TaxTMI 
TaxTMI 
2026 (6) TMI 549
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....'DTAA' for short). 3. Briefly, the facts relating to the dispute are, the assessee, as stated by the Assessing Officer ('A.O.' for short), is part of Atos Group of companies, having headquarters at France. The assessee is incorporated in Hong Kong and is a tax resident of Hong Kong. As stated, the assessee provides a wide range of specialized services, including managed services, systems integration and hi-tech transactional services. Upto A.Y. 2013, the assessee was providing the aforesaid services to Standard Chartered Bank in India directly and receiving the charges for rendering such services. Since, 01.10.2013, the assessee entered into an agreement with its Indian group company, Atos India for providing the services. Atos India, in turn, entered into agreement with the Standard Chartered Bank to provide identical services. However, instead of providing such services directly to Standard Chartered Bank, Atos India sub contracted the work to the assessee. Thus, essentially, the assessee continued to provide services to Standard Chartered Bank. For provision of services during the year under consideration, the assessee received an amount of Rs. 99,61,61,006/- from Atos India.....
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....be in the nature of either royalty or FTS. Thus, be submitted, there being no variation in the factual position, the decisions of ITAT in past assessment years would squarely apply. 7. Learned Departmental Representative (ld. DR for short) though agreed that in preceding assessment years, the ITAT has decided the issue in favour of the assessee, however, he relied upon the observations of the A.O. and ld. DRP. 8. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. As discussed in the foregoing paragraphs and also seen from the observations of AO and ld. DRP, the nature of transaction giving rise to the present receipts has remained identical over the years. The only minor change which was brought in since 01.10.2013 was, instead of directly providing the services to Standard Chartered Bank in India, the assessee had routed through Atos India. But, even the AO admits that Atos India was merely an intermediary without providing any services itself. In fact, Atos India has sub-contracted the entire service again to the assessee. Thus, essentially, the assessee had provided the services do Standard Chartered Bank. In....
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.... mainly engaged in the business of providing services/facilities for data processing through computer hardware and software to banking entities. It had entered into an agreement which has been termed as "Cocteau agreement" with SCB for provision of data processing support, which is for 68 countries with various branches. Under the said "Cocteau agreement", the role and responsibilities of assessee in respect of providing data processing services has already been discussed in detail in the earlier part of the order including the manner in which the entire processing activity is carried out. The Revenue's case is that first of all, it is in the nature of royalty and for coming to this conclusion, the main contention of Assessing Officer is that, firstly, the assessee is not merely providing data processing services, but also providing technology in the form of data centre, infrastructure, connectivity and application technology for its banking operations; and secondly, it has created and provided facility in the form of dedicated centres for exclusive use of SCB with disaster recovery facility and storage facility. These infrastructure facilities in the form of data centre, storage a....
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.... data through computers. There is no providing or giving any use or right to use of any process to SCB. The technology, infrastructure, data centre, connectivity, etc. is solely used by the assessee for its own purposes and not to make available any such thing to SCB as explained by the ld. Counsel. At the first stage, SCB transmits raw data through operating software owned by it to the hardware facility of assessee in Hong Kong. The assessee in Hong Kong mainly receives the data so transmitted and at this stage there is absolutely no use or right to use of any process of assessee in Hong Kong by SCB. At the second stage, the raw data transmitted by SCB is processed by the assessee in its computer system/hardware as per the requirement of SCB and at times may be using the application software owned by SCB. At this stage also, SCB does not use or have any right to use any process. At the third stage, the processed data is transmitted electronically to SCB in India and at this stage also there is no use or right to use of any process which is given or made available to SCB. Here, in this case there is absolutely no use of equipment also as alleged by the Department within the definit....
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.... be some kind of a transfer of any right in respect of various items as given in Explanation - 2 or any imparting of any information or use of any patent, invention, model, design, secret formula, process, etc. Here, in this case, there is neither transfer of any of right in respect of any patent, invention, model, design, secret formula or process or trademark or any similar property by the assessee to SCB, nor there is any imparting of any information or use of any of similar nature of things. Here, the entire equipment and technology which are used for processing the data is solely for performing the activity of assessee for itself while rendering data processing services to SCB. There is absolutely no transfer of any technology, information, knowhow or any of the terms used in Explanation 2 or any kind of providing of technology in the form of data centre, infrastructure, connectivity and application technology by the assessee to SCB for SCB"s banking operations. Thus, we are of the opinion that the payment made by SCB to assessee-company does not fall within the realm of "royalty" and hence cannot be taxed in India as royalty u/s 9(1)(vi) of the Act. 21. As regards wh....
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....ntemplated in Explanation 2 to section 9 (1)(vii). If any person delivers any technical skills or services or make available any such services through aid of any machine, equipment or any kind of technology, then such a rendering of services can be inferred as "technical services". In such a situation there is a constant human endeavour and the involvement of the human interface. On the contrary, if any technology or machine developed by human and put to operation automatically, wherein it operates without any much of human interface or intervention, then usage of such technology cannot per se be held as rendering of "technical services" by human skills. It is obvious that in such a situation some human involvement could be there but it is not a constant endeavour of the human in the process. Merely because certificates have been provided by the humans after a test is carried out in a Laboratory automatically by the machines, it cannot be held that services have been provided through the human skills. Even in the latest decision of Hon'ble Supreme Court in the case of M/s. Kotak Securities Ltd. (supra), (the relevant portion of which has already been reproduced above),....