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TMI Blog2022 (10) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to provide the similar services, without recourse to the service provider, in future. An incidental benefit or enrichment which may add to the capabilities is not sufficient; the critical factor triggering the taxability in the source jurisdiction is the transfer of skills. Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Income Tax Act, 1961, as in terms of Section 90(2), where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. - Decided in favour of assessee. - ITA No.325/Mum./2022 - - - Dated:- 13-10-2022 - Shri Prashant Maharishi, Accountnat Member And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Sunil Motilala For the Revenue : Shri Soumendu Kumar Dash ORDER PER SANDEEP SINGH KARHAIL, J.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law, the learned Assessing Officer erred in considering the income from interest on loan as taxable at the rate of 10% instead of 5% provided in section 115A(1)(a)(iiaa) read with Section 194LC of the Act. Consequently, the additional tax demand so raised is wholly unjustified and liable to be deleted. 3. Ground No. 3- Short grant of credit of refund of earlier years adjusted against wrong demand of AY 18-19 3.1 On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in not grating credit of refund of earlier years adjusted against wrong demand of ant year under consideration while computing the total demand. Consequently, the demand so raised is wholly unjustified, ought to be deleted. 4. Ground no.4 Levy of Interest u/s 234A of the Act 4.1 On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in levying interest under Section 234A of the Act without appreciating that the Appellant had filed its return within the due date prescribed under Section 139(1) of the Act. i.e., November 30, 2018. Consequently, the levy of interest being wholly unjustified, ought to be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial systems statements, review of cash flow analysis and overall cash balances, detailed review of all sales transactions, inventory ageing, customer licensing review, payments and payable review, detailed review, analysis of actual forecast and budgets, supervising country managers and regional sales personnel and operations, monitoring sales transactions to preserve pricing structures of the group entities, etc. The Assessing Officer ( AO ) vide draft assessment order dated 27/02/2021, treated the entire amount of management fees received by the assessee as fee for technical services under the provisions of the DTAA. 5. The assessee filed detailed objections before the learned Dispute Resolution Panel ( learned DRP ). Vide directions dated 28/12/2021 issued under section 144C(5) of the Act, the learned DRP following its directions rendered in assessee s own case for assessment year 2017 18 rejected the objections filed by the assessee, after noting that the material facts remain same during the year under consideration,. In conformity, the AO passed the impugned final assessment order dated 31/12/2021, under section 143(3) r/w section 144C(13) of the Act. Being aggrieved, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble , the technical knowledge, skill?, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered made available when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of consideration would be regarded as fee for technical/included services only if the twin test of rendering services and making technical knowledge available at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is treated as an enduring advantage. As observed in the binding judicial precedents referred to above, in order to invoke make available‟ clause, to fit into the terminology making available , the technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end and the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider . Technology will be considered made available when the person acquiring the service is enabled to apply the technology. In our considered view, that condition is not satisfied on the facts of the present case. We, therefore, hold that that make available‟ clause in the Indo-Singapore tax treaty cannot be invoked on the facts of the present case- as no case is even made out by the revenue that as a result of rendition of these services to the Indian entity, there is any transfer of skill or technology. It is not a question of, as the learned DRP put it, enriching the service recipient, making him wiser to face similar c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal for preceding assessment year. Thus, respectfully following the order passed by the coordinate Bench of the Tribunal in assessee s own case cited supra, we uphold the plea of the assessee and delete the impugned addition in respect of management fees received by the assessee. As a result, ground no. 1, raised in assessee s appeal is allowed. 10. As regards grounds No. 2, 3 and 4, learned AR submitted that assessee has filed rectification application under section 154 of the Act before the AO, which is still pending consideration. Copy of the aforesaid rectification application 04/01/2022, was furnished by the learned AR during the course of hearing. Since, these issues are already under consideration before the AO, therefore, we direct the AO to decide these issues as per law after necessary factual verification. As a result, grounds No. 2, 3 and 4 raised in assessee s appeal are allowed for statistical purpose. 11. Ground No. 5 pertains to levy of interest under section 234B of the Act, which is consequential in nature. Therefore, the said ground is allowed for statistical purpose. 12. The learned AR wish to not press grounds No. 6, 7 and 8 raised in assessee s a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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