TaxTMI 
TaxTMI 
2022 (3) TMI 1012
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.... treat the aforesaid receipts as 'Royalty' u/s. 9(1)(vi) of the Act. 2. On the facts and in the circumstances of the case and in law, the Learned AO and the DRP erred in holding the sum of Rs. 40,46,45,646/- as 'Fees for Technical Services' under Section 9(1)(vii) of the Act. The Appellant humbly prays that the Learned AO be directed to not treat the aforesaid receipts as 'Fees for Technical Services' u/s. 9(1)(vii) of the Act. 3. On the facts an in the circumstances of the case and in law, the Learned AO erred in considering business connection issue for the first time, which was not a subject matter at the time of appellate proceedings before the Hon'ble ITAT. While doing so, the Learned AO has not appreciated that no directions were provided by the Hon'ble ITAT with respect to the same. The Appellant humbly prays that the action of the Learned AO in considering the business connection issue be held as bad in law since remand proceedings are conducted beyond the directions provided by the Honourable ITAT. 4. Without prejudice to the above Ground, the Learned AO and DRP erred in holding the sum of Rs. 40,46,4....
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....for Technical Services' under Section 9(l)(vi) and 9(l)(vii) of the Income-tax Act, 1961 ('the Act'). In doing so, the Learned AO and the DRP disregarded the Contract for Provision of Computing Services entered into between the Appellant 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 1 ISA 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 1 ISA of the Act and accordingly, the provisions of section 1 ISA 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 circ....
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....l ground No. 1.5 in which the assesses has raised grievances regarding rates of 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 AR 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 t....
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....011-12 is allowed for statistical purposes." Pursuant to the said remand present assessment was framed. In assessment order the Assessing Officer has noted that the ITAT in ITA No. 1464/Mum/2015 had passed an order dated 4.3.2016 in which the additions are deleted and the issue has been set aside to the file of the Assessing Officer for denova adjudication of all the issues. The Assessing Officer noted that the submissions of the assessee during assessment proceedings were same as in A.Y. 2009-10. That contention of the assessee was already rejected by the Department and it has been held that the receipts from SCB, India are Royalty/FTS specially after the retrospective amendments section 9 of the Act. Without prejudice to the above the Assessing Officer held that :- "15. Without prejudice to the assessee's submission and, further, without prejudice to the stand of the Department that the payments by SCB India to the assessee can be taxed in India as royalty and/or FTS, it is also held that the said payments can also be taxed as 'business income' under section 9(l)(i) of the Act. Section 9(l)(i) of the Act is reproduced hereunder : Income deemed to accrue or....
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.... the DRP. Learned DRP rejected the assessee's contention and confirmed the Assessing Officer's order." 5. Against the above order, Assessee is in appeal before us. 6. We have heard both the parties and perused the records. Learned Counsel of the assessee has submitted that as regards Ground No. 1&2 the same is covered in favour of the assessee by the ITAT's order in assessee's own case by a series of orders for seven years. He submitted that in ITA No. 237 to 240/Mum/2016 for A.Y. 2006-07 to 2012-13 vide order dated 9.2.2017 the matter was identically remanded to the Assessing Officer and subsequent to that remand the ITAT has held as under :- 7. The ITAT's order for taxability of payment received from assessee from SCB India read as under :- 18. We have carefully considered the entire gamut of facts as discussed above, relevant findings given in the impugned order as well as the rival submissions made before us. The main issue involved, which has been raised vide ground no. 1.1 is, whether the payments made by Standard Chartered Bank India (SCB) to the assessee is in the nature of 'royalty' u/s 9(1)(vi) or 'fees for technical services'. Since the assessee-company....
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....e agreement which has been referred to extensively by both the parties at the time of hearing and discussed herein above, we find that the main objective of the 'Cocteau agreement' is to provide SCB group all across the world, processing of data through a network of computer systems in Hong Kong. In the entire agreement there is no whisper of any technology transfer or application of technology per se to SCB. This is a kind of outsourcing activity which has been given by SCB to Atos to process its data from various branches across the country. We agree with the contention of the ld. Counsel that the reference to the various details in the agreement is merely to ensure quality, standard and various safeguards which are to be adopted in the course of processing data especially looking the volume of data required to be processed from all around the Globe. The provisions mainly contains assessee's responsibility to ensure adequate facility, systems and software which are located in Hong Kong and to ensure that all the hardware which is used in Hong Kong is maintained and housed in secured building space and infrastructure, manage proper performance of the hardware and operating systems....
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....only. Thus, there is no concept of right to use of equipment here in this case. So far as applicability of Explanation 5 & 6 are concerned, we agree with the contentions of ld. Counsel, as reproduced above, that same would not be applicable at all in the case of assessee because, firstly, Explanation 6 enlarges the scope of process to include transmission by satellite cable, fibre optic, etc.; and secondly, Explanation 5 is applicable where consideration is of any right, property or information as defined in clauses (i) to (v) of Explanation 2 only and not in clause (iva) for the reason that Explanation 5 has been inserted with retrospective effect from June 1, 1976. In other words, Explanation 5 has been inserted retrospectively from the birth of Section 9(1)(vi) to clarify the intention behind the legislation. Hence, Explanation 5 is to be read with the Section 9(1)(vi) which was there on the statute as on April 1, 1976. Whereas clause (iva) to Explanation 2 was inserted from April 1, 2002. Thus, retrospective effect of clause (iva) cannot be deemed from 1.06.1976 and hence it cannot be held that Explanation 5 also applies to the said clause as this clause never existed as on Apr....
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....uch data. The employees of the assessee-company are only required to oversee as to whether the computer systems are functioning properly and performing well and if there is any breakdown or fault, then same needs to be taken care of. The human intervention if at all is mainly for repairing and monitoring the hardware and software of the assessee which are processing the raw data of SCB and there is no human involvement or endeavour for rendering any kind of technical or consultancy services in data processing. It has been stated that before us that even the faults are corrected automatically. Further, looking to the number of volume of transactions transmitted by SCB to assessee, it would be impossible for any number of humans to apply their mind and generate reports. This has been demonstrated by the ld. Counsel before us by way of an example which has been already incorporated above. Thus, the magnitude of transactions undertaken by assessee itself goes to show that the computer systems installed by the assessee in Hong Kong is standard facility through which data is processed. In this regard, strong reliance was placed on the decision of ITAT, Mumbai Bench in the case of Siemens....
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....o the seeker of the service, the latter, even if termed as a service, is available to all and would therefore stand out in distinction to the former. The service provided by the Stock Exchange for which transaction charges are paid fails to satisfy the aforesaid test of specialized, exclusive and individual requirement of the user of consumer who may approach the service provider for such assistance/service. It is only service of the above kind that according to us, should come within the ambit of the expression "technical services" appearing in Explanation 2 of Section 9(1)(vii) of the Act. In the absence of the above distinguishing feature, service, though rendered, would be mere in the nature of a facility offered or available which would not be covered by the aforesaid provision of the Act." Before us, the ld. Counsel has also pointed out that assessee is also providing similar services to other clients like Hong Kong Government and other big MNEs and there is nothing special or exclusive about the services which are being rendered to SCB. In view of the entire gamut of facts as discussed above, we are of the opinion that the payment made by SCB to assessee- company do....