M/s. Sandvik Information Technology AB., Pune V. Deputy Director of Income-tax, Pune

CO 124/PUN/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 4158 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-08-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 22-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A K MODI
• Keywords: Double taxation relief; Advance ruling
• Section: 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . . . . , ,, , , ,, , , ,, , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM ./ ITA NOS. 500 & 501/PUN/2016 / ASSESSMENT YEARS : 2009-10 & 2012-13 THE DY.DIRECTOR OF INCOME TAX OFFICER (INTERNATIONAL TAXATION), CIRCLE-2, PUNE ....... / APPELLANT / V/S. M/S. SANDVIK INFORMATION TECHNOLOGY AB (NOW KNOWN AS SANDVIK IT SERVICES AB), C/O. SANDVIK ASIA LIMITED, MUMBAI PUNE ROAD, DAPODI, PUNE 411 012 PAN : AADCA5375J / RESPONDENT C.O.NO.124/PUN/2017 (ARISING OUT OF ITA NO.500/PUN/2016 M/S. SANDVIK INFORMATION TECHNOLOGY AB (NOW KNOWN AS SANDVIK IT SERVICES AB), C/O. SANDVIK ASIA LIMITED, MUMBAI PUNE ROAD, DAPODI, PUNE 411 012 PAN : AADCA5375J .......CROSS OBJECTOR / V/S. THE DY.DIRECTOR OF INCOME TAX OFFICER (INTERNATIONAL TAXATION), CIRCLE-2, PUNE APPELLANT IN THE APPEAL APPELLANT BY : SHRI A.K. MODI RESPONDENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 07.08.2018 / DATE OF PRONOUNCEMENT : 08.08.2018 2 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB / ORDER PER D. KARUNAKARA RAO, AM THERE ARE TOTAL 3 APPEALS UNDER CONSIDERATION. ITA NOS. 500 AND 501/PUN/2016 ARE FILED BY THE REVENUE AGAINST THE T WO DIFFERENT ORDERS OF DRP, COMMONLY DATED 02-12-2015 INVOLVING A.YRS. 200 9-10 & 2012-13. THE CO NO.124/PUN/2017 IS FILED BY THE ASSESSEE AGAINST THE DIRECTIONS OF THE DRP QUA HOLDING OF THE RE-ASSESSMENT PROCEEDINGS AS VALID. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE SAID CO. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 2. WE SHALL DEAL WITH THE TWO MAIN APPEALS OF THE R EVENUE. THE GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS ARE IDENT ICAL. THE ISSUE IN THESE APPEALS RELATES TO CHARGEABILITY OF PAYMENTS RECEIV ED BY THE ASSESSEE, A SWEDEN BASED COMPANY IN LIEU OF THE SERVICES RENDER ED TO THE INDIAN BASED COMPANY. 3. WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A .Y.2009-10 FOR THE SAKE OF REFERENCE TO FACTS. THE GROUNDS RAISED BY THE R EVENUE ARE EXTRACTED HERE AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE DRP, MUMBAI ERRED IN CONCLUDING THAT THE SERVICES P ROVIDED BY THE ASSESSEE DO NOT QUALITY AS FEES FOR TECHNICAL SERVI CE UNDER CLAUSE (B) OF PARA 4 OF ARTICLE 12 OF DOUBLE TAXATION AVOIDANC E AGREEMENT BETWEEN INDIA AND PORTUGUESE REPUBLIC BY REFERRING TO THE PROTOCOL OF INDIA-SWEDEN DTAA. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DRP, MUMBAI ERRED IN CONCLUDING THAT THE TERM MAKE AVAILABLE MEANS SUPPLYING OR TRANSFERRING OF TECHNICAL KNOWLEDGE OR TECHNOLOGY TO ANOTHER. 3 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DRP, MUMBAI ERRED IN ALLOWING ASSESSEES APPEAL WIT HOUT GIVING A CATEGORICAL FINDING AS TO HOW THE SERVICES ARE NOT TAXABLE IN INDIA AS PER INDIA-PORTUGUESE DTAA. 4. THE APPELLANT CRAVES TO LEAVE TO ADD TO MODIFY A NY OF THE GROUNDS OF APPEAL. 4. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A FOREIGN COMPANY AND RENDERED SUPPORT SERVICES TO TH E INDIAN BASED COMPANY NAMELY SANDVIK ASIA PRIVATE LIMITED (SAP). ASSESSE E RECEIVED A SUM OF RS.6,76,46,959/- IN THIS YEAR AS PER THE AGREEMENT DATED 01-04-2002 FOR RENDERING THE SAID SERVICES. IN THE RE-ASSESSMENT PROCEEDINGS, THE AO TREATED THE SAID SUM AS CHARGEABLE IN INDIA, I.E. FEE FOR T ECHNICAL SERVICES (IN SHORT FTS). AO MADE THE ASSESSMENT U/S.144(1) R.W.S. 1 43(2) R.W.S. 147 OF THE ACT DETERMINING THE TAXABLE INCOME OF THE FOREIGN COMPA NY AT RS.6,76,46,959/-. AO DID NOT ACCEPT THE CLAIM OF THE ASSESSEE THAT TH E PAYMENT RECEIVED BY THE ASSESSEE IS NOT FOR FTS. APPLICABILITY OF PROTOCOL LINKED MAKE AVAILABLE CLAUSE IN THE AGREEMENT WAS NOT ALLOWED TOO BY THE AO. 5. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE SUBMITTED THAT THE PAYMENTS RECEIVED BY THE ASSESSEE DO NOT CONSTITUTE FTS UNDER ARTICLE 12 OF THE TAX TREATY BETWEEN INDIA AND SWEDEN READ WITH P ROTOCOL THERETO. REFERRING TO THE AVAILABILITY OF CLAUSE RELATING TO THE MAKE AVAILABLE WITH THE PROTOCOL ATTACHED TO THE TAX TREATY BETWEEN INDIA A ND SWEDEN, ASSESSEE ARGUED THAT THE PAYMENTS ARE NOT MADE IN THE CONTEX T OF MAKE AVAILABLE TO THE IMPUGNED SERVICES. THEREFORE, THE PAYMENTS RECEIVE D DO NOT CONSTITUTE FTS. ASSESSEE RELIED ON VARIOUS DECISIONS INCLUDING THAT OF DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE GROUP CONCE RNS OF THE ASSESSEE, I.E. SANDVIK AUSTRALIA PTY. LTD. ASIA PRIVATE LIMITED TS -46-ITA-2013-PUNE ITAT APART FROM MANY OTHERS. THE DETAILS ARE GIVEN IN P ARA NO. 3.2.12 OF THE ORDER OF 4 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB DRP. THE DRP CONSIDERED THE AOS FINDING AS WELL A S THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT THE DECISION OF THE TRIBUNAL IN THE CASE OF SANDVIK AB VS. DDIT VIDE ITA NO.1720/PN/2011 ADVOCATES FOR CON SIDERING THE PROTOCOL LINKED MAKE AVAILABLE CLAUSE, TAX TREATY BETWEEN INDIA AND SWEDEN. EVENTUALLY, THE DRP GAVE THE FINDING THAT THE PAYME NTS ARE NOT ATTRIBUTABLE TO THE FTS OR ROYALTY AS THEY ARE IN THE NATURE OF HEL P DESK AND IT SUPPORT SERVICES. THE RELEVANT PARA NO.4.4 OF THE ORDER OF DRP IS EXTRACTED HERE AS UNDER : 4.4 OUR FINDING WE HAVE GONE THROUGH IN DETAIL THE SUBMISSION MADE BY THE ASSESSEE. THE SERVICES ARE IN THE NATURE OF HELPDESK AND IT SUPPO RT SERVICES. ACCORDING TO US THERE SERVICES DO NOT QUALIFY AS ROYALTY NEITHER UN DER THE ACT NOR UNDER THE TAX TREATY BETWEEN INDIA AND SWEDEN. ACCORDINGLY, THE DRP GRANTED RELIEF TO THE ASSESSEE . AGGRIEVED WITH THE DIRECTIONS GIVEN BY THE DRP, THE REVENUE IS IN APPE AL BEFORE US. 6. AT THE OUTSET, LD. DR FOR THE REVENUE RELIED HEA VILY ON THE ORDER OF THE AO. FURTHER, HE FAIRLY SUBMITTED THAT THERE IS NO MAKE AVAILABLE CLAUSE IN THE INDO-SWEDEN TREATY BUT FOR THE PROTOCOL WITH MAKE AVAILABLE CLAUSE ATTACHED TO THE TREATY BETWEEN THE TWO COUNTRIES. IN EFFECT , THE PROVISIONS OF MAKE AVAILABLE CLAUSE APPLIES TO THE INDO-SWEDEN TREATY TOO. 7. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE RELIED HEAVILY ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SANDVIK AUS TRALIA PTY. LTD. AS WELL AS THE SANDVIK AB VS. DDIT (SUPRA) AND SUBMITTED THAT THE FACTS IN BOTH THE CASES ARE IDENTICAL AND THE MAKE AVAILABLE CLAUSE IS APPLIC ABLE IN BOTH THE CASES. HE ALSO SUBMITTED THAT THE SERVICES RENDERED BY THE AS SESSEE DO NOT CONSTITUTE FTS OR ROYALTY. 5 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB 8. DURING THE REBUTTAL TIME, LD. DR FOR THE REVENUE COULD NOT DEMONSTRATE THE SERVICES RENDERED BY THE ASSESSEE CONSTITUTE M AKE AVAILABLE SERVICES. 9. AFTER HEARING BOTH THE SIDES, WE FIND IT RELEVAN T TO EXTRACT THE FINDING GIVEN BY THE TRIBUNAL IN THE CASE OF GROUP CONCERN OF THE ASSESSEE, I.E. SANDVIK AUSTRALIA PTY. LTD. IN ITA NO.93/PN/2011 DECIDED ON 31-01-2013. THE SAID FINDING GIVEN BY THE TRIBUNAL IS REPRODUCED BELOW F OR THE SAKE OF COMPLETENESS OF THIS ORDER : 13. WE ARE CONCERNED WITH PARA NO.3 OF ARTICLE 12, WHICH DEFINES THE TERM ROYALTY. UNDER THE IT ACT, THE TERM ROYALTY AND EX PRESSION FTS ARE CLASSIFIED AS TWO DIFFERENT CONNOTATIONS, I.E. 9(1)(VI) AND 9( 1)(VII). SO FAR AS ARTICLE 12 IS CONCERNED, FTS IS INCLUDED IN THE TERM ROYALTY FO R THE PURPOSE OF DECIDING IN WHICH CONTRACTING STATE THE INCOME FROM THE SAME IS TO BE TAXED. CLAUSE (G) IN ARTICLE 12(3) GOES TO THE ROOTS OF THE ISSUE. MAIN THRUST OF THE ARGUMENT OF THE LD. COUNSEL IS THAT IT IS NOT ONLY SUFFICIENT TO RE NDER THE SERVICES BUT THE SAME SHOULD BE MADE AVAILABLE TO THE RECIPIENT AND THIS PARTICULAR IMPORTANT ASPECT IS MISSED BY THE DRP/TPO. WE FIND THAT THE EXPRESSION MAKING AVAILABLE IS VERY MUCH IMPORTANT TO DECIDE IN WHICH CONTRACTING STATE THE AMOUNT RECEIVED FOR RENDERING THE SERVICES RELATING TO THE TECHNICA L KNOW-HOW IS TO BE TAXED. THE EXPRESSION MAKE AVAILABLE IS USED IN THE CONT EXT OF SUPPLYING OR TRANSFERRING TECHNICAL KNOWLEDGE OR TECHNOLOGY TO A NOTHER. IT IS DIFFERENT THAN THE MERE OBLIGATION OF THE PERSON RENDERING THE SER VICES OF THAT PERSONS OWN TECHNICAL KNOWLEDGE OR TECHNOLOGY IN PERFORMANCE OF THE SERVICES. THE TECHNOLOGY WILL BE CONSIDERED AS MADE AVAILABLE WHE N THE PERSON RECEIVING THE SERVICES IS ABLE TO APPLY THE TECHNOLOGY BY HIMSELF . 14. THE EXPRESSION MAKE AVAILABLE HAS COME FOR CO NSIDERATION BEFORE THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S. DE BEERS INDIA MINERALS PVT. LTD. (SUPRA). IN THE SAID CASE, THE TREATY BE TWEEN INDIA AND NETHERLANDS WAS FOR THE CONSIDERATION OF THEIR LORDSHIPS. THE ASSESSEE IN THAT APPEAL WAS A PROVIDING COMPANY ENGAGED IN THE BUSINESS OF PROS PECTING AND MINING FOR DIAMONDS AND OTHER MINERALS. THEY HAVE BEEN GRANTE D LICENCES (RECONNAISSANCE PERMITS) BY THE STATE GOVERNMENT OF KARNATAKA, ANDHRA PRADESH AND CHHATTISGARH. DURING THE EARLY STAGE, VARIOUS TECHNIQUES WERE EMPLOYED FOR THE PURPOSE OF CARRYING OUT GEOPHYSICA L SURVEY, THE ASSESSEE ENTERED INTO AGREEMENT WITH M/S.FUGRO ELBOCON B.V. NETHERLANDS, WHO HAD A TEAM OF EXPERTS SPECIALISED IN AIR BORNE GEOPHYSICA L SERVICES FOR CLIENTS. FOR THE TECHNICAL SERVICES RENDERED BY THEM THE SAID AS SESSEE HAD PAID CONSIDERATION. THE ASSESSING OFFICER APPLIED ARTIC LE 12 OF THE INDO- NETHERLANDS TREATY AND HELD THAT THE SAME WAS TAXAB LE IN THE HANDS OF THE NETHERLANDS COMPANY. AS THE WORDINGS OF ARTICLE 12 IN THE INDO-NETHERLANDS TREATY ARE ANALOGOUS TO ARTICLE 12 OF THE INDIA AUS TRALIA TREATY, AS EXPRESSION MAKE AVAILABLE IS ALSO USED WHILE DETERMINING FIS CAL JURISDICTION OF THE CONTRACTING STATE, THE HON'BLE HIGH COURT EXPLAINED THE MEANING OF THE EXPRESSION MAKE AVAILABLE WHICH WAS APPEARING IN THE INDO-NETHERLANDS TREATY, THE LORDSHIPS EXPLAINED THE EXPRESSION AS U NDER: 13. UNDER THE ACT IF THE CONSIDERATION PAID FOR RE NDERING TECHNICAL SERVICES CONSTITUTE INCOME BY WAY OF FEES FOR TECHN ICAL SERVICES, IT IS TAXABLE. HOWEVER, ARTICLE 12 OF THE AFORESAID IND IA-NETHERLANDS TREATY 6 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB DEFINES FEES FOR TECHNICAL SERVICES FOR THE PURPOSE OF ARTICLE 12 WHICH DEALS WITH ROYALTIES AND FEES FOR TECHNICAL SERVICE S. THE FEES FOR TECHNICAL SERVICES MEANS THE PAYMENT OF ANY AMOUNT TO ANY PERSON IN CONSIDERATION FOR RENDERING OF ANY TECHNICAL SERVIC ES ONLY, IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERT ISE, SKILL, KNOW-HOW OR PROCESSES. IF THE TECHNICAL KNOWLEDGE EXPERTISE , SKILL, KNOW HOW OR PROCESS IS NOT MADE AVAILABLE BY THE SERVICE PROVID ER, WHO HAS RENDERED TECHNICAL SERVICE FOR THE PURPOSE OF ARTIC LE 12 OF DTAA IT WOULD NOT CONSTITUTE FEES FOR TECHNICAL SERVICES. TO THA T EXTENT THE DEFINITION OF FEE FOR TECHNICAL SERVICES FOUND IN THE AGREEMENT I S INCONSISTENT WITH THE DEFINITION OF FEES FOR TECHNICAL SERVICES PROVIDED IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9. IN V IEW OF SECTION 90 THE DEFINITION OF FEES FOR TECHNICAL SERVICES CONTAINED IN THE AGREEMENT OVERRIDES THE STATUTORY PROVISIONS CONTAINED IN THE ACT. IN FACT, THE LATEST AGREEMENT BETWEEN INDIA AND SINGAPORE FURTHER CLARI FIES THIS POSITION, WHERE THEY HAVE EXPLAINED THE MEANING OF THE WORD MAKE AVAILABLE. ACCORDING TO THE AFORESAID DEFINITION FEES FOR TECH NICAL SERVICE MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR SERVICES OF TECHNICAL NATURE IF SUCH SERVICES MAKE AVAILABLE TE CHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESSES WHICH ENAB LES THE PERSON ACQUIRING THE SERVICE TO APPLY TECHNOLOGY CONTAINED THEREIN. THOUGH THIS PROVISION IS NOT CONTAINED IN INDIA NETHERLAND S TREATY, BUT VIRTUE OF PROTOCOL IN THE AGREEMENT, CLAUSE (IV)(2) READS AS UNDER: IF AFTER THE SIGNATURE OF THIS CONVENTION UNDER AN Y CONVENTION OR AGREEMENT BETWEEN INDIA AND THIRD STATE WHICH IS A MEMBER OF THE OECD INDIA SHOULD LIMIT ITS TAXATION AT SOURCE ON D IVIDENDS, INTERESTS, ROYALTIES, FEES FOR TECHNICAL SERVICES OR PAYMENTS FOR THE USE OF EQUIPMENT TO A RATE LOWER OR A SCOPE MORE RESTRICTE D THAN THE RATE OR SCOPE PROVIDED FOR IN THIS CONVENTION ON THE SAID I TEMS OF INCOME, THEN AS FROM THE DATE ON WHICH THE RELEVANT INDIAN CONVE NTION OR AGREEMENT ENTERS INTO FORCE THE SAME RATE OR SCOPE AS PROVIDE D FOR IN THAT CONVENTION OR AGREEMENT ON THE SAID ITEMS OF INCOME SHALL ALSO APPLY UNDER THIS CONVENTION. 14. THEREFORE THE CLAUSE IN SINGAPORE AGREEMENT WHI CH EXPLICITLY MAKES IT CLEAR THE MEANING OF THE WORD MAKE AVAILA BLE, THE SAID CLAUSE HAS TO BE APPLIED, AND TO BE READ INTO THIS AGREEME NT ALSO. THEREFORE, IT FOLLOWS THAT FOR ATTRACTING THE LIABILITY TO PAY TA X NOT ONLY THE SERVICES SHOULD BE OF TECHNICAL IN NATURE, BUT IT SHOULD BE MADE AVAILABLE TO THE PERSON RECEIVING THE TECHNICAL SERVICES. THE TECHN OLOGY WILL BE CONSIDERED MADE AVAILABLE WHEN THE PERSON WHO REC EIVED SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE SERVICE PROVI DER IN ORDER TO RENDER TECHNICAL SERVICES USES TECHNICAL KNOWLEDGE, EXPERI ENCE, SKILL, KNOW HOW OR PROCESSES. TO ATTRACT THE TAX LIABILITY, TH AT TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESS WHICH IS USE D BY SERVICE PROVIDER TO RENDER TECHNICAL SERVICE SHOULD ALSO BE MADE AVAILABLE TO THE RECIPIENT OF THE SERVICES, SO THAT THE RECIPIEN T ALSO ACQUIRES TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESSES SO AS TO RENDER SUCH TECHNICAL SERVICES. ONCE ALL SUCH TECHNOLOGY IS MADE AVAILABLE IT IS OPEN TO THE RECIPIENT OF THE SERVICE TO MAKE USE OF THE SAID TECHNOLOGY. THE TAX IS NOT DEPENDENT ON THE USE OF THE TECHNOLOGY BY THE RECIPIENT. THE RECIPIENT AFTER RECEIVING OF TE CHNOLOGY MAY USE OR MAY NOT USE THE TECHNOLOGY. IT HAS NO BEARING ON T HE TAXABILITY ASPECT IS CONCERNED. WHEN THE TECHNICAL SERVICE IS PROVID ED, THAT TECHNICAL SERVICE IS TO BE MADE USE OF BY THE RECIPIENT OF TH E SERVICE IN FURTHER CONDUCT OF HIS BUSINESS. MERELY BECAUSE HIS BUSINE SS IS DEPENDENT ON THE TECHNICAL SERVICE WHICH HE RECEIVES FROM THE SE RVICE PROVIDER, IT DOES NOT FOLLOW THAT HE IS MAKING USE OF THE TECHNO LOGY WHICH THE SERVICE PROVIDER UTILISES FOR RENDERING TECHNICAL S ERVICES. THE CRUX OF THE 7 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB MATTER IS AFTER RENDERING OF SUCH TECHNICAL SERVICE S BY THE SERVICE PROVIDER, WHETHER THE RECIPIENT IS ENABLED TO USE T HE TECHNOLOGY WHICH THE SERVICE PROVIDER HAD USED. THEREFORE, UNLESS T HE SERVICE PROVIDER MAKES AVAILABLE HIS TECHNICAL KNOWLEDGE, EXPERIENCE , SKILL, KNOW HOW OR PROCESS TO THE RECIPIENT OF THE TECHNICAL SERVICE, IN VIEW OF THE CLAUSES IN THE DTAA, THE LIABILITY TO TAX IS NOT ATTRACTED. 15. THEIR LORDSHIPS ALSO CONSIDERED THE DECISIONS O F THE AUTHORITY FOR ADVANCE RULINGS (AAR) WHERE THE TERM MAKE AVAILABL E IS INTERPRETED. THE RELEVANT DISCUSSION AND OBSERVATIONS OF THEIR LORDS HIPS ARE AS UNDER: 22. WHAT IS THE MEANING OF MAKE AVAILABLE. THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NA TURE THAT IT MAKES AVAILABLE TO THE RECIPIENT TECHNICAL KNOWLEDGE, KN OW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSM ITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE C OULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW- HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY MAKING AVAILABLE, THE TECHNICAL K NOWLEDGE, SKILLS, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENO UGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EF FORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE P ROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT TH E RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTU RE 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 SER VICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN TH AT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WIT HIN THE MEANING OF PARAGRAPH 4(B). SIMILARLY, THE USE OF A PRODUCT WH ICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE T HE TECHNOLOGY AVAILABLE. IN OTHER WORDS, PAYMENT OF CONSIDERATIO N WOULD BE REGARDED AS FEE FOR TECHNICAL/INCLUDED SERVICES ONLY IF TH E TWIN TEST OF RENDERING SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE A T THE SAME TIME IS SATISFIED. 16. IN THE PRESENT CASE, AS PER THE TERMS OF THE AG REEMENT BETWEEN THE ASSESSEE COMPANY AND SANDVIK ASIA LTD., DOES NOT SU PPORT THE CASE OF THE REVENUE THAT THE ASSESSEES CASE IS COVERED IN CLAU SE (G) OF PARA 3 TO ARTICLE 12 OF THE INDIA AUSTRALIA TREATY AS THE ASSESSEE HA S NOT MADE AVAILABLE ANY TECHNICAL KNOWLEDGE OR EXPERTISE TO THE RECIPIENT I NDIAN COMPANY. IN OUR OPINION, THE ASSESSEE HAS ONLY PROVIDED THE BACK-UP SERVICES AND IT SUPPORT SERVICES FOR SOLVING IT RELATED PROBLEMS TO ITS IND IAN SUBSIDIARY. HENCE, UNLESS AND UNTIL THE SERVICES ARE NOT MADE AVAILABLE, SAME CANNOT BE TAXABLE IN INDIA. WE, THEREFORE HOLD THAT THE SERVICES RENDERED BY AS SESSEE COMPANY TO ITS INDIAN GROUP COMPANIES, THOUGH ARE IN THE NATURE OF TECHNICAL SERVICES, BUT IS NOT COVERED IN PARA (3)(G) TO ARTICLE 12 OF THE INDIA AUSTRALIA TREATY AND HENCE, THE SAME IS NOT TAXABLE IN INDIA. WE AL SO HOLD THAT THE AMOUNT RECEIVED BY THE ASSESSEE CANNOT BE TREATED AS A ROY ALTY EVEN UNDER THE NORMAL PROVISIONS OF I.T. ACT. BUT UNDER THE NORMAL PROVISION OF THE I.T. ACT THE SAME CONSTITUTE CONSIDERATION FOR RENDERING THE TECHNICAL SERVICES COVERED U/S.9(1)(VII) OF THE I.T.ACT. ACCORDINGLY, GROUND NO.1 IS ALLOWED AND ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 8 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB 9.1 FURTHER, ON THE SIMILAR ISSUE, WE FIND THE PUNE BENCH OF THE TRIBUNAL IN THE CASE M/S. SANDVIK AB VS. DDIT IN ITA NO.1720/PN /2011 ORDER DATED 28- 11-2014. THE SAID PARA IS REPRODUCED BELOW : 12. SO FAR AS THE PRESENT CASE BEFORE US IS CONCER NED, ON THE BASIS OF THE PROTOCOL TO THE DTAA BETWEEN THE INDIA AND SWEDEN T HE ASSESSEE CAN CLAIM THE BENEFIT OF THE CONDITIONS IMPOSED FOR BRINGING TO TAX THE FEES FOR TECHNICAL SERVICES IN THE TREATY BETWEEN THE INDIA AND PORTUG UESE. WE, THEREFORE, HOLD THAT ON THE PRINCIPLE OF THE MOST FAVOURED NATION ( MFN) CLAUSES THE PAYMENT OF RS.5.93 CRORES RECEIVED BY THE ASSESSEE COMPANY FRO M ITS INDIAN SUBSIDIES CANNOT BE BROUGHT TO TAX. WE, THEREFORE, ALLOW THE GROUNDS TAKEN BY THE ASSESSEE ON THE ABOVE REASONS THEREFORE, THERE IS NO DISPUTE ON THE EXISTENCE OF A PROTOCOL IN THE CONTEXT OF THE INDO-SWEDEN DTAA. IT CONTAINS THE R EFERENCE TO THE MAKE AVAILABLE CLAUSE. THE PAYMENT BECOMES FTS OR OTHE RWISE, ONLY WHEN THE CONDITIONS RELATABLE TO MAKE AVAILABLE CLAUSE ARE MET. IT IS A COVERED ISSUE BY VIRTUE OF THE ORDERS OF THE TRIBUNAL IN THE GROUP C ASES OF THE ASSESSEE. CONSIDERING THE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE DECISION TAKEN BY THE DRP IN FAVOUR OF THE ASSESSEE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. THUS, WE HO LD THAT THE SUM RECEIVED BY THE ASSESSEE IS NOT TAXABLE IN INDIA. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IN BOTH THE APPEALS ARE DISMISSED. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. 11. TO SUM UP, BOTH THE APPEALS OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 08 TH DAY OF AUGUST, 2018. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / PUNE; / DATED : 08 TH AUGUST, 2018. SATISH 9 ITA NOS.500 & 501/PUN/2016 & CO NO. 124/PUN/2017 M/S. SANDVIK INFORMATION TECHNOLOGY AB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (IT/TP), PUNE) 4. , , , / DR, ITAT, B BENCH, PUNE. 5. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.