TaxTMI 
TaxTMI 
2025 (10) TMI 1429
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.... Appellant humbly prays that the final assessment order is liable to be quashed. 2. On the facts and in the circumstances of the case and in law, the notice dated 2 7.06.2022 under section 143(2) of the Act issued by the Assistant Commissioner of Income Tax/Deputy Commissioner of Income Tax (International Taxation), Circle -1(1)(1), Delhi is without jurisdiction and all proceedings pursuant to the aforesaid notice under section 143(2) (ire without jurisdiction, bad in law, void-ab-initio and liable to be quashed. The Appellant humbly prays that the draft assessment order and the final assessment order are liable to be quashed. 3. On the facts and in the circumstances of the case and in law, the Ld. AO and the Ld. Dispute Resolution Panel ('the DRP') erred in holding that the receipts of Rs. 85,63,75,446/- are in the nature of 'Royalty' under Section 9(1)(vi) of the Act as well as under the Double Taxation Avoidance Agreement between India and Hong Kong ("India - Hong Kong DTAA") The Appellant humbly prays that the Learned AO be directed to not treat the aforesaid receipts as Royalty' under the Act and the India-Hong Kong DTAA ....
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.... in Hong Kong, providing services/facilities for processing data from Hong Kong. The company's expertise covers a wide range of specialized services including managed services, systems integration and Hi-tech transactional services. The assessee filed its return of income declaring total income of Rs. 6,64,89,345/-. The return was selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 4.1. During the year under consideration, the receipts from India for which the assessee company is through its group entity Atos India. During the past years, the assessee used to get receipts from its client, Standard Chartered Bank, India, directly. In the year under consideration, the receipts are received from its Indian entities i.e., Atos India. Though the services have been rendered by the assessee to Standard Chartered Bank through the Indian entity. The assessee rendered its services to Standard Chartered Bank directly and collected receipts directly from Standard Chartered Bank, according to the arrangement entered by Atos Group and SCB, through the global arrangement dated 12/02/2004. Since the agreement dates back to 12/02/2004 ....
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....CB with disaster recovery facility and storage facility. These infrastructure facilities in the form of data centre, storage area network, disaster recovery facility and dedicated network connectivity is translated into functional process by defined service flow for the various geographic locations for various business application which would constitute process. The assessee in this process has also made available SCB use of its equipment, model, design, invention and process. After coming to the conclusion that the payment is in the nature of "royalty" within the scope of section 9(1)(vi), the revenue went further to hold that, since assessee has provided technical, managerial and consultancy services to SCB, therefore, it also falls in the nature of "FTS" and for coming to this conclusion, certain clauses in the Cocteau agreement has been referred to. 19. First of all, we will deal with the issue whether the said payment falls within the realm of "royalty" or not. From the perusal of the various clauses of the 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 "Coc....
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.... made available to SCB. Here, in this case there is absolutely no use of equipment also as alleged by the Department within the definition given in clause (iva) of Explanation 2 to Sec. 9(1)(vi) of the Act. The said clause deals mainly with the "use" or "right to use" any industrial, commercial or scientific equipment and applies only to income from leasing of such industrial, commercial or scientific equipment. This is borne out from the Memorandum to the Finance Bill, 2001 through which the said clause was inserted w.e.f. 1.4.2002, the relevant extract of the Memorandum has already been incorporated in the earlier part of our order and same proposition is also held by Mumbai Bench in Yahoo India P, Ltd. Vs DCIT (supra). Here, in the case of assessee, there is no income from leasing of any equipment. The legislature thus, has clearly envisaged that clause (iva) is to cover lease rent of industrial, commercial and scientific equipment in the definition of royalty and the said definition has been widened to that extent 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 contenti....
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....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 whether the payment is in the nature of FTS or not, we find that the provision regarding services provided by assessee to SCB is mainly a standard facility and there is no constant human endeavour or human intervention which is required to provide the data servicing service. As stated earlier, raw data fed into by SCB India are transmitted to assessee and the data so transmitted stands captured by the mainframe computers owned by assessee wherein such data are processed automatically and the final result is then transmitted to SCB India. All these transmission and processing of data is done automatically by computers and there is not much human involvement or intervention. There is no application of mind by the employees of assessee on said data because, they are processed through programmed software and neither any verification nor any analysis is carried out by the assessee on such 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 ther....
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....ion 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), the Hon'ble Court opined that, if services are provided through fully automated standard facility, the same cannot be reckoned as rendering of technical services as contemplated u/s 9(1)(vii) of the Act. The relevant observation reads as under:- "8. ..... All such services, fully automated, are available to all members of the stock exchange in respect of every transaction that is entered into. There is nothing special, exclusive or customized service that is rendered by the Stock Exchange. "Technical services" like "Managerial and Consultancy service" would denote seeking of services to cater to the special needs of the consumer/ user as may be felt necessary and the making of the same available by the service provider. It is the above feature that would distinguish / identify a service provided from a facility offered. While the former is special and exclusive to 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 pro....