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TMI Blog2018 (6) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... orted cargo and certifying in relation to the quality and price, provision of such services does not make available technical knowledge, experience, skill, know-how or processes to the recipient of the service - as per Article 13(4)(c) of the DTAA these services are not made available to the Indian parties - thus we held that ₹ 18772897/- received by the assessee is not chargeable to tax in India - Decided in favor of assessee. Initiation of penalty u/s 271(1)(c) - Held that:- Assessee is providing the services of technical nature - assessee is resident of UK and therefore, is eligible for benefit contained therein - assessee claim that services of the assessee are not made available to the Indian entities has been rejected - in AY 2014-15 that such services does not satisfy “make available” test under Article 13(4)(c) of the DTAA - hence it is said that it is merely the rejection of the claim of the assessee. It is not the case of the revenue that assessee has made any false claim - thus in view of the decision in case of CIT Vs Reliance Petro Products Ltd [2010 (3) TMI 80 - SUPREME COURT] it cannot be said that the submission or claim of the assessee is not accurate - he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed that customers of the company in India appoint the assessee at a principal to principal basis to provide certain inspection and testing services for UK. For this purpose customers placed the work order at assessee specifying the scope of work to be carried out in UK. During the Assessment Year the assessee received ₹ 18772897/- from customers in India. Before the ld AO the assessee submitted the copies of the invoices. However, the ld AO asked the assessee that why the above sum should not be treated as business income and royalty/ FTS and taxed accordingly. The assessee submitted that the assessee is a company from UK and therefore, is entitled to the benefit of DTAA between UK and India. It was further stated that fees for technical services should satisfy the condition of make available to be taxed in India. It was stated that the above test is not satisfied and therefore, same is not chargeable to tax in India. The assessee further relied on several decision to support its case. The ld AO held that income is chargeable to tax according to Income Tax Act, 1961 u/s 9(1)(vii)(2) of the Act and further as per article 13 of the DTAA it is chargeable to tax as technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recipient of the services. He further stated that they do not make available‟ those services to the assessee. In view of this he submitted that sum are not chargeable to tax in India in view of the DTAA between India and UK. He therefore, submitted that though income is chargeable to tax in India according to domestic tax laws u/s 9(1) but as assessee is a resident of UK it gets the benefit of the DTAA according to which the fees for technical services if not made available‟ recipient of the services is not chargeable to tax in India. He further placed reliance on the decision of the coordinate bench in case of ACIT Vs. DA Javery and Hon‟ble Karnataka High Court in case of CIT Vs. DE Beer India Minerals Pvt. Ltd 346 ITR 467. He further submitted a chart on various decisions to support his claim. 5. The ld DR vehemently stated that the ld DRP has also relied upon 12 judgments to show that the assessee has made the service available to the recipient of the services. He therefore, submitted that there is no reason to state that the assessee has not made available the services to the recipient. In view of this he submitted that there is no error in the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso agreed with the order of the ld Assessing Officer and accordingly, sum received of ₹ 187.72 lacs was considered as fees for technical services. Now coming to the nature of services rendered by the assessee to the various entities, the assessee has provided services to M/s. Hindalco Ltd and the nature of services is umpire instruction based on which a certificate of Umpire Analysis was given. For the certification there were different methods such as F25, G18, I18, i20 and I23 were employed. It also certified the state of material and element of such certification. The another services rendered to Hindalco Industries Ltd is with respect to weighing, sampling the moisture determination services. After providing these services a certificate of inspection was also provided. The service provided to Grifith India also involvd chemical analysis of different products and then providing a certificate thereof. The services of Indian Oil Corporation is inspection of the vessel on arrival. The services provided to Dell International is also with respect to data security audit and auditing. The services provided to Nirma was also with respect to the certificate of analysis of various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, the order under section 250 of the Act dated 30n June 2016 passed by the Commissioner of Income Tax (Appeals) [ CIT(A) ]confirming the penalty imposed u/s 271 (1 )(c) ( Impugned Order ) by the Learned Assessing Officer ( Ld. AO )dated 27th November, 2013 is erroneous and bad in law. 2. That on the facts and in the circumstances of the case, the Ld. CIT(A) grossly erred in law and on facts of the case in passing the impugned order without appreciating that the penalty proceedings were initiated for furnishing inaccurate particulars while penalty u/s 271 (1 )(c) was imposed for concealment of income‟. 3. That the Ld. CIT (A) erred in law and on facts of the case in passing the impugned order without appreciating that the Ld. AO failed to establish that the Appellant has submitted inaccurate particulars of income while levying the penalty under section 271(1)(c) of the Act. 4. That on the facts and in the circumstances of the case, the Ld. C1T(A) grossly erred in law and facts of the case in passing the impugned order without appreciating that income of the appellant was not even subject to tax in India by virtue of the provisions of the Act read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-15 in case of the assessee. He further stated that merely because the contention of the assessee that such services are not made available to the Indian service recipient the amount was charged to tax. It cannot be said that the contention of the assessee is not sustainable. He therefore, stated that penalty cannot be levied u/s 271(1)(c) of the Act. 13. The ld Departmental Representative relied upon the orders of the lower authorities. 14. We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is providing the services of technical nature. It is undisputedly the resident of UK and therefore, is eligible for benefit contained therein. The assessee submitted that the services of the assessee are not made available to the Indian entities. Such explanation of the assessee was rejected. We have held in the case of the assessee in AY 2014-15 that such services does not satisfy make available test under Article 13(4)(c) of the DTAA. Therefore, for the impugned year though income of the assessee was taxed but whether the penalty can be levied u/s 271(1)(c) or not is the issue before us. According to us it is merely the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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