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TMI Blog2018 (7) TMI 2259X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 on the ground that no services were rendered during the year, ignoring the invoice available on record indicating charges paid towards such services and without appreciating that by incurring cost on maintaining infrastructures for co-ordination and setting up conditions for efficient rendering of services in relation to maintenance and repairs of cable system the assessee rendered managerial and technical service in the form of commercial advantage to assignees by ensuring that the cable system was in seamless operational condition at all times and in case of actual need for the repairs and maintenance, the same could be carried within least time. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in concluding that the amount received by assessee as standby maintenance charges were not of the nature of 'Fee for technical services' under section 9(1)(vii) of the Act on the ground that service was not rendered while holding at the same time that whenever payment is received on account of actual repair or maintenance carried out, then same would definitely fall within the ambit of FTS chargeable to tax u/s 9(1)(vii). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee with reference to the Indian business connection. The CIT(A) noticed that in the computation made by the assessee, it had not included the total receipts from TCL as its turnover while computing the gain/loss. Ostensibly, the assessee had offered the revenues from this activity by holding that only a portion of the total receipts from TCL computed in the ratio of the length of cable in Indian territorial waters vis-a-vis the total length worldwide is attributable to operations in India. The CIT(A) differed with the assessee on treating the length of cable as a reasonable basis for apportioning of turnover between the Indian business connection vis-a-vis the total receipts from worldwide length of cable. As per the CIT(A), the standby maintenance charges do not have any connection with the length of cable and, in fact, they represent fixed and running costs with reference to maintaining the standby facility. He, therefore, upheld the stand of the Assessing Officer that the entire turnover, i.e. gross receipts from the Indian landing party, i.e. TCL, was liable to be treated as turnover for the purpose of computing the income attributable to business connection in India. Again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible plant, remotely operated vehicles and other devices when included in the wet maintenance zone agreement standby charges, shall be recovered by the Founding Signatory through fixed charges payable by the Signatories and other holders of Assignable Capacity, in accordance with Schedules H-1 through H-55 and J. adjusted to reflect inflation. 11.2 The cost of running charges, which shall be limited to recovery the direct incremental costs incurred in connection with a repair operation involving Segment S or Segment X-1 or Segment X-2, including, but not limited to, the cost of fuel, at sea insurance, additional crew at sea, crew overtime, victual ling, telecommunications, mobilization and de-mobilization expenses, consumables, replenished equipment, and remotely operated vehicles, the extent not included in the wet maintenance agreement standby charges, shall be apportioned among Signatories (excluding the Founding Signatory) and other holders of Assignable Capacity on the affected Segment S or Segment X-1 or Segment X-2 in accordance with Schedule F. 69. Thus, under the C&MA the responsibility of maintenance and repairs belongs to both, assessee and the landing parties. The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iver" or "to do something". Thus, rendering services mean some kind of actual services is being provided or delivered which are in the nature of managerial technical or consultancy. The word 'managerial' has to be understood in the context of running and managing the business of the client or one who is in charge for management and control of its business. Here the payment made by VSNL is not in the nature of managerial. Again the term 'consultancy' has to be understood as advisory services wherein necessary advice and consultation is given to the client for the purpose of client's business. It is act of consulting or giving advice or guidance. Again here-in-this case there is no consultancy services. The word "technical" services connote services which are provided in technical field or by the person who has skill, knowledge expertise in the area of technical or science. Here-in-this case if the assessee is providing some kind of repair services in the cable system, then it can be termed as technical services, however, if there is no actual rendering of services, but mere collection of annual charge to recover the cost of standby facility, agreed by all the members of the consorti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the CIT(A), which is in line with the precedents in assessee's own case by way of orders of the Tribunal (supra). At the time of hearing, it was also a common ground between the parties that the said decisions of the Tribunal continue to hold the field and have not been altered by any higher authority. Therefore, following the precedents, qua the Grounds raised by the Revenue, the order of CIT(A) is affirmed and Revenue fails in its appeal." 6. Thus, the aforesaid discussion would reveal that the issue has been consistently adjudicated by the Tribunal since Assessment Years 1998-99 onwards upholding the stand of the assessee that the receipts from standby maintenance charges cannot be taxed as 'fee for technical services'. Therefore, following the aforesaid precedents which have been rendered in identical circumstances, and since they continue to hold the field as they have not been altered by any higher authority, we affirm the decision of CIT(A) qua the grounds raised by the Revenue and accordingly, Revenue fails in its appeal. 7. Now, we may take-up the Cross objections raised by the assessee, which is common in both the assessment years. For completeness, we repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Cross objection no. 2 is concerned, the same has not been pressed and is accordingly liable to be dismissed. We hold so. 9. On the aspect of Cross objection nos. 1, 3 and 4, it was a common ground between the parties that identical controversy has been considered by the Tribunal in Assessment Years 2010-11 & 2011-12 vide order dated 04.05.2018 (supra), wherein the relevant discussion reads as under :- "17. On this aspect, the short dispute relates to the manner in which the income from standby maintenance charges taxable in India u/s 9(1)(i) of the Act is to be computed. Said charges have been received by the assessee from TCL and, as per the assessee, portion thereof which is relatable to the length of cable in Indian territorial waters vis-a-vis the length of cable worldwide be taken as the total revenue deemed to accrue or arise in India from which relatable expenses are to be reduced so as to compute the income accruing or arising in India u/s 9(1)(i) of the Act. On the contrary, the stand of the CIT(A) is that the entire amount of revenue received on this score from TCL should be considered. 18. As the aforesaid discussion shows, the dispute revolves around computatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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