TaxTMI 
TaxTMI 
2019 (1) TMI 743
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....for technical services u/s 9 (1) (vii) of the Act and fees for included services under Article 12 of the DTAA between India and the United States of America. 4. With ground No.1 the assessee claims that the proceedings are barred by limitation. 5. Representatives of both the sides were heard at length. Case records carefully perused and the judicial decisions relied upon carefully considered. 6. Facts on record show that in all the three years the order framed u/s 201 (1) / 201 (1A) are dated 28.03.2013. The counsel vehemently stated that the orders so framed are barred by limitation. Before proceeding further let us consider the provisions of the Act as under :- Consequences of failure to deduct or pay._- 201. -[(1) Where any person, including the principal officer of a company,- ( a) who is required to deduct any sum in accordance with the provisions of this Act; or ( b) referred to in sub-section (1A) of section 192 , being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any ....
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....he amendment has been considered by the Hon'ble High Court of Delhi in the case of Bharti Airtel Limited 76 taxmann.com 256. The relevant findings on the Hon'ble High Court read as under :- It is proposed to make these amendments effective from 1st April, 2010. Accordingly it will apply to such orders passed on or after the 1st April, 2010." 12. When NHK Japan {supra) and Hutchinson (supra) were decided, the amendment was not brought about and therefore the issue of existence of a period of limitation, did not arise. The court therefore, considered, on the basis of available authority, that a four year period was "reasonable period" as the outer limit for issuance of notice under Section 201. However, in the present case, Parliament consciously amended the Act. In doing so, it prescribed a limitation only for residents. Instead of actively barring the applicability of the provision on non-residents, did the Parliament choose to passively do so by remaining silent on non-residents and only amending the provision, for residents. The question is, whether the petitioner is right in contending that if the Act does not specify a time period, then a rea....
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....islate a period of limitation. 15. This court is of opinion that the latest judgment, in Vodafone Essar Mobiles Ltd. (supra) provides a complete answer to the revenue's contentions. The Court had then ruled as follows: "9. More recently in CIT v. Calcutta Knitwears [2014] 362 ITR 673, the Supreme Court had the occasion to deal with the correct position in law as to the initiation of Income-tax proceedings. Although, the context of the dispute was in respect of recording of a satisfaction note as to the initiation of proceedings against third parties under the erst while section 158BD of the Act which did not prescribe the period of limitation and left it to the discretion of the Assessing Officer to decide on being satisfied that such proceedings were required to be initiated, the court limited such discretion in the following terms (page 691 of 362 ITR): 44. In the result, we hold that for the purpose of section 1 58BD of the Act a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the otrm Assessing Officer who has jurisdiction over such other person. The satisfaction note could prepare....
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....ourt within the meaning of section 194H of the Act. It is stated that it is consequent upon the said decision that the Department issued the impugned notices to these petitioners and that thisy was permissible in terms of section 153(3)(ii) of the Act. 20. The above submission of Mr. Shivpuri cannot be accepted if section 153 is perused carefully. It reads as under: '153. Time limit for completion of assessments and reassessments.-. . . (3) The provisions of sub-sections (1), (1 A), (IB) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the provisions of sub-section (2A), be completed at any time- . . . (ii') where the assessment, reassessment or recomputation is made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 250. 254, 260, 262, 263 or 264 or in an order of any court in a proceeding otherwise than by way of appeal or reference under this Act." 21. In the first place, what the said provision does is to not apply the time limit of two years completing the assessment from the e....
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....he provisions of the Act" is used only in section 195. For example, section 194C casts an obligation to deduct TAS in respect of "any sum paid to any resident". Similarly, sections 194EE and 194F, inter alia, provide for deduction of tax in respect of "any amount" referred to in the specified provisions. In none of the provisions we find the expression "sum chargeable under the provisions of the Act", which as stated above, is an expression used only in section 195(1). Therefore, this court is required to give meaning and effect to the said expression. It follows, therefore, that the obligation to deduct TAS arises only when there is a sum chargeable under the Act. Section 195(2) is not merely a provision to provide information to the Income-tax Officer (TDS). It is a provision requiring tax to be deducted at source to be paid to the Revenue by the payer who makes payment to a non-resident. Therefore, section 195 has to be read in conformity with the charging provisions, i.e., sections 4, 5 and 9. This reasoning flows from the words "sum chargeable under the provisions of the Act" in section 195(1). The fact that the Revenue has not obtained any information per se cannot b....
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.... the payer even if the sum paid is not chargeable to tax because there is no provision in the Income-tax Act by which a payer can obtain refund. Section 237 read with section 199 implies that only the recipient of the sum, i.e.the payee could seek a refund. It must therefore follow, if the Department is right, that the law requires tax to be deducted on all payments, the payer, therefore, has to deduct and pay tax, even if the so-called deduction comes out of his own pocket and he has no remedy whatsoever, even where the sum paid by him is not a sum chargeable under the Act. The interpretation of the Department, therefore, not only requires the words "chargeable under the provisions of the Act" to be omitted, it also leads to an absurd consequence. The interpretation placed by the Department would result in a situation where even when the income has no territorial nexus with India or is not chargeable in India, the Government would nonetheless collect tax. In our view, section 195(2) provides a remedy by which a person may seek a determination of the "appropriate proportion of such sum so chargeable" where a proportion of the sum so chargeable is liable to tax. The entire basis of ....
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....r such remittance and on inquiry if the Assessing Officer finds that the sums remitted outside India come within the definition of royalty or fees for technical service or other sums chargeable under the Income-tax Act then it would be open to the Assessing Officer to disallow such claim for deduction. Similarly, vide the Finance Act, 2008, with effect from April I, 2008, sub-section (6) has been inserted in section 195 which requires the payer to furnish information relating to payment of any sum in such form and manner as may be prescribed by the Board. This provision is brought into force only from April 1, 2008. It will not apply for the period with which we are concerned in these cases before us. Therefore, in our view, there are adequate safeguards in the Act which would prevent revenue leakage." 16. In this court's view, therefore, since Vodafone Essar {supra) considered the entire issue and noted that even recently a reasonable period was read into the Act, in relation to exercise of powers (although in a different context) accepting the petitioner's contention in the present case is based on precedent. Furthermore, the only reason cited by the respondent, ....
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....elevant findings of the CIT(A) read as under :- 5.32 It is noted that as per the agreement, the NR was to provide a copy of the Data, an analysis and final report at the conclusion of the project. The copy of the data so supplied may be used for the Exploration Licensing rounds in future. Memorandum of Understanding concerning Fees for Included services appended to the India-USA DTAA, inter-alia, provides that typical categories of services that generally involve either the development and transfer of technical plans or technical involve either the development and transfer of technical plans or technical designs or making technology available [as described in paragraph 4 (b)] include engineering services, architectural services and computer software development. Further, memorandum also states that technical and consultancy services could make technology available in a variety of settings, activities and industries. Memorandum has considered geological surveys, exploration or exploitation of mineral oil or natural gas as examples of some services where it can be said that technology can be made available. It is noted that in the case of ABC , In re (234 ITR 371AAR....
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....icense. Licensee shall In no event disclose or transfer the Data or Derivatives thereof or transfer the license to any Third Party whatsoever, except as may specifically be provided in this License. Licensor shall have the right at any time to license any part of the Data to Third Parties at such prices and on such terms and conditions as are determined by Licensor. Except as expressly permitted by this License, Licensee agrees (a) to keep strictly confidential, and shall ensure that its employees and agents keep strictly confidential, the Data and Derivatives and (b) not to Disclose, allow the use of, or display the Data or Derivatives to any Third Party. 2.2 Original Data-Retention/Licensing/Right to Destroy It is the intent of Licensor to retain the original Data (such as field tapes and other related information obtained during acquisition); however, Licensee acknowledges that original media containing the original Data may erode, become damaged, and/or contain Data not relevant to the geological area covered by the Data and in such situations, Licensor may be unable to provide Licensee copies of the portion of the original Data thereby affected. Lice....
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.... this License to the same extent as is Licensee. In the event that any such Related Entity should cease to exist or no longer meet the definition of a Related Entity, all rights of usage by such company or other legal entity in the Data and Derivatives shall immediately cease and any copies of the Data, Derivatives, then in the possession of such company or other legai entity shall immediately be returned to Licensee. 3.2 Government Agencies 3.2.1 Notwithstanding the foregoing, the Data and Derivatives may be disclosed by Licensee to the extent such disclosure is specifically required by law, governmental or court decree, order rule or regulation, or by any similar legal process. In the event Licensee is required by aw, governmental or court decree, order, rule or reguiat.cn, or by any similar legal process to disclose any Data or Derivatives, Licensee shall give Licensor prompt notice ot such process so that Licensor may seek an appropriate protective order (or other appropriate remedy) with respect to maintaining the confidentiality of the affected Data and Derivatives before disclosure thereof by Licensee. If, in the absence of a protective order, Licensee is n....
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....) immediately returns all copies of the Data and Derivatives to Licensee upon completion of the service for which the Storage Contractor has been entrusted by Licensee. 3.4 Prospective Acquirers/Prospective Co-venturers Licensee may Disclose the Data or Derivatives to any Prospective Acquirer or Prospective Co- venturers provided that the respective Third Party prior signs with Licensee a Confidentiality Agreement for the disclosure of the Data or Derivatives and, in case of cisclosure to any Prospective Co-venturer, the Data or Derivatives Disclosed are limited to such portions of the Data or Derivatives covering the prospect(s) and/or the particular geographical area(s) under negotiation for a Third Party Business Transaction. 3.5 Co-venturers: Licensee shall not Disclose or give copies of the Data or Derivatives to any Co-venturer without the prior written consent of Licensor which shall not be unreasonably withheld or delayed. 3.6 Internet Disclosures: Licensee shall not Disclose Data or Derivatives to any Third Party via the Internet, E-Commerce sites, virtual data rooms, asset divestiture web sites, or any other similar means of virtual access outsi....
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....ata and cannot be equated to development and transfer of technical maps and designs as contemplated by the Assessing Officer / CIT (A). 17. A similar issue was considered by the Tribunal Ahmedabad Bench Adani Welspun Exploration Ltd. V. ITO 48 ITR (T) 533. The relevant facts read as under :- "The assessee has made a remittance of Rs. 1,09,61,353/- during tire year under consideration to RPS Energy Ltd., UK. The said remittances had been made for providing 3D Seismic Data interpretation Services. The assessee has availed these sendees for conducting exploration work in Mumbai Shallow Offshore Block MB- OSN-2005/2, which is located in Tapti-Daman Sector of Mumbai Offshore Basin along with west coast of India which covers an area of 1191 sq. knr. A perusal of the related documentary evidences shows that the objective of the project was to carry out a 3D Seismic interpretation which included the basin modeling, culminating in prospect generation along with GRV calculations, play fairway mapping and risking of prospects for exploratory drilling." 18. And the relevant findings of the coordinate bench read as under :- 20. On identical set of facts, the Hon'b....
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....they used in rendering services, then it falls with the definition of fee for technical services as contained in DTAA. However if the technology is not made available along with the technical services and what is rendered is only technical services and the technical knowledge is with-held, then, such a technical service would not fall within the definition of technical services m DTAA and not liable to tax. (Para 26) In the background of the aforesaid principles and facts of this case, it is clear that assessees acknowledge the services of Fugro for conducting aerial survey, taking photographs and providing^ data information and maps. That is the technical services which the Fugro has rendered to the assessees. The technology adopted by Fugro in rendering that technical services is not made available to the assessees. The survey report is very clear. Unless that technology is also made available, the assessees are unable to undertake the very same survey independently excluding Fugro in future. Therefore that technical services which is rendered by Fugro is not of enduring in nature. It is a case specific. That information pertains to 8 blocks. The assess....
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....etti Van Melle Holding B. V. In re [20111 16 taxmann.com 207/T2012I 204 Taxman 166/342 ITR 200 (AAR) held as under:- "The expression 'make available' only means that the recipient of the service should be in a position to derive an enduring benefit and be in a position to utilise the knowledge or know-how in future on his own. "By making available the technical ski/Is or know how, the recipient of the same will get equipped with that knowledge or expertise and be able to make use of it in future, independent of the service provider. So when the expertise in running the industry run by the group is provided to the Indian entity in the group to be applied in running the business, the employees of the Indian entity get equipped, to carry on that business model or service mode! on their own without reference to the service provider, when the service agreement comes to and end. It is not as if for making available, the recipient must also be conveyed specifically the right to continue the practice put into effect and adopted under the service agreement on its expiry." 22. An analysis of the aforementioned rulings lead to one conclusion- "if the fruits ....