TaxTMI 
TaxTMI 
2007 (3) TMI 421
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....of the case and in law, the learned CIT(A) erred in rejecting the plea that remittance of US $ 65000 in favour of M/s. Purvin & Gertz Inc., Singapore (P&G) was towards rendition of commercial services and did not constitute fees for technical services within the meaning of Article 12(4)(b) Indo-Singapore treaty obliging the appellant to remit tax under section 195 of the Act. 2. In the facts and circumstances of the case and in law, the learned CIT(A) ought to have accepted the contention of the appellant that the reimbursement of actual expenses did not constitute payment towards income and hence such payments did not constitute payment towards income and hence such payments did not constitute income chargeable to tax. 3. In the facts and circumstances of the case and in law, the learned CIT(A) ought to have accepted contention of the appellant that reimbursement of actual expenses did not constitute payment towards income and hence such payments did not constitute income chargeable to tax. 4. The appellant prays that its claim for interest under section 244A be accepted in the event of refund becoming due to it. 5. The appellant craves leave to add to, amend, alter, delete an....
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....ggrieved, the assessee preferred appeals before the CIT(A). The assessee, however, paid only a sum of USD 25,000 for the financial year 2001-02 on which tax was deducted and deposited on 29-10-2002 and 1-2-2002. The balance amount of USD 40,000 and USD 4,340 towards reimbursement of expenses was paid on 3rd July, 2002, after deducting tax at source. The appeals emanated from both the payments were decided by the CIT(A) in the light of provisions of Article 12 of DTAA between India and Singapore. While adjudicating these appeals, the CIT(A) took a note of the payments made by Bharat Oman Refineries Ltd. and the assessee to P & G for similar type of services, rendered, in earlier years in which the BORL and the assessee itself has deducted the TDS and deposited the same with the Government, and was not convinced with the explanation of the assessee that the fees for services rendered by the P & G, Singapore do not fall within the definition of fee for technical services defined in clause 4 of Article 12 of DTAA between India and Singapore. Relying upon the Order of his predecessor passed in the assessee's own case and the decision of the Authority for the Advanced Rulings in Advance ....
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....ssee further contended that in the case of Wipro Ltd. v. ITO [2005] 94 ITD 9 (Bang.), the Tribunal has again held that payment made by the assessee Indian Company to U.S. Company for providing access to information available in data base maintained by it, was not royalty within the meaning of Article 12(3)(a) of DTAA between India and USA and was not taxable in India. Hence, no tax deductible under section 195. The phrase making available used in Article 12(4)(b) was examined by the Tribunal in the case of Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791 (Mum.) and C.E.S.C. Ltd. v. Dy. CIT [2003] 87 ITD 653 (Cal.) (TM) and it was examined that the phrase 'making available' has been understood to be rendering of services under the circumstances where the person availing the services is enabled to apply the services availed in his own right without recourse to the person providing the services. Such has been the clarification in the Protocol of India-USA Treaty. The learned counsel for the assessee further invited our attention to the language used in clause 4 of Article 12 of DTAA between India and Singapore and has submitted that though in the opening part of clause 4, the term 'fee....
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.... P & G, is chargeable to tax in India as per provisions of section 9 of Indian Income-tax Act as well as the provision of Article 12 of the DTAA between India and Singapore and this order of the CIT(A) was accepted by the assessee as no second appeal was preferred before the Tribunal. Though principles of res judicata are not applicable in the Income-tax Proceedings, but Rule of Consistency must be followed. Since similar type of payments were charged to tax in India in earlier years and the assessee has accepted its taxability in India, he has no right to challenge the same payment in the impugned assessment year. In the light of these facts, the order of the CIT(A), deserves to be sustained as he has decided the issue in the light of the Order of his predecessor and the Advance Ruling Petition No. P-6 of 1995, In re [1998] 100 Taxman 206 (AAR - New Delhi). 8. In rejoinder, the learned counsel for the assessee has submitted that every assessment year is an independent assessment year and the legal issues are required to be adjudicated in the light of legal provisions and not by following the Rule of Consistency. No doubt, the assessee did not challenged the Order of the CIT(A) in....
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.... orders. The principle of rule of consistency cannot be applied in this type of situation. Generally, a view taken in the earlier year should be followed in succeeding years, but, whenever the legal position is changed or re-interpreted, the legal issues should be decided afresh in the light of current interpretations of law. We, therefore, do not find any force in the arguments of the Revenue that following the rule of consistency, the Order of the CIT(A), deserves to be confirmed. 10. In the case of Kotak Mahindra Primus Ltd. (supra), the Tribunal has examined the provisions of article 12(3)(c) of the India-Australia Tax Treaty and the Ruling of the Authority for Advanced Rulings with regard to the definition of 'Royalty' and the Tribunal has held that once payment is made not for supply of any knowledge or information, but, for processing of the information, the services cannot be treated as fees for technical services, as per provisions of Article 12 DTAA between the India and Australia. The relevant observation of the Tribunal in paras 16 and 17 is extracted hereunder : "16. We now come to the provisions of Article 12(3)(c ) of the India- Australia Tax Treaty. It provides th....
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....roved by the Hon'ble Authority for Advance Ruling and we have dealt with the same in the course of our consideration to the matter. The prescription of section 245S is unambiguous. Section 245S of the Act provides that the Advance Ruling pronounced by the Authority under section 245R will be binding only on the applicant who had sought it, in respect to the transaction in relation to which the ruling had been sought, on the Commissioner and the income-tax authorities subordinate to him, in respect to the applicant and the said transaction. It is, therefore, obvious that, apart from whatever its persuasive value, it would be of no help to us. We are not inclined to disturb our conclusions merely because the conclusions arrived at above, and in the light of detailed reasons set out earlier in the order, are at variance with the conclusions arrived at in the said ruling. We have carefully perused the esteemed views of the Hon'ble Authority for Advance Ruling and with respect but without hesitation, we are not persuaded." 11. In the case of Boston Consulting Group Pte Ltd. (supra) the Tribunal has examined the DTAA between the India and the Singapore and its clause 12(4)(b) and has ob....
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....to NQA, U.K. for providing ISO Certification and to one 'P' for U.K. for certification, at final audit are neither a royalty nor fees for technical services within the meaning of article 13(3) of Indo-U.K. DTAA inasmuch as these services do not result in making available any technical knowledge, experience, skill, know-how or process to the assessee. This was essential before it could be said that the payments made by the assessee to the non-residents were fees for technical services rendered as the services involved making assessment survivalance for the purpose of ISO Certification, hence, not taxable in India. Likewise, in the case of Wipro Ltd. (supra) Tribunal has held that annual subscription paid to non-resident, an American Company for providing access to information available in data base located outside India through web to an Indian Company, is not covered by royalties under article 12(3)(a) of the DTAA between India and USA, since the information made available is copy-righted information in the form of publications and consequently the said payments are not amenable to taxation in India. It was further examined in the case of CESC Ltd. (supra) by the Tribunal in the li....
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.... processes, which enables the person acquiring the services to apply the technology contained therein; or (c )consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply the technology contained therein. For the purposes of (b) and (c) above, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person." 14. Though the payment for consultancy services falls within the definition of fee for technical services in opening para, but, it would be subject to certain conditions enumerated in sub-clauses (a), (b) and (c ). Since the relevant clause is (b) with regard to issue in dispute, we confine ourselves with interpretation of this clause and according to this sub-clause, the consultancy services shall make available technical knowledge, experience, skill, know-how or process, which enabled the person acquiring the services to apply the technology contained therein. Meaning thereby, the consultancy services must have the element of technology which can be applied by the persons acquiring the services. If the consultancy services ....