TaxTMI 
TaxTMI 
2023 (3) TMI 518
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter referred as the Ld. AO). 2. Brief facts of the case is that the assessee Avaya International Sales Limited (Avaya Ireland' or 'the Assessee') is a company incorporated in Ireland and a tax resident of Ireland. The assessee is engaged in the business of developing, marketing, licensing and providing enterprise communication networks related hardware, software and services to the customers located in different geographies in the world, including India. During the year under consideration, the assessee has earned income from sale of hardware, software and rendering of standard automated services to Indian customers. The assessee filed the original return of income under section 139(4) of the Act for Assessment Year 2016-17 on March 30, 2018 reporting Nil income and claiming a refund of Rs. 6,02,56,590 (for tax deducted at source) in the return of income. The return of income was selected for scrutiny by the Assistant Commissioner of Income Tax, Circle 1(1)(1), International Taxation ('the Ld. AO') and a notice dated 30 August 2018 under section 143(2) of the Act was issued to the assessee. Further, a notice dated 9 October 2018 under 142(1) of the Act along....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the following grounds of appeal:- "1. Ground 1: Non-taxability of fee for support/ maintenance services 1.1 That on the fact of the case and in law, the learned Commissioner of Income-tax (Appeals) [hereinafter referred to as "learned CIT(A)"] has erred in holding that the payments received by the Appellant towards support/ maintenance services are taxable in the hands of the Appellant in India. 1.2 That on the fact of the case and in law, the learned CIT(A) has failed to appreciate that payments received by the Appellant towards support/ maintenance services (being standard automated services) do not qualify as Fees for Technical Services ("FTS") neither under section 9(1)(vi) of the Income-tax Act, 1961 nor under Article 12 of India-Ireland Double Taxation Avoidance Agreement ("DTAA") and thus, is not chargeable to tax in the hands of the Appellant in India. 1.3 Without prejudice to the above and on the fact of the case and in law, the learned CIT(A) has erred in not adjudicating on the quantum of support/ maintenance services provided by the Appellant for the subject AY. 2. Ground 2: Initiation of penalty proceedings under section 27....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se, and in law, Ld. AO has erred in characterising the receipts from rendering of standard automated services as 'fees for technical services within the meaning of Article 12 of the India- Ireland DTAA. It is prayed that the income from rendering of standard automated services does not qualify as 'fees for technical services' as per India-Ireland DTAA. Ground No 6 On the facts and circumstances of the case, and in law, Ld. AO has erred in characterising the receipts to the tune of INR 30,04,84.790 as income from provision of services taxable as 'fees for technical services' at the rate of 10% as per Article 12 of the India-Ireland DTAA. It is prayed that the addition made by the Ld. AO be deleted. Ground No 7 On facts and circumstances of the case, and in law, Ld. AO erred in levying interest under section 234A of the Income-tax Act, 1961. It is prayed that the interest under section 234A of the Act be deleted. Ground No 8 On facts and circumstances of the case, and in law, Ld. AO erred in levying interest under section 234B of the Income-tax Act, 1961. It is prayed that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ftware, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment." 8.1 The ld DR could not submit anything on fact or law to support the findings of the ld CIT(A) consequent to the judgment of the Hon'ble Supreme Court in Engineering Analysis Centre of Excellence Pvt Ltd (supra). 8.2 In the light of the aforesaid, Bench is of the considered opinion that the issue involved in this regard is now further covered in favour of the assessee by the decision of the Hon'ble Supreme Court. Thus, the grounds in appeal of the revenue have no substance. 9. In regard to appeal of the assessee ITA No. 526/Del/2020 the sum and substance of the argument on behalf of the assessee was that there is no dispute to the fact that the disputed standard automated services were in the nature of technical services and only submission was that these technical services were without human intervention. The ld A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessment order that it is ample clear from the perusal of agreement entered into by the assessee with the Indian clients that for providing the technical services, human intervention is there in the form of service desk, support staff, Avaya accredited technician, Not only off site service but on site service was provided to the Indian clients as per the agreement. As per the Service Agreement following services through technical staff were to be provided to the Indian clients during the period of agreement. 2.1.2 Remote Tier III/Tier IV technical support service Under this service Avaya will provide the following technical support services directly to Partner's end user's own support staff * Assistance in isolating and recommending corrective action to resolve an escalated problem and to dial into the partner's and user's Avaya Product e.g. communication manager, to attempt to resolve the problem remotely on the product. * Case management and tracking of all service escalations * 24x7 remote support for major severity situations * Business day remote support for all other situations * Tier 3 (bac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e supervision of transmission work by the technical personnel of the payee "there is no human intervention in so far as the assessee is concerned regarding the transmission". It was further held that even if technical knowledge could be upgraded without "presence of human beings by way of handing over drawings and designs or a technical service can be rendered by robot (machines) without intervention of human element, the classification of the services rendered by the assessee as technical service is not free from doubt". 10. When the case was heard on 16th July 2015, Mr. A.B. Dial, learned Senior counsel for DTL, drew the attention of this Court to the decision dated 8th May 2015 of the Division Bench of the Bombay High Court in CIT(TDS) v. Maharashtra State Electricity Distribution Co.Ltd. [2015] 375 ITR 23/232 Taxman 373/58 taxmann.com 339 (Bom.) which held that wheeling charges would not amount to payment of fees for technical services. Mr. Kamal Sawhney, learned Senior Standing counsel for the Revenue then sought time to examine the said decision and make submissions. Submissions on behalf of the Revenue 11. The submissions of Mr. Sawhney were heard ....