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TMI Blog2005 (1) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a public charitable trust registered under the Societies Registration Act, it is functioning like a Government Department. Thus for pursuing the appeal before the Tribunal, the assessee is required to obtain necessary clearance from the High Power Committee set up by the Government of India called Committee on Disputes (CoD). Since the assessee has not obtained such approval, the appeals cannot be allowed to be prosecuted. For this purpose, he relied upon the decision of Hon'ble Supreme Court in the case of ONGC v. Collector of Central Excise [1992] 104 CTR (SC) 31 and in the case of Mahanagar Telephone Nigam Ltd. v. Chairman, CBDT [2004] 267 ITR 647. Learned Departmental Representative submitted that the assessee was set up under the Memorandum of Association. The registered Office of the assessee is C/o Department of Electronics, Government of India. The various clauses of Memorandum of Association regarding acceptance of gifts from foreign Government through Government of India, requirement of obtaining prior approval of the Government for acquiring, holding and disposing of the property, power of Central Government to issue directions for effective functioning of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation with the Departmental Advisor, Department of Electronics, Government of India. (xiv)Rule 19.3 - Rules and regulations of the society can only be changed after obtaining approval from Department of Electronics, Government of India. He also submitted that the real character of the society is of Government Department as all Administrative, Financial and Personnel functions of the society are totally controlled by the Government of India. Thus necessary approval from the COD is required to be obtained for pursuing the appeal before the Tribunal. 3. Learned counsel for assessee Shri KR Pradeep submitted that the assessee is registered as a public charitable trust under the Societies Registration Act. The assessee has been filing its return of income in the status of AOP since several years. The assessee is registered under section 12A of the Income-tax Act. The objectives of the assessee are charitable in nature and accordingly the assessee enjoys exemption under sections 11 and 12 of the Income-tax Act. The Government to carry out avowed objectives of public good has set up several trusts to oversee that the ultimate beneficiaries are properly benefited. However, the Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the above decision, the CBDT issued following Circular No. F.No. 279/222/91-ITJ Pt-II, dated 13-2-1995 : To : The Chief Commissioners of Income-tax and Directors General of Income-tax. Subject:Settlement of disputes between one Government Department and another and one Government Department and a Public Enterprise and Public Enterprise and another. *** I am directed to refer to Board's letter F.No. 279/222/91-ITJ, dated 17-3-1992 enclosing Cabinet Secretariat O.M. No. 53/3/6/91-Cab., dated 31-12-1991 as well as to Board's letter F.No. 279/222/91-ITJ (Pt.), dated 3-2-1994 enclosing Cabinet Secretariat O.M. No. 53/3/10/94-Cab., dated 24-1-1994 on the above subject. All matters before any Court or Tribunal involving dispute between a Government Department and another and one Government and a Public Enterprise and Public Enterprises inter se requires the approval of the High Power Committee set up by the Cabinet Secretariat vide its Office Memorandum dated 31-12-1991 (supra). Such approval is required to be taken before the filing of the appeal/petition. 4.1 From the aforesaid decision of Hon'ble Supreme Court as well as circular of CBDT, it is seen that whenever there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. We accordingly hold that the assessee is not a Government Department or a public sector undertaking so as to obtain necessary approval from the Committee on Disputes. We accordingly proceed to dispose of the appeals. 5. The facts of the case are as under :- 5.1 In pursuant to its main objectives as mentioned above, the appellant was engaged in the business of providing end to end communication facility to various companies in and around Bangalore and such user companies avail the facility provided by the appellant to transfer and receive data through international communication channel. For this purpose, the appellant has entered into agreement with various foreign companies who are providing the necessary bandwidth to the appellant which in turn provides the same to the end users for the purpose of their data transmission. The technology and methodology involved in making available the bandwidth along with its attendant services would be adverted to at the appropriate time in subsequent paragraphs. As stated above, the appellant has entered into agreement with various foreign companies which are generally termed as 'internet services agreement' as per which such international ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is transmitted through a medium and is received by the user at the other end and, therefore, the payment received by the recipient for making available the said 'process' partook the character of 'fees for technical services' in the hands of the recipients as per section 9(1)(vii) of the Act and also as 'fees for included services' as defined in Article 12(4)(b ) of the Double Taxation Avoidance Agreement between India and USA read with the MoU in respect of the said treaty, between these two countries. In view of this, the Assessing Officer was of the opinion that the payments received by the non-resident companies were sums chargeable to tax in India and hence was liable for deduction of tax at source in respect of such payments/remittances, the ITO held the appellant to be an assessee in default under section 201(1) of the Act and also levied interest under section 201(1A). The amount of default under section 201(1) as also the interest leviable under section 201(1) was separately determined for each assessment year, though a single order was passed. Learned CIT(A) confirmed the same and hence these appeals. 5.2 Learned counsel for assessee Shri Pradeep submitted that identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be considered as 'fees for technical services' under section 9(1)(vii). - Skycell Communications Ltd. v. Dy. CIT [2001] 170 CTR (Mad.) 238 : (2001) 251 ITR 53 (Mad.) and Dy. CIT v. Asia Satellite Telecommunications Co. Ltd. [2003] 78 TTJ (Delhi) 489 relied on. [Para 5.4] The liability under the Act does not arise due to operation of DTAA but the charging provision of the Act. So long as the amount paid is not taxable under the Act, the clause in the DTAA cannot bring the charge. DTAA is a relief giving mechanism and operates as relief against liability in resident country and host country. In this case since there is no domestic liability, on this score itself DTAA would not be applicable and no liability will arise on account of DTAA. It is an accepted position in law that if domestic law exempts certain income or if domestic law is inapplicable in a given circumstances, DTAA would be inapplicable as there is no double taxation. It is also correct that DTAA between India and USA would not be applicable insofar as services are rendered in other countries other than these two countries. To that extent the order suffers from incorrect application of DTAA provisions. Insofar as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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