was not engaged in the profession of credit rating activities, therefore no technical experience, expertise, know-how was made available to assessee for which could be used by assessee in future without having recourse to the performer of services in future. We find no force in this contention of the assessee as Tribunal, in that matter, was concerned, with the Article 13(4)(c) of treaty between India & UK in different context. The said article reads as under : "Make available technical knowledge, experience, skill, know-how or process or consist of the development and transfer of a technical plan or technical design." 12. From the bare perusal of above it is clear that this is worded in an entirely different manner as compared to Article 12(3) of Indo Australian Treaty, therefore, is not relevant for the issue on hand. Secondly, if phrase 'making available' is treated as similar to phrase 'the supply of' thereby implying vesting of some right in the user without having recourse to supplier, this also supports our view because during the validity period ....