2014 (11) TMI 1083

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....llant and Standard Chartered Bank, India ('SCB India') for the services rendered by the Appellant to SCB India. The Appellant humbly prays that the aforesaid receipts should not be taxed in India and the Learned AO be directed accordingly. 1.2 Without prejudice to above Ground no. 1.1, the Learned AO and the DRP erred in denying the benefit of the rate prescribed under section 115A of the Act. In doing so, the Learned AO and the DRP held that SCB India being a non resident company does not fall within the ambit of the term 'Indian concern' as per the provisions of section 115A of the Act and accordingly, the provisions of section 115A of the Act do not apply to the payments made by SCB India. The Appellant humbly prays that the Learned AO be directed to apply the rate as prescribed under section 115A of the Act. 1.3 Without prejudice to Ground Nos. 1.1 to 1.2, on the facts and in the circumstances of the case and in law, while calculating the tax liability of the Appellant, the Learned AO has erred in adopting chargeable income as gross receipts instead of net receipts received buy the Appellant (i.e. after deducting the expenses attributable to gross rec....

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....g. Once the data was received by the assessee from SCB was looked into, output data was transmitted back to SCB, using the same software, as used and provided by SCB, after retaining the back office data. 3. In the entirety, on to and fro of data transmission, the assessee had no right to access the data of SCB India. It was further submitted that neither SCB had any right to exploit the data independently nor there was any user rights, procured by the assessee to access the data base for or in favour or behalf of SCB. Similar services were made available by the assessee to other clients as well. 4. In this factual scenario the payment made by SCB India, for the use of services provided by the assessee could not be termed as 'Royalty'. 5. The assessee further urged that the services could not be characterized as FTS u/s 9(1)(viii) of the Income Tax Act, because, the to fall in such service characterization, the assessee should have expertise/special skill/knowledge to provide the service. In the present case, the assessee did not have any of the above qualifications but it was a company, which provided services to clients, who required back office rendition. 6. The reve....

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.... the assessee has provided SCB India with the use of its equipments and processes and has also rendered services in connection with the same. The procedure manual complied by Atos for the benefit of SCB India was held to be information for which the right to use had been provided to SCB. The AO held that in these circumstances, the charges paid by the assessee amounted to royalty as defined in section 9(1)(vi). It was further held the assessee was also provided advanced technical services. For example, the Cocteau Contract provided that the Atos group will proactively monitor and manage resources and individual clustered management systems in order to detect bottlenecks and potential problems and to automatically recover from critical situations. He, therefore, held that the charges paid can also be classified as fees for technical services. The AO analysed some of the invoices raised by the assessee and held that the description of services in these invoices strengthened his conclusion that the charges were paid as royalties and fees for technical services. The AO further held that section 115A is not applicable in the present case since it applies to payments made by the governme....

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....f any process, whether or not such process is secret. These clarifications were not before the Hon'ble ITAT when they considered the issue in the assessee's own case in AY 2004-05. Moreover, the nature of services rendered has also undergone a change with a Cocteau contract entered into in February, 2004. In the light of the above facts and the clarifications made by the Finance Act, 2012, we are of the view that the payments made by the Standard Chartered Bank to the assessee can be categorized as royalty. 4.2 We are also of the view that the nature of the services provided, as brought out by the AO, can certainly be categorized as managerial and technical services. It is clear from the terms of the Cocteau contract that the services rendered are not merely back office or date pr4ocessing services but are services relating to critical areas of the functioning of the bank and the objective underlying the services is to improve the management and the operations of the bank. Evidently, there is a high degree of skill, both managerial as well as technical, involved in the rendering of these services. This Panel therefore holds that the payment made by the assessee can also be....

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....f tax to be applied on the above receipts. All these issues on merits are to be readjudicated as per law in ITA No. 6762/Mum/2009 & 219/Mum/2010 being cross appeals in respect of assessment year 2006-07 against original assessment. 7.2 The other issues raised in ITA No. 6888/Mum/2011 regarding leviability of interest under section 234B which was admitted to be consequential and with a rider that assessee has liberty to show before AO why it is not liable for levy of interest under section 234B, the matter would be re-adjudicated in original assessment proceedings as discussed in para 5.3 of this order". 10. Based on the above decision of the ITAT in the preceding year(s), the AR submitted that for the sake of consistency, the issue, in the current years, deserved to be restored to the file of the AO. 11. The DR did not object to the submission of the aAR for restoration of the issue to the file of the AO. 12. On hearing both the sides, we are of the view that since the preceding years were awaiting adjudication at the AO stage, it would be inappropriate for us, to come to any conclusion. We, therefore, set aside the orders of the revenue authorities and restore th....