Appeal Details
Counselvise Citation
[2014] 122 COUNSELVISE.COM (IT) 9368 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 4 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
14-03-2014
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
D
Next Hearing Date
11-11-2013
Assessment Year
2006-2007
Appeal Filed On
10-03-2011
Judgement Text
FIT FOR PUBLICATION SD/- SD/- JM AM IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SH. R. S. SYAL, AM AND SH. A. D. JAIN, JM ITA NO. 540/DEL/2011 : ASSTT. YEAR : 2006-07 DEPUTY DIRECTOR OF INCOME TAX, CIRCLE-3(1), INTERNATIONAL TAXATION, NEW DELHI VS M/S JC BAMFORD EXCAVATORS LIMITED, C/O PRICEWATERHOUSE, 11-A, SUCHETA BHAWAN, VISHNU DIGAMBAR MARG, NEW DELHI-110002 (APPELLANT) (RESPONDENT) C. O. NO. 73/DEL/2011 : AS STT. YEAR : 2006-07 M/S JC BAMFORD EXCAVATORS LIMITED, C/O PRICEWATERHOUSE, 11-A, SUCHETA BHAWAN, VISHNU DIGAMBAR MARG, NEW DELHI-110002 VS DEPUTY DIRECTOR OF INCOME TAX, CIRCLE-3(1), INTERNATIONAL TAXATION, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AABCJ6004D ASSESSEE BY : S/SHRI G.C.SRIVASTAVA & SAURABH SRIVA STAVA REVENUE BY : SHRI SANJEEV SHARMA DATE OF HEARING : 11.3.2014 DATE OF PRONOUNCEMENT : 14.3.2014 ORDER PER R. S. SYAL , AM: THESE TWO CROSS APPEALS ONE BY THE REVENUE AND TH E OTHER CROSS OBJECTION BY THE ASSESSEE - ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 03.11.2010 IN RELATION TO THE ASSESSMENT YEAR 20 06-07. 2. FIRST GROUND OF THE REVENUES APPEAL IS AGAINST THE HOLDING BY THE LD. CIT(A) THAT THE STAY OF THE SECONDED EMPLOYEES OF THE ASSESSEE FOR MORE THAN 90 DAYS IN INDIA, ENGAGED IN PROVIDING MA NAGERIAL SERVICES TO ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 2 JCB INDIA, DID NOT CONSTITUTE SERVICES PERMANENT ES TABLISHMENT (P.E). THE SECOND GROUND, WHICH IS RELATED TO THE FIRST, P ROJECTS THE GRIEVANCE IN THE TERMS THAT THE LD. CIT(A) ERRED IN HOLDING THAT INCOME OF THE ASSESSEE BE TREATED AS `ROYALTY INSTEAD OF `BUSINESS PROFIT S AS HELD BY THE ASSESSING OFFICER. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE TH AT THE ASSESSEE IS A FLAGSHIP COMPANY OF JCB IN UK WHICH OWNS, DEVELOPS AND MANUF ACTURES EXCAVATORS SOLD UNDER THE JCB BRAND NAME. THE ASSES SEE, A NON-RESIDENT FOREIGN COMPANY, BEING A TAX RESIDENT OF UK, ENTER ED INTO A TECHNOLOGY TRANSFER AGREEMENT (TTA) WITH ITS WHOLLY OWNED SUBS IDIARY JCB INDIA LTD. ON 5.3.2004. THE ASSESSEE ALSO ENTERED INTO AN INTERNATIONAL PERSONNEL ASSIGNMENT AGREEMENT (IPAA) DATED 5.12.20 05 WITH JCB INDIA BUT EFFECTIVE FROM 1.1.2004. DURING THE RELEV ANT YEAR, THE ASSESSEE CLAIMED TO HAVE RECEIVED A SUM OF RS. 40,67,16,967/ - AS ROYALTIES/FEES FOR TECHNICAL SERVICES FROM JCB INDIA IN CONSIDERA TION FOR GRANT OF EXCLUSIVE RIGHTS TO MANUFACTURE AND MARKET EXCAVAT OR LOADER IN THE TERRITORY OF INDIA AND OUTSIDE UNDER THE TRADEMARK OF 3DX. THIS AMOUNT OF ROYALTIES/FEES FOR TECHNICAL SERVICES WAS OFFERE D FOR TAXATION AT THE RATE OF 15% BY TREATING THE RECEIPT AS `ROYALTIES AND FE ES FOR TECHNICAL SERVICES UNDER ARTICLE 13(2) OF THE DOUBLE TAXATIO N AVOIDANCE AGREEMENT BETWEEN INDIA AND UK (HEREINAFTER CALLED `THE DTAA). ON PERUSAL OF THE RELEVANT CLAUSES OF TTA READ WITH IP AA, THE A.O OBSERVED THAT THE ASSESSEE WAS REQUIRED TO SEND ITS PERSONNEL TO THE PLANT ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 3 OF JCB INDIA FOR SOLVING PROBLEMS RELATING TO THE L ICENSED PRODUCTS. IPAA WAS HELD BY THE A.O TO HAVE BEEN ENTERED IN TO FORMALIZE THE BROADER TERMS SET OUT IN TTA FOR SENDING OF THE TEC HNICAL AND OTHER PERSONNEL OF THE ASSESSEE IN THE PREMISES OF JCB IN DIA. ON BEING CALLED UPON TO FURNISH THE DETAILS OF EMPLOYEES OF THE ASS ESSEE VISITING INDIA INDICATING THE DURATION AND PURPOSE OF THE STAY, TH E ASSESSEE SUBMITTED DETAILS VIDE ITS LETTER DATED 10.10.2008 INDICATING THAT ITS EIGHT EMPLOYEES ` WERE SENT ON DEPUTATION TO JCB INDIA . FURTHER DETAILS OF SEVEN EMPLOYEES WERE ALSO FILED WHO FREQUENTLY VISITED IN DIA MAINLY FOR REVIEWING THE BUSINESS OF JCB INDIA. ON GOING THRO UGH THE RELEVANT CLAUSES OF TTA, THE ASSESSING OFFICER NOTED THAT T HE AGREEMENT WAS MEANT FOR GRANT OF LICENSE TO JCB INDIA FOR TRANSFE R OF IP RIGHTS TO MANUFACTURE, ASSEMBLE, USE AND SELL LICENSED PRODUC TS. ON EXAMINING CLAUSE-IV OF TTA, IT WAS NOTICED THAT HAVING REGARD TO THE COMMITMENT BY THE ASSESSEE IN MANUFACTURING AND OTHER OPERATIO NS, SOME SPECIALISTS OR ENGINEERS WERE ALSO REQUIRED TO BE DEPUTED AT TH E REQUEST AND EXPENSE OF THE LICENSEE. THE ASSESSING OFFICER HAS DRAWN A CHART ON PAGES 7 TO 9 OF THE ASSESSMENT ORDER INDICATING THE WORK PROFI LE OF SUCH EMPLOYEES WHO WERE SECONDED TO JCB INDIA. IT WAS NOTICED THAT SUCH REPATRIATES WERE ENGAGED IN MANAGING THE OVERALL OPERATIONS OF JCB INDIA. THIS CONCLUSION WAS DRAWN BY CONSIDERING THAT ONE OF THE M WAS APPOINTED AS MANAGING DIRECTOR, THE OTHER AS JOINT MANAGING DIRE CTOR, STILL ANOTHER AS VICE-PRESIDENT AND THE REMAINING FIVE AS GENERAL MA NAGERS. THESE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 4 EMPLOYEES WERE DEPUTED TO ENSURE THAT THE LICENSED PRODUCTS WERE MANUFACTURED AS PER THE SPECIFICATIONS PROVIDED BY THE ASSESSEE THROUGH ITS TECHNICAL DOCUMENTS AND THERE WAS NO COMPROMISE ON QUALITY. THE ASSESSEES CONTENTION THAT THE PERSONS SO DEPUTED T O JCB INDIA BECAME THE EMPLOYEES OF JCB INDIA ON THEIR ASSIGNMENT AND HENCE CEASED TO HAVE ANY RELATION WITH THE ASSESSEE, WAS REJECTED. IN VIEW OF THE DEPUTATION OF THESE EIGHT PERSONS FOR A PERIOD OF M ORE THAN 90 DAYS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE A.O HELD THAT THEY CONSTITUTED S ERVICES P.E OF THE ASSESSEE (NAMED AS JCB INDIA) IN INDIA IN TERMS OF ARTICLE 5(2)(K)(I) OF THE DTAA. HE FORTIFIED HIS VIEW ON THE STRENGTH OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF DIRECTOR OF INDIA TAX (INTERNATIONAL TAXATION) VS MORGAN STANLEY AND COMP ANY INC. (2007) 292 ITR 416 (SC). IN THE BACKDROP OF HIS CONCLUSION THAT JCB INDIA CONSTITUTED THE ASSESSEES SERVICE PE IN INDIA, THE AO HELD THAT IT CARRIED ON THE BUSINESS IN INDIA AND ROYALTIES/FEES FOR TEC HNICAL SERVICES RECEIVED FROM JCB INDIA WAS EFFECTIVELY CONNECTED WITH SUCH SERVICE PERMANENT ESTABLISHMENT (PE). RELYING ON PARA 6 OF ARTICLE 1 3, THE ASSESSING OFFICER HELD THAT SUCH ROYALTIES/FEES FOR TECHNICAL SERVICES WAS LIABLE TO BE CONSIDERED AS `BUSINESS PROFITS UNDER ARTICLE 7 OF THE DTAA AS IT WAS EFFECTIVELY CONNECTED WITH THE P.E. THE ASSESSE ES CONTENTION THAT IF THE ROYALTY WAS TO BE CONSIDERED UNDER ARTICLE 7, THEN INCOME ONLY TO THE EXTENT OF ITS RELATION WITH P.E IN INDIA SHOULD BE TAXED, DID NOT FIND ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 5 FAVOUR WITH THE ASSESSING OFFICER. HE HELD THAT T HE AMOUNT IN QUESTION WAS LIABLE TO BE CONSIDERED AS ROYALTIES/FEES FOR T ECHNICAL SERVICES AS PER ARTICLE 13, BUT, BY VIRTUE OF PARA 6 OF ARTICLE 13, ITS TAXABILITY WAS TO BE GOVERNED BY ARTICLE 7 WITHOUT TAKING AWAY THE CONSE QUENCES OF ROYALTIES/FEES FOR TECHNICAL SERVICES TAXABLE UNDER ARTICLE 13. THEREAFTER HE EXAMINED THE PROVISIONS OF SEC. 44DA DEALING WIT H THE COMPUTATION OF INCOME OF NON-RESIDENTS BY WAY OF ROYALTY OR FEE S FOR TECHNICAL SERVICES ETC. LIABLE TO TAX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OF PROFESSION. THE ASSESSEE WAS CALLED UPON TO SUBMIT DETAILS OF EXPENSES INCURRED DURING THE YEAR FOR EARNING SUCH ROYALTY I NCOME FROM JCB INDIA. NO SUCH DETAILS WERE FURNISHED BY THE ASSESS EE CLAIMING THAT ITS INCOME SHOULD BE TAXED AT THE RATE OF 20% OF THE GR OSS AMOUNT. AS THE ASSESSEE DID NOT MAINTAIN ANY BOOKS OF ACCOUNT IN A CCORDANCE WITH SEC. 44AA FOR THE PURPOSES OF DETERMINING INCOME U/S 44D A, THE A.O INVOKED THE PROVISIONS OF RULE 10 OF INCOME-TAX RUL ES, 1962 FOR COMPUTING THE INCOME. ACCORDINGLY, HE HELD THAT 20 % OF THE ROYALTIES/FEES FOR TECHNICAL SERVICES INCOME REPRES ENTED EXPENSES EXCLUSIVELY INCURRED FOR THE BUSINESS OF PE. AFTER GROSSING UP THE RECEIPT OF RS. 40.67 CRORE IN TERMS OF SEC. 195A AND ALLOWI NG DEDUCTION FOR EXPENSES AT THE RATE OF 20% OF SUCH AMOUNT OF ROYAL TIES/FEES FOR TECHNICAL SERVICES, HE COMPUTED TOTAL INCOME OF THE ASSESSEE AT RS.38,27,92,440/-. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 6 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) CONTENDING THAT IT DID NOT HA VE ANY PE IN INDIA BECAUSE THE EMPLOYEES, WHO WERE CONSIDERED BY THE A .O TO BE THOSE OF THE ASSESSEE, BECAME THE EMPLOYEES OF JCB INDIA ON THEIR DEPUTATION TO INDIA AND FURTHER THEIR REMUNERATION WAS ALSO PAID BY JCB INDIA THROUGH THE ASSESSEE. AS THE ASSESSEE DID NOT HAVE ANY PE I N INDIA, THE ASSESSEE MADE OUT A CASE THAT NO AMOUNT COULD BE CHARGED TO TAX WITHIN THE MEANING OF ARTICLE 7 OF THE DTAA. THE LD. CIT(A) O BSERVED THAT TWO AGREEMENTS, NAMELY, TTA AND IPAA WERE ENTERED INTO AT DIFFERENT POINTS OF TIME. HE HELD THAT SUCH AGREEMENTS SHOULD BE CONSIDERED AS MATERIALLY DIFFERENT AND INDEPENDENT OF EACH OTHER. HE FURTHER NOTICED THAT JBC INDIA FILLED UP VACANT POSITION BY MEANS O F THE EMPLOYEES ASSIGNED BY THE ASSESSEE WHO BECAME THE EMPLOYEES O F JCB INDIA AND WERE TO WORK UNDER THE DIRECTION, SUPERVISION AND C ONTROL OF JCB INDIA. FOR A SERVICE PE TO BE ESTABLISHED, IT WAS HELD TO BE NECESSARY THAT THE ASSESSEE MUST HAVE RENDERED SOME SERVICES TO JCB IN DIA THROUGH ITS EMPLOYEES. SINCE THESE EIGHT PERSONS BECAME THE EMP LOYEES OF JCB INDIA ON THEIR DEPUTATION, THE LD. CIT(A) HELD THAT THE ASSESSEE DID NOT HAVE ANY PE IN INDIA. HE BOLSTERED HIS CONCLUSION BY RELYING ON THE ORDER PASSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN DDIT VS TECKMARK GLOBAL SOLUTIONS LLC (2010) 131 TTJ 173 (M UM) IN WHICH THE TRIBUNAL HELD THAT WHEN THE EMPLOYEES WERE NOT UNDER THE CONTROL OF THE ASSESSEE, THEY COULD NOT BE CONSIDERED AS CONST ITUTING A PERMANENT ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 7 ESTABLISHMENT OF THE ASSESSEE IN INDIA. THE LD. CIT (A) ALSO OBSERVED FROM THE VISITING CARDS, LEASE DEEDS AND FORM NOS. 16 ETC. OF THESE EMPLOYEES THAT THEY HAD BECOME EMPLOYEES OF JCB IND IA ON THEIR ASSIGNMENT AND THUS DISCHARGED THEIR DUTIES AS EMPL OYEES OF JCB INDIA. IN THAT VIEW OF THE MATTER, THE LD. CIT(A) OPINED T HAT THERE WAS NO OTHER MATERIAL TO CONSTITUTE THE ASSESSEES PERMANENT EST ABLISHMENT IN INDIA. RESULTANTLY, IT WAS HELD THAT THERE COULD BE NO COM PUTATION OF INCOME AS PER ARTICLE 7 OF THE DTAA. THE REVENUE IS IN APPEAL BEFORE US THROUGH THE GROUNDS WHICH HAVE BEEN SUMMARIZED ABOVE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BOTH THE SIDES HAVE MADE EXTENS IVE ARGUMENTS ON I) THE QUESTION OF THE ESTABLISHMENT OR OTHERWISE OF T HE PE BY THE ASSESSEE IN INDIA AND II) THE EFFECTIVE CONNECTION OF ROYALT IES/FEES FOR TECHNICAL SERVICES WITH SUCH PE, IF ANY, FOR BRINGING/KEEPING THIS AMOUNT UNDER ARTICLE 7/ARTICLE 13(2) OF THE DTAA. WE WILL DEAL W ITH THESE ARGUMENTS ONE BY ONE. A. WHETHER ASSESSEE HAS ANY P.E. IN INDIA? 6.1. IT IS NOTICED THAT THE ASSESSING OFFICER HEL D JCB INDIA TO BE THE ASSESSEES SERVICES P.E IN INDIA BECAUSE OF THE DE PUTATION OF EIGHT EMPLOYEES OF THE ASSESSEE HERE FOR A PERIOD OF MOR E THAN 90 DAYS. IN THIS REGARD, IT IS RELEVANT TO CONSIDER THE RELEVA NT PARTS OF ARTICLE 5 OF THE DTAA WHICH DEALS WITH THAT PERMANENT ESTABLISHMENT AS UNDER: - ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 8 ARTICLE 5 PERMANENT ESTABLISHMENT 1. FOR THE PURPOSES OF THIS CONVENTION, THE TERM 'P ERMANENT ESTABLISHMENT' MEANS A FIXED PLACE OF BUSINESS THRO UGH WHICH THE BUSINESS OF AN ENTERPRISE IS WHOLLY OR PARTLY C ARRIED ON. 2. THE TERM 'PERMANENT ESTABLISHMENT' SHALL INCLUDE ESPECIALLY : .. (K) THE FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICE S, OTHER THAN THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES), WITHIN A CONTRACTING STATE BY AN ENTERPRISE THROUGH EMPLOYEES OR OTHER PERSONNEL , BUT ONLY IF: (I) ACTIVITIES OF THAT NATURE CONTINUE WITHIN THAT STATE FOR A PERIOD OR PERIODS AGGREGATING MORE THAN 90 DAYS WIT HIN ANY TWELVE-MONTH PERIOD; OR (II) SERVICES ARE PERFORMED WITHIN THAT STATE FOR A N ENTERPRISE WITHIN THE MEANING OF PARAGRAPH 1 OF ART ICLE 10 (ASSOCIATED ENTERPRISES) AND CONTINUE FOR A PERI OD OR PERIODS AGGREGATING MORE THAN 30 DAYS WITHIN ANY TWELVE-MONTH PERIOD. PROVIDED . 3. THE TERM 'PERMANENT ESTABLISHMENT' SHALL NOT BE DEEMED TO INCLUDE : . (E) THE MAINTENANCE OF A FIXED PLACE OF BUSINESS S OLELY FOR THE PURPOSE OF ADVERTISING, FOR THE SUPPLY OF INFORMATI ON OR FOR SCIENTIFIC RESEARCH, BEING ACTIVITIES SOLELY OF A PREPARATORY OR AUXILIARY CHARACTER IN THE TRADE OR BUSINESS OF THE ENTERPRISE. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 9 HOWEVER, THIS PROVISION SHALL NOT BE APPLICABLE WHE RE THE ENTERPRISE MAINTAINS ANY OTHER FIXED PLACE OF BUSIN ESS IN THE OTHER CONTRACTING STATE FOR ANY PURPOSE OR PURPOSES OTHER THAN THE PURPOSES SPECIFIED IN THIS PARAGRAPH; 6.2. THE CASE OF THE REVENUE IS THAT EIGHT EMPL OYEES SECONDED BY THE ASSESSEE TO JCB INDIA WERE ENGAGED IN PROVIDING SER VICES INCLUDING MANAGERIAL, TO JCB INDIA. IN VIEW OF SUCH ACTIVIT IES CONTINUING FOR MORE THAN 90 DAYS DURING THE RELEVANT YEAR, THE AO HELD THAT JCB INDIA CONSTITUTED SERVICE PE OF THE ASSESSEE IN INDIA. TH E RELEVANT DISCUSSION IS CONTAINED IN PARA 6.4 OF THE ASSESSMENT ORDER. THE LD. AR CONTENDED THAT THE VISITS BY THE EMPLOYEES OF THE ASSESSEE WE RE OF PREPARATORY OR AUXILIARY CHARACTER IN THE TRADE OR BUSINESS OF THE ENTERPRISE AS PER THE PROVISIONS OF ARTICLE 5(3)(E) AND HENCE SUCH VISITS WOULD NOT LEAD TO SETTING UP OF A PE IN INDIA. 6.3. THIS CONTENTION OF THE LD. AR IS PARTLY CO RRECT. IT IS RELEVANT TO NOTE THAT THERE ARE TWO CATEGORIES OF THE EMPLOYEES OF THE ASSESSEE WHO VISITED JCB INDIA. FIRST CATEGORY IS OF EIGHT EMPLO YEES, WHOSE DETAILS HAVE BEEN TABULATED BY THE ASSESSING OFFICER ON PAG ES 7 TO 9 OF THE ASSESSMENT ORDER, BEING THE EMPLOYEES ON DEPUTATION TO INDIA ON ASSIGNMENT BASIS. THIS CATEGORY OF EMPLOYEES AS PER TTA CONSISTS OF TEMPORARY TECHNICAL CONSULTANTS AND RESIDENT TECHNI CAL CONSULTANTS. SECOND CATEGORY COMPRISES OF OTHER PERSONNEL VISITI NG INDIA ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 10 OCCASIONALLY. THE LD. DR HAS INVITED OUR ATTENTION TOWARDS CLAUSE VI OF THE TTA BY WHICH THE ASSESSEE WOULD BE ENTITLED TO DO RANDOM TESTING OF THE LICENSED PRODUCTS AND INSPECTION OF JCB INDIAS PLANT AS AND WHEN DESIRED TO FIND OUT WHETHER THE LICENSED PRODUCTS M ANUFACTURED BY THE LICENSEE MET THE QUALITY STANDARDS. WE ARE INCLUDIN G THE DOING OF INSPECTION AND TESTING BY THE EMPLOYEES OR OTHER PE RSONNEL OF THE ASSESSEE UNDER THIS SECOND CATEGORY OF EMPLOYEES. WHEREAS THE DETAIL OF EMPLOYEES SENT ON DEPUTATION TO INDIA ON ASSIGNMENT BASIS (HEREINAFTER CALLED `THE EMPLOYEES OF THE FIRST CATEGORY) IS A VAILABLE ON PAGES 133 AND 134 OF THE PAPER BOOK, THE DETAIL OF A PART OF SECOND CATEGORY OF EMPLOYEES VISITING JCB INDIA OCCASIONALLY IS AVAILA BLE ON PAGE 132 OF THE PAPER BOOK. NO SEPARATE DETAIL HAS BEEN MADE AV AILABLE QUA THE VISITS IN CONNECTION WITH INSPECTION AND TESTING IN TERMS OF CLAUSE VI OF TTA. THESE TWO TYPES OF PERSONNEL OR EMPLOYEES OF THE AS SESSEE, NAMELY, DOING STEWARDSHIP ACTIVITIES AND DOING INSPECTION A ND TESTING ARE HEREINAFTER CALLED AS `THE EMPLOYEES OF THE SECOND CATEGORY. 6.4. THE ASSESSING OFFICER HAS RIGHTLY NOT CON SIDERED THE EMPLOYEES OF THE SECOND CATEGORY FOR HOLDING THAT THE ASSESSE E HAS A SERVICE PE IN INDIA. THE HONBLE SUPREME COURT IN MORGAN STANLEY (SUPRA) HAS HELD THAT THE ACTIVITIES OF PREPARATORY OR AUXILIARY CHA RACTER DO NOT CONSTITUTE PE AS PER ARTICLE 5(3)(E) OF THE RELEVANT DTAA. IT HAS FURTHER BEEN HELD THAT THE ACTIVITY OF INSPECTION FOR ENSURING THAT T HE QUALITY OF LICENSED PRODUCTS IS AS PER THE SPECIFICATIONS, IS FOR THE INTEREST OF THE SUPPLIER OF ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 11 KNOW-HOW AND NOT FOR THE BENEFIT OF USER AND HENCE IT CANNOT BE CONSIDERED FOR CONSTITUTING PE IN INDIA. THE RELEVA NT PART OF THE JUDGMENT IS AS UNDER :- UNDER ART. 5(3)(E) ACTIVITIES WHICH ARE PREPARATORY OR AUXILIARY IN CHARACTER WHICH ARE CARRIED OUT AT A F IXED PLACE OF BUSINESS WILL NOT CONSTITUTE A PE. .. STEWARDSHIP ACTIVITIES INVOLVE BRIEFING OF THE MSAS STAFF TO ENSURE THAT T HE OUTPUT MEETS THE REQUIREMENTS OF THE MSCO. THESE ACTIVITIE S INCLUDE MONITORING OF THE OUTSOURCING OPERATIONS AT MSAS. T HE OBJECT IS TO PROTECT THE INTEREST OF THE MSCO. THESE STEWA RDS ARE NOT INVOLVED IN DAY TO DAY MANAGEMENT OR IN ANY SPECIFI C SERVICES TO BE UNDERTAKEN BY MSAS. THE STEWARDSHIP ACTIVITY IS BASICALLY TO PROTECT THE INTEREST OF THE CUSTOMER. IN THE PRESENT CASE THE MSAS IS A SERVICE PE. IT IS IN A SENSE A S ERVICE PROVIDER . IN SUCH A CASE IT CANNOT BE SAID THAT MSCO HAS BEEN RENDERING THE SERVICES TO MSAS. MSCO IS MERELY PROTECTING ITS OWN INTERESTS IN THE COMPETITIVE WOR LD BY ENSURING THE QUALITY AND CONFIDENTIALITY OF MSAS SE RVICES. 6.5. THE CASE OF THE AO FOR HOLDING THAT THE ASSE SSEE HAS A SERVICE PE IN INDIA DOES NOT REST ON THE BASIS OF THE SERVICES RENDERED BY THE EMPLOYEES OF THE SECOND CATEGORY. IT IS CORRECT ALS O BECAUSE SUCH EMPLOYEES DO NOT CONSTITUTE PE OF THE ASSESSEE IN I NDIA AS PER THE ABOVE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 12 EXTRACTED OBSERVATIONS OF THE HONBLE SUMMIT COURT IN THE CASE OF MORGAN STANLEY (SUPRA) . 6.6. IN FACT, THE ASSESSING OFFICER CONSIDERED `THE EMPLOYEES OF THE FIRST CATEGORY FOR HOLDING THE ASSESSEE TO HAVE A PE IN INDIA AS PER ARTICLE 5(2)(K) OF THE DTAA. A CLOSE LOOK AT THE PR ESCRIPTION OF ARTICLE 5(2)(K)(I) DIVULGES THE REQUIREMENT OF A CUMULATIVE FULFILLMENT OF THE FOLLOWING REQUISITES AS A SINE QUA NON FOR CONSTITUTING A PE OF A RESIDENT OF ONE STATE IN THE OTHER STATE :- I. FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICE S. II. SUCH SERVICES SHOULD BE OTHER THAN THOSE TAXABLE UN DER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES). III. SUCH SERVICES SHOULD BE RENDERED WITHIN THE OTHER CONTRACTING STATE. IV. SUCH SERVICES SHOULD BE RENDERED BY THE ENTERPRISE OF THE FIRST STATE THROUGH ITS EMPLOYEES OR OTHER PERSONNEL. V. THE ACTIVITIES SHOULD CONTINUE FOR A PERIOD OR PERI ODS AGGREGATING MORE THAN NINETY DAYS WITHIN TWELVE-MONTH PERIOD. 6.7. WE WILL EXAMINE IF ALL SUCH CONDITIONS HAVE BEEN SATISFIED IN THIS CASE. I. FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICE S - 6.8.1. THE FIRST ESSENTIAL IS OF FURNISHING SERVI CES INCLUDING MANAGERIAL SERVICES. A GLANCE AT THE PROFILE OF THESE EIGHT P ERSONS SENT ON DEPUTATION TO JCB INDIA GIVES THE DESCRIPTION OF TH EIR RESPECTIVE DUTIES. FIRST PERSON IS ONKAR SUNAR, THE MANAGING DIRECTOR OF JCB INDIA, WHO ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 13 WAS RESPONSIBLE FOR OVERALL OPERATIONS OF THE COMPA NY. THEN, SHRI ARJUN MIRDHA WHO JOINED AS DEPUTY MANAGING DIRECTOR WAS RESPONSIBLE FOR OVERALL CUSTOMERS SATISFACTION ENSURING UNINTERRUP TED SUPPLY OF PARTS. THIRD PERSON, MR. RAY SPOONER DESIGNATED AS GENERAL MANAGER, WAS HEADING THE MARKETING STRATEGY FOR IMPROVING THE OV ERALL CUSTOMER PERCEPTION OF JCB INDIA. SHRI BUTA ATWAL, GENERAL MANAGER WAS HEADING THE QUALITY CONTROL INVENTION. SHRI RAY WOO LAY WAS TO KEEP A CLOSE TAB OVER THE SERVICE INFRASTRUCTURE AT THE DE ALERSHIP AND TO DEAL WITH FIT BACK TO MANUFACTURING AND QUALITY CONTROL DEPAR TMENT ON QUALITY ISSUES IN THE FIELD. NEXT PERSON, MR. MICHEL HIGGS, VICE PRESIDENT HEADED THE PRODUCT ENGINEERING DEPARTMENT. MR. PETE R DOBSON WAS OVERALL IN-CHARGE OF DEALERS DEVELOPMENT ACTIVITIE S AND LAST PERSON MR. ANDREW THOMAS WAS A PART OF PRODUCT DESIGN & ENGINE ERING TEAM. FROM THE ABOVE NARRATION OF THE DUTIES CARRIED OUT BY THESE EIGHT KEY PERSONNEL DEPUTED BY THE ASSESSEE TO JCB INDIA, IT IS CLEARLY BORNE OUT THAT THEY WERE BASICALLY ENGAGED IN MANAGING THE OV ERALL OPERATIONS OF JCB INDIA INCLUDING THE QUALITY CONTROL. THE SERVIC ES SO RENDERED BY SUCH PERSONS FALL WITHIN THE AMBIT OF ` SERVICES INCLUDING MANAGERIAL SERVICES . THE FIRST CONDITION THUS STANDS SATISFIED. II. SERVICES SHOULD BE OTHER THAN THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES) 6.9.1. ACCENTUATING ON THE EXPRESSION ` OTHER THAN THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVIC ES) AFTER THE PHRASE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 14 `FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVIC ES AS EMPLOYED IN THE LANGUAGE OF ARTICLE 5(2)(K), THE LD. AR ARGUED THAT SINCE SUCH EIGHT EMPLOYEES RENDERED SERVICES IN CONNECTION WITH `RO YALTIES AND FEES FOR TECHNICAL SERVICES, HENCE THEIR STAY IN INDIA SHO ULD NOT BE CONSIDERED FOR CONSTITUTING PE IN INDIA. IN OUR CONSIDERED O PINION, THIS CONTENTION COMPLETELY LACKS COHERENCE. THE IMPORTANT WORDS USE D IN THE LANGUAGE OF THE RELEVANT PART OF THE ARTICLE ARE THAT THE SE RVICES SHOULD BE OTHER THAN THOSE ` TAXABLE UNDER ARTICLE 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES). AS THE ENTIRE CASE OF THE ASSESSING OFFI CER RESTS ON THE FOUNDATION THAT THE CONSIDERATION FOR SUCH SERVICES IS ` TAXABLE UNDER ARTICLE 7, WHICH IS DEFINITELY ` OTHER THAN ARTICLE 13 , IN OUR CONSIDERED OPINION THIS CONDITION IS ALSO FULLY SATISFIED. III. SUCH SERVICES SHOULD BE RENDERED WITHIN THE O THER CONTRACTING STATE 6.10.1. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE IS A RESIDENT OF ONE STATE (UK) AND THE SERVICES IN QUESTION HAVE B EEN RENDERED IN THE OTHER CONTRACTING STATE (INDIA). IV. SUCH SERVICES SHOULD BE RENDERED BY THE ENT ERPRISE OF THE FIRST STATE THROUGH ITS EMPLOYEES OR OTHER PERSONNEL, 6.11.1. NOW COMES THE NUCLEUS OF CONTROVERSY AS TO WHETHER THESE EIGHT PERSONS WERE THE EMPLOYEES OF THE ASSESSEE O R OF JCB INDIA. IF SUCH EXPATRIATES ARE HELD TO BE THE EMPLOYEES OF J CB UK, IT WOULD AMOUNT TO RENDERING OF SERVICES BY THE ASSESSEE, B UT IF WE COME TO THE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 15 CONCLUSION THAT THESE PERSONS BECAME THE EMPLOYEES OF JCB INDIA, THEN IT WOULD MEAN THAT THE SERVICES WERE NOT RENDERED B Y THE ASSESSEE THROUGH ITS EMPLOYEES OR OTHER PERSONNEL. THE FORME R SITUATION WOULD LEAD TO THE SATISFACTION OF THE CONDITION FOR THE E STABLISHMENT OF THE ASSESSEES PE IN INDIA AND VICE VERSA . 6.11.2. THE STAND TAKEN BY THE ASSESSEE IS THAT ON THEIR DEPUTATION TO JCB INDIA, THESE PERSONS CEASED TO BE ITS EMPLOYEES AND BECAME THE EMPLOYEES OF JCB INDIA. ON THE CONTRARY, THE REVENU ES VIEW POINT IS THAT EVEN UNDER DEPUTATION TO JCB INDIA, THEY CONTI NUED TO REMAIN THE EMPLOYEES OF THE ASSESSEE. IN ORDER TO DECIDE THIS QUESTION IT WOULD BE RELEVANT TO HAVE A LOOK AT THE RELEVANT PARTS OF TT A. PREAMBLE OF THE TTA INDICATES THAT THE ASSESSEE LICENSOR IS ENGAGED IN THE MANUFACTURE AND ASSEMBLY, RESEARCH AND DESIGN, SALE AND DISTRIB UTION OF EARTH MOVING AND MATERIAL HANDLING MACHINERY AND EQUIPMENT AND H AS THE AUTHORITY TO LICENSE PATENTS, KNOW-HOW AND DESIGNS AND TO TRANSM IT TECHNICAL INFORMATION AND KNOW-HOW RELATING TO THE MANUFACTUR E AND ASSEMBLY OF SAID MACHINERY AND EQUIPMENT. IT CAN BE SEEN THAT PURSUANT TO TTA, THE ASSESSEE-LICENSOR AGREED TO GRANT TO JCB INDIA-LICE NSEE A LICENSE UNDER SUCH PATENTS AND KNOW-HOW FOR THE MANUFACTURE OF TH E LICENSED PRODUCTS IN INDIA. RELEVANT PARTS OF CLAUSE-II OF TTA PROVI DING FOR THE GRANT OF LICENSE AND ITS CONSIDERATION READS AS UNDER: ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 16 CLAUSE II GRANT OF LICENSE AND CONSIDERATION 2.1 THE LICENSOR HEREBY GRANTS TO THE LICENSEE DURING THE TERM OF THIS AGREEMENT AN EXCLUSIVE NON-TRANSFERABLE LICENSE IN THE TERRITORY UNDER THE IP RIGHTS TO MANUFACTURE, ASSEMBLE, USE AND SELL LICENSED PRODUCTS AND FOR THAT PURPOSE TO USE THE KNOW-HOW, THE INVENTIONS COVERED BY THE PATENT RIGHTS, THE IMPROVEMENTS OF L ICENSOR COMMUNICATED TO LICENSEE AND ANY CONFIDENTIAL INFOR MATION OF LICENSOR COMMUNICATED TO LICENSEE (COLLECTIVELY THE IP RIGHTS) . LICENSOR HEREBY ALSO GRANTS TO THE LICENSEE DURING THE TERM OF THIS AGREEMENT A NON-EXCLUSIVE AND NON-TRANSFERABLE LICE NSE UNDER THE IP RIGHT TO USE AND SELL THE LICENSED PRODUCTS TO ANY COUNTRY OR TERRITORY OUTSIDE THE TERRITORY AS DETERMINED BY MUTUAL WRITT EN AGREEMENT OF THE PARTIES. THE RIGHTS GRANTED TO THE LICENSEE HER EUNDER TO MANUFACTURE, ASSEMBLE, USE AND SELL LICENSED PRODUC TS MAY ONLY BE EXERCISED STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. 2.2 IN CONSIDERATION FOR THE ABOVE , THE LICENSEE SHALL PAY TO THE LICENSOR A LUMP SUM LICENSE/KNOW-HOW FEES AND ROYALTY AS FOLLOWS:- A. LICENSE/KNOW-HOW FEES OF US $ 1,995,000 PAYABLE AS FOLLOWS: (I) US $ 665,000 (1/3) WITHIN 30 DAYS OF THE EFFECT IVE DATE AS DETERMINED UNDER CLAUSE XI. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 17 (II) US $ 665,000 (1/3) UPON DELIVERY OF THE KNOW-H OW TO LICENSEES DESIGNATED REPRESENTATIVE. (III) BALANCE OF US $ 665,000 (1/3) ON COMMENCEMENT OF COMMERCIAL PRODUCTION OR 4 (FOUR) YEARS FROM THE EFFECTIVE DAT E AS DETERMINED UNDER CLAUSE XI, WHICHEVER IS EARLIER. . B. ROYALTY (NET OF TAXES) AT THE RATE OF 5% (FIVE PER CENT) ON THE NET EX-FACTORY SALE PRICE (EX-FACTORY) SALE PRICE (LESS EXCISE DUTY) LESS COST OF STANDARD BOUGHT OUT COMPONENTS, LANDED COST OF IMPORTED COMPONENTS AND OCEAN FREIGHT INSURANCE CUSTOMS DUTY ETC ON IMPORTED COMPONENTS) OF THE LICENSED PRODUCTS FOR D OMESTIC SALES AND 8% (EIGHT PER CENT) FOR EXPORTS TO SUCH COUNTRI ES AS THE PARTIES AGREE IN WRITING FROM TIME TO TIME. 2.3 . 6.11.3. IT CAN BE NOTICED FROM PARA 2.1 OF THE A BOVE CLAUSE THAT THE ASSESSEE (LICENSOR) GRANTED TO JCB INDIA (LICENSEE) A LICENSE TO MANUFACTURE, ASSEMBLE, USE AND SELL LICENSED PRODUC TS AND FOR THAT PURPOSE PERMITTED IT TO USE ITS KNOW-HOW, THE INVE NTIONS AND ANY CONFIDENTIAL INFORMATION (COLLECTIVELY CALLED THE IP RIGHTS). IN CONSIDERATION OF THE USE OF SUCH IP RIGHTS, JCB IND IA UNDERTOOK TO PAY CONSIDERATION BY WAY OF TWO COMPONENTS, VIZ., LICEN SE/KNOW-HOW FEES AND ROYALTY. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 18 6.11.4. RELEVANT PART OF CLAUSE-III OF TTA, W HICH IS QUITE SIGNIFICANT FOR OUR PURPOSE, IS AS UNDER: CLAUSE III KNOW-HOW, ASSISTANCE AND INFORMATION 3.1 THE LICENSOR AGREES WITHIN A REASONABLE PERIOD AFTER RECEIVING THE LICENSEES WRITTEN REQUEST THEREFOR TO DELIVER SUCH TECHNICAL DOCUMENTS CONTAINING THE IP RIGHTS , RELATING TO THE LICENSED PRODUCTS AS ARE IN USE BY THE LICENSOR IN UK AS AT THE DATE OF THIS AGREEMENT AND DURING ITS TERM TO ENABLE AND ASSIST THE LICENS EE IN ESTABLISHING THE MANUFACTURE OF THE LICENSED PRODUC TS IN THE TERRITORY UNDER LICENSE AND TO ENABLE THE LICENSED PRODUCTS TO BE MANUFACTURED TO THE STANDARD OF QUALITY AND INCORPO RATING SUCH SPECIFICATION AND FEATURES AS ARE DIRECTED BY THE L ICENSOR, GIVEN REASONABLE ENGINEERING SKILLS ON THE PART OF THE LI CENSEE. 6.11.5. A CURSORY LOOK AT THE CAPTION AND CONTE NTS OF THE ABOVE CLAUSE MAKES IT PALPABLE THAT THE ASSESSEE NOT ONLY UNDERT OOK TO SUPPLY KNOW- HOW TO JCB INDIA , BUT ALSO `ASSISTANCE BY MEANS OF ` ENGINEERING SKILLS TO ENABLE IT TO MANUFACTURE THE LICENSED PRODUCTS T O THE STANDARD OF QUALITY BY INCORPORATING SUCH SPECIFICATION AND FEATURES. 6.11.6. RELEVANT PARTS OF CLAUSE-IV OF TTA, DEAL ING WITH THE PROVISION OF TECHNICAL PERSONNEL, IS REPRODUCED AS UNDER: - ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 19 CLAUSE IV TECHNICAL PERSONNEL 4.1 THE LICENSOR MAY, FROM TIME TO TIME AT THE LICENSEES REQUEST AND EXPENSE , MAKE AVAILABLE SPECIALISTS OR ENGINEERS , SUBJECT TO THEIR AVAILABILITY HAVING REGARD TO THEIR COMMITMENTS IN THE LICENSOR S MANUFACTURING AND OTHER OPERATIONS , AS TEMPORARY TECHNICAL CONSULTANTS , TO ASSIST THE LICENSEES PERSONNEL TO STUDY, ANALYSE AND ADVISE ON THE PROBLEMS IN THE LICENSEES PLANT IN T HE TERRITORY IN RELATION TO THE MANUFACTURE OR ASSEMBLY OF LICENSED PRODUCTS HEREUNDER. IN ADDITION TO THE SERVICES BY THE LICENSORS TEMPORARY TECHNICAL CONSULTANTS, THE LICENSOR SHALL, IF REQUIRED SUBJECT TO THEIR AVAILABILITY, AT THE REQUEST AND COST OF THE LICENS EE DURING THE TERM OF THIS AGREEMENT, MAKE AVAILABLE TO THE LICENSEE QUALIFIED AND COMPETENT PERSONS AS RESIDENT TECHNICAL CONSULTANTS TO ADVISE THE LICENSEE IN REGARD TO THE DESIGNING, QUALITY CONTROL AND MA NUFACTURE OF THE LICENSED PRODUCTS TO CONVEY TECHNICAL INFORMATION AND TO TRAIN THE LICENSEES EMPLOYEES IN THE LICENSEES PLANT IN THE TERRITORY. THE LICENSOR WILL AT THE REQUEST OF THE LICENSEE, T RAIN AT ROCESTER REPRESENTATIVES OF THE LICENSEE FOR THE MANUFACTURI NG, MARKETING, SALES, SERVICE AND RESEARCH WITH RESPECT TO THE LIC ENSED PRODUCTS SUBJECT TO THE APPROPRIATE INDIAN GOVERNMENT REGULA TIONS. 4.2 THE LICENSEE SHALL BE LIABLE TO PAY BOARDING AND LODGIN G CHARGES, TRAVELING EXPENSES AND DAILY ALLOWANCES TO ANY TECHNICAL ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 20 CONSULTANTS OF THE LICENSOR AND IN RESPECT OF ANY OF ITS REPRESENTATIVES VISITING UK FOR TRAINING OR OTHERWI SE, TOGETHER WITH LICENSORS CHARGES FOR ALL TRAINING, DRAWING FACILI TY, CONSULTANCY AND OTHER SERVICES FROM TIME TO TIME SUPPLIED TO THE LI CENSEE UNDER THIS AGREEMENT IN UK OR THE TERRITORY AT ITS STANDARD RA TES THEN CURRENTLY PREVAILING, ALL SUCH CHARGES AND EXPENSES TO BE PAI D BY THE LICENSEE IN POUNDS STERLING WITHIN 30 DAYS OF THE DATE OF TH E LICENSORS INVOICES THEREFORE. THE LICENSORS STANDARD CHARGES CURRENT AT THE DATE HEREOF ARE SET OUT IN ANNEXURE 2. 4.3 ALL TAXES, DUTIES, DUES AND FEES IN CONNECTION WITH THE SAID EXPENSES DUE TO AUTHORITIES IN INDIA SHALL BE BORNE AND PAID BY THE LICENSEE. 4.4 ANY DEPUTATION UNDER SUB-CLAUSE 4.1 ABOVE SHALL BE SUBJECT TO FINALIZATION OF DETAILS OF THE NUMBER OF PERSONNEL, TIME AND DURATION OF DEPUTATION , THE PAYMENT OF THE COSTS AND EXPENSES AND OTHER T ERMS AND CONDITIONS RELATING TO SUCH DEPUTATION AND SUBJ ECT TO NECESSARY APPROVALS OF INDIAN GOVERNMENT AUTHORITIES. 4.5 REPRESENTATIVES AND PERSONNEL OF THE LICENSOR AND THE LICENSEE DURING THE TIME THEY ARE PRESENT ON THE PREMISES OF THE OTHER PARTY SHALL BE SUBJECT TO ALL RULES AND REGULATIONS PREVA ILING ON SUCH PREMISES, BUT SHALL NOT BE CONSIDERED AS EMPLOYEES OF THE OTHER ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 21 PARTY . SUBJECT TO THE PROVISIONS OF THIS AGREEMENT THE L ICENSOR AND THE LICENSEE SHALL EACH BE RESPONSIBLE FOR THE PAYM ENT OF ALL SALARY COMPENSATION AND EXPENSES OF THEIR RESPECTIVE PERSO NNEL. 6.11.7. ON GOING THROUGH THE HEADING ` TECHNICAL PERSONNEL AND CONTENTS OF PARA 4.1 OF CLAUSE-IV, IT CAN BE SEEN THAT THE ASSESSEE `HAVING REGARD TO THEIR COMMITMENTS WAS OBLIGED TO `MAKE AVAILABLE SPECIALISTS OR ENGINEERS TO ASSIST JCB INDIAS PERSONNEL TO STUDY, ANALYSE AND ADVISE ON THE PROBLEMS IN THE LICENSEE S PLANT IN RELATION TO THE MANUFACTURE OR ASSEMBLY OF LICENSED PRODUCTS ; AND ` TO TRAIN THE LICENSEES EMPLOYEES IN THE LICENSEES PLANT ; AND ALSO ` TO CONVEY TECHNICAL INFORMATION . SUCH SPECIALISTS OR ENGINEERS HAVE BEEN DESCRIBED AS TEMPORARY TECHNICAL CONSULTANTS AND R ESIDENT TECHNICAL CONSULTANTS IN TTA. THESE PERSONNEL WERE TO BE DEPU TED AT THE LICENSEES REQUEST AND EXPENSE AND THE FURTHER CONDITION IS THAT SUCH DEPUTATION WAS TO BE MADE ` SUBJECT TO THEIR AVAILABILITY WITH THE ASSESSEE. JCB INDIA WAS BOUND TO PAY FOR SUCH PERSO NNEL AT THE STANDARD RATES FIXED BY THE ASSESSEE AS SET OUT IN ANNEXURE 2 IN POUNDS STERLING WITHIN 30 DAYS OF THE DATE OF THE ASSESSEES INVOIC ES THEREOF. SUCH DEPUTATION UNDER SUB-CLAUSE 4.1 WAS SUBJECT TO FINALIZATION OF DETAILS OF THE NUMBER OF PERSONNEL, TIME AND DURATION OF DEPUTATIO N , THE PAYMENT OF THE COSTS AND EXPENSES AND OTHER TERMS AND CONDI TIONS RELATING TO SUCH DEPUTATION. THE TERMS OF PAYMENT OF BOARDING AND LODGING CHARGES, TRAVELING EXPENSES AND DAILY ALLOWANCES TO SUCH TE CHNICAL CONSULTANTS ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 22 OF THE LICENSOR TOGETHER WITH LICENSORS CHARGES FOR ALL TRAINING, DRAWING FACILITY, CONSULTANCY AS REFERRED TO IN CLAUSE IV WERE FORMALIZED THROUGH IPAA WHICH WAS ENTERED INTO ON 5.12.2005 W ITH RETROSPECTIVE EFFECT FROM 1.1.2004, BEING THE DATE EVEN PRIOR TO THAT OF TTA. IT IS MANIFEST FROM PARA 4.1 OF CLAUSE IV OF TTA THAT THE SERVICES TO BE PROVIDED BY THE ASSESSEE ARE IN `MANUFACTURING AND OTHER OPERATIONS. PARA 4.4 TALKS OF `DEPUTATION UNDER SUB-CLAUSE 4.1 AND PROVIDES THAT THE TERMS OF DEPUTATION SHALL BE SUBJECT TO FINALIZATI ON OF DETAILS OF THE NUMBER OF PERSONNEL ETC. IPAA FINALIZES THE TERMS OF DEPUTATION OF SUCH EMPLOYEES SENT BY THE ASSESSEE TO JCB INDIA ON SECO NDMENT BASIS. IT PROVIDES THAT JCB INDIA DESIRES TO UTILIZE THE SERVICES OF VARIOUS JCB UK PERSONNEL ON SECONDMENT BASIS FOR THE PROPER FUNCTIONING OF THEIR OPERATIONS IN INDIA. THE ASSESSEE AGREED UNDER THIS AGREEMENT TO PROVIDE THE PERSONNEL SO DESIRED AT JCB INDIAS EXP ENSE. PARA 2 OF IPAA WHICH IS VERY SIGNIFICANT READS AS UNDER: - PERSONNEL ASSIGNMENT. THE PERSONNEL SHALL ACT UNDE R THE DIRECTION OF COMPANY DURING THE TERM OF THEIR ASSIG NMENT. UNLESS OTHERWISE PROVIDED IN THE AGREEMENT, COMPANY SHALL BE FULL LIABLE FOR, AND SHALL INDEMNIFY AND HOLD JCB UK HARMLESS F ROM AND AGAINST, ANY AND ALL CLAIMS, LIABILITIES, COSTS, AN D EXPENSES RESULTING FROM, OR ARISING OUT OF, THE ACTIONS OF THE PERSONN EL WHILE UNDER THE DIRECTION OF COMPANY. APPROPRIATE WORK PERMITS OR O THER ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 23 DOCUMENTS AS REQUIRED IN INDIA SHALL BE SECURED FOR THE PERSONNEL BY COMPANY IN THE NAME EXPATRIATE AS APPLICABLE UNDER INDIAN LAW. 6.11.8. IT CAN BE SEEN FROM THE ABOVE CLAUSE OF IPAA THAT THE PERSONNEL TO BE PROVIDED BY THE ASSESSEE TO JCB IND IA WERE TO ACT UNDER THE DIRECTION OF JCB INDIA. THE ASSESSEE COMPANY WA S TO BE INDEMNIFIED BY JCB INDIA FOR ANY AND ALL CLAIMS, LIABILITIES, C OSTS AND EXPENSES RESULTING FROM OR ARISING OUT OF ACTIONS OF THESE P ERSONNEL WHILE UNDER THEIR DIRECTION. PARA 3 OF IPAA PROVIDES THAT JCB I NDIA SHALL PAY COMPENSATION TO THE ASSESSEE FOR PROVIDING THESE P ERSONNEL. 6.11.9. WHEN WE CONSIDER IPAA IN JUXTAPOSITION TO TTA, IT BECOMES MANIFEST THAT IPAA IS NOT AN INDEPENDENT AGREEMENT IN ITSELF BUT SIMPLY FORMALIZES THE TERMS FOR THE SUPPLY OF PERSONNEL BY THE ASSESSEE TO JCB INDIA AS PER TTA. IN FACT, IPAA IS NOTHING BUT ELA BORATION OF THE TERMS FOR THE PROVISION OF SUCH PERSONNEL BY THE ASSESS EE TO JCB INDIA AND IS IN THE NATURE OF AN ADDENDUM TO TTA. THE VIEW CANVA SSED BY THE LD. CIT(A) THAT BOTH THESE AGREEMENTS ARE `MATERIALLY D IFFERENT HAVING SEPARATE PURPOSES IS CLEARLY UNSUSTAINABLE. 6.11.10. IT HAS BEEN PROVIDED IN IPAA THAT JCB INDIA DESIRED TO UTILIZE THE SERVICES OF THE ASSESSEES EMPLOYEES O N `SECONDMENT BASIS . THE TERM SECONDMENT IN COMMON PARLANCE MEANS THAT T HE EMPLOYEE REMAINS AN EMPLOYEE OF HIS EXISTING EMPLOYER BUT BY VIRTUE OF SOME ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 24 AGREEMENT BETWEEN THE EMPLOYER AND THE THIRD PERSON , THE EMPLOYEE HAS TO PERFORM THE DUTIES FOR THE BENEFIT OF SUCH THIRD PERSON. AT NO TIME THE EMPLOYEE BECOMES EMPLOYEE OF THE HOST COMPANY, THA T IS, THE THIRD PERSON. ALBEIT THE ASSESSEE HAS PLACED ON RECORD C OPIES OF EMPLOYMENT CONTRACTS OF THE PERSONS WHO WERE SENT ON DEPUTATI ON TO JCB INDIA, BUT SUCH EMPLOYMENT CONTRACTS ARE FOR THEIR ORIGINAL EM PLOYMENT WITH THE ASSESSEE. NO COPY OF THE TERMS AND CONDITIONS OF SU CH EMPLOYEES ON SECONDMENT BASIS HAS BEEN PLACED ON RECORD. HOWEVE R, A COPY OF JCB INTERNATIONAL ASSIGNMENT POLICY UK HAS BEEN PLACED ON PAGES 62 TO 88 OF ANOTHER PAPER BOOK. CLAUSE 1.5 OF THIS INTERNATI ONAL ASSIGNMENT POLICY PROVIDES THAT : `ONCE AN EXPATRIATE HAS COM PLETED THREE YEARS UNDER THE TERMS OF AN EXPATRIATE POSTING PACKAGE, O RDINARILY THEY WILL BE TRANSFERRED TO LOCAL TERMS AND CONDITIONS, REPATRIA TED TO THEIR HOME COUNTRY (JCB UK). TERMINATION OF EXPATRIATES HAS B EEN DEALT WITH IN CLAUSE 6 OF INTERNATIONAL ASSIGNMENT POLICY. CLAUS E 6.1 PROVIDES THAT : `DURING THE EXPATRIATE POSTING GRIEVANCES AND APPEA LS RELATING TO LOCAL CONDITIONS OR LOCAL DISCIPLINARY MATTERS SHOULD BE REFERRED IN THE FIRST INSTANCE TO INTERNATIONAL HOME RESOURCES MANAGER AN D/OR THE GROUP HR DIRECTOR. CLAUSE 6.2 PROVIDES THAT : UPON COMPLET ION OF AN EXPATRIATE POSTING, EXPATRIATES, THEIR ACCOMPANYING FAMILY, TH EIR PERSONAL EFFECTS AND HOUSEHOLD GOODS WILL BE REPATRIATED. THE HOME C OMPANY (WHICH IS THE ASSESSEE IN THE PRESENT CASE) WILL USE ITS BEST ENDEAVORS TO FIND A POSITION IN THE HOME COUNTRY (WHICH IS UK IN THE PR ESENT CASE), TO A LEVEL ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 25 NO LESS FAVORABLE TO THAT WHICH THE EXPATRIATE LEFT TO TAKE UP THE EXPATRIATE POSTING. NEXT PARA OF CLAUSE 6.2 FURTH ER PROVIDES THAT THE RETURNING EXPATRIATE WILL BE REEMPLOYED BY THE HOME COMPANY (THAT IS, THE ASSESSEE IN THE PRESENT CASE). THE ABOVE PROVIS IONS OF THE INTERNATIONAL ASSIGNMENT POLICY MAKE IT MANIFEST TH AT ON THE TERMINATION OF THE EXPATRIATE POSTING, THE PERSONNEL WILL HAVE TO REPORT BACK TO THE PARENT COMPANY WHICH WILL REEMPLOY HIM. FURTHER, I F DURING SUCH DEPUTATION CERTAIN DISCIPLINARY MATTERS ARISE, THOS E WILL BE LOOKED INTO BY THE GROUP DIRECTOR AND NOT INDIVIDUAL COMPANY TO WH ICH SUCH PERSONNEL HAS BEEN DEPUTED (JCB INDIA). EXCEPT FOR THE ARRAN GEMENT BETWEEN THE ASSESSEE AND JCB INDIA FOR SUPPLY OF SUCH PERSONNEL ON DEPUTATION TO FULFIL THE COMMITMENTS IN MANUFACTURING AND OTHER O PERATIONS AS PER TTA, OUR ATTENTION HAS NOT BEEN DRAWN TOWARDS ANY A PPOINTMENT LETTERS HAVING BEEN ISSUED BY JCB INDIA ON THE ARRIVAL OF S UCH EXPATRIATES FROM THE ASSESSEE ON DEPUTATION. AS CAN BE SEEN FROM THE TERMS OF TTA READ IN CONJUNCTION WITH IPAA THAT IT LIES IN THE COMPL ETE DOMAIN OF THE ASSESSEE TO CONSIDER THE REQUEST OF JCB INDIA AND S END SUCH NUMBER OF ITS PERSONNEL ON ASSIGNMENT BASIS SUBJECT TO THEIR AVAILABILITY. CONTENTS OF CLAUSE 4.5 OF TTA ARE PRETTY VITAL FOR LEAVING N OTHING TO DOUBT THAT SUCH PERSONNEL CONTINUED TO BE THE EMPLOYEES OF THE ASSESSEE COMPANY DURING THE TERM OF SERVING JCB INDIA ON DEPUTATION. IT HAS BEEN UNEQUIVOCALLY PROVIDED IN THIS PARA THAT THE : PERSONNEL OF THE LICENSOR AND THE LICENSEE DURING THE TIME THEY ARE PRESENT ON THE PREMISES OF THE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 26 OTHER PARTY SHALL BE SUBJECT TO ALL RULES AND REGULATIONS PREV AILING ON SUCH PREMISES, BUT SHALL NOT BE CONSIDERED AS EMPLOYEES OF THE OTHER PARTY . SUBJECT TO THE PROVISIONS OF THIS AGREEMENT THE L ICENSOR AND THE LICENSEE SHALL EACH BE RESPONSIBLE FOR THE PAYMENT OF ALL SALARY COMPENSATION AND EXPENSES OF THEIR RESPECTIVE PERSO NNEL. THIS CLAUSE FURTHER MAKES IT ABUNDANTLY CLEAR THAT THAT THESE E IGHT PERSONS, WHO WERE SENT ON DEPUTATION TO JCB INDIA ON SECONDMENT BASIS , CONTINUED TO REMAIN ON THE PAYROLL OF THE ASSESSEE COMPANY AND M AINTAINED THEIR LIEN ACCORDINGLY. SALARY OF SUCH PERSONNEL WAS THE SOLE RESPONSIBILITY OF THE ASSESSEE ALONE, WHICH WAS ADMITTEDLY PAID BY THE AS SESSEE. THE FACT THAT THE ASSESSEE RECOVERED COSTS OF SUCH EMPLOYEES FROM JCB INDIA AS PER THE TERMS OF TTA READ WITH IPAA DOES NOT PROVE ANYT HING BEYOND THIS THAT BOTH THE PARTIES AGREED FOR CONSIDERATION FOR THE SUPPLY OF SUCH PERSONNEL IN THE MANNER AS STATED IN ANNEXURE 2 OF TTA READ WITH IPAA. WE HAVE NOTICED ABOVE THAT THERE ARE TWO CATE GORIES OF EMPLOYEES OF THE ASSESSEE VISITING JCB INDIA, VIZ., FIRST ARE THE EIGHT PERSONS WHO WERE ASSIGNED ON DEPUTATION BASIS, WHIC H ARE PRESENTLY CONSIDERED AND SECOND ARE THOSE WHO OCCASIONALLY VI SITED JCB INDIA FOR RENDERING SERVICES IN THE NATURE OF PREPARATORY OR AUXILIARY CHARACTER. WHEREAS THERE IS NO SEPARATE CONSIDERATION FIXED IN THE AGREEMENTS FOR THE EMPLOYEES OF THE SECOND CATEGORY, WHICH IMPLIES THAT THE QUID PRO QUO FOR SUCH SERVICES WAS INCLUDED IN THE CONSIDERATION FOR THE IP RIGHTS, THE CONSIDERATION FOR THE EMPLOYEES OF THE FIRST CA TEGORY HAS BEEN ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 27 SEPARATELY SETTLED AS PER ANNEXURE-2 READ WITH IPAA , WHICH IS IN ADDITION TO THE CONSIDERATION FOR THE IP RIGHTS. TH ERE CAN BE NO DOUBT THAT CONSIDERATION CAN BE AGREED IN ANY FORM. IT CA N BE A LUMP SUM CONSIDERATION OR VARIABLE DEPENDING UPON THE NUMBER OF MAN-HOURS OR MAN-DAYS DEVOTED FOR SUCH PURPOSE OR THERE MAY BE S TILL ANY OTHER MUTUALLY AGREED BASIS BETWEEN THE PARTIES. INSOFAR AS THE PRESENT CASE IS CONCERNED, JCB INDIA AGREED TO COMPENSATE THE ASSES SEE FOR SUCH SERVICES BY THE EMPLOYEES OF THE FIRST CATEGORY IN TERMS OF ANNEXURE-2 COUPLED WITH THE TERMS SET OUT IN IPAA. IT IS QUIT E NATURAL THAT WHEN THEY WERE DEPUTED TO JCB INDIA FOR A GIVEN CONSIDER ATION, THEY WERE BOUND TO WORK UNDER THE DIRECTIONS OF JCB INDIA AND COULD NOT HAVE WORKED FOR THE BENEFIT OF THE ASSESSEE COMPANY. T HERE IS ABSOLUTELY NO MATERIAL TO INDICATE THAT THE ASSESSEE TERMINATED T HEIR SERVICES AND THEY WERE EMPLOYED BY JCB INDIA. THE CRUX OF THE RELEVAN T CLAUSES OF THE AGREEMENTS IS THAT THE ASSESSEE AGREED TO TRANSFER IP RIGHTS TO JCB INDIA AND IN FULFILMENT OF ITS OBLIGATIONS UNDER THESE AG REEMENTS, IT UNDERTOOK TO SUPPLY ITS TECHNICAL PERSONNEL. JCB INDIA, PURSU ANT TO SUCH AGREEMENTS AND AS A MATTER OF ITS RIGHT, DESIRED T O UTILIZE THE SERVICES OF VARIOUS JCB UK PERSONNEL ON A SECONDMENT BASIS . SUCH TECHNICAL AND OTHER PERSONNEL OF THE ASSESSEE WERE TO BE PROVIDED TO JCB INDIA ON THE REQUEST OF THE LATTER. SUCH PERSONNEL WERE SENT ON DEPUTATION TO JCB INDIA AND SUCH PERSONNEL OF THE ASSESSEE DURING THE TIME THEY WERE TO BE PRESENT ON THE PREMISES OF THE INDIAN ENTERPRISE, W ERE NOT BE CONSIDERED ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 28 AS EMPLOYEES OF THE OTHER PARTY (JCB INDIA LICENSEE). THE ABOVE NARRATION OF FACTS INDICATES THAT THESE EIGHT PERSO NS CONTINUED TO REMAIN AS THE EMPLOYEES OF THE ASSESSEE DESPITE THEIR DEPU TATION TO JCB INDIA. 6.11.11. THE LANGUAGE USED BY THE LD. CIT(A) IN PARA 4.2 OF THE IMPUGNED ORDER SEEMS TO SUGGEST THAT JCB INDIA WAS FULLY EQUIPPED TO MANUFACTURE SUCH BACKHOE EXCAVATORS AND ITS AGREEME NT WITH THE ASSESSEE WAS FOR SOME MINOR UPGRADATION. ON A SPECI FIC QUERY, IT WAS FAIRLY CONCEDED ON BEHALF OF THE ASSESSEE THAT THE TECHNOLOGY HITHERTO USED BY JCB INDIA BEFORE ENTERING INTO TTA WITH THE ASSESSEE WAS COMPLETELY DISPENSED WITH AND THE NEW TECHNOLOGY PR OVIDED BY THE ASSESSEE WAS THEREAFTER USED. IT WAS FURTHER ADMITT ED THAT THE PRODUCTION OF EARLIER MODELS OF EXCAVATORS WAS STOPPED BY JCB INDIA AND NEW MODEL OF BACKHOE EXCAVATOR, PURSUANT TO THE SUPPLY OF TECHNOLOGY AND PERSONNEL BY THE ASSESSEE UNDER TTA AND IPAA, WAS I NTRODUCED. 6.11.12. THE LD. CIT(A) APPEARS TO HAVE BEEN S WAYED BY THE VISITING CARDS AND FORM NOS. 16 OF SUCH EMPLOYEES FOR COMING TO THE CONCLUSION THAT THEY BECAME THE EMPLOYEES OF JCB INDIA. FORM N O. 16 WAS TO NECESSARILY SHOW THESE PERSONS AS EMPLOYEES OF JCB INDIA SINCE THE INDIAN ENTERPRISE NOT ONLY UNDERTOOK TO PAY THEM SA LARIES AND OTHER ALLOWANCES BUT ALSO AGREED TO BEAR THEIR INCOME-TAX BURDEN. VISITING CARDS DO NOT ADVANCE THE CASE OF THE ASSESSEE ANY F URTHER. WE ARE REMINDED OF THE WELL SETTLED POSITION THAT IT IS TH E SUBSTANCE OF A ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 29 TRANSACTION WHICH IS RELEVANT AND NOT UNNECESSARY A ND INSIGNIFICANT CONSIDERATIONS. WHEN WE VIEW THE FACTS IN ENTIRETY , THERE REMAINS ABSOLUTELY NO DOUBT THAT THESE EIGHT PERSONNEL DEPU TED FROM JCB UK TO JCB INDIA ON ASSIGNMENT BASIS REMAINED EMPLOYEES OF THE ASSESSEE AND NEVER BECAME THE EMPLOYEES OF JCB INDIA. 6.11.13. THE LD. CIT(A) HAS HEAVILY BANKED ON THE O RDER PASSED BY MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DDIT VS TEKMARK GLOBAL SOLUTIONS LLC (2010) 131 TTJ 173 (MUM) FOR COMING TO THE CONCLUSION THAT THE DEPUTED PERSONS OUGHT NOT TO HAVE BEEN CON SIDERED AS CONSTITUTING THE PERMANENT ESTABLISHMENT OF THE ASS ESSEE IN INDIA. IT WOULD BE APPOSITE TO CONSIDER THE FACTS AND CIRCUMS TANCES OF THAT CASE. THAT ASSESSEE, AN AMERICAN COMPANY HAD AN ARRANGEME NT WITH THE LUCENT INDIA, AN INDIAN COMPANY TO DEPUTE CERTAIN P ERSONNEL PURELY ON A HIRE-OUT BASIS. SUCH PERSONNEL WERE TO WORK UNDER T HE SUPERVISION AND CONTROL OF LUCENT INDIA. THE ASSESSING OFFICER HELD THAT LUCENT INDIA CONSTITUTED PERMANENT ESTABLISHMENT OF TEKMARK GLOB AL AS PER ARTICLE 5(2)(1) OF THE RELEVANT DTAA BECAUSE OF SUCH DEPUTA TION OF EMPLOYEES. THE TRIBUNAL HAS DISCUSSED THIS ISSUE IN PARA 8 OF ITS ORDER IN WHICH IT WAS NOTICED THAT THE AMERICAN COMPANY PROVIDED ASSI STANCE IN SELECTING AND OFFERING PERSONNEL TO WORK UNDER CONTROL AND SUPERVISION OF LUCENT INDIA. SUCH PERSONNEL WERE TO WORK UNDER THE CONTROL AND SUPERVISION OF LUCENT INDIA AND FURTHER IT WAS `NOT A PART OF ANY TECHNICAL SERVICES TO BE RENDERED BY THE ASSESSEE T O THE INDIAN ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 30 COMPANY . IT WAS ALSO NOTICED BY THE BENCH THAT INDIAN COMPANY HAS A RIGHT TO REMOVE THE DEPUTED PERSON FROM THE SERVI CES. IT WAS UNDER SUCH CIRCUMSTANCES THAT THE TRIBUNAL CAME TO HOLD T HAT THE DEPUTED PERSONNEL COULD NOT BE CONSIDERED AS CONSTITUTING A P.E OF THE ASSESSEE IN INDIA. WHEN WE TURN TO THE FACTS OF THE INSTANT CAS E, WE FIND THAT THE SAME ARE WHOLLY DISTINGUISHABLE. FIRSTLY, IN THAT C ASE THE PERSONNEL WERE SIMPLY SELECTED AND OFFERED TO WORK UNDER THE CONTR OL AND SUPERVISION OF THE ASSESSEE IN INDIA WHICH WAS NOT A PART OF ANY T ECHNICAL SERVICES TO BE RENDERED BY THE ASSESSEE TO THE INDIAN COMPANY. WHE N WE LOOK AT THE FACTS OF OUR CASE, IT IS EVIDENT THAT TTA PROVIDE S NOT ONLY FOR THE SUPPLY OF IP RIGHTS BY THE ASSESSEE TO JCB INDIA BUT ALSO TO DEPUTE ITS PERSONNEL FOR RENDERING SERVICES IN CONNECTION WITH SUCH IP R IGHTS. THE ASSIGNMENT OF PERSONNEL BY THE ASSESSEE IS NOT INDE PENDENT OF TTA. FURTHER, THE ASSESSEE WAS NOT TO APPOINT AND SELECT SOME PERSONNEL FOR SENDING TO JCB INDIA, BUT WAS TO DEPUTE ITS TECHNIC AL PERSONNEL ON ASSIGNMENT BASIS. SINCE THE SUPPLY OF PERSONNEL ON ASSIGNMENT BASIS IS A PART AND PARCEL OF THE OVERALL TTA READ WITH IPAA A ND NOT DE HORS THAT, WE FAIL TO APPRECIATE AS TO HOW THE DECISION RENDER ED IN THE CASE OF TEKMARK GLOBAL (SUPRA) CAN BE APPLIED WHICH WAS A CASE CONFINED TO MERELY SELECTING AND OFFERING SUCH PERSONNEL TO WORK IN INDIA. WE, THEREFORE, HOLD THAT THE CASE OF TEKMARK GLOBAL (SUPRA) DOES NOT ADVANCE THE CASE OF THE ASSESSEE. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 31 6.11.14. AT THIS STAGE IT IS RELEVANT TO CONSIDER THE JUDGMENT OF THE HONBLE SUPREME COURT IN MORGAN STANLEY (SUPRA) WHICH HAS BEEN RELIED BY THE ASSESSING OFFICER TO BRING HOME THE P OINT THAT SUCH PERSONNEL ON DEPUTATION REMAINED THE EMPLOYEES OF THE ASSESSEE COMPANY AND HENCE CONSTITUTED A SERVICE P.E. IN TH AT CASE ALSO TWO ACTIVITIES WERE TO BE CARRIED OUT, NAMELY, STEWARD SHIP ACTIVITIES AND THE WORK TO BE PERFORMED BY DEPUTATIONISTS OF MORGAN S TANLEY AND COMPANY (MSCO) INDIA AS EMPLOYEES OF MORGAN STANLEY ADVANTAGES SERVICES LTD. (MSAS). WE HAVE NOTICED ABOVE THAT AS REGARDS THE STEWARDSHIP ACTIVITIES, THE HONBLE SUPREME COURT H AS HELD THAT IT DID NOT CONSTITUTE PE. AS REGARDS THE DEPUTATIONISTS, THE HONBLE SUPREME COURT HELD THAT WHEN AN EMPLOYEE OF MSCO IS DEPUTED TO MSAS, HE DOES NOT BECOME THE EMPLOYEE OF MSAS. A DEPUTATIONI ST HAS LIEN ON HIS EMPLOYMENT WITH MSCO. AS LONG AS THE LIEN REMAINS W ITH THE MSCO, THE SAID COMPANY RETAINS CONTROL OVER THE DEPUTATIO NISTS TERMS AND PAYMENT. THE RELEVANT OBSERVATIONS OF THE HONBLE S UPREME COURT IN THIS REGARD HOLDING THAT WHEN MSCO RENDERED SERVICE S THROUGH ITS EMPLOYEES TO MSAS, THEY CONSTITUTED A SERVICE PE (M SAS) IN INDIA, ARE AS UNDER: - `AS REGARDS THE QUESTION OF DEPUTATION, AN EMPLOYEE OF MSCO WHEN DEPUTED TO MSAS DOES NOT BECOME AN EMPLOYEE OF MSAS . A DEPUTATIONIST HAS A LIEN ON HIS EMPLOYMENT WITH M SCO. AS LONG AS THE LIEN REMAINS WITH THE MSCO THE SAID COM PANY ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 32 RETAINS CONTROL OVER THE DEPUTATIONISTS TERMS AND EMPLOYMENT.. APPLYING THE ABOVE TESTS TO THE FACTS OF THIS CASE, IT IS FOUND THAT ON REQUEST/REQUISITION FROM MSAS THE APPLICANT DEPUTES ITS STAFF. THE REQUEST COMES FROM MSAS DEPENDING UPON ITS REQUIREMENT. . ON COMPLETION O F HIS TENURE HE IS REPATRIATED TO HIS PARENT JOB. HE RETA INS HIS LIEN WHEN HE COMES TO INDIA. HE LENDS HIS EXPERIENCE TO MSAS IN INDIA AS AN EMPLOYEE OF MSCO AS HE RETAINS HIS LIEN AND IN THAT SENSE THERE IS A SERVICE PE (MSAS) UNDER ART. 5(2)( L). 6.11.15. A PERUSAL OF THE FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE OF MORGAN STANLEY (SUPRA) VIS--VIS THOSE IN THE PRESENT CASE MAKES IT VISIBLE THAT IN BOTH THE CASES THE EMPLOYEES OF FOREIGN COMPANY WERE DEPUTED TO INDIA IN CONNECTION WITH SOME WORK TO BE DONE FOR THE ENTERPRISE IN INDIA. THE EMPLOYEES WHO WERE SO SENT ON DEPUTATION CONTINUED TO MAINTAIN THEIR LIEN IN FOREIGN COMPANY , THOUGH THEY RENDERED SERVICES IN THE INDIAN COMPANY. THE CONTE NTION THAT SUCH PERSONNEL OF JCB UK BECAME EMPLOYEES OF JCB INDIA I S IN CLEAR CONFLICT WITH THE JUDGMENT OF THE HONBLE SUPREME C OURT IN MORGAN STANLEY (SUPRA). THE RELIANCE OF THE LD. AR ON ANOTHER DECISION IN ABBEY BUSINESS SERVICES (INDIA) (P.) LTD. VS. DCIT IS OF NO HELP IN VIEW OF THE ABOVE DIRECT JUDGMENT OF THE HONBLE SUPREME COURT IN MORGAN STANLEY (SUPRA) ON THE POINT. WE, THEREFORE, HOLD THAT THE PERSON NEL OF ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 33 THE ASSESSEE SENT ON DEPUTATION TO JCB INDIA CONTIN UED TO REMAIN THE EMPLOYEES OF THE ASSESSEE RENDERING SERVICES TO THE INDIAN ENTERPRISE. V. THE ACTIVITIES SHOULD CONTINUE FOR A PERIOD OR P ERIODS AGGREGATING MORE THAN NINETY DAYS WITHIN TWELVE-MONTH PERIOD - 6.12. THERE IS NO QUARREL ON THE DURATION OF STAY OF SUCH PERSONNEL OF THE ASSESSEE WHICH ADMITTEDLY IS MORE THAN NINETY D AYS WITHIN THE TWELVE-MONTHS PERIOD. THIS POSITION WAS DULY ADMITT ED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND SUCH POSITION HAS NOT BEEN DENIED EVEN BEFORE US. 7. IT IS THUS SEEN THAT ALL THE REQUISITE CONDIT IONS FOR ATTRACTING THE MANDATE OF ART.5(2)(K)(I) STAND SATISFIED INASMUCH AS I. THERE IS FURNISHING OF SERVICES INCLUDING MANAGERIAL SERVICE S; II. SUCH SERVICES ARE OTHER THAN THOSE TAXABLE UNDER ARTICLE 13 (ROYALTIE S AND FEES FOR TECHNICAL SERVICES) ; III. SUCH SERVICES ARE RENDER ED WITHIN INDIA ; IV. SUCH SERVICES ARE RENDERED BY THE ASSESSEE THROUGH ITS E MPLOYEES ; AND V. SUCH ACTIVITIES CONTINUED FOR A PERIOD OF MORE THAN NINE TY DAYS WITHIN TWELVE- MONTHS PERIOD. EX CONSEQUENTI , WE HOLD THAT JCB INDIA CONSTITUTED A SERVICE P.E OF THE ASSESSEE IN INDIA. THE IMPUGNED ORDER ON THIS SCORE IS SET ASIDE AND THE VIEW TAKEN BY THE AO IS RESTORED. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 34 B. ROYALTIES/FTS IS TAXABLE U/A. 7 OR 13(2)? 8. HAVING HELD THAT THE ASSESSEE HAD A SERVIC E PE IN INDIA BY VIRTUE OF THE DEPUTATIONISTS IN INDIA IN THE RELEVANT YEAR , NOW THE NEXT THING WHICH REQUIRES DETERMINATION IS WHETHER ROYALTIES/F EES FOR TECHNICAL SERVICES IS TAXABLE UNDER ARTICLE 7 AS HELD BY THE AO OR ARTICLE 13(2) AS CLAIMED BY THE ASSESSEE AND UPHELD IN THE FIRST APP EAL. 9. IN ORDER TO DECIDE AS TO WHETHER THE AMOUNT RECEIVED BY THE ASSESSEE IS TAXABLE UNDER ARTICLE 13(2) OR ARTICLE 7, IT IS FIRST NECESSARY TO PRECISELY DECIDE THE CHARACTER AND NATURE OF WORK D ONE BY THE ASSESSEE FOR JCB INDIA WHICH LED TO THE RECEIPTS. CLAUSE-II OF TTA, AS REPRODUCED ABOVE, MAKES IT EXPLICIT THAT THE ASSESSEE GRANTED IP RIGHTS TO MANUFACTURE, ASSEMBLE, USE AND SELL THE LICENSED PR ODUCTS AND FOR THAT PURPOSE TO USE THE KNOW-HOW AND INVENTIONS COVERED BY THE PATENT RIGHTS AND THE IMPROVEMENTS THERETO. CLAUSE-III PROVIDES T HAT THE ASSESSEE AGREED TO DELIVER TECHNICAL DOCUMENTS CONTAINING TH E IP RIGHTS AND GIVE REASONABLE ENGINEERING SKILLS TO ENABLE THE LICENSE D PRODUCTS TO BE MANUFACTURED AS PER THE STANDARD QUALITY. CLAUSE-IV OF TTA MAKES IT ABUNDANTLY CLEAR THAT THE ASSESSEE UNDERTOOK TO ASS IST JCB INDIAS PERSONNEL IN RELATION TO MANUFACTURE OR ASSEMBLY OF THE LICENSED PRODUCTS THROUGH ITS OWN TEMPORARY AND RESIDENT TEC HNICAL CONSULTANTS FOR A SEPARATE CONSIDERATION. APART FROM THAT, IT H AS BEEN NOTICED ABOVE THAT CLAUSE-VI OF TTA ENTITLES THE ASSESSEE TO DO RANDOM TESTING AND INSPECTION OF LICENSED PRODUCTS AND JCB INDIAS PLA NT TO ASCERTAIN IF THE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 35 LICENSED PRODUCTS WERE MANUFACTURED AS PER THE QUAL ITY STANDARD. AN OVERVIEW OF THE ABOVE CLAUSES BRINGS OUT THAT THE A SSESSEE NOT ONLY PROVIDED IP RIGHTS FOR MANUFACTURE AND ASSEMBLY OF THE LICENSED PRODUCTS BUT ALSO UNDERTOOK TO ASSIST JCB INDIA IN ESTABLISHING THE MANUFACTURE OF THE LICENSED PRODUCTS THROUGH THE AS SIGNMENT OF EMPLOYEES FROM THE ASSESSEE AND ALSO DID ACTIVITIES IN THE NATURE OF STEWARDSHIP AND INSPECTION AND TESTING. THE ASSESS ING OFFICER HAS MADE OUT A CASE THAT THE ENTIRE CONSIDERATION RECEIVED B Y THE ASSESSEE AS DESCRIBED IN PARA 2.2 OF CLAUSE-II OF TTA IS TAXABL E IN INDIA UNDER ARTICLE 7 OF THE DTAA AS IT REPRESENTS ROYALTIES/FE ES FOR TECHNICAL SERVICES IN TERMS OF ARTICLE 13(4). ON THE OTHER HA ND, THE CLAIM OF THE ASSESSEE IS THAT NO PART OF TOTAL CONSIDERATION REC EIVED BY IT IS CONSIDERATION FOR SERVICES RENDERED IN INDIA AS IT REPRESENTS THE PRICE FOR TRANSFER OF IP RIGHTS, WHICH EVENT TOOK PLACE OUTSI DE INDIA WITHOUT ANY INVOLVEMENT OF THE SO-CALLED SERVICE P.E IN INDIA. 10. PARA 2.1 OF CLAUSE-II OF TTA, AS REPRODU CED ABOVE, TALKS OF TRANSFERRING IP RIGHTS TO MANUFACTURE, ASSEMBLE, U SE AND SELL THE LICENSED PRODUCTS AND TO ACHIEVE THAT END, USE THE KNOW-HOW AND INVENTIONS ETC. COVERED BY THE PATENT RIGHTS. THEN COMES CONTRACT PRICE IN PARA 2.2 OF CLAUSE-II OF TTA WHICH BEGINS WHEN T HE WORDS : IN CONSIDERATION FOR THE ABOVE. THE WORD ABOVE IN T HIS PHRASE REFERS TO THE CONTENTS OF PARA 2.1 WHICH, IN TURN, DENOTES TH E TRANSFER OF IP RIGHTS FOR MANUFACTURE AND ASSEMBLY OF THE LICENSED PRODUC TS AS PER KNOW-HOW ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 36 SUPPLIED BY THE ASSESSEE. PARA 2.2 OF CLAUSE-II HAS TWO CATEGORIES, VIZ. A) LICENCE/KNOW-HOW FEES AND B) ROYALTY. THE LD. D R VEHEMENTLY ARGUED THAT B) OF PARA 2.2 DESCRIBED AS ROYALTY IS CONSIDERATION FOR RENDERING SERVICES BY THE EMPLOYEES OF THE FIRST CA TEGORY, WHO WERE SENT ON DEPUTATION TO INDIA ON ASSIGNMENT BASIS. HE PUT FORTH THAT SUCH AMOUNT SHOULD BE CHARGED TO TAX IN TERMS OF ARTICLE 7 BECAUSE OF THE OPERATION OF ARTICLE 13(6) OF THE DTAA. 11. WE DO NOT FIND MUCH FORCE IN THE CONTENTION PUT FORTH BY THE LD. DR THAT THE CONSIDERATION MENTIONED AS B. IN PARA 2.2 IS RELATABLE TO THE SUPPLY OF TECHNICAL PERSONNEL AS REFERRED TO IN VAR IOUS CLAUSES OF TTA. THE REASON FOR OUR THIS DECISION IS THAT ALTHOUGH P ARA 2.2 OF CLAUSE-II SPLITS THE CONTRACT PRICE INTO TWO PARTS, VIZ., LIC ENCE/KNOW-HOW FEES AND ROYALTY, BUT IT IS IN LIEU OF `CONSIDERATION FOR THE ABOVE WHICH TAKES US BACK TO PARA 2.1 OF CLAUSE-II. IN TURN, PA RA 2.1 SPEAKS OF SUPPLY OF IP RIGHTS SIMPLICITOR. WHEN WE GO THROUGH VARIOU S CLAUSES OF TTA, IT COMES TO THE FORE THAT THE ASSESSEE UNDERTOOK TO PR OVIDE THE EMPLOYEES OF THE FIRST AND SECOND CATEGORIES AS DISCUSSED ABO VE. WHEREAS CONSIDERATION FOR THE SERVICES RENDERED BY EMPLOYEE S OF THE FIRST CATEGORY IS SEPARATELY GIVEN IN TTA READ WITH IPAA, IT WAS FAIRLY ADMITTED BY THE LD. AR THAT THERE WAS NO SEPARATE C HARGE FOR THE EMPLOYEES OF THE SECOND CATEGORY. IT SHOWS THAT THE CONSIDERATION FOR THE SERVICES RENDERED BY THE EMPLOYEES OF THE SECOND CA TEGORY IS EMBEDDED IN TOTAL CONSIDERATION AS MENTIONED IN PARA 2.2 OF CLAUSE-II OF TTA. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 37 THUS IT EMERGES THAT THE ASSESSEE CHARGED JCB INDIA FOR SUPPLY OF IP RIGHTS AND ALSO FOR THE EMPLOYEES OF THE FIRST AND SECOND CATEGORIES. WHEREAS THE CONSIDERATION FOR THE EMPLOYEES OF THE FIRST CATEGORY IS SEPARATE AND DISTINCT FROM CONSIDERATION IN PARA 2. 2, THE CONSIDERATION FOR THE EMPLOYEES OF THE SECOND CATEGORY IS PART AN D PARCEL OF THE CONSIDERATION FOR TRANSFER IP RIGHTS AS MENTIONED I N PARA 2.2 OF TTA. IT, THEREFORE, FOLLOWS THAT THE TOTAL AMOUNT CONSISTING OF LUMP-SUM LICENCE/KNOW-HOW FEES AND ALSO ROYALTY AS MENTIONED IN PARA 2.2 OF TTA IS CONSIDERATION FOR THE TRANSFER OF IP RIGHTS SIMPLICITOR AND ALSO THE SERVICES RENDERED BY EMPLOYEES OF THE SECOND CA TEGORY. 12. NOW WE WILL PROCEED TO DETERMINE THE CHARACT ER OF THE ABOVE DISCUSSED THREE COMPONENTS OF THE AMOUNT EARNED BY THE ASSESSEE FROM JCB INDIA, VIZ., THE CONSIDERATION FOR SUPPLY OF I P RIGHTS SIMPLICITOR ; THE CONSIDERATION FOR RENDERING OF SERVICES BY THE EMPLOYEES OF THE FIRST CATEGORY AND THE CONSIDERATION FOR RENDERING OF SE RVICES BY THE EMPLOYEES OF THE SECOND CATEGORY. WE WANT TO MAKE IT CLEAR THAT THE ASSESSING OFFICER HAS CONSIDERED THE ENTIRE AMOUNT AS A SINGLE UNIT OF ROYALTIES/FEES FOR TECHNICAL SERVICES, AS CAN BE S EEN FROM PARA 7.1 OF THE ASSESSMENT ORDER, THOUGH AT SOME PLACES, HE SIMPLY REFERRED TO THE AMOUNT AS ROYALTY FOR CONVENIENCE. HE CONSIDERED A RT. 13 OF THE DTAA AND SECTION 44DA, BOTH OF WHICH DEAL JOINTLY WITH R OYALTIES AND FEES FOR TECHNICAL SERVICES. IT IS RELEVANT TO NOTE THAT TH E ASSESSEE ALSO OFFERED THE ENTIRE AMOUNT OF ROYALTIES/FEES FOR TECHNICAL SERVI CES AS CHARGEABLE TO ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 38 TAX AS PER ARTICLE 13(2) OF THE DTAA. CONSIDERING THE LANGUAGE OF ARTICLE 13(6), THE AO HELD THAT SUCH AMOUNT OF ROYA LTIES/FEES FOR TECHNICAL SERVICES WAS LIABLE TO BE CONSIDERED AS ` BUSINESS PROFITS UNDER ARTICLE 7 OF THE DTAA AS IT WAS EFFECTIVELY C ONNECTED WITH THE P.E. IT, THEREFORE, FOLLOWS THAT THE REFERENCE AT SOME PLACES IN THE ASSESSMENT ORDER OF THE TOTAL AMOUNT RECEIVED BY TH E ASSESSEE AS `ROYALTY, IS NOTHING BUT REPRESENTATIVE OF BOTH ROYALTIES AND FEES FOR TECHNICAL SERVICES. IN ORDER TO DECIDE THE CHARACT ER OF THE CONSIDERATION FOR IP RIGHTS, EMPLOYEES OF THE FIRST CATEGORY AND EMPLOYEES OF SECOND CATEGORY, IT WILL BE APPROPRIATE TO NOTE THE PRESC RIPTION OF THE RELEVANT PARAS OF ARTICLE 13 OF THE DTAA AS UNDER : - ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. ROYALTIES AND FEES FOR TECHNICAL SERVICES ARISING IN A CONTRACTING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXED IN THAT OTHER STATE . 2. HOWEVER, SUCH ROYALTIES AND FEES FOR TECHNICAL SERVICES MAY ALSO BE TAXED IN THE CONTRACTING STATE IN WHICH THE Y ARISE AND ACCORDING TO THE LAW OF THAT STATE; BUT IF THE BENE FICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES IS A R ESIDENT OF THE OTHER CONTRACTING STATE, THE TAX SO CHARGED SHALL N OT EXCEED : .. (3) FOR THE PURPOSES OF THIS ARTICLE, THE TERM 'ROYALTIES' MEANS : (A) PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FO R THE USE OF, OR THE RIGHT TO USE, ANY COPYRIGHT OF A LITERARY, ARTISTIC OR ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 39 SCIENTIFIC WORK, INCLUDING CINEMATOGRAPH FILMS OR W ORK ON FILMS, TAPE OR OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TELEVISION BROADCASTING, ANY PATENT, TRADEMARK, DESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SC IENTIFIC EXPERIENCE; AND (B) PAYMENTS OF ANY KIND RECEIVED AS CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT, OTHER THAN INCOME DERIVED BY AN ENTERPRI SE OF A CONTRACTING STATE FROM THE OPERATION OF SHIPS OR AI RCRAFT IN INTERNATIONAL TRAFFIC. 4. FOR THE PURPOSES OF PARAGRAPH 2 OF THIS ARTICLE, AND SUBJECT TO PARAGRAPH 5, OF THIS ARTICLE, THE TERM ' FEES FOR TECHNICAL SERVICES' MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TE CHNICAL OR OTHER PERSONNEL) WHICH : (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A P AYMENT DESCRIBED IN PARAGRAPH 3(A) OF THIS ARTICLE IS RECE IVED; OR (B) ARE ANCILLARY AND SUBSIDIARY TO THE ENJOYMENT O F 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 DEVELOPMEN T AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. 13. PARA 3(A) OF THE ARTICLE GIVES MEANING TO THE T ERM ROYALTIES AS ` PAYMENT OF ANY KIND RECEIVED AS CONSIDERATION FOR T HE USE OF OR TO RIGHT ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 40 TO USE ANY COPYRIGHT OF-----PATENT, TRADE MARK, DES IGN OR MODEL------- . WE FIND THAT THE ASSESSEE GRANTED TO JCB INDIA THE TECHNICAL KNOW-HOW, PATENT RIGHTS AND CONFIDENTIAL INFORMATION FOR MANU FACTURE, ASSEMBLY, USE AND SELL THE LICENSED PRODUCTS. THE CONSIDERATI ON FOR IT CERTAINLY FALLS WITHIN THE SCOPE OF ROYALTIES AS PER THE DTAA. T HIS ASPECT HAS NOT BEEN DISPUTED BY THE ASSESSEE, WHO HAS RIGHTLY TREA TED THE ENTIRE AMOUNT AS ROYALTY AND OFFERED IT TO TAX AS PER ARTICLE 13( 2) OF THE DTAA. 14. THEN, THERE IS DEFINITION OF `FEES FOR TECHNICAL SERVICES AS GIVEN IN PARA 13(4) OF THE DTAA. IT HAS BEEN DEFINED TO MEA N PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF 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 ARTIC LE IS RECEIVED. A CAREFUL PERUSAL OF PARA 4 OF ARTICLE 13 OF THE DTAA DIVULGES THAT WHEN COPYRIGHTS OF ANY PATENT, TRADE MARK, DESIGN OR MOD EL AS PER PARA 3(A) OF ARTICLE 13 ARE ASSIGNED AND SERVICES OF TECHNICAL O R OTHER PERSONNEL ARE PROVIDED WHICH ARE ANCILLARY AND SUBSIDIARY FOR THE APPLICATION OR ENJOYMENT OF SUCH PATENTS, TRADE MARK, OR DESIGN, T HEN THE PAYMENT FOR SUCH PROVISION OF SERVICES FALLS UNDER PARA 4 OF AR TICLE 13 OF THE DTAA. WE FIND THAT CONSIDERATION FOR SERVICES RENDERED BY THE EMPLOYEES OF THE FIRST AND THE SECOND CATEGORIES IS NOTHING BUT THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL PROVIDED BY THE ASSESS EE TO JCB INDIA FOR ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 41 THE APPLICATION OR ENJOYMENT OF KNOW-HOW, PATENT RI GHT AND OTHER INVENTIONS. WHEREAS THE CONSIDERATION FOR TRANSFER OF SUCH KNOW-HOW, PATENTS AND INVENTIONS FALLS WITHIN THE MEANING OF ROYALTIES AS PER ARTICLE 13(3), THE CONSIDERATION FOR RENDERING OF S ERVICES BY BOTH THE CATEGORIES OF THE EMPLOYEES IS IN THE NATURE OF `FE ES FOR TECHNICAL SERVICES AS PER ARTICLE 13(4) OF THE DTAA. THE POS ITION IS NOT DIFFERENT AS PER SEC. 9(1) OF THE ACT. WHEREAS EXPLANATION 2 (I) TO SEC. 9(1)(VI) DEFINES `ROYALTY TO MEAN INTER ALIA THE : ` CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR . (I) THE TRANSFER O F ALL OR ANY RIGHTS (INCLUDING THE GRANTING OF A LICENCE) IN RESPECT OF A PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE M ARK OR SIMILAR PROPERTY , EXPLANATION 2 TO SEC. 9(1)(VII) DEFINES FEES FOR TECHNICAL SERVICES TO MEAN : `ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL) . FROM THE ABOVE DISCUSSION, IT IS PERCEPTIBLE THAT THE CONSIDERATION FOR EMPLOYEES OF BOTH THE CATEGORIES FALLS WITHIN THE REALM OF FEES FOR TECHNICAL SERVICES AS PER ARTICLE 13(4) OF THE DTAA. 15. THE POSITION DECIDED SO FAR CAN BE TABULAT ED AS UNDER :- CONSIDERATION FOR SUPPLY/SERVICES RENDERED IN/OUTSIDE INDIA WHETHER CONSTITUTES PE IN INDIA (AS HELD BY US ABOVE) FALLS UNDER SUPPLY OF IP RIGHTS OUTSIDE INDIA N.A. S. 9(1)(VI) AND ALSO ART. 13(2) R.W. 13(3) ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 42 RENDERING OF SERVICES BY EMPLOYEES OF FIRST CATEGORY IN INDIA YES S. 9(1)(VII) AND ALSO ART. 13(2) R.W. 13(4) RENDERING OF SERVICES BY EMPLOYEES OF SECOND CATEGORY IN INDIA NO S. 9(1)(VII) AND ALSO ART. 13(2) R.W. 13(4) 16.1. NOW COMES THE CORE QUESTION AS TO WHETHER SUCH ROYALTIES AND FEES FOR TECHNICAL SERVICES COVERED UNDER ARTICLE 1 3(3) AND (4) OF THE DTAA CAN BE BROUGHT WITHIN THE AMBIT OF ARTICLE 7 O F THE DTAA? WHEREAS THE ASSESSEE KEPT THE ENTIRE AMOUNT UNDER A RTICLE 13(2), THE A.O CAME TO HOLD THAT THE FULL AMOUNT IS INCLUDIBLE UNDER ARTICLE 7 BY MEANS OF PARA 6 OF ARTICLE 13 OF DTAA. WE HAVE HELD ABOVE THAT THE LD. DR WAS NOT CORRECT IN ARGUING THAT COMPONENT B. OF PARA 2.2 OF TTA CHARACTERIZED AS `ROYALTY IS EXCLUSIVELY TOWARDS T HE SERVICES RENDERED BY THE FIRST AND THE SECOND CATEGORIES OF THE EMPLO YEES. IT HAS ALSO BEEN HELD THAT THE AMOUNT RELATABLE TO THE SERVICES REND ERED BY THE EMPLOYEES OF THE SECOND CATEGORY IS EMBEDDED IN SUCH TOTAL CO NSIDERATION AS PER PARA 2.2 OF TTA. COMING BACK TO OUR POINT, WE NOTI CE THAT THE ASSESSING OFFICER HAS CONSIDERED PARA 6 OF ARTICLE 13 FOR BRINGING THE ROYALTIES AND FEES FOR TECHNICAL SERVICES WITHIN TH E MEANING OF ARTICLE 7 OF THE DTAA. TO EXAMINE AND EVALUATE THE CONTENTION OF THE REVENUE, IT ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 43 WOULD BE APPOSITE TO NOTE DOWN THE PRESCRIPTION OF PARA 6 OF ARTICLE 13 AS UNDER : - 6. THE PROVISIONS OF PARAGRAPHS 1 AND 2 OF THIS AR TICLE SHALL NOT APPLY IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES, BEING A RESIDENT OF A CONTRACTI NG STATE, CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE IN WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARISE THRO UGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFOR MS IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FI XED BASE SITUATED THEREIN, AND THE RIGHT, PROPERTY OR CONTRA CT IN RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISH MENT OR FIXED BASE. IN SUCH CASE, THE PROVISION OF ARTICLE 7 (BUSINESS PROFITS) OR ARTICLE 15 (INDEPENDENT PERSONAL SERVIC ES) OF THIS CONVENTION, AS THE CASE MAY BE, SHALL APPLY. 16.2. PARA 1 OF ARTICLE 13 PROVIDES THAT ROYALTIES AND FEES FOR TECHNICAL SERVICES ARISING IN INDIA PAID TO A RESID ENT OF UK MAY BE TAXED IN UK. PARA 2 PROVIDES THAT SUCH ROYALTIES AND FEES FOR TECHNICAL SERVICES MAY ALSO BE TAXED IN INDIA WHERE IT ARISES. THE LAT ER PART OF PARA 2 PRESCRIBES THE RATES AT WHICH SUCH FEES FOR TECHNIC AL SERVICES SHOULD BE CHARGED TO TAX. IF MANDATE OF PARA 6 IS SATISFIED, THEN THE AMOUNT WHICH WOULD HAVE BEEN OTHERWISE CHARGEABLE AS PER PARAS 1 AND 2 OF ARTICLE 13 WOULD GET EXCLUDED FROM IT AND FIND ITS PLACE UN DER ARTICLE 7 OF THE DTAA. WHEREAS THE AO HAS HELD THAT THE DIRECTION OF PARA 6 OF ARTICLE 13 HAS BEEN FULLY MET WITH FOR BRINGING THE AMOUNT OF ROYALTIES AND FEES FOR TECHNICAL SERVICES UNDER ARTICLE 7, THE CASE OF THE ASSESSEE IS DIAGONALLY OPPOSITE TO IT. WE NEED TO DETERMINE IF PARA 6 OF ARTICLE 13 IS ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 44 APPLICABLE ON THE AMOUNT OF ROYALTIES ARISING OUT O F IP RIGHTS AND FEES FOR TECHNICAL SERVICES ARISING OUT OF RENDERING OF SERVICES BY THE EMPLOYEES OF FIRST AND SECOND CATEGORIES. FOLLOWING POINTS EMERGE ON DISSECTION OF PARA 6 OF ARTICLE 13 AND BY APPLYING THEM ON THE FACTS OF OUR CASE,:- I. THE PROVISIONS OF PARAGRAPHS 1 AND 2 OF THIS ARTICL E SHALL NOT APPLY (I.E. THE AMOUNT SHALL NOT BE CONSIDERED AS ROYALTY OR FTS CHARGEABLE TO TAX IN INDIA AS PER THE RATES OF TAXA TION PRESCRIBED) II. IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FO R TECHNICAL SERVICES (THE ASSESSEE), BEING A RESIDENT OF A CONTRACTING S TATE (RESIDENT OF UK), III. CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE IN WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARISE THRO UGH A PERMANENT ESTABLISHMENT SITUATED THEREIN(I.E. IN INDIA), OR IV. PERFORMS IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FIXED BASE SITUATED THEREIN (I.E. IN INDIA), V. AND THE RIGHT, PROPERTY OR CONTRACT IN RESPECT OF W HICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIV ELY CONNECTED WITH SUCH PERMANENT ESTABLISHMENT OR FIXED BASE. 16.3. POINT V. PROVIDES THAT THE RIGHT, PROPERTY OR CONTRACT IN RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID SHOULD BE EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISH MENT OR FIXED BASE. SO WE NEED TO DECIDE AS TO WHETHER THE RIGHT, PROPE RTY OR CONTRACT IN ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 45 RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICA L SERVICES HAS BEEN PAID ARE EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABL ISHMENT OF THE ASSESSEE IN INDIA. IT TRANSPIRES THAT THERE SHOULD BE; I) RIGHT PROPERTY OR CONTRACT; II) IN RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID; AND III) SUCH RIGHT, PROPERTY OR CONTRACT SHOULD BE EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABLISHM ENT. IT CAN BE SEEN THAT THE TERM `ROYALTIES HAS RELATION WITH THE W ORDS `RIGHT OR PROPERTY AND THE TERM `FEES FOR TECHNICAL SERVICES HAS RELA TION WITH THE WORD CONTRACT. WHEN BOTH THE `ROYALTIES AND `FEES FO R TECHNICAL SERVICES ARE COMBINED AND SEEN IN JUXTAPOSITION TO THE WORDS `RIGHT, PROPERTY OR CONTRACT, THERE SURFACES ASSET TEST ( HAVING RELA TION WITH `RIGHT OR PROPERTY) WHICH IS SPECIFIC TO `ROYALTIES AND ACT IVITY TEST ( HAVING RELATION WITH `CONTRACT) WHICH IS SPECIFIC TO `FEE S FOR TECHNICAL SERVICES. IN ORDER TO BRING `ROYALTIES OR FEES FOR TECHNICAL SERVICES RELATING TO `RIGHT, PROPERTY OR CONTRACT WITHIN THE AMBIT OF PARA 6 OF ARTICLE 13, IT IS OF UTMOST IMPORTANCE THAT SUCH `RIGHT, PROPERTY OR CONTRACT MUST BE EFFECTIVELY CONNECTED WITH THE PERMANENT ESTABLISHM ENT. THE EFFECTIVE CONNECTION SHOULD EXIST BETWEEN PERMANENT ESTABLISH MENT ON ONE HAND AND RIGHT, PROPERTY OR CONTRACT ON THE OTHER AND NO T ROYALTIES OR FEES FOR TECHNICAL SERVICES FLOWING FROM SUCH RIGHT, PROPERT Y OR CONTRACT. THE PHRASE `EFFECTIVELY CONNECTED WITH HAS NEITHER BEE N DEFINED UNDER THE ACT NOR THE DTAA. IN SUCH A SITUATION, IT BECOMES CRUCIAL TO UNDERSTAND THE IMPORT OF SUCH AN EXPRESSION. IN OUR CONSIDERE D OPINION, THE WORDS ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 46 `EFFECTIVELY CONNECTED ARE AKIN TO `REALLY CONNECT ED. IN THE CONTEXT OF ROYALTIES, IT IS IN THE NATURE OF SOMETHING MORE T HAN THE MERE POSSESSION BY THE PE OF PROPERTY OR RIGHT BUT EQUAL TO OR A LI TTLE LESS THAN THE LEGAL OWNERSHIP OF SUCH PROPERTY OR RIGHT. BUT IN NO CAS E THE REMOTE CONNECTION BETWEEN THE PE AND PROPERTY OR RIGHT CAN BE CATEGORIZED AS EFFECTIVELY CONNECTED. 16.4. IT IS NOTICED THAT THE A.O HAS HELD JCB INDIA TO BE THE ASSESSEES SERVICE PE. THE NOMENCLATURE OF SERVICE PE TO JCB I NDIA HAS BEEN GIVEN IN THE BACKGROUND OF THE FACT THAT EIGHT DEPUTATION ISTS OF THE ASSESSEE WERE RENDERING SERVICES TO JCB INDIA. INSTEAD OF CA LLING THESE EIGHT PERSONS AS SERVICE PE, THE A.O CHOSE TO DESIGNATE J CB INDIA AS SERVICE PE REPRESENTING THESE EIGHT EMPLOYEES OF THE FIRST CATEGORY WHO WERE ON DEPUTATION TO JCB INDIA. THE POSITION IS MORE CLEAR FROM THE FACT THAT THE AO SPECIFICALLY HELD ON PAGE 2 OF THE ASSESSMENT OR DER THAT THE SHORT TERM BUSINESS VISITS OF STEWARDSHIP NATURE DID NOT CREATE A PE OF THE ASSESSEE IN INDIA. IT IS AXIOMATIC THAT JCB INDIA O N ENTITY LEVEL COULD NOT HAVE EVEN POSSIBLY BEEN CONSIDERED AS THE PE OF THE ASSESSEE IN INDIA BECAUSE THE QUESTION WAS OF TAXING THE INCOME EARNE D BY THE ASSESSEE FROM JCB INDIA AND NOT THAT EARNED BY JCB INDIA FRO M ITS INDIAN OPERATIONS. MOREOVER, IT HAS BEEN SPECIFICALLY PROV IDED IN PARA 6 OF ARTICLE 5 THAT THE FACT THAT A COMPANY WHICH IS A R ESIDENT OF A CONTRACTING STATE CONTROLS OR ITS CONTROLLED BY A C OMPANY WHICH IS A RESIDENT OF THE OTHER CONTRACTING STATE, OR WHICH C ARRIES ON BUSINESS IN ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 47 THAT OTHER STATE (WHETHER THROUGH A PERMANENT ESTAB LISHMENT OR OTHERWISE), SHALL NOT OF ITSELF CONSTITUTE EITHER C OMPANY A PERMANENT ESTABLISHMENT OF THE OTHER. THE NAME OF JCB INDIA AS THE SERVICE PE OF THE ASSESSEE SEEMS TO HAVE BEEN INSPIRED FROM THE C ASE OF MORGAN STANLEY (SUPRA) IN WHICH CASE MSAS WAS HELD TO BE A SERVICE PE OF MSCO BECAUSE OF THE DEPUTATION OF EMPLOYEES BY MSCO TO MSAS. THE ESSENCE OF THE AOS ACTION IS THAT HE TREATED T HESE EIGHT EMPLOYEES OF THE ASSESSEE AS CREATING SERVICE PE IN INDIA AND CALLED SUCH PE WITH THE NAME OF JCB INDIA. 16.5. INSOFAR AS THE QUESTION OF ROYALTY REPRE SENTING CONSIDERATION FOR THE TRANSFER OF IP RIGHTS SIMPLICITOR IS CONCERNED, IT IS CLEAR THAT THE SERVICE PE REPRESENTING EIGHT DEPUTATIONISTS HAD AB SOLUTELY NO ROLE TO PLAY EITHER IN CREATING OR MAKING IT AVAILABLE TO J CB INDIA. IT IS NOT EVEN THE CASE OF THE A.O THAT THESE EIGHT DEPUTATIONISTS HAD ANYTHING TO DO IN THE GRANT OF IP RIGHTS TO JCB INDIA. THE SERVICE P E, AS THE VERY NAME SUGGESTS AND THE ACTUAL POSITION INDICATES, IS CONC ERNED ONLY WITH THE ACTIVITIES OF RENDERING SERVICES AFTER THE GRANT OF IP RIGHTS. THE LD. DR WAS ALSO FAIR ENOUGH TO CANDIDLY ACCEPT THIS POSITI ON. THUS, IT FOLLOWS THAT ALBEIT THE AMOUNT OF ROYALTY RECEIVED BY THE ASSESSEE ARI SES OUT OF IP RIGHTS WHICH ARE IN THE NATURE OF RIGHT OR PROPERTY BUT THE SAME CANNOT BE CONSIDERED UNDER PARA 6 OF ARTICLE 13 BECAUSE IT IS NOT EFFECTIVELY CONNECTED WITH THE SERVICE PE OF THE ASSESSEE IN IN DIA. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 48 16.6. NOW WE COME TO THE CONSIDERATION FOR THE EMP LOYEES OF THE FIRST CATEGORY. WE HAVE NOTICED ABOVE THAT IT IS IN THE NATURE OF `FEES FOR TECHNICAL SERVICES. IN THAT VIEW OF THE MATTER, I TS RELATION NEEDS TO BE CONSIDERED VIS--VIS THE CONTRACT FROM WHICH SUCH FEES FOR TECHNICAL SERVICES RESULTED. IF THE CONTRACT FROM WHICH SUCH FEES FOR TECHNICAL SERVICES RESULTED IS HELD TO BE EFFECTIVELY CONNECT ED WITH THE PE, THEN THIS AMOUNT WOULD FALL WITHIN THE MEANING OF PARA 6 OF ARTICLE 13 AND VICE VERSA . HERE AGAIN IT IS OF SIGNIFICANCE TO NOTE THAT TH E EFFECTIVE CONNECTION IS REQUIRED TO BE SEEN BETWEEN THE PE AN D THE `CONTRACT FROM WHICH SUCH FEES RESULTED AND NOT SUCH FEES FOR TECHNICAL SERVICES PER SE . THE MERE FACT THAT SUCH FEES IS EFFECTIVELY CONN ECTED WITH THE PE IS NOT SUFFICIENT TO BRING THE AMOUNT WITHIN THE PU RVIEW OF PARA 6 OF ARTICLE 13. THE CONTRACT, WHICH IS THE SOURCE OF PRESENT INCOME, IS TTA AND IPAA. WE HAVE NOTICED ABOVE THAT IPAA IS NOT AN INDEPENDENT AGREEMENT IN ITSELF BUT IT SIMPLY FORMALIZES THE TE RMS FOR THE ASSIGNMENT OF EIGHT DEPUTATIONISTS ON SECONDMENT BASIS BY THE ASSESSEE TO JCB INDIA AS PER TTA. THE ONLY EMPLOYEES SO SENT ON DEPUTATI ON TO JCB INDIA ARE THOSE EIGHT WHO HAVE BEEN REFERRED TO ABOVE AS THE EMPLOYEES OF THE FIRST CATEGORY. THUS, IT IS AMPLY CLEAR THAT THE CONTRACT (TTA READ WITH IPAA), UNDER WHICH SUCH EMPLOYEES OF THE FIRST CATEGORY WE RE SENT TO JCB INDIA, IS EFFECTIVELY CONNECTED WITH THE SERVICE PE OF THE ASSESSEE. IT WILL NOT BE OUT OF PLACE TO MENTION THAT THE PE IS SIMPL Y REPRESENTED BY THESE VERY EIGHT DEPUTATIONISTS. SUCH FEES FOR TECHNICAL SERVICES ARISES OUT OF ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 49 CONTRACT (TTA READ WITH IPAA), WHICH CONTRACT, IN TURN, IS EFFECTIVELY CONNECTED WITH THE PE OF THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT FEES FOR TECHNICAL SERVICES IN RELATIO N TO THE EMPLOYEES OF THE FIRST CATEGORY FALLS WITHIN PARA 6 OF ARTICLE 1 3 OF THE DTAA. 16.7. NEXT COMES FEES FOR TECHNICAL SERVICES RESUL TING FROM THE RENDERING OF SERVICES BY THE EMPLOYEES OF THE SECON D CATEGORY. THIS AMOUNT, AS NOTICED ABOVE, IS EMBEDDED IN TOTAL CON SIDERATION AS PER PARA 2.2 OF THE TTA. ALTHOUGH SUCH FEES FOR TECHNICAL S ERVICES IS THE RESULT OF RENDERING OF SERVICES IN INDIA BUT IT IS NOT EFFECT IVELY CONNECTED WITH THE ASSESSEES PE IN INDIA. WE HAVE NOTICED ABOVE THAT ONLY EIGHT DEPUTATIONISTS CONSTITUTE SERVICE PE OF THE ASSESSE E IN INDIA, WHICH REPRESENT THE EMPLOYEES OF THE FIRST CATEGORY. WE H AVE ALSO HELD ABOVE THAT THE EMPLOYEES OF THE SECOND CATEGORY, WHICH AR E PRESENTLY UNDER CONSIDERATION, DO NOT CONSTITUTE PE OF THE ASSESSEE IN INDIA. ONCE SUCH EMPLOYEES DO NOT CONSTITUTE PE OF THE ASSESSEE IN I NDIA, THERE CAN BE NO QUESTION OF ANY CONNECTION, MUCH LESS THE EFFECTIV E CONNECTION, OF FEES FOR TECHNICAL SERVICES RECEIVED AS A RESULT OF ENDE AVOR BY SUCH EMPLOYEES WITH THE PERMANENT ESTABLISHMENT. AT THE COST OF RE PETITION, WE STATE THAT IN ORDER TO BRING FEES FOR TECHNICAL SERVICES WITHI N THE AMBIT OF PARA 6 OF ARTICLE 13, THE SAME MUST BE PAID IN RESPECT OF `CO NTRACT WHICH IS EFFECTIVELY CONNECTED WITH THE PE. IF IN THE FIRST INSTANCE ITSELF, THE CONNECTION BETWEEN THE PE AND THE `CONTRACT IN RES PECT OF WHICH THE FEES FOR TECHNICAL SERVICES IS PAID IS LACKING, THE SAME CANNOT BE INCLUDED ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 50 WITHIN THE SWEEP OF PARA 6 OF ARTICLE 13 OF THE DTA A. THE POSITION REGARDING FEES FOR TECHNICAL SERVICES ARISING ON AC COUNT OF EMPLOYEES OF THE SECOND CATEGORY IS SOMEWHAT SIMILAR TO THAT OF ROYALTY AS DISCUSSED ABOVE. SIMILAR TO THE ROYALTY ARISING FROM `PROPER TY OR RIGHT IN THE NATURE OF IP RIGHTS HAVING NO RELATION WITH THE SER VICE PE OF THE ASSESSEE IN INDIA, FEES FOR TECHNICAL SERVICES ARISING FROM `CONTRACT IN RELATION TO THE EMPLOYEES OF THE SECOND CATEGORY HAS ALSO GOT N O RELATION WHATSOEVER WITH THE SERVICE PE OF THE ASSESSEE IN I NDIA SO AS TO WARRANT THE INCLUSION OF SUCH AMOUNT IN PARA 6 OF ARTICLE 13. 16.8. WE, THEREFORE, HOLD THAT THE AMOUNT OF ROYAL TY AND CONSIDERATION FOR RENDERING OF SERVICES BY THE EMPL OYEES OF SECOND CATEGORY DO NOT FALL IN PARA 6 OF ARTICLE 13 AND AR E HENCE CHARGEABLE TO TAX AS PER PARA 2 OF ARTICLE 13 OF THE DTAA. AS BOT H THESE AMOUNTS MAKE UP THE TOTAL CONSIDERATION AS PER PARA 2.2 OF TTA, ITS SPLITTING INTO TWO PARTS, VIZ., TOWARDS ROYALTY AND EMPLOYEES OF T HE SECOND CATEGORY HAS BECOME ACADEMIC, WHICH WOULD OTHERWISE HAVE BEE N REQUIRED IF ONE OF SUCH COMPONENTS HAD FALLEN UNDER PARA 6 OF ARTIC LE 13 FOR THE COMPUTATION OF INCOME AS PER ARTICLE 7 OF THE DTAA. IN SO FAR AS FEES FOR TECHNICAL SERVICES FOR RENDERING OF SERVICES BY THE EMPLOYEES OF THE FIRST CATEGORY IS CONCERNED, THIS FALLS UNDER PARA 6 OF ARTICLE 13. ONCE THIS AMOUNT FALLS UNDER PARA 6, IT WOULD AUTOMATICA LLY STAND EXCLUDED FROM PARA 2 OF ARTICLE 13 AND WOULD FIND ITS PLACE UNDER ARTICLE 7 OF THE DTAA. ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 51 17.1. AT THIS JUNCTURE, IT WOULD BE RELEVANT TO DEAL WITH THE CONTENTION THAT SINCE ROYALTIES OR FEES FOR TECHNIC AL SERVICES HAVE BEEN SPECIFICALLY DEALT WITH IN ARTICLE 13, THEN NO COGN IZANCE CAN BE TAKEN OF ARTICLE 7, WHICH IS A GENERAL PROVISION. IN ORDER T O APPRECIATE THIS CONTENTION, IT WOULD BE APT TO NOTE THE RELEVANT PA RTS OF ARTICLE 7 OF THE DTAA, AS UNDER : - ARTICLE 7 BUSINESS PROFITS 1. THE PROFITS OF AN ENTERPRISE OF A CONTRACTING ST ATE SHALL BE TAXABLE ONLY IN THAT STATE UNLESS THE ENTERPRISE CA RRIES ON BUSINESS IN THE OTHER CONTRACTING STATE THROUGH A P ERMANENT ESTABLISHMENT SITUATED THEREIN. IF THE ENTERPRISE CARRIES ON BUSINESS AS AFORESAID , THE PROFITS OF THE ENTERPRISE MAY BE TAXED IN THE OTHER STATE BUT ONLY SO MUCH OF THEM A S IS DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO THAT PERMANENT ESTABL ISHMENT . 2 TO 8.. 9. WHERE PROFITS INCLUDE ITEMS OF INCOME WHICH ARE DEALT WIT H SEPARATELY IN OTHER ARTICLES OF THIS CONVENTION, THEN THE PROVISIONS OF THOSE ARTICLES SHALL NOT BE AFFECTED BY THE PROVISIONS OF THIS ARTICLE. 17.2. A CURSORY LOOK AT PARA 1 OF ARTICLE 7 OF THE DTAA MANIFESTS THAT THE PROFITS OF AN ENTERPRISE OF A CONTRACTING STATE SHALL BE TAXABLE ONLY IN THE STATE OF RESIDENCE UNLESS THE ENTERPRIS E CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE THROUGH A PERMANENT EST ABLISHMENT SITUATED THEREIN. IF THE ENTERPRISE CARRIES ON BUSINESS IN T HE OTHER CONTRACTING ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 52 STATE THROUGH A PERMANENT ESTABLISHMENT SITUATED TH EREIN {THE WORDS ` AS AFORESAID REFER TO EXCEPTION IN THE FIRST LINE OF PARA 1, TH AT IS, THE ENTERPRISE CARRIES ON BUSINESS IN THE OTHER CONTRAC TING STATE THROUGH A PERMANENT ESTABLISHMENT}, THEN THE PROFITS OF THE E NTERPRISE MAY BE TAXED IN THE OTHER STATE (THAT IS THE STATE OF SOUR CE) BUT ONLY SO MUCH OF THEM AS ARE DIRECTLY OR INDIRECTLY ATTRIBUTABLE TO THAT PERMANENT ESTABLISHMENT. IN OUR CONTEXT, IT MEANS THAT IF THE UK ENTERPRISE CARRIES ON BUSINESS IN INDIA THROUGH ITS PERMANENT ESTABLIS HMENT SITUATED IN INDIA, THEN THE INCOME EARNED BY SUCH UK ENTERPRISE FROM BUSINESS CARRIED ON THROUGH SUCH PE IN INDIA IS CHARGEABLE T O TAX IN INDIA WITHIN THE MEANING OF PARA 1 OF ARTICLE. PARA 9 OF ARTICL E 7, WHICH IS THE FOUNDATION FOR THE ABOVE SUBMISSION URGED ON BEHALF OF THE ASSESSEE, PROVIDES THAT WHERE PROFITS INCLUDE ITEMS OF INCOME WHICH ARE DEALT WITH SEPARATELY IN OTHER ARTICLES OF THE DTAA, THEN THE PROVISIONS OF THOSE ARTICLES SHALL NOT BE AFFECTED BY THE PROVISIONS OF THIS ARTICLE. IT MEANS THAT THE ITEMS OF INCOME SEPARATELY DEALT WITH BY S UCH SPECIFIC ARTICLES SHALL PREVAIL AND THE INCOME WILL BE CONSIDERED UND ER SUCH SPECIFIC ARTICLES AND NOT ARTICLE 7. THIS PARA EMBODIES TH E WELL-SETTLED RULE OF GENERALIA SPECIALIBUS NON DEROGANT WHICH MEANS THAT THE SPECIAL PROVISION OVERRIDES THE GENERAL PROVISIONS. IF A SP ECIAL PROVISION DEALING WITH A PARTICULAR THING OR SITUATION HAS BEEN ENACT ED, THEN THAT PARTICULAR THING OR SITUATION SHOULD BE GOVERNED BY SUCH SPECI AL PROVISION ALONE. APPLICATION OF GENERAL PROVISIONS STANDS EXCLUDED O N THAT. TO PUT IT ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 53 SIMPLY, IF THERE IS A PARTICULAR SUBJECT WHICH IS GOVERNED BOTH BY A SPECIAL PROVISION AS WELL AS A GENERAL PROVISION, T HEN IT IS THE SPECIAL PROVISION WHICH WILL TAKE THE SUBJECT WITHIN ITS FO LD TO THE EXCLUSION OF THE GENERAL PROVISION. HOWEVER, IT IS NOT THE END OF THE ROAD. IF SUCH ORIGINAL SPECIAL PROVISION AGAIN TAKES THE PARTICUL AR SUBJECT, ON FULFILLMENT OF CERTAIN CONDITIONS, BACK TO THE GEN ERAL PROVISION OR ANY OTHER SPECIAL PROVISION, THEN IT IS SUCH GENERAL OR ANY OTHER SPECIAL PROVISION WHICH WILL RULE THAT PARTICULAR SUBJECT. IN SUCH A SITUATION, BY WHICH THE ORIGINAL SPECIAL PROVISION SENT THE SUBJE CT BACK TO THE GENERAL PROVISION OR ANY OTHER SPECIAL PROVISION, THE SUBJ ECT WILL BE GOVERNED BY THE GENERAL OR SUCH OTHER SPECIAL PROVISION. COMI NG BACK TO OUR POINT, WE NOTE THAT THE EFFECT OF PARA 9 OF ARTICLE 7 IS T HAT IF `BUSINESS PROFITS INCLUDE AN ITEM OF INCOME WHICH FALLS UNDER ANY OF THE SPECIFIC ARTICLES OF THE DTAA, SUCH AS ROYALTIES AND FEES FOR TECHNIC AL SERVICES UNDER ARTICLE 13, THEN SUCH INCOME SHALL BE EXCLUDED FRO M THE `BUSINESS PROFITS UNDER ARTICLE 7 AND COME UP FOR CONSIDERAT ION UNDER SUCH SPECIFIC ARTICLES SUCH AS ARTICLE 13. BUT WHEN ANY PARA OF ARTICLE 13 SENDS THE SUBJECT BACK TO ARTICLE 7, THEN IT SHALL BE ADMINISTERED BY THE MANDATE OF ARTICLE 7 TO THE EXCLUSION OF ARTICLE 13 . THE NUTSHELL IS THAT ONCE ARTICLE 7 HAS EXCLUDED ROYALTY OR FEES FOR TEC HNICAL SERVICES TO BE CONSIDERED UNDER ARTICLE 13 BUT PARA 6 OF ARTICLE 13 HAS SENT THE MATTER BACK TO ARTICLE 7, IT IS THE MANDATE OF ARTICLE 7 W HICH SHALL APPLY ON THE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 54 AMOUNT EXCLUDED BY PARA 6 OF ARTICLE 13. THE CONTEN TION RAISED ON BEHALF OF THE ASSESSEE IN THIS REGARD, THEREFORE, F AILS. 18. ANOTHER INTERESTING POINT ARISES ON OUR HOLDING THAT THE FEES FOR TECHNICAL SERVICES ON ACCOUNT OF THE EMPLOYEES OF T HE FIRST CATEGORY IS LIABLE TO BE CONSIDERED UNDER ARTICLE 7 OF THE DTAA . THE ASSESSING OFFICER OBSERVED IN PARA 9.4.2 OF HIS ORDER THAT WH EN THE CONDITIONS LAID DOWN IN ARTICLE 13(6) ARE SATISFIED, THE TAXABILITY OF ROYALTY IS GOVERNED UNDER ARTICLE 7 OF THE DTAA. TO THIS EXTENT IT IS C ORRECT. HE FURTHER HELD THAT : HOWEVER, THE RECEIPTS IN THE HANDS OF THE ASSESSEE ARE CLEARLY ROYALTY WITHIN THE MEANING OF ARTICLE 13 OF DTAA AN D PARA 6 OF ARTICLE 13 WILL NOT TAKE AWAY THE CHARACTER OF RECEIPTS . THIS IS THE AREA WHICH REQUIRES A LITTLE MORE CLARIFICATION AND ELABORATIO N AT OUR END. THE VERY FIRST LINE OF PARA 6 OF ARTICLE 13 OF THE DTAA MAKE S IT EXPLICITLY CLEAR THAT THE PROVISION OF PARAGRAPHS 1 AND 2 OF THIS ARTICLE SHALL NOT APPLY IF THE REQUISITE CONDITIONS ARE FULFILLED. THE LAST LINE OF PARA 6 SPELLS OUT THAT : IN SUCH CASE THE PROVISIONS OF ARTICLE 7 (BUSINESS PROFITS) SHALL APPLY . WE HAVE NOTICED SUPRA THAT PARA 1 OF ARTICLE 13 LAYS DOWN THAT THE AMOUNT OF ROYALTY OR FEES FOR TECHNIC AL SERVICES MAY BE TAXED IN THE STATE OF RESIDENCE OF THE RECIPIENT. P ARA 2 OF THIS ARTICLE PROVIDES THAT SUCH ROYALTIES AND FEES FOR TECHNICAL SERVICES MAY ALSO BE TAXED IN THE HANDS OF RECIPIENT IN THE STATE OF SOU RCE AT THE RATES PRESCRIBED THEREIN. PARA 6 OF ARTICLE 13 PROVIDES THAT IF THE REQUISITE CONDITIONS ARE SATISFIED, THEN THE PROVISIONS OF PA RAS 1 AND 2 OF THIS ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 55 ARTICLE SHALL NOT APPLY. IT MEANS THAT THE MANDATE CONTAINED IN PARAS 1 AND 2 OF ARTICLE 13 SHALL ABATE TO THE EXTENT OF TH E AMOUNT OF ROYALTY OR FEES FOR TECHNICAL SERVICES COVERED UNDER PARA 6 OF ARTICLE 13 OF THE DTAA. THE ANSWER TO - WHAT NEXT? - ON SUCH AMOUNT AS IS COVERED UNDER PARA 6, IS GIVEN IN THE LATER PART OF THE SA ME PARA, WHICH STATES THAT : IN SUCH CASE THE PROVISIONS OF ARTICLE 7 (BUSINESS PROFITS) SH ALL APPLY. ORDINARILY INCOME ARTICLES IN A DTAA FIRST CONTA IN THE JURISDICTIONAL CONDITIONS BY WHICH THE REVENUE IS A TTRACTED IN ITS SCOPE AND THEN THE MANNER OF COMPUTATION AND RATE OF TAXA TION. THE COMMAND OF PARA 6 OF ARTICLE 13 IN SENDING THE REVENUE FROM ROYALTIES AND FEES FOR TECHNICAL SERVICES TO BUSINESS PROFITS UNDER ARTICL E 7 IS LIMITED TO THE EXTENT OF SATISFACTION OF THE JURISDICTIONAL CONDIT ION FOR ATTRACTING THE INCLUSION OF THE AMOUNT IN THE FOLD OF ARTICLE 7. NOTHING FURTHER IS REQUIRED TO BE ESTABLISHED IN THIS REGARD THEREBY L EAVING THE MANNER OF COMPUTATION AND RATE OF TAXATION OF SUCH INCOME WIT HIN THE FOUR CORNERS OF ARTICLE 7. IT MEANS THAT SUCH AMOUNT OF ROYALTY OR FEES FOR TECHNICAL SERVICES IS FOR ALL PRACTICAL PURPOSES CONSIDERED A S BUSINESS PROFIT COVERED UNDER ARTICLE 7 AND AS SUCH, ALL THE CONSE QUENCES OF AN INCOME FALLING UNDER `BUSINESS PROFITS, SUCH AS THE MACH INERY FOR COMPUTATION OF INCOME AND RATE OF TAXATION MUTATIS MUTANDIS APPLY. IN OTHER WORDS, THE AMOUNT OF SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES ASSUMES THE CHARACTER OF BUSINESS PROFITS ON ITS ARRIVAL IN A RTICLE 7. SUCH AMOUNT WILL INTERMINGLE WITH OTHER BUSINESS PROFITS, IF AL READY AVAILABLE AS PER ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 56 ARTICLE 7 AND WILL SHED ITS CHARACTER OF ROYALTY OR FEES FOR TECHNICAL SERVICES IN SO FAR AS THE COMPUTATION OF INCOME AND ITS TAXATION UNDER THE DTAA IS CONCERNED. IT IS TOTALLY MISLEADING TO CONS TRUE THE AMOUNT OF ROYALTIES AND FEES FOR TECHNICAL SERVICES COMING TH ROUGH ARTICLE 13(6) TO ARTICLE 7 AS RETAINING THE SAME CHARACTER AS WAS TH ERE UNDER ARTICLE 13. IF FOR A MOMENT WE ACCEPT THE POINT OF VIEW CANVASSED BY THE ASSESSING OFFICER IN INCLUDING THE AMOUNT OF ROYALTIES OR FEE S FOR TECHNICAL SERVICES UNDER ARTICLE 7 BUT STILL APPLYING THE MANDATE OF A RTICLE 13 AS REGARDS COMPUTATION AND RATES OF TAXATION, THEN THE INSERTI ON OF PARA 6 TO ARTICLE 13 WOULD BECOME REDUNDANT AND MEANINGLESS. IT IS, THEREFORE, HELD THAT THE CONSIDERATION FOR RENDERING OF SERVICES BY THE EMPLOYEES OF THE FIRST CATEGORY IS CHARGEABLE TO TAX UNDER ARTICLE 7 OF TH E DTAA AND AS SUCH THE PROVISIONS DEALING WITH THE COMPUTATION AND THE TAXATION AS PROVIDED UNDER ARTICLE 7 SHALL APPLY PRO TANTO . SINCE SEPARATE DETAILS OF SUCH RECEIPTS AND ACTUAL EXPENSES INCURRED FOR EARNING T HEM ARE NOT AVAILABLE ON RECORD, WE REMIT THIS MATTER TO THE FILE OF ASSE SSING OFFICER FOR FRESH DETERMINATION OF THE AMOUNT OF INCOME IN TERMS OF A RTICLE 7 AS PER OUR ABOVE DISCUSSION AFTER ALLOWING A REASONABLE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. 19. WE, THEREFORE, ALLOW THE FIRST GROUND OF APPEAL BY HOLDING THAT THE SERVICES RENDERED BY THE EMPLOYEES OF THE FIRST CAT EGORY, BEING EIGHT DEPUTATIONISTS, CONSTITUTED SERVICE PE OF THE ASSE SSEE IN INDIA. THE IMPUGNED ORDER HOLDING OTHERWISE IS, THEREFORE, OV ERTURNED AND THE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 57 VIEW TAKEN BY THE A.O IS RESTORED. THE SECOND GROUN D ABOUT THE DIRECTION OF THE LD. CIT(A) THAT THE ENTIRE AMOUNT SHOULD BE CONSIDERED AS ROYALTY AND NOT AS BUSINESS INCOME IS PARTLY ALL OWED IN THE TERMS INDICATED ABOVE. 20.1. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION IS AGAINST THE DIRECTION GIVEN BY THE LD. CIT(A) THAT THE GROUND RELATING TO LEVY OF INTEREST U/S 234B IS CONSEQUENTIAL IN NATUR E. 20.2. AFTER CONSIDERING THE RIVAL SUBMISSIONS AN D PERUSING THE RELEVANT MATERIAL ON RECORD WE FIND IT AS UNDISPUTED FACT TH AT THE ASSESSEE INCLUDED THE ENTIRE AMOUNT OF ROYALTY AND FEES FOR TECHNICAL SERVICES IN ITS TOTAL INCOME BY TREATING IT AS COVERED UNDER AR TICLE 13(2) OF THE DTAA. THE CASE OF THE REVENUE IS THAT IT IS PARA 6 OF ARTICLE 13 WHICH WILL OPERATE IN THE PRESENT CASE FOR TAXING SUCH AM OUNT UNDER ARTICLE 7. THE RELIANCE OF THE LD. DR ON THE JUDGMENT DATED 7. 11.2013 RENDERED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS ALCATEL LUCENT USA INC. IS MISPLACED. IN THAT CASE THE HONBLE HIGH COURT H ELD THAT A NON- RESIDENT ASSESSEE WHICH DOES NOT ADMIT INCOME CHARG EABLE TO TAX IN HIS RETURN MUST BE INFERRED TO HAVE INDUCED THE INDIAN PAYER NOT TO DEDUCT TAX AT SOURCE AND HENCE HE IS LIABLE FOR INTEREST O N NON-PAYMENT OF ADVANCE TAX. IT HAS FURTHER BEEN LAID DOWN IN THIS CASE THAT WHERE THE ASSESSEE ADMITS THAT IT HAS INCOME CHARGEABLE TO TA X IN INDIA BUT DOES NOT PAY ADVANCE TAX ON THE GROUND THAT THE INDIAN PAYER OUGHT TO HAVE ITA NO. 540/DEL/2011 & CO NO. 73/DEL/2011 JC BAMFORD E XCAVATORS LTD. 58 DEDUCTED TAX AT SOURCE, NO LIABILITY FOR INTEREST U /S 234B ARISES. THE SECOND SITUATION CONSIDERED BY THE HONBLE DELHI HI GH COURT IN THE CASE OF ALCATEL LUCENT USA INC. (SUPRA) IS REITERATION OF THE VIEW TAKEN IN ITS EARLIER JUDGMENT IN DIT VS JACABS CIVIL INCORPORATED : (2011) 330 ITR 578 (DEL). AS THE ASSESSEE IN THE EXTANT CASE INCLUDED THE A MOUNT OF ROYALTY AND FEES FOR TECHNICAL SERVICES IN ITS TOTA L INCOME, IT IS THE RATIO DECIDENDI IN THE CASE OF JACABS CIVIL INCORPORATED (SUPRA) WHICH SHALL APPLY TO RELIEVE THE ASSESSEE FROM ANY INTEREST LIA BILITY U/S 234B OF THE ACT. THIS GROUND IS ALLOWED. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/03/2014. SD/- SD/- (A. D. JAIN ) (R. S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14/03/2014 *SUBODH* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR
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