TaxTMI 
TaxTMI 
2020 (10) TMI 1205
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..... Ground No. 3 stands dismissed. 5. Grounds No. 4 to 6 relate to taxation of intermediary services. 6. The assessee is aggrieved by the treatment of Rs. 1,16,81,407/- received on account of intermediary services as being a taxable as 'fees for technical services'. 7. Representatives of both the sides were heard at length. Case records carefully perused. 8. Facts emanating from the assessment record show that during the year under consideration, the appellant had rendered intermediaries services like marketing, sales, business development, project management, customer services etc. to Bombardier Transportation India Ltd [BTIN] and received fees for intermediary services amounting to Rs. 1,16,81,407/. At this stage, it would be pertinent to mention that the appellant company is registered and incorporated under the laws of Sweden and is a non-resident and tax resident of Sweden. 9. The appellant is engaged in the business of manufacturing of train control and signalling systems for mass transit system. During the year, the appellant entered into international transactions with its Associated Enterprises [AE]. The case was referred to the Transfer Pricing Officer [TPO] ....
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....g taxable. 15. Drawing support from the decision of the Tribunal of Bangalore Bench in the case of Bovis Land Lease [India[ Private Limited, the Assessing Officer held that the revenue earned by the assessee from intermediary services rendered to BTIN are taxable in India. 16. Objections were raised before the DRP but were of no avail. 17. Before us, the ld. counsel for the assessee reiterated what has been argued before the lower authorities. 18. It is the say of the ld. counsel for the assessee that on identical set of facts, in assessee's own case for A.Y 2010-11, the CIT(A) vide order dated 07.06.2016 and further in A.Y 2012-13, vide order dated 31.03.2018, has categorically observed that the said intermediary services rendered by the appellant to BTIN does not satisfy the 'Make Available' clause and does not amount to FTS. The ld. counsel for the assessee further pointed out that the order of the CIT(A) for A.Y. 2010- 11 was not appealed by the revenue or by the appellant before the Tribunal and hence, has attained finality. 19. Per contra, the ld. DR strongly supported the findings of the Assessing Officer. It is the say of the ld. DR that import of findings gi....
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....arted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. 25. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service. In our considered view, payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. For this, we derive support from the decision of the Hon'ble Karnataka High Court in the case of De Beers India Minerals Private Limited 346 ITR 467. 26. In consideration of totality of facts, we are of the opinion that the intermediary services rendered by the appellant do not make available any technical knowledge, skill etc to BTIN and BTIN is not a equipped to apply technology contained in services rendered by the appellant. Therefore, the intermediary services provided by the a....
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....ite contract, therefore, there has to be attribution. The ld. DR pointed out that as per the contract, liability was fastened jointly and severally and the same profit has to be attributed for supply made to India by the appellant. 34. Referring to the findings of the DRP at Pages 18 & 19 of its order, the ld. DR pointed out that the seconded employee of Bombardier Transportation Sweden who has been seconded to Bombardier India and is overall responsible for entire delivery including mechanical and electrical equipment and commissioning of the train and ensuring BT standard in all testing activities prior delivery of train in connection with the contract with DMRC. The ld. DR rested his submissions on the following findings of the DRP: "1. There is a Expat employee who is being paid a very high salary of Rs. 7,35,26,751. This shows that his job is of paramount importance for the contract with DMRC and his job responsibilities as defined in the appointment letter include coordination with DMRC engineers for completion of contract. 2. He has overall technical responsibility for the entire scope of delivery including electrical and mechanical equipments. ....
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....of ITAT Rules. The undisputed fact is that the supplies made under the BS-02 agreement were off shore supplies. The Hon'ble Supreme Court in the case of Ishikawajima HarimaHeavy Industries Ltd 158 Taxman 259 has categorically held that only such part of the income as is attributable to the operations carried out in India can be taxed in India. Same view was taken by the Hon'ble High Court of Delhi in the case of Nortel Networks India International Inc & Ors 386 ITR 0353. 36. We have also considered the agreement between the appellant and BTIN. We find that as per this MOU, scope of work between eh appellant and BTIN are clearly bifurcated. The relevant part reads as under: "WHEREAS BT Sweden, BT India and their subsidiaries/affiliates as a fully integrated group are desirous and possess full capability to effectively execute the Project. WHEREAS in view of the prescribed 'eligibility criteria as detailed in Clause A 5.2 (b) of Instructions to Tenderers('ITT) of DMRC Tender BS02 document, BT Sweden has been selected as the Lead Member for the above Project of DMRC and BT India has been designated to act as the local Indiah member of the consortiu....
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....MRC for any default by any party, the party not responsible for the respective default will have the right to be indemnified by the other party, 3. Co-operation Principles . - 3.1 It is clarified that the proposed arrangements between ~_ scope shall be on 'principal to principal' basis. 3.2 The co-operation defined in this MoU is on an exclusive basis and shall be subject to BT internal policies and guidelines. 3.3 In the event of contract, this MoU will be further elaborated for detailed clarity of scope split In meeting the overall project requirement 3.4 3.5 The detailed interfaces and scope of supply & services is defined after taking into consideration each entities' experience ond capabilities while considering the requirement of the tender document of DMRC and in particular the need to involve suitable local partners. 14. The date of letter of acceptance is 17-09-2007 while the MoU is dated 11-10-2007. Thus, the MoU between B T Sweden and BUN has been signed after the contract has been accepted 37. As mentioned elsewhere, the appellant does not have any place of business in India and all business activ....