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TMI Blog2015 (7) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be used by the assessee independently in its business and without recourse to M/s. Appledore International Ltd. These services were neither geared to nor did they make available any technical knowledge, skill or experience to the assessee or consisted of development and transfer of a technical man or technical design to the assessee. See Nokia India Pvt. Ltd. [ 2015 (7) TMI 476 - ITAT DELHI] M/s. Appledore International Ltd., in the second set of services is not responsible for preparation of any design, diagram etc. for the assessee and accordingly on the second set of services provided by M/s. Appledore International Ltd., does not involve development and transfer of a technical man or technical design to the assessee. Accordingly, we hold that the payments made by the assessee to M/s. Appledore International Ltd., on the second set of services for which payment has been made GBP 88950 do not qualify as FTS under the provisions of Indo-UK Tax treaty. As per the provisions of Indo-UK Tax Treaty where the services do not qualify as FTS, Article 13 would not be applicable to M/s. Appledore International Ltd. and its taxability would need to be examined as per Article-7 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its stand. 2.3. The assessee explained that Article 13 is not applicable as the services rendered by Appledore as specified in the corrigendum to the agreement are consultancy services and do not make available the technical knowledge, skill etc. It was further explained that FTS as defined in Article 13(4) do not apply to the facts of the case. It was brought to the notice of the AO that the payment to M/s. Appledore International Ltd. aggregating to GBP 88950 does not constitute FTS and the same is therefore business profits under the DTAA. As M/s. Appledore does not have PE in India under Article-7 of the India-UK Treaty, therefore the said payment is not liable to tax in India, therefore, no withholding tax was deducted and there is no default in respect of withholding tax. 2.4. The submissions made by the assessee did not find any favour with the AO who was of the firm belief that the payment for the services provided as per additional corrigendum also fall under the category fees for technical services and since the beneficiary is supposed to carry out global market survey to determine demand for repairs conversion new builds and to determine the short/medium/long term busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 950 and allowed the appeals of the assessee. 4. Aggrieved by this, the Revenue is before us. 5. The Ld. Departmental Representative strongly supported the findings of the AO. It is the say of the Ld. DR that the bifurcation of the services made by the assessee in the agreement and the additional corrigendum agreement is arbitrary and without any basis. The Ld. DR continued to submit that the services rendered by Appledor comes within the definition of fees for Technical Services and therefore the assessee should have deducted tax at sources and the AO has rightly treated the assessee as assessee in default. 6. Per contra, the Ld. Counsel for the assessee advanced the very same arguments which were advanced before the First Appellate authority. The Ld. Counsel further relied upon the same decisions which were relied upon before the First Appellate Authority. 7. Having heard the rival submissions, we have given a thoughtful consideration to the orders of the authorities below. The undisputed facts are that the assessee entered into an agreement with M/s. Appledore International Ltd., vide agreement dt. 25.4.2003 by which M/s. Appledore International Ltd., was made consultant to perfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ips calling at Pipavav Port. Report targeted for 30th June 2003. 7.1. It was agreed that the assessee will pay GBP 1,59,200 excluding travel and other expenses. Immediately after entering this agreement an additional corrigendum was made on 2.5.2003 by which the assessee and M/s. Appledore International Ltd., agreed for specifying the value of different services which read as under: This Additional Corrigendum made on 2nd day of May 2003 between Appledore International Limited, a U.K. registered Company and Sea King Infrastructure Limited: an Indian Company to amend the original document dated 25th April 2003. Whereas the parties hereto had entered into contract whereby Appledore International Ltd. had agreed to conduct The study on Evaluation of business opportunities of Pipavav Ship Dismantling and Engineers facility at Pipavav, India. Whereas the said document provided the scope of work and the contract value. Now Appledore and Sea King are desirous of specifying the value of different services and the same's agreed between them as under: 1. The contract value in Great Britain Pounds (GBP) 70,250 in respect of following services: a. Detailed layout plan. b. Determine specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, financial structure and pay-back period and provide report for the same. These services by M/s. Appledore International Ltd., were not given towards imparting any technical knowledge or experience to the assessee that could be used by the assessee independently in its business and without recourse to M/s. Appledore International Ltd. These services were neither geared to nor did they make available any technical knowledge, skill or experience to the assessee or consisted of development and transfer of a technical man or technical design to the assessee. For this proposition, we draw support from the decision of the Tribunal in Nokia India Pvt. Ltd. 59 Taxman.com 120 (Delhi). 7.4. Considering the aforementioned services in totality, in our understanding M/s. Appledore International Ltd., in the second set of services is not responsible for preparation of any design, diagram etc. for the assessee and accordingly on the second set of services provided by M/s. Appledore International Ltd., does not involve development and transfer of a technical man or technical design to the assessee. Accordingly, we hold that the payments made by the assessee to M/s. Appledore International Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X
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