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TMI Blog2019 (1) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... he year. The sales of LNG could not have been achieved without the aid of support staff and the same was provided by BGEPIL. - Decided in favour of assessee. TDS u/s 195 - Disallowance of the expenditure on account of time-writing charges - assessee has not deducted tax at source - Held that:- ‘Make available’ means the person acquiring the services is enabled to apply technology contained therein on his own in future without recourse to the service provider which means that the knowledge must remain with the service recipient once service has ended and thereafter, service recipient is at liberty to use the technical knowledge, skill know-how and processes. The service provided by employees of BGIL are merely in the nature of routine support services and, therefore, cannot be termed as ‘FTS’ under Article 13 of the India UK DTAA. No requirement for the assessee to deduct taxes from such payments in India u/s 195 of the Act. We, accordingly, direct the Assessing Officer to delete the addition - Decided in favour of assessee. - ITA No. 1980/DEL/2015 - - - Dated:- 31-12-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method for bench marking the corporate intra group services and considered CUP as the most appropriate method for bench marking receipt of corporate services. The assessee was asked to justify the need for receipt of services for which payment has been made. 7. In its reply, the assessee explained that it is engaged in the gas operating operations in India primarily involving marketing and distribution of natural gas as well as LNG. It was explained that the assessee does not have in-house skilled man power. Therefore, it has sought assistance of BGIL. The organizational set up can be understood from the following chart: 8. The explanation of the assessee did not find any favour with the TPO who proposed upward T.P. adjustment of ₹ 1,45,06,572/- in respect of international transaction pertaining to payment of MSU charges and determined ALP at NIL. 9. The assessee raised objections before the DRP and the DRP, after considering the submissions of the assessee, dismissed the same by observing that BGEPIL is getting management services from BGIL, then how can it pass on these services to the assessee when it itself is getting these services from BGIL. The DRP fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. ( b) assist BGIES to sell LNG and natural gas to various customers of BGIES. ( c) obtain information concerning industrial and commercial matters, which are of interest to BGIES especially in connection with upcoming projects in the oil, gas and energy sector. ( d) provide services towards the promotion, marketing or sale of LNG and natural gas. ( e) provide incidental support services such as, without limitation, the billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customers or vendors, and public relations services. This Includes services such as that of commission agent, as well as information technology services Including but not limited to any service in relation to designing, development or maintaining of computer software, or computerized data processing or systems networking, or any other service in relation to the operation of computer systems. 16. Article 3 provides for consideration and the same reads as under: 3.1 In consideration of the Services provided by BGEPIL under Article 2, BGEPIL agrees to pay BGEPIL fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of business of the assessee. However, the same was reversed in April 2010. 21. The explanation of the assessee did not find favour with the Assessing Officer. The Assessing Officer observed that no invoice had been raised by BGIL as on 31.03.2010 and the assessee failed to give any scientific or historical basis for arriving at the said provision. The Assessing Officer concluded by holding that the assessee failed to establish that the provision for time writing charges was an ascertained liability. Accordingly, addition of ₹ 14,00,976/- was made. 22. The assessee raised objections before the DRP. 23. After considering the submissions and objections raised by the assessee, the DRP observed that payments being FTS in nature, were subject to TDS u/s 195 of the Act and since the assessee has not deducted tax at source, the payment needs to be disallowed u/s 40(a)((i) of the Act. Disallowance made by the Assessing Officer was upheld but though on different ground. 24. Before us, the ld. AR vehemently stated that the impugned payment cannot be considered as FTS, as nothing was made available to the assessee by BGIL. It is the say of the ld. AR that invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which: ( a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received; or ( b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or ( c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. 28. In our understanding, make available means the person acquiring the services is enabled to apply technology contained therein on his own in future without recourse to the service provider which means that the knowledge must remain with the service recipient once service has ended and thereafter, service recipient is at liberty to use the technical knowledge, skill know-how and processes. In our understanding of the facts, the service provided by employees of BGIL are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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