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TMI Blog2010 (4) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... f Technical Services and the balance 50 per cent is in the nature of Business Receipt of the recipient, when the entire payment is inextricably linked and arises by a single agreement and is part and parcel of the same agreement and is indivisible." 2. At the outset, the learned counsel for the assessee submitted that on similar facts the ITAT In ITA No. 6980/Mum./2008 for the assessment year 2007-08 in the case of M/s. Navin Gems, sister concern, has dismissed the revenue s appeal and the facts are similar in the present case. 3. The learned D.R., however, objected to and submitted that the CIT(A) has erred in holding that there is no PE for part of service and arbitrarily fixed the ratio at 50 per cent. 4. Facts of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee s case the technical services rendered are related to procurement of rough diamonds without any interruption and also ensuring the quality and quantity of the diamonds. The Assessing Officer was of the opinion that quantity and quality of diamonds is a business technique which can be acquired through specialized knowledge which DTC has passed on to the assessee. In view of this, the Assessing Officer held that the services rendered by the DTC are in the nature of technical services and liable to tax at 15 per cent as per the Article 13 of DTAA. 6. Before the CIT(A), it was submitted that continuity of supply service is in the nature of assurance by DTC of continuity in supply of rough diamonds during contract period whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enough to cover within its scope services provided by DTC to the assessee, as per Article 13(4)( c ) of DTAA between India and UK, which override provisions of section 9 of the Act, fees for any services in order to be taxed as fees for technical services requires that such services, provider should make available technical knowledge, experience, skill, know-how or processes, or consist of the development transfer of a technical plan or technical design to the recipient of service. It was further submitted that the expression "fees for included services" used in Article 12 of Indo-USA DTAA and the extract of the memorandum attached to Indo-USA DTAA which explains the term "fees for included services" is equally applicable and worth consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its hands in the absence of a PE in India. It was also submitted that the fees paid for services rendered by DTC is not liable to tax because the fees paid are not for technical services within the meaning of the provisions of DTAA between India and UK, the services are rendered outside India and DTC does not have a PE in India. 9. Based on the arguments advanced by the assessee, the learned CIT(A) held that 50 per cent of the VAS payment is towards royalty/fees for technical services and the balance 50 per cent is towards business receipts. He, accordingly, allowed part relief to the assessee. Aggrieved with such order of the CIT(A), the revenue is in appeal before us. 10. After hearing the learned counsel and learned D.R., we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the intranet and the server of the DTC. In view of this I hold that the appellant is making payment for use of DTC s own commercial experience and also for using the scientific/commercial equipment owned by the DTC. At the same time, it is also seen that certain services "Continuity of Supply", "Intention to Offer (ITO)", "Consistency of Boxes", "SoC Integrity", "Provision of Key Account Manager" are not coming within the purview of technical services as contemplated under the India-UK treaty. These are purely business receipts and it can be assessed in India only if the DTC is having PE in India. Considering all the above, I hold that 50 per cent of the VAS payment is towards royalty/fees for technical services and another 50 per cent is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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