ADIT (IT) - 3(1), MUMBAI V. M/s. HARVARD MEDICAL INTERNATIONAL. INC., USA, MUMBAI

ITA 1020/MUM/2008

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1747 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 24-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 11-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Charitable institution; Permanent establishment; Advance ruling
• Section: 143(3); 234B

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI . , , ! ! ! ! '# $% '# $% '# $% '# $% , ,, , & & & & ' ' ' ' BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 791/MUM./2008 ( &) * !+* / ASSESSMENT YEAR : 200405 ) HARVARD MEDICAL INTERNATIONAL INC. C/O PRICEWATERHOUSECOOPERS PVT. LTD. 252, VEER SAVARKAR MARG SHIVAJI PARK, DADAR MUMBAI 400 028 .. ,- / APPELLANT ) V/S DY. COMMISSIONER INCOME TAX INTERNATIONAL TAXATION3(1), MUMBAI .... ./,- / RESPONDENT , . / PERMANENT ACCOUNT NUMBER AABCH2171F . / ITA NO. 1020/MUM./2008 ( &) * !+* / ASSESSMENT YEAR : 200405 ) DY. COMMISSIONER INCOME TAX INTERNATIONAL TAXATION3(1), MUMBAI .. ,- / APPELLANT ) V/S HARVARD MEDICAL INTERNATIONAL INC. C/O PRICEWATERHOUSECOOPERS PVT. LTD. 252, VEER SAVARKAR MARG SHIVAJI PARK, DADAR MUMBAI 400 028 .... ./,- / RESPONDENT , . / PERMANENT ACCOUNT NUMBER AABCH2171F &) *1# 2 3 / ASSESSEE BY : MR. KANCHAN KAUSHAN A/W MR. DHANESH BAFNA 4 ! 2 3 / REVENUE BY : MR. MAHESH KUMAR HARVARD MEDICAL INTERNATIONAL INC. 2 )! 2 # / DATE OF HEARING 20.12.2012 $ 5+ 2 # / DATE OF ORDER 22.02.2013 $ $ $ $ / ORDER ./ ./ ./ ./ PER BENCH THESE CROSS APPEALS ARE DIRECTED AGAINST THE IMPUGN ED ORDER DATED 12 TH NOVEMBER 2007, PASSED BY THE LEARNED COMMISSIONER (APPEALS) XXXIII, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSE D UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), FOR THE ASSESSMENT YEAR 200405. SINCE THE GROUNDS RAISED BY EITHER PA RTY ARE INTERCONNECTED, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEAL S WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS CONSOLIDA TED ORDER. 2. WE FIRST TAKE UP ASSESSEES APPEAL IN ITA NO.791/MU M./2008. THE ASSESSEE, VIDE GROUNDS NO.1, 2 AND 3, HAS CHALLENGE D THE TAXABILITY OF A SUM OF US$ 9,82,500 RECEIVED BY THE ASSESSEE FROM THREE PARTIES NAMELY MAX INDIA LTD., WOCKHARDT HOSPITALS LTD. AND SRI RAMACH ANDRA MEDICAL COLLEGE & RESEARCH INSTITUTE. 3. FACTS IN BRIEF: THE ASSESSEE IS A NONRESIDENT AND IS INCORPORATED AS CORPORATION UNDER THE LAWS OF MASSACHUSETTS, U.S.A. IT HAS BEEN CLAIMED THAT IT IS A NONPROFIT EDUCATIONAL ENTITY WHICH HA S BEEN SETUP WITH THE FOLLOWING OBJECTIONS. EXCLUSIVELY TO PERFORM INTERNATIONALLY CERTAIN CHA RITABLE AND EDUCATIONAL FUNCTIONS OF AND TO CARRY OUT CERTAIN C HARITABLE AND EDUCATIONAL PURPOSES OF PRESIDENT AND FELLOWS OF HA RVARD COLLEGE (HARVARD) A CHARITABLE INSTITUTION FOR HIGHER EDUCA TION DULY INCORPORATED AND EXISTING UNDER THE LAWS OF THE COM MONWEALTH OF MASSACHUSETTS, AND OTHERWISE TO ADVANCE THE CHARITA BLE AND EDUCATIONAL OBJECTIVES OF HARVARDS MEDICAL SCHOOL (THE HARVARD MEDICAL SCHOOL), BY ASSISTING OTHER MEDICAL SCHOOLS , TO PROVIDE HIGH QUALITY MEDICAL TRAINING AND TO ENHANCE TIE QUALITY OF PATIENT CARE AND RESEARCH BY TEACHING TRAINING AND SHARING MEDICAL A ND HARVARD MEDICAL INTERNATIONAL INC. 3 TECHNOLOGICAL KNOW-HOW WITH SCIENTISTS AND HEALTH C ARE PROFESSIONALS IN COUNTRIES WHICH MAY NOT HAVE READY ACCESS TO SUCH I NFORMATION BY PARTICIPATING IN AND PROMOTING JOINT MEDICAL RESEAR CH INITIATIVES THROUGHOUT THE WORDS BY ASSISTING MEDICAL INSTITUTI ONS THROUGHOUT THE WORDS IN VARIOUS RELATED ADMINISTRATIVE AND MANAGEM ENT FUNCTIONS, AND BY PROVIDING SUCH OTHER CHARITABLE AND EDUCATIO NAL SERVICES IN THE MEDICAL FIELD TO AND FOR THE BENEFIT OF HARVARD MED ICAL SCHOOL AND SUCH OTHER ORGANIZATIONS AFFILIATED WITH, OR RELATED TO HARVARD AS HARVARD MAY DESIGNATE, PROVIDED THAT SUCH ORGANIZATIONS FUR THER THE EDUCATIONAL PURPOSES OF HARVARD AND ARE ORGANIZATIO NS DESCRIBED IN SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE OF 1 986, AS AMENDED FROM TIME TO TIME. 4. IN SHORT, THE BRIEF AREAS OF ACTIVITIES ARE (I) L EADERSHIP TRAINING; (II) UNDER GRADUATE MEDICAL EDUCATIONAL PROGRAMME; (III) CONTINUING MEDICAL EDUCATION; (IV) MEDICAL EDUCATIONAL EXCHANGE PROGRA MME; (V) CLINICAL RESEARCH TRAINING; AND (VI) CONSULTING SERVICES IN RELATION TO DEVELOPMENT OF HEALTH SYSTEM. IN PURSUANCE OF ITS OBJECTS, THE ASS ESSEE HAD ENTERED INTO COLLABORATION AGREEMENT WITH MAX INDIA LTD., A COMP ANY INCORPORATED IN INDIA (FOR SHORT MAX ), WOCKHARDT HOSPITALS LTD. (FOR SHORT WHL ) AND SRI RAMACHANDRA MEDICAL COLLEGE & RESEARCH INSTITUTE (F OR SHORT SRMCRI ), WHEREIN THE ASSESSEE WAS REQUIRED TO PROVIDE VARIOU S SERVICES TO THESE THREE PARTIES. DURING THE YEAR, THE ASSESSEE HAS RECEIVED FOLLOWING AMOUNTS: NAME OF CLIENT AMOUNT IN U.S. $ WOCKHARDT HOSPITALS LTD. 6,20,000 MAX INDIA LTD. 50,000 SRI RAMACHANDRA MEDICAL COLLEGE 3,12,500 TOTAL: 9,82,500 5. BESIDES THIS, AN AMOUNT OF U.S.D. 28695.39 WAS ALSO RECEIVED TOWARDS REIMBURSEMENT OF EXPENSES. THE AMOUNT SO RECEIVED W AS CLAIMED NOT TAXABLE IN INDIA IN THE ABSENCE OF PERMANENT ESTABL ISHMENT (FOR SHORT P.E ) IN TERMS OF ARTICLE5 R/W ARTICLE7 OF INDOU.S. DT AA. WITHOUT PREJUDICE, IT WAS ALSO CLAIMED THAT THE RECEIPTS IN QUESTION WERE NEITHER IN THE NATURE OF FEES FOR INCLUDED SERVICE UNDER ARTICLE 12(4)(B) NOR AS ROYALTY . HARVARD MEDICAL INTERNATIONAL INC. 4 6. BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE ASSESSEE HAS PROVIDED HEALTH CARE RELATED SERVICES TO MAX AND WH L IN PURSUANCE OF TERMS AND CONDITIONS OF THE RESPECT SERVICE AGREEMENTS AN D DETAIL SUBMISSIONS WERE MADE WITH REGARD TO ITS CLAIM OF NONTAXABILIT Y IN INDIA. THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN INCORPORATED BY THE ASSESSING OFFICER FROM PAGES3 TO 11 OF THE ASSESSMENT ORDER. THE ASS ESSING OFFICER REJECTED THE ASSESSEES CONTENTIONS ON THE GROUND THAT, FROM THE READING OF MEMORANDUM OF AGREEMENT ENTERED WITH THEM IT IS SEE N THAT THE ASSESSEE HAS GIVEN ITS RIGHTS OVER THE THREE PARTIES TO USE THEIR COPYRIGHT ITEMS, DELIVERABLES, NAME, LOGOS, ETC. WITH LIMITED RESTRI CTIONS AND THE PART OF IT WILL FALL WITHIN THE PURVIEW OF ROYALTIES , AS GIVEN IN ARTICLE12(3) AND PART OF IT WILL FALL WITHIN THE MEANING OF FIS, AS GIVEN IN AR TICLE12(4). THE REIMBURSEMENT OF EXPENDITURE WAS ALSO HELD TO BE TA XABLE AS PER THE SPECIFIED RATES GIVEN IN ARTICLE12. THUS, AFTER AP PLYING THE PROVISIONS OF RULE10 OF INCOMETAX RULES, 1962, HE APPORTIONED 9 0% AS INCOME FROM ROYALTY AND 10% AS INCOME FROM FIS. THUS, AN ADDITI ON OF ` 4,59,35,280, WAS MADE AFTER CONVERTING THE SAME IN INR. 7. BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSE SSEE REFERRED TO VARIOUS CLAUSES OF THE AGREEMENT ENTERED INTO BY TH E ASSESSEE WITH MAX, WHL AND SRMCRI AND SUBMITTED THAT NONE OF THE SERVI CES PROVIDED FALL WITHIN THE REALM OF ROYALTY OR FIS . THE NATURE OF SUCH SERVICES RENDERED BY THESE PARTIES WERE ILLUSTRATED AS UNDER: SERVICES RENDERED BY HMI TO WHL A. CONSULTANCY AND EDUCATION AND TRAINING SERVICES CONSULTING IN RELATING TO HEALTH CARE PROJECTS PROVIDE ONGOING CONSULTATION / ADVICE TO WHLS CORP ORATE LEADERSHIP AND STAFF ADVISE ON ALIGNING SYSTEMS TO ADDRESS INSURANCE NEE DS TO ENABLE WHLS PROACTIVE APPROACH IN HEALTH CARE. HARVARD MEDICAL INTERNATIONAL INC. 5 EDUCATION & TRAINING PROGRAMS IN RELATION TO SYSTEM -WIDE CORE COMPETENCIES EDUCATIONAL PROGRAMS TO WHL NURSE MANAGER/EDUCATO R. CONDUCT WORKSHOPS AND UNDERTAKE CONTINUING MEDICA L AND NURSING EDUCATION PROGRAMS FOR W HL STAFF. TRAINING THROUGH HEALTH CARE SPECIALLY PROGRAMS T O HOSPITAL MANAGERS AND/OR CLINICIONS. FACILITY SPECIFIC DELIVERABLES (NEW CARDIAC HOSPITA L AND NEW WOMENS HOSPITAL) CONDUCT ASSESSMENT TO EVALUATE AND MAKE RECOMMEN DATIONS ON OPERATIONAL AND EDUCATIONAL NEEDS AND PRIORITIES FO R HOSPITAL STALL CONDUCT SITE SPECIFIC IT ASSESSMENT TO EVALUATE NEEDS, PRIORITIES AND TRAINING REQUIRED. PROVIDE QUALITY MANAGEMENT EDUCATION AND TRAININ G, ASSESSMENTS AND AUDITS MONITORING THE OPERATIONAL EFFICIENCY AND OVERALL P ROGRESS OF THE PROJECT PROVIDE SITE SPECIFIC HEALTH CARE QUALITY IMPROV EMENT EDUCATION AND TRAINING B. SERVICES IN RELATION TO WOCKHARDT AWARDS ADVISE AND ASSIST WHL IN DEVELOPING THE NOMINATION AND SELECTION PROCESS OF AWARDEES FOR THE W OCKHARDT AWARDS MANAGE THE NOMINATION PROCESS AND THE SELECTION OF THE APPROPRIATE AWARDEES PROVIDE PROFESSIONAL DEVELOPMENT PROGRAMS AND OP PORTUNITIES FOR ACADEMIC INTERACTION TO THE AWARDEES PROVIDE INTERNATIONAL PLATFORM TO THE AWARDEES B Y WAY OF INVITATIONS FOR DELIVERING A SCIENTIFIC ADDRESS. SERVICES RENDERED BY HMI TO MAX REVIEWING CONCEPT, DESIGN, SERVICE PROFILE AND L AYOUT OF NEW HOSPITALS SERVICES RENDERED BY HMI TO SRMCI ASSESS ANNUAL EDUCATIONAL PROGRAM NEEDS OF SRMCI. HARVARD MEDICAL INTERNATIONAL INC. 6 PROVIDE MONTHLY CONTINUING MEDICAL EDUCATION VIDE OCONFERENCES WITH HARVARD UNIVERSITY FACULTY. COORDINATE AND MANAGE THE CLINICAL CLERKSHIPS AND STUDENT EXCHANGES FOR STUDENTS AND TRAINEES PROVIDE TRAINING AND EDUCATIONAL WORKSHOPS IN CUR RICULUM DEVELOPMENT AND IN MEDICAL EDUCATION LEADERSHIP PROVIDE ELEARNING SUPPORT ASSIST IN DEVELOPMENT AND SELECT PROGRAMS IN EDUC ATION, CLINICAL CARE AND RESEARCH JOINTLY SPONSOR INTERNATIONAL PROFESSIONAL DEVELO PMENT AND CONTINUING MEDICAL EDUCATION EVENTS AND PROGRAMS OF HMI. 8. FURTHER, THE ASSESSEE ALSO MADE DETAIL SUBMISSIONS AS TO HOW PROVISIONS OF ARTICLE12(3) AND (4) WILL NOT BE APP LICABLE. THE LEARNED COMMISSIONER (APPEALS), AFTER DISCUSSING VARIOUS CL AUSES OF THE AGREEMENT, HELD THAT, IN THE APPEAL FOR THE ASSESSMENT YEAR 20 0203 AND 200304, THE LEARNED COMMISSIONER (APPEALS) HAS HELD THAT INSOFA R AS THE PAYMENT RECEIVED FROM MAX IS CONCERNED, THE ENTIRE AMOUNT S HOULD BE TREATED AS FIS AND SHOULD BE TAXED @ 15%. WITH REGARD TO RECEIPTS FROM WHL IS CONCERNED, RELYING UPON THE EARLIER YEARS ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS), HE HELD THAT 50% OF THE RECEIPTS SHOULD BE TREATED AS PAYMENT ATTRIBUTABLE TO TEACHING AS AN EDUCATIONAL INSTITUT ION AND THE SAME CANNOT BE CONSIDERED AS FIS AND THE REMAINING 50% HAS TO BE T AXED AS ROYALTY. FURTHER, WITH REGARD TO SRMCRI, THE PAYMENT OF 60% WILL NOT COME UNDER FIS, WHEREAS 40% WILL COME UNDER ROYALTY. THEREFORE , HE DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION TO THE EXT ENT OF 60% AND TAXED 40% OF THE RECEIPT AS ROYALTY. REGARDING REIMBURSEMENT OF EXPENDITURE, HE HELD THAT SINCE HE HAS ALREADY HELD THAT THE AMOUNT RECE IVED FROM WHL IS NOT TAXABLE AS FIS, THEREFORE, REIMBURSEMENT OF EXPENDI TURE WILL ALSO TO BE NOT TAXABLE, HENCE, THE SAME WAS DELETED. 9. BEFORE US, THE LEARNED COUNSEL, MR. KANCHAN KAUSHAL , SUBMITTED THAT THE PAYMENT RECEIVED FROM MAX AND WHL WAS A SUBJECT MATTER OF CONSIDERATION BEFORE THE TRIBUNAL IN THE ASSESSMENT YEARS 200203 AND HARVARD MEDICAL INTERNATIONAL INC. 7 200304 AND IN CASE OF MAX, IT WAS ALSO THERE IN AS SESSMENT YEAR 200001. THE TRIBUNAL, AFTER DISCUSSING THE ENTIRE AGREEMENT ENTERED WITH BOTH THE PARTIES AND THE NATURE OF SERVICES RENDERED, HELD T HAT THE SAME IS NOT TAXABLE. HE REFERRED TO THE RELEVANT PARAGRAPHS AND FINDINGS OF THE TRIBUNAL GIVEN IN DIFFERENT YEARS. 10. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, SUBMITTED THAT INSOFAR AS MAX AND WHL ARE CONCERNED, THE AGRE EMENTS WHICH WERE THERE IN THE EARLIER YEARS, IS ALSO APPLICABLE IN T HIS YEAR AND, ACCORDINGLY, HE FAIRLY AGREED THAT THE ISSUE IS QUITE SIMILAR TO TH E ISSUE RAISED IN THE EARLIER YEARS. HE, HOWEVER, SUBMITTED THAT THE REASONING GI VEN BY THE ASSESSING OFFICER AS WELL AS BY THE LEARNED COMMISSIONER (APP EALS) SHOULD BE AFFIRMED. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS OF THE T RIBUNAL IN ASSESSEES CASE RENDERED IN EARLIER ASSESSMENT YEARS. WITH REGARD T O THE PAYMENT RECEIVED FROM MAX, WE FIND THAT THE TRIBUNAL HAS DEALT WITH THIS ISSUE IN THE FOLLOWING MANNER: ASSESSMENT YEAR 200001 14. WE HAVE ALREADY SET OUT THE NATURE OF SERVICE S TO BE RENDERED BY THE ASSESSEE TO MAX INDIA LTD. A PERUSAL OF THE CL AUSES OF AGREEMENT DATED 1.3.1999 BETWEEN THE ASSESSEE AND MAX INDIA L TD. CLEARLY SHOWS THAT THEY ARE PURELY IN THE NATURE OF ADVISOR Y SERVICES. NOTHING IS MADE AVAILABLE TO MAX INDIA LTD. BY THE ASSESSEE . AS TO WHETHER OR NOT GIVING ADVISORY SERVICES CAN BE CONSIDERED TO B E MAKING AVAILABLE INCLUDED SERVICES, EXAMPLE NO. 7 GIVEN IN THE MOU B ETWEEN INDIA AND USA ON THE DTAA THROWS SOME MORE LIGHT ON THE UNDER STANDING OF THE GOVERNMENT S OF INDIA AND THE USA ON THE SUBJECT. T HIS EXAMPLE IS AS FOLLOWS :- FACTS : THE INDIA VEGETABLE OIL MANUFACTURING FIRM HAS MASTERED THE SCIENCE OF PRODUCING CHOLESTEROL FREE OIL AND WISHES TO MARKET THIS PRODUCT WORLDWIDE. IT HIRES A N AMERICAN MARKETING CONSULTANCY FIRM TO DO COMPUTER SIMULATION OF THE WORLD MARKET FOR SUCH OIL AND TO ADVISE IT ON MARKETING STRATEGIES. ARE THE FEES PAID TO TH E US COMPANY FOR INCLUDED SERVICES? ANALYSIS : THE FEES WOULD NOT BE FOR INCLUDED SERVI CES. THE AMERICAN COMPANY IS PROVIDING A CONSULTANCY WHICH INVOLVES THE USE OF SUBSTANTIAL TECHNICAL SKILL AND HARVARD MEDICAL INTERNATIONAL INC. 8 EXPERTISE. IT IS, HOWEVER, MAKING AVAILABLE TO THE INDIAN COMPANY ANY TECHNICAL EXPERIENCE, KNOWLEDGE OR SKIL L ETC. NOR IS IT TRANSFERRING A TECHNICAL PLAN OR DESIGN. WHAT IS TRANSFERRED TO THE INDIAN COMPANY THROUGH THE SERVI CE CONTRACT IS COMMERCIAL INFORMATION. THE FACT THAT T ECHNICAL SKILLS WERE REQUIRED BY THE PERFORMER OF THE SERVIC E IN ORDER TO PERFORM THE COMMERCIAL INFORMATION DOES NO T MAKE THE SERVICE A TECHNICAL SERVICE WITHIN MEANING OF PARA (4)(B). THIS EXAMPLE, SET OUT IN THE MOU BETWEEN THE INDIAN AND US GOVERNMENTS, ALSO MAKES IT CLEAR THAT CONSIDERATION FOR ADVISORY SERVICES RENDERED CANNOT BE TREATED AS FEES FOR INC LUDED SERVICES UNDER ARTICLE 12(4)(B). 15. WE WILL NOW DEAL WITH THE DECISIONS REFERRED T O BY LEARNED CIT(A) IN SUPPORT OF HIS CONCLUSIONS. THE DECISION IN THE CASE OF ADVANCE RULING PETITION NO. P-6 OF (1995) 234 ITR 371 WAS A CASE WHERE ADMITTEDLY THERE WAS A SITUATION WHERE TECHNOLOGY W AS MADE AVAILABLE. SO ALSO IN THE CASE OF ADVANCE RULING P. NO. 13 OF 1995 228 ITR 487. THE DECISION IN THE CASE OF CESC LTD. (SUP RA) ACTUALLY SUPPORTS THE PLEA OF THE ASSESSEE. FOR THE REASONS SET OUT ABOVE, WE ARE OF THE VIEW THAT LEARNED CIT(A) INDEED ERRED IN HOLDING THAT THE MONIES RECEIVED BY THE ASSESSEE FROM MAX INDIA LTD. CONSTITUTE FEES FOR INCLUDED SERVICES WITHIN THE MEANING OF ARTICL E 12(4) OF THE INDIA- US TREATY, AND ARE ACCORDINGLY LIABLE TO BE TAXED I N INDIA. SINCE, THE ASSESSEE DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, THE INCOMES SO ARISING TO THEM IN INDIA CANNOT BE TAXED UNDER ARTICLE 7 AS BUSINESS PROFITS EITHER. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITIONS. ASSESSMENT YEAR 200203 25. THIS APPEAL IS DIRECTED AGAINST THE ORDER DATED 31.3.2005 OF LEARNED CIT(A)-XXXIII, MUMBAI RELATING TO A.Y. 2001 -02. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THE APPEAL B Y THE ASSESSEE IS WITH REGARD TO TAXABILITY OF RECEIPT BY THE ASSESSEE DUR ING THE PREVIOUS YEAR FROM MAX INDIA LIMITED. WHILE DECIDING THE APPEAL O F THE ASSESSEE FOR A.Y. 2000-01, WE HAVE ALREADY HELD THAT RECEIPT BY THE ASSESSEE FROM MAX IS NOT IN THE NATURE OF FIS AND THE SAME CANNOT BE BROUGHT TO TAX IN INDIA. FOR THE REASONS STATED THEREIN, WE HOLD T HAT RECEIPT DURING THE PREVIOUS YEAR BY THE ASSESSEE FROM MAX CANNOT B E BROUGHT TO TAX IN INDIA. APPEAL OF THE ASSESSEE IS ACCORDINGLY ALL OWED. ASSESSMENT YEAR 200203 13. THE LEARNED D.R. SUBMITTED BEFORE US THAT ONCE THE ASSESSEE GIVES MATERIAL IN THE FORM OF STANDARD OPERATING PR OCEDURES, TECHNICAL ADVICE ETC., IT MAKES AVAILABLE TO MAX KNOWLEDGE, E XPERIENCE, SKILL, KNOW-HOW AND IN THIS REGARD BROUGHT TO OUR NOTICE C ERTAIN CLAUSES OF THE AGREEMENT. IN THIS REGARD OUR ATTENTION WAS DR AWN TO EXHIBIT-A OF THE AGREEMENT DT.1.3.2000. HE LAID EMPHASIS ON THE FACT THAT THERE WAS REFERENCE TO OBJECTIVE OF ENSURING THAT MAX ENJ OYS CONTINUED HARVARD MEDICAL INTERNATIONAL INC. 9 STATUS AS AN HMI ASSOCIATED INSTITUTION. WE HAVE G IVEN A CAREFUL CONSIDERATION TO THE ABOVE SUBMISSION OF THE LEARNE D D.R. AND ARE OF THE VIEW THAT THE SAME IS WITHOUT ANY MERIT. EXHIB IT A REFERRED TO BY THE LEARNED D.R. IS PLAN ENVISAGED IN DIFFERENCE PH ASES. ALL THE PHASES ONLY REFERS TO ADVISE GIVEN BY THE ASSESSEE TO MAX TO ACHIEVE EXCELLENCE IN HOSPITAL MANAGEMENT LIKE MEDICAL EQUI PMENT TO BE USED, NUMBER OF MEDICAL STAFF REQUIRED, ON-SITE TRAINING REQUIRED ETC. THESE SERVICES DO NOT MAKE AVAILABLE ANY TECHNICAL KNOWLE DGE, EXPERIENCE, SKILL, KNOW-HOW, AS EXPLAINED IN THE DECISIONS REFE RRED TO IN THE ORDER OF THE TRIBUNAL IN ASSESSEES CASE FOR AY 00-01 AND 01-02. WE THEREFORE REJECT THE CONTENTIONS OF THE LEARNED D.R . BEFORE US AND RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSESS OWN CASE FOR AY 00-01 AND 01-02, HOLD THAT LEARNED CIT( A) INDEED ERRED IN HOLDING THAT THE MONIES RECEIVED BY THE ASSESSEE FR OM MAX INDIA LTD. CONSTITUTE FEES FOR INCLUDED SERVICES WITHIN THE MEANING OF ARTICLE 12(4) OF THE INDIA-US TREATY, AND ARE ACCORDINGLY L IABLE TO BE TAXED IN INDIA. SINCE, THE ASSESSEE DOES NOT HAVE ANY PERMAN ENT ESTABLISHMENT IN INDIA, THE INCOMES SO ARISING TO THEM IN INDIA C ANNOT BE TAXED UNDER ARTICLE 7 AS BUSINESS PROFITS EITHER. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITIONS. THE RELE VANT GROUNDS OF CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. 12. INSOFAR AS THE PAYMENT RECEIVED FROM WHL IS CONCERN ED, WE FIND THAT THIS ISSUE HAS ALSO BEEN DEALT WITH BY THE TRIBUNAL IN ASSESSMENT YEARS 200203 AND 200304 IN THE FOLLOWING MANNER: ASSESSMENT YEAR 200203 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE ARE OF THE VIEW THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE CAN NEITHER BE SAID TO BE ROYALTY NOR FIS. THE PAYMENT IN QUESTION WAS PU RELY FOR THE PURPOSE OF ADVISING, RECOMMENDING AND ASSISTING IN RELATION TO HEALTHCARE PROJECTS. IT WAS ALSO FOR CONDUCTING ED UCATION AND TRAINING PROGRAMMES. IT WAS ALSO FOR THE PURPOSE OF REVIEW AND GIVING FEED BACK OF VARIOUS ASPECTS AND NEW CARDIAC HOSPITAL TO BE SET UP, RECOMMENDATION ON PLANNED PATIENT CARE DELIVERY SYS TEM. IN PAGE 15A TO 15D OF THE CIT(A)S ORDER A SUMMARY OF THE A CTIVITIES UNDERTAKEN BY THE ASSESSEE FOR WHL HAVE BEEN GIVEN. A PERUSAL OF THE SAME SHOWS THAT THE CONSIDERATION RECEIVED BY T HE ASSESSEE CANNOT BE SAID TO BE ROYALTY AS THEY WERE NOT A PAY MENT FOR USE OF ORDER, THE RIGHT TO USE ANY COPY RIGHT, TRADEMARK O R INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE. SIMILARLY THE ASSESSEE DID NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL KNOWHOW OR PROCESS. THE DECISION OF THE DELHI BENCH OF THE IT AT IN THE CASE OF SHERATON INTERNATIONAL INC.(SUPRA) SUPPORTS THE PLE A OF THE ASSESSEE THAT WHERE THE AGREEMENT BETWEEN THE PARTIES PROVID ES THAT THERE WAS NO ECONOMIC CONSIDERATION FOR RIGHT TO USE THE NAME IT CANNOT BE SAID THAT ANY PAYMENT CAN BE CALLED ROYALTY. SO ALSO TH E CONSIDERATION PAID IN A LUMPSUM CANNOT BE SPLIT AS A PART BEING IN THE NATURE OF ROYALTY AND ANY PART BEING IN THE NATURE OF FIS AS LAID DOW N IN THE CASE OF HARVARD MEDICAL INTERNATIONAL INC. 10 MOTOROLA INC.(SUPRA). THE PAYMENT CANNOT BE SAID T O BE FIS FOR THE REASON THAT NOTHING IS MADE AVAILABLE BY THE ASSESS EE TO WHL AND IN THIS REGARD, THE OBSERVATIONS WHILE DECIDING PAYMEN TS RECEIVED BY THE ASSESSEE FROM MAX WOULD BE EQUALLY APPLICABLE TO TH E PAYMENTS RECEIVED FROM WHL ALSO. WE ARE OF THE VIEW THAT TH E ENTIRE PAYMENT RECEIVED BY THE ASSESSEE FROM WHL IS IN THE NATURE OF BUSINESS PROFITS AND SINCE THE ASSESSEE DOES NOT HAVE A PE IN INDIA THE SAME CANNOT BE BROUGHT TO TAX IN INDIA. CONSEQUENTLY, GROUND N O.2 & 3 OF THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. ASSESSMENT YEAR 200304 28. ITA NO.1559/M/07 IS AN APPEAL BY THE REVENUE A GAINST THE ORDER DATED 26/10/2006 OF CIT(A) 33, MUMBAI RELATING TO A .Y 2003-04 AND C.O NO.146/M/07 IS A CROSS OBJECTION BY THE ASSESSE E AGAINST THE VERY SAME ORDER OF THE CIT(A). THE GROUND RAISED BY THE REVENUE IN ITS APPEAL AND GROUND NO.1 TO 3 RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION ARE IDENTICAL TO THE GROUNDS 1 & 2 RAISED BY THE REVENUE IN ITS APPEAL ITA 1558/M/07 AND GROUND NO.1 TO 3 IN TH E CROSS OBJECTION NO.145/M/07 RAISED BY THE ASSESSEE IN THIS CROSS OB JECTION FOR A.Y 2002-03. FOR THE REASONS GIVEN WHILE DECIDING IDEN TICAL GROUNDS IN A.Y 2002-03, WE DISMISS THE GROUNDS RAISED BY THE REVEN UE AND ALLOW GROUND NO.1 TO 3 RAISED BY THE ASSESSEE IN ITS CROS S OBJECTION. BOTH THE PARTIES AGREED THAT THE FACTS AND CIRCUMSTANCES PREVAILING IN BOTH THE A.YS ARE IDENTICAL. GROUND NO.4 RAISED BY THE ASSESSEE IN CROSS OBJECTION NO.146/M/07 RELATING TO CHARGING OF INTER EST IS ACADEMIC AND DOES NOT REQUIRE ANY ADJUDICATION. 13. CONSISTENT WITH THE AFORESAID VIEW TAKEN BY THE TRI BUNAL IN ASSESSEES OWN CASE, WE HOLD THAT THE PAYMENTS RECEIVED FROM M AX DOES NOT CONSTITUTE FIS WITHIN THE MEANING OF ARTICLE 12(4), AS NOTHING IS MADE AVAILABLE BY THE ASSESSEE TO MAX AND ALSO THE ASSESSEE DOES NOT HAVE ANY P.E. IN INDIA, THEREFORE, THE INCOME SO ARISING TO THE ASSESSEE IN INDIA CANNOT BE TAXED UNDER ARTICLE7 AS BUSINESS PROFIT . 14. IN CASE OF WHL ALSO, WE HOLD THAT IT IS NEITHER TAX ABLE AS FIS NOR AS ROYALTY AND ALSO THE ASSESSEE DOES NOT HAVE ANY P.E . IN INDIA AND, THEREFORE, THE PAYMENT RECEIVED BY IT CANNOT BE TAXED IN INDIA . ACCORDINGLY, CONSISTENT WITH THE VIEW TAKEN IN EARLIER YEARS IN ASSESSEES OWN CASE, WE ALLOW GROUNDS NO.1 AND 2, RAISED BY THE ASSESSEE. 15. NOW, COMING TO THE PAYMENT RECEIVED FROM SRMCRI, TH E LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT EVEN THO UGH THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) HAVE HELD THAT THE HARVARD MEDICAL INTERNATIONAL INC. 11 AGREEMENT ENTERED WITH THE ASSESSEE AND SRMCRI ARE SIMILAR TO WHL, HOWEVER, THERE IS REMARKABLE DIFFERENCE, WHICH IS E VIDENT FROM THE FACT THAT IN CASE OF MAX, THE CONSIDERATION RECEIVED IS FOR R ENDERING OF SERVICES AS NOTED BY THE TRIBUNAL IN THE EARLIER YEARS. THERE W AS NO USE OF LOGO OR TRADE MARK AND NOTHING WAS TO BE PAID FOR SUCH USAGE. EVE N IN CASE OF WHL, THE PAYMENT WAS PURELY FOR RENDERING OF SERVICES AND NO CONSIDERATION HAS BEEN EARMARKED FOR USE OF LOGO AND TRADE MARK. IN BOTH T HE AGREEMENTS, THERE IS A SPECIFIC FINDING THAT THERE IS NO ECONOMIC CONSID ERATION FOR USAGE OF LOGO AND TRADE MARK. WHEREAS IN CASE OF SRMCRI, APART FR OM AGREEMENT FOR SERVICES, THERE WAS ALSO A CASE FOR USAGE OF NAME O F HARVARD MEDICAL INTERNATIONAL ASSOCIATION INSTITUTE , I.E., THE NAME OF THE ASSESSEE AND, THEREFORE, THERE WAS A USE OF LOGO / TRADE NAME. TH E BASIC PART OF THE DELIVERABLES WAS THE USAGE OF STATUS OF THE NAME OF THE ASSESSEE. HE REFERRED TO THE ATTACHMENT A AND B TO MEMORANDU M OF AGREEMENT BETWEEN SRMCRI AND THE ASSESSEE AND SUBMITTED THAT ONCE THERE IS A USAGE OF NAME, IT IS CLEAR CUT CASE OF USAGE OF LOGO AND HENCE, THE PAYMENT HAS TO BE TREATED AS ROYALTY. THE OTHER CLAUSES OF DELIVER ABLES AND SERVICES ARE MERE INCIDENTAL, THE DOMINANT OBJECT OF THE AGREEME NT HAS TO BE SEEN AND THIS ASPECT HAS NEITHER BEEN CONSIDERED BY THE LEAR NED COMMISSIONER (APPEALS) NOR BY THE ASSESSING OFFICER, THEREFORE, THE ENTIRE AMOUNT IN CASE OF SRMCRI SHOULD BE HELD AS ROYALTY . IN SUPPORT OF HIS CONTENTIONS, HE STRONGLY RELIED UPON THE DECISION OF THE TRIBUNAL I N SHERATON INTERNATIONAL INC. V/S DEPUTY DIRECTOR OF INCOME-TAX, [2007] 107 ITD 0120 (MUM.). FURTHER RELIANCE WAS ALSO PLACED ON THE DECISION OF AAR IN CASE OF MERSEN INDIA PVT. LTD. AAR NO.1074/2010, ORDER DATED 16 TH APRIL 2012 AND DREW OUR ATTENTION TO PARA18 AND 19 THAT IF ONE OF THE TERM S OF AGREEMENT FALLS WITHIN THE PARAMETERS OF SERVICES AS GIVEN IN ARTIC LE, THE SAME HAS TO BE TREATED AS DOMINANT OBJECT AND IS TO BE TAXED IN IN DIA. THE SUM AND SUBSTANCE OF HIS SUBMISSIONS WERE THAT IF THE MAIN PURPOSE OF THE AGREEMENT IS FOR USAGE OF LOGO OR TRADE NAME, THE SAME IS TO BE TAXED AS ROYALTY EVEN IF THERE ARE INCIDENTAL SERVICES NOT FALLING WITHIN TH E MEANING OF FIS. WITH REGARD TO THE LEARNED COMMISSIONER (APPEALS)S OBSE RVATION THAT THE ASSESSEE IS PROVIDING TEACHING SERVICES IS NOT CORR ECT, AS THE TEACHING AND HARVARD MEDICAL INTERNATIONAL INC. 12 TRAINING ARE TWO DIFFERENT ACTIVITIES AND IN CASE O F SRMCRI, IT IS A CASE OF TRAINING AND, THEREFORE, DOES NOT FALL WITHIN THE P URVIEW OF THE WORD TEACHING AS GIVEN IN ARTICLE12(5)(C). ALTERNATIVELY, THE L EARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN CASE IT DOES NOT FALL WITHIN THE PURVIEW OF ROYALTY , IT FALLS WITHIN THE PURVIEW OF FTS SINCE THE AGREEMENT IS FOR EDUCATION AND TRAINING AND NOT FOR EDUCATION AND TEACHING. 16. IN THE REJOINDER, THE LEARNED COUNSEL SUBMITTED THA T THE LEARNED DEPARTMENTAL REPRESENTATIVE CANNOT TAKE CONTRARY ST AND AS ONE TAKEN BY THE ASSESSING OFFICER / LEARNED COMMISSIONER (APPEALS), BECAUSE BOTH THE AUTHORITIES HAVE CATEGORICALLY HELD THAT THE SERVIC ES RENDERED IN PURSUANCE TO THE AGREEMENT ENTERED WITH SRMCRI ARE SIMILAR TO TH AT OF MAX AND WHL. HE POINTED OUT RELEVANT OBSERVATIONS OF THE ASSESSING OFFICER AS WELL AS THE LEARNED COMMISSIONER (APPEALS). REGARDING NONAPPLI CABILITY OF EARLIER YEARS TRIBUNAL ORDER WITH REGARD TO THE AGREEMENT OF SRMCRI, HE SUBMITTED THAT IN CASE OF SRMCRI ALSO, THERE IS NO SEPARATE E CONOMIC CONSIDERATION EARMARKED FOR USE OF NAME AND LOGO. IN FACT, SIMILA R CLAUSES ARE THERE IN THE CASE OF MAX AS WELL AS WHL. THE AGREEMENT IN ESSENC E IS THAT OF SERVICE CONTRACT AND NOT AN AGREEMENT FOR USE OF NAME AND L OGO. REGARDING DECISION OF SHERATON INTERNATIONAL INC. (SUPRA), CITED BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE IN SUPPORT OF THE CONTENTIONS THAT D OMINANT PURPOSE OF THE AGREEMENT HAS TO BE SEEN WHICH WAS FOR THE USE OF L OGO AND NOT FOR RENDERING SERVICES, HE SUBMITTED THAT ATTACHMENT A REFERRED TO BY THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT MUCH SI GNIFICANCE AS IT MERELY STATES CURRENT STATUS OF HARVARD MEDICAL INTERNATIO NAL ASSOCIATION INSTITUTE (SUPRA). THE SAID CLAUSE IS ALSO AVAILABLE IN THE A GREEMENTS WITH WHL AND MAX. IN SUPPORT OF THIS, HE HAS FILED A COPY OF THE AGREEMENT WITH THAT OF MAX AND WHL. THE COMMISSIONER (APPEALS) IN ANNEXURE -I TO THE ORDER HAS GIVEN DETAIL DESCRIPTION OF THE SERVICES RENDERED W HICH CLARIFIES THE DOMINANT PURPOSE WHICH WAS FOR RENDERING OF SERVICES AS GIVE N IN THE AGREEMENT AND USE OF NAME WAS ONLY INCIDENTAL. THE ESSENCE OF THE AGREEMENT AND THE DOMINANT PURPOSE HAS ALSO BEEN DEALT WITH BY THE TR IBUNAL IN THE ENTIRE YEARS. HARVARD MEDICAL INTERNATIONAL INC. 13 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED C OMMISSIONER (APPEALS). THE CONTENTIONS OF THE LEARNED DEPARTMENTAL REPRESE NTATIVE BEFORE US IS THAT IN CASE OF SRMCRI, THE MAIN PURPOSE OF THE AGREEMEN T WAS THE USE OF LOGO OR NAME OF THE ASSESSEE AND, THEREFORE, THE SAME SH OULD FALL WITHIN THE AMBIT OF ROYALTY . IT IS SEEN THAT THE LEARNED COMMISSIONER (APPEALS ), IN ANNEXURE TO THE APPELLATE ORDER, HAS HIGHLIGHTED VA RIOUS PROGRAMMES CONDUCTED BY THE ASSESSEE FOR SRMCRI WHICH IS MAINL Y ORIENTATION OF VARIOUS TEACHING ON MEDICAL AND HEALTH RELATED ISSUES VIA V IDEO CONFERENCE. EVEN AS PER THE AGREEMENT, DOMINANT PURPOSE IS FOR PROVIDIN G EDUCATION AND TRAINING PROGRAMMES AND THE USE OF THE ASSESSEES NAME IS ON LY INCIDENTAL FOR CARRYING OUT SUCH TEACHING AND TRAINING ACTIVITIES. IT IS FURTHER SEEN THAT SIMILAR USAGE OF NAME IS THERE IN THE AGREEMENT WIT H WHL AND MAX. THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 200203 AND 200304 HAVE CONSIDERED EXACTLY THE SIMILAR CONTENTION AS H AS BEEN RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE AS IN THOSE YEA RS, THE ASSESSING OFFICERS CASE WAS THAT USE OF THE NAME HARVARD AMOUNTS TO USE OF LOGO AND, THEREFORE, 90% OF THE PAYMENT IS ATTRIBUTABLE TO RIGHT TO USE THE LOGO. THIS ASPECT OF THE MATTER HAS BEEN DEALT WITH IN PA RAS8 AND 9, OF THE APPELLATE ORDER WHICH, FOR THE SAKE OF READY REFERE NCE, IS REPRODUCED BELOW: 8. THE CONSIDERATION PAYABLE FOR SERVICES TO BE RE NDERED BY THE ASSESSEE TO WHL HAS BEEN SET OUT IN CLAUSE2 OF THE AGREEMENT. CLAUSE3, OF THE AGREEMENT PROVIDES FOR USE OF THE NAME OF THE ASSESSEE BY WHL. THE RELEVANT PORTIONS THEREOF ARE AS FOLLOWS: 3. USE OF NAMES; INTELLECTUAL PROPERTY:- (A) SUBJECT TO THE TERMS OF THIS MOA, AND FOR THE D URATION THEREOF WHL, THE EXISTING CARDIAC HOSPITAL AND THE EXISTING KIDNEY HOSPITAL, AND, WHEN DEVELOPED, THE PROPOSE CARDIAC HOSPITAL A ND THE PROPOSED WOMENS HOSPITAL, EACH MAY REFER TO ITSELF AS RECEI VING EDUCATION AND TRAINING SERVICES FROM HMI AND DESIGNATE THEMSELVES AS A HARVARD MEDICAL INTERNATIONAL ASSOCIATED INSTITUTION. WHL S AND SUCH FACILITIES USE OF SUCH NAME WILL BE IN ACCORDANCE WITH THE RES TRICTIONS SET FORTH BELOW, AND SUCH OTHER REASONABLE RESTRICTIONS INTEN DED TO PROTECT THE GOODWILL IN THE NAME AS HMI MAY IMPOSE FROM TIME TO TIME. ANY OTHER USE OF THE NAME HARVARD AND THE ASSOCIATED LOGOS AND DESIGNS HARVARD MEDICAL INTERNATIONAL INC. 14 (ALONE OR AS PART OF ANOTHER NAME) IN CONNECTION WI TH THIS MOA, THE SERVICES, WHL OR ANY FACILITY SHALL BE PERMITTED ON LY DURING THE TERM OF THIS MOA AND ONLY UPON THE WRITTEN APPROVAL OF A ND IN ACCORDANCE WITH RESTRICTIONS AGREED TO BY, HMI. (B)THE USE OF THE NAMES AND LOGOS OF WHL AND THE FA CILITIES BY HMI SHALL BE SUBJECT LO THE TERMS OF THIS MOA, AND FOR THE DURATION THEREOF, HMI MAY USE THE NAME OF WHL BY REFERRING TO ITS REL ATIONSHIP WITH WHL IN FACTUAL STATEMENTS TO THE EFFECT THAT HMI IS PROVIDING THE SERVICES HEREUNDER WHL, HMIS USE OF SUCH NAME WILL BE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH BELOW. (C) ALL MATERIALS DELIVERED TO WHL BY OR O BEHALF O F HMI IN CONNECTION /WITH PROVIDING SERVICES, TOGETHER WITH ALL COPYRIG HT, TRADEMARK, TRADE DRESS, TRADE SECRET, PATENT, AND OTHER PROPRIETARY RIGHTS THEREIN (INTELLECTUAL PROPERTY) SHALL BELONG EXCLUSIVELY TO HMI. DURING THE TERM OF THIS MOA, HMI HEREBY GRANTS TO WHL AND THE FACILITIES RIGHTS TO USE THE WHOLE (NOT INDIVIDUAL PIECES ALONE) OF S UCH INTELLECTUAL PROPERTY (OTHER THAN THE NAME HARVARD, OR ANY OF ITS LOGOS AND DESIGNS, WHICH IS GOVERNED BY THE PROVISIONS OF SEC TION 3(A) ABOVE), FREE TO ANY ROYALTY OR ANY RELATED ECONOMIC CONSIDE RATION. NOTWITHSTANDING THE FOREGOING, HMI SHALL, ALSO RETA IN ALL RIGHTS TO USE THE INTELLECTUAL PROPERTY, SUBJECT TO THE TERMS OF THIS MOA. 9. CASE OF THE ASSESSING OFFICER: ACCORDING TO THE AO, THE ASSESSEE BY VIRTUE OF THE AFORESAID AGREEMENTS GAVE A RIGHT TO USE COPY RIGHTED ITEMS, DELIVERABLES, NAME, LOGO ETC. THE INTELLECTUAL PROPERTY RIGHTS IN THE MATERIALS DELIVERED BY THE ASSESSEE TO MAX AND WHL REMAINED E XCLUSIVE PROPERTY OF THE ASSESSEE. ACCORDING TO THE AO THE U SE OF THE NAME HARWARD CARRIES IMMENSE VALUE AS IT IS ASSOCIATED W ITH QUALITY. THE ASSESSEE HAD DULY PROTECTED ITS INTELLECTUAL PROPER TY RIGHTS TO ITS NAME AND ITS LOGO IN THE AGREEMENT AND HAS GIVEN ONLY LI MITED RIGHTS TO MAX AND WHL TO USE THEM. THUS THE CONSIDERATION RECEIVE D BY THE ASSESSEE TO THE EXTENT OF 90% CAN BE ATTRIBUTED TO THE RIGHT TO USE THE LOGO AND THEREFORE 90% OF THE PAYMENTS RECEIVED BY THE ASSESSEE HAS TO BE CONSTRUED AS ROYALTY. THE REMAINING 10% WAS T O BE CONSIDERED AS FIS. THE SUMS RECEIVED BY THE ASSESSEE AS AFORES AID WERE ACCORDINGLY BROUGHT TO TAX BY THE AO. 18. SIMILAR TERMS GIVEN IN EXHIBIT A IN CASE OF MAX W HICH WAS CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THE E ARLIER YEAR ALSO HAS ALSO BEEN TAKEN NOTE OF BY THE TRIBUNAL IN PARA13, WHIC H HAS BEEN REJECTED BY THE TRIBUNAL. THE TRIBUNAL, IN PARAS15 TO 17, HAS DEALT WITH THE SIMILAR ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIV E IN THE FOLLOWING MANNER: HARVARD MEDICAL INTERNATIONAL INC. 15 15. WE HAVE ALREADY SEEN THE NATURE OF SERVICES RENDERED BY THE ASSESSEE TO WHL. FROM A PERUSAL OF THE NATURE OF S ERVICES RENDERED BY THE ASSESSEE TO THE WHL IT IS CLEAR THAT NOTHING IS MADE AVAILABLE BY THE ASSESSEE TO WHL. THE EMPHASIS OF THE LD. D. R BEFORE US WAS THAT THE USE OF THE NAME HARWARD MEDICAL INTERNATIO NAL INC., GIVEN IN CLAUSE (3) OF THE AGREEMENT DATED 14/12/2000 IS THE ESSENCE OF THE AGREEMENT AND ALL THE OTHER SERVICES RENDERED ARE O NLY INCIDENTAL. ACCORDING TO HIM IT IS ONLY THE USE OF THE ASSESSEE S NAME AND LOGO THAT GIVES BENEFIT TO WHL AND, THEREFORE, THE PROVI SIONS OF ARTICLE 12(3)(A) AND ARTICLE 12(4)(A) WILL MAKE IT EITHER A ROYALTY OR A FEES FOR INCLUDED SERVICES. IN THIS REGARD IT WAS ALSO SUB MITTED BY THE LD. D.R THAT THE ASSESSEE IN CLAUSE 5 OF THE AGREEMENT HAS AGREED NOT TO ESTABLISH ANY ALLIANCE SIMILAR TO THE ONE ENTERED I NTO WITH WHL. THIS CLAUSE ACCORDING TO THE LD. D.R ALSO SHOWS THAT IT IS ONLY THE RIGHT TO USE THE LOGO AND NAME OF THE ASSESSEE WAS THE PRIME CONSIDERATION FOR THE PAYMENT OF CONSIDERATION TO THE ASSESSEE BY WHL . 16. THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD SUBMITTED THAT THE RIGHT TO USE THE LOGO AND NAME OF THE ASSESSEE BY WHL WAS ONLY INCIDENTAL. IN THIS REGARD HE DREW OUR ATTENTION TO CLAUSE 3(C) OF THE AGREEMENT DATED 14/12/2000, WHEREIN IT HAS BEEN MAD E CLEAR THAT THERE ARE NO ECONOMIC CONSIDERATION FOR RIGHT TO US E THE NAME OR LOGO OF THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TO T HE DECISION OF HONBLE DELHI BENCH OF THE ITAT IN THE CASE OF SHER ATON INTERNATIONAL INC. VS. DDIT, 107 ITD 120 (DEL), WHEREIN IT WAS HE LD THAT WHERE MAIN PURPOSE OF THE AGREEMENT WAS TO RENDER SERVICES AND USE OF TRADEMARK OR TRADE NAME WAS ONLY INCIDENTAL THEN THE ENTIRE P AYMENT OR EVEN A PART OF IT CANNOT BE CONSIDERED AS ROYALTY. THE TR IBUNAL ALSO HELD THAT WHERE THE AGREEMENT BETWEEN THE PARTIES SPECIFICALL Y PROVIDE USE OF TRADEMARK FREE OF COST, NO PART OF THE CONSIDERATIO N PAID FOR SERVICES RENDERED CAN BE TREATED AS ROYALTY. THE AFORESAID DECISION WAS ALSO CONFIRMED BY THE HONBLE DELHI HIGH COURT REPORTED IN (2009) TIOL-57- HC-DEL- IT. OUR ATTENTION WAS ALSO DRAWN TO THE DE CISION OF THE SPECIAL BENCH OF THE ITAT IN THE CASE OF MOTOROLA I NC. VS. DCIT , 95 ITD 269(DEL)(SB), WHEREIN IT WAS HELD THAT WHERE A LUMPSUM CONSIDERATION WAS PAID IT WAS NOT OPEN TO THE INCOM E TAX AUTHORITIES TO SPLIT THE SAME AND TREAT A PART OF THE SAME AS R OYALTY. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE A RE OF THE VIEW THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE CAN NEITHER BE SAID TO BE ROYALTY NOR FIS. THE PAYMENT IN QUESTION WAS PU RELY FOR THE PURPOSE OF ADVISING, RECOMMENDING AND ASSISTING IN RELATION TO HEALTHCARE PROJECTS. IT WAS ALSO FOR CONDUCTING ED UCATION AND TRAINING PROGRAMMES. IT WAS ALSO FOR THE PURPOSE OF REVIEW AND GIVING FEED BACK OF VARIOUS ASPECTS AND NEW CARDIAC HOSPITAL TO BE SET UP, RECOMMENDATION ON PLANNED PATIENT CARE DELIVERY SYS TEM. IN PAGE 15A TO 15D OF THE CIT(A)S ORDER A SUMMARY OF THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE FOR WHL HAVE BEEN GIVEN. A PERUSAL OF THE SAME SHOWS THAT THE CONSIDERATION RECEIVED BY T HE ASSESSEE CANNOT BE SAID TO BE ROYALTY AS THEY WERE NOT A PAY MENT FOR USE OF HARVARD MEDICAL INTERNATIONAL INC. 16 ORDER, THE RIGHT TO USE ANY COPY RIGHT, TRADEMARK O R INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE. SIMILARLY THE ASSESSEE DID NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL KNOWHOW OR PROCESS. THE DECISION OF THE DELHI BENCH OF THE IT AT IN THE CASE OF SHERATON INTERNATIONAL INC.(SUPRA) SUPPORTS THE PLE A OF THE ASSESSEE THAT WHERE THE AGREEMENT BETWEEN THE PARTIES PROVID ES THAT THERE WAS NO ECONOMIC CONSIDERATION FOR RIGHT TO USE THE NAME IT CANNOT BE SAID THAT ANY PAYMENT CAN BE CALLED ROYALTY. SO ALSO TH E CONSIDERATION PAID IN A LUMPSUM CANNOT BE SPLIT AS A PART BEING IN THE NATURE OF ROYALTY AND ANY PART BEING IN THE NATURE OF FIS AS LAID DOW N IN THE CASE OF MOTOROLA INC.(SUPRA). THE PAYMENT CANNOT BE SAID T O BE FIS FOR THE REASON THAT NOTHING IS MADE AVAILABLE BY THE ASSESS EE TO WHL AND IN THIS REGARD, THE OBSERVATIONS WHILE DECIDING PAYMEN TS RECEIVED BY THE ASSESSEE FROM MAX WOULD BE EQUALLY APPLICABLE TO TH E PAYMENTS RECEIVED FROM WHL ALSO. WE ARE OF THE VIEW THAT TH E ENTIRE PAYMENT RECEIVED BY THE ASSESSEE FROM WHL IS IN THE NATURE OF BUSINESS PROFITS AND SINCE THE ASSESSEE DOES NOT HAVE A PE IN INDIA THE SAME CANNOT BE BROUGHT TO TAX IN INDIA. CONSEQUENTLY, GROUND N O.2 & 3 OF THE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. 19. THUS, WE FIND THAT THIS ISSUE HAS BEEN TAKEN INTO C ONSIDERATION BY THE TRIBUNAL IN THE ASSESSMENT YEARS 200203 AND 20030 4. EVEN THE LEARNED COMMISSIONER (APPEALS) HAS GIVEN A CATEGORICAL FIND ING THAT THE AGREEMENT WITH SMRCRI IS SIMILAR TO THAT OF WHL AND MAX WHICH , IN OUR OPINION, IS ABSOLUTELY CORRECT. HENCE, SUCH A FINDING OF THE LE ARNED COMMISSIONER (APPEALS) GIVEN WITH REGARD TO THE PAYMENT RECEIVED FROM SRMCRI IS SIMILAR TO THAT OF MAX AND WHL WILL ALSO APPLY IN THE CASE OF PAYMENT RECEIVED FROM SRMCRI AND, THEREFORE, THE FINDINGS OF THE TRIBUNAL IN THE EARLIER YEARS WILL ALSO SQUARELY APPLY HERE IN THE CASE OF SRMCRI. THU S, RESPECTFULLY FOLLOWING THE EARLIER YEARS PRECEDENCE, WHICH IS ALSO APPLIC ABLE WITH REGARD TO THE PAYMENT MADE TO SRMCRI, WE HOLD THAT THE SAME IS NO T TAXABLE IN INDIA EITHER AS ROYALTY OR AS FIS . ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND AL LOW GROUND NO.3, RAISED BY THE ASSESSEE. 20. GROUND NO.4, IS AN ALTERNATIVE GROUND THAT THE AMOU NT RECEIVED FROM THREE PARTIES CANNOT BE REGARDED AS BUSINESS PROFIT IN THE ABSENCE OF P.E. IN INDIA IN TERMS OF ARTICLE5. HARVARD MEDICAL INTERNATIONAL INC. 17 21. SINCE WE HAVE ALREADY DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE THAT THE PAYMENT RECEIVED IS NOT TAXABLE AS FIS OR ROYALTY IN INDIA, THEREFORE, GROUND NO.4, IS TREATED AS ACADEMIC. 22. 1 #6 &) *1# 2 !# 7 ) 4# 89 : 22. IN THE RESULT, ASSESSEES APPEAL TREATED AS ALL OWED. WE NOT TAKE UP REVENUES APPEAL ITA NO. 1020/MUM./2008, VIDE WHICH FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO TREAT 50% OF THE FEES RECEIVED FROM WOCHKHARDT HOSPITAL LTD AS N ON TAXABLE REPRESENTING TEACHING IN OR BY EDUCATIONAL INSTITUT ION AND BALANCE 50% AS ROYALTY, AS AGAINST 90% AS ROYALTY AND 10% AS FE ES FOR INCLUDED SERVICES TAKEN BY THE ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO DELETE THE ADDITION OF FEES OF US$ 35000 UNDER THE WOCKHARD AW ARDS AGREEMENT WITH WHL BY HOLDING THAT WHL HAS NOT GAINED ANY T ECHNICAL KNOWLEDGE FROM THE SERVICES DONE BY THE ASSESSEE A ND IT CANNOT BE ASSESSED AS FEES FOR INCLUDED SERVICES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO TAKE 40% AS ROYALTY AND DELETE 60% OF THE ADDITION OF FEES O F US $ 312500 FROM SRMCI BY HOLDING THAT 60% OF THE PAYMENT WILL NOT COME UNDER FEES FOR INCLUDED SERVICES WHEREAS 40% WILL COME UNDER ROYALTY. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN DIRECTING TO DELETE THE ADD ITION MADE BY THE ASSESSING OFFICER OF REIMBURSEMENT OF EXPENSES OF U S $ 28695.39 BY HOLDING THAT REIMBURSEMENT OF EXPENSES ARE CONNECTE D WITH TEACHING BY THE ASSESSEE AND THEREFORE, THE PAYMENT IS NOT T AXABLE AS THE REIMBURSEMENT OF EXPENDITURE ALSO WILL TAKE THE SAM E COLOUR AND HENCE IT IS NOT TAXABLE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN HOLDING THAT NO INTEREST IS LEVIABLE UNDER SECTION 234B OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO DELETE THE SAME. 23. THE ISSUE ARISING OUT OF GROUND NO.1, IS COVERED BY THE DECISION GIVEN BY US IN GROUND NO.1, RAISED BY THE ASSESSEE IN ITS APPEAL IN ITA NO.791/ MUM./2008. CONSISTENT WITH THE VIEW TAKEN THEREIN, THIS GROUND IS TREATED AS HARVARD MEDICAL INTERNATIONAL INC. 18 DISMISSED, AS WE HAVE ALREADY HELD THAT THE PAYMENT RECEIVED FROM WHL IS NEITHER TAXABLE AS FIS NOR AS ROYALTY . 24. IN GROUND NO.2, THE REVENUE HAS CHALLENGED DELETION OF ADDITION OF PAYMENT OF FEES OF US$ 35,000 UNDER THE WACKHARDT A WARDS AGREEMENT. 25. THE ASSESSEE HAS RECEIVED PAYMENT OF US$ 35,000 FOR SERVICES RENDERED IN TERMS OF NEW WOCKHARDT AWARDS AGREEMEN T ENTERED INTO BY THE ASSESSEE WITH WHL. THE ASSESSEE HAD SUBMITTED THAT WOCKHARDT AWARDS ARE ESTABLISHED IN ORDER TO RECOGNISE INDIVIDUALS WHO H AVE MADE SIGNIFICANT CONTRIBUTIONS IN CLINICAL CARE, MEDICAL RESEARCH AN D TEACHING IN MEDICAL SPECIALITIES SUCH AS CARDIOLOGY, NEUROLOGY, ONCOLOG Y, ETC. UNDER THE AGREEMENT, THE ASSESSEE IS REQUIRED TO RENDER SERVI CES SUCH AS ADVISING AND ASSESSING WHL IN THE NOMINATION AND SELECTION PROCE SS FOR THE AWARDEE FOR THE WOCKHARDT AWARD. THE PAYMENT WAS RECEIVED FOR M ANAGING AND STRUCTURING THE ACADEMIC COMPONENT OF THE AWARD FOR THE AWARDEES. IT WAS CONTENDED THAT THE SAME IS NOT TAXABLE IN INDIA SIN CE THESE SERVICES MAINLY INVOLVED PROVIDING THE AWARDEES OF WHL AWARDS AND H ELP IN SELECTING THE AWARDEES AND ALSO SELECTION OF POSSIBLE PROGRAMMES TO OFFER TO THE AWARDEES. THEREFORE, THERE IS NO MAKE AVAILABLE OF ANY KNOWLEDGE, EXPERIENCE OR SKILL TO WHL. THE LEARNED COMMISSIONE R (APPEALS), AFTER CAREFULLY ANALYSING THE NATURE OF SERVICE RENDERED IN THIS ASPECT, IN PARAS8 AND 8.1, HAS HELD THAT THE ASSESSEE IS NOT DOING AN Y SERVICES WHICH COMES WITHIN THE DEFINITION OF FIS. 26. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSION ER (APPEALS). WE FIND THAT THE ASSESSEE FOR THE PURPOSE OF WOCKHARDT AWAR D THE ASSESSEE IS ASSISTING IN THE SELECTION OF THE AWARDEES IN THE V ARIOUS MEDICAL SPECIALTIES AND IS MAINLY PROVIDING STRUCTURING AND MANAGING OF THE WOCKHARDT SELECTION COMMITTEE TO HELP THEM TO SELECT POTENTIAL AWARD NO MINEES, PROVIDING SELECTION CRITERIA AND INVITATION TO THE AWARDEES T O DELIVER SCIENTIFIC ADDRESS AT APPROXIMATE CLINICAL FORUMS. THE NATURE OF SERVI CES UNDER THIS AGREEMENT HAVE BEEN ENUMERATED AS UNDER: HARVARD MEDICAL INTERNATIONAL INC. 19 THE SERVICES TO BE PROVIDED BY THE APPELLANT IS LI STED IN ATTACHMENT A OF THE AGREEMENT AND IT IS EXTRACTED BELOW: SERVICES TO BE PROVIDED BY HMI A IN THE 1ST 3 RD AND 5 TH AND EVERY SUBSEQUENT ODD NUMBERED CONTRACT YEAR HMI WILL PROVIDE W HL THE ACADEMIC COMPONENT OF THE AWARDS. HMI WILL PROVIDE EACH AWARDEES THE FOLLOWING HMI RE LATED AWARD COMPONENTS: TITLE OF AN HMI VISITING FACULTY FOR THE AWARD PERI OD. INVITATION TO THE AWARDEE TO DELIVER ONE SCIENTIFIC ADDRESS AT AN APPROPRIATE HMI OR HMS CLINICAL FORUM III BOSTON DU RING THE AWARD PERIOD. PARTICIPATION IN AN INTENSIVE HMI OR HMS PROFESSI ONAL DEVELOPMENT PROGRAM OF UP TO 5 DAYS TO BE SELECTED FROM AMONG A SELECTION OF POSSIBLE PROGRAMME THAT HMI WILL OFFER THE AWARDEE WITHIN THE AWARD PERIOD. ELIGIBILITY TO PARTICIPATE IN A PM PROGRAMME THA T PM! MAY IMPLEMENT IN OTHER COUNTRIES OUTSIDE INDIA BASED ON HMI NEEDS , AS A FUTURE HMI PROGRAM FACULTY, WITH ALL THE BENEFITS NORMALLY AVA ILABLE TO HMI PROGRAM FACULTY. B IN THE 2 ND 4 TH AND 6 TH AND EVERY SUBSEQUENT EVEN NUMBERED CONTRACT YEAR HMI WILL PROVIDE WHL THE FOLLOWING SE RVICES. I) STRUCTURE AND MANAGING THE WOCKHARDT AWARDS SELE CTION COMMITTEE. HMI WILL STRUCTURE AND OVERSEE A SELECTI ON COMMITTEE TO AT POTENTIAL AWARD NOMINEE AND MAKE THE FINAL SELECTIO N OF THE RECIPIENTS OF THE WOCKHARDT AWARDS THE SELECTION COMMITTEE WIL L CONSIST OF UP TO FOUR (4) SENIOR HMI REPRESENTATIVES AND UPTO THREE (3) REPRESENT AT LYE FROM AMONG PREVIOUS WOCKHARDT AWARD AWARDEES. THE C HAIRMAN OF THE COMMITTEE WILL BE THE PRESIDENT OF HARWARD MEDICAL INTERNATIONAL. THE FETAL SIZE OF THE SELECTION COMMITTEE WILL NOT EXCE ED SEVEN (7) MEMBERS THE COMMITTEE WILL MEET TWICE PER AWARD PER IOD, ONCE IN BOSTON AND ONCE IN MUMBAI, THE FIRST MEETING TO BE HELD BY THE 18 TH MONTH OF THE AWARD PERIOD TO VET AND SHORTLIST NOMI NEES AND THE SECOND MEETING TO BE HELD BY THE 22 ND MONTH OF THE AWARD PERIOD TO SELECT THE FINAL FIVE AWARDEES. II) DEVELOPING NOMINATION LAND SELECTION CRITERIA. HMI WILL DEVELOP THE NOMINATION SELECTION CRITERIA AND SELECTION PRO CESS OF THE WACKHARDT AWARDS, TO BE UPDATED ANNUALLY TO PROVIDE THE FRAMEWORK ON WHICH CANDIDATES WILL BE NOMINATED AND SELECTED ON A BIANNUAL BASIS. HARVARD MEDICAL INTERNATIONAL INC. 20 BROADLY, NOMINATIONS AND SELECTIONS WILL BE MADE FO R CANDIDATES WHO HAVE DEMONSTRATED NATIONAL EXCELLENCE IN MEDICAL RE SEARCH AND INNOVATION, TEACHING AND DELIVERY OF CLINICAL CARE IN THEIR SPECIALTY. THE SELECTION COMMITTEE WILL HAVE ALL THE FINAL RIGHTS ON THE SELECTION PROCESS AND WILL HAVE THE RIGHT TO CHARGE THE SELEC TION PROCESS IF IT SO DEEMS FIR. III) VETTING NOMINEES AND SELECTING POTENTIAL AWARD EES. THE SELECTION COMMITTEE UNDER HIMSS SUPERVISION WILL H AVE THE RESPONSIBILITY OF VETTING NOMINEES, AND REEKING THE FINAL SELECTION OF THE FIVE AWARDEES. THE SELECTION COMMITTEE WILL HAV E FINAL AUTHORITY OR ALL DECISIONS RELATED TO THE SELECTION OF WOCKHARDT AWARDEES. 27. THUS, FROM A PLAIN READING OF THE ABOVE CLAUSES, IT IS SEEN THAT THE ASSESSEE IS NOT DOING ANY SERVICE WHICH FALLS WITHI N THE DEFINITION OF FIS AS CONTEMPLATED IN PARA4 OF ARTICLE12. WE AGREE WITH THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) THAT THESE ARE MEREL Y FACILITATION SERVICES WITH REGARD TO THE SELECTION OF AWARENESS FOR WOCKH ARDT AWARDS AND WHL HAS NOT GIVEN ANY TECHNICAL KNOWLEDGE FROM SUCH SER VICES, THEREFORE, THE LEARNED COMMISSIONER (APPEALS) HAS RIGHTLY DELETED THE SAID ADDITION. ACCORDINGLY, GROUND NO.2, RAISED BY THE REVENUE IS DISMISSED. 28. THE ISSUE ARISING OUT OF GROUND NO.3, HAS BEEN DECI DED BY US VIDE GROUND NO.3, IN ASSESSEES APPEAL IN ITA NO.791/MUM ./2008, AND CONSISTENT WITH THE VIEW TAKEN THEREIN THAT THE PAYMENT MADE T O SRIMCRI IS NEITHER TAXABLE AS ROYALTY NOR AS FIS . THEREFORE, GROUND NO.3, RAISED BY THE REVENUE STANDS DISMISSED. 29. GROUND NO.4, RELATES TO DELETION OF REIMBURSEMENT O F EXPENSES. 30. THE ASSESSEE HAS RECEIVED REIMBURSEMENT OF EXPENSES IN US$ 28695.39 FROM WHL. THE LEARNED COMMISSIONER (APPEAL S) HAS HELD THAT THE REIMBURSEMENT OF EXPENSES IS CONNECTED TO TEACHING BY THE ASSESSEE AND HE HAS ALREADY HELD THAT THE PAYMENT MADE BY WHL IS NO T TAXABLE AS FIS, THEREFORE, THE REIMBURSEMENT OF EXPENSES ALSO CANNO T BE TAXED. 31. WHILE DECIDING THE ASSESSEES APPEAL, WE HAVE ALREA DY HELD THAT THE PAYMENT RECEIVED IN VIEW OF VARIOUS SERVICES IS NEI THER TAXABLE AS ROYALTY HARVARD MEDICAL INTERNATIONAL INC. 21 NOR FIS , THEREFORE, THE REIMBURSEMENT OF EXPENSES ALSO CAN NOT BE HELD TO BE TAXABLE. ACCORDINGLY, GROUND NO.4, RAISED BY THE REVENUE STANDS DISMISSED. 32. GROUND NO.5, RELATES TO LEVY OF INTEREST UNDER SECT ION 234B OF THE ACT. 33. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE AMOUNT WAS SUBJECTED TO TDS, THEREFORE, THERE IS NO LIABIL ITY ON THE ASSESSEE TO PAY ADVANCE TAX UNDER SECTION 208. THEREFORE, THE PROVI SIONS OF SECTION 234B CANNOT BE INVOKED. 34. BOTH THE PARTIES AGREE BEFORE US THAT THIS ISSUE IS COVERED BY VARIOUS DECISIONS AS HAS BEEN REFERRED TO BY THE LEARNED CO MMISSIONER (APPEALS). IN VIEW THEREOF, WE HOLD THAT THE LEARNED COMMISSIONER (APPEALS) HAS RIGHTLY DELETED THE LEVY OF INTEREST UNDER SECTION 234B. CO NSEQUENTLY, GROUND NO.5, RAISED BY THE REVENUE IS DISMISSED. 35. 1 #6 4 ! 2 14 2 4# 89 : 35. IN THE RESULT, REVENUES APPEAL IS DISMISSED. 36. &) *; $ !< , 4 ! 2 14 2 4# 89 ! &) *1# 2 !# 7 ) 4# 89 : 36. TO SUM UP, ASSESSEES APPEAL IS TREATED AS ALLO WED AND REVENUES APPEAL IS TREATED AS DISMISSED. $ 2 + = >)6 22 ND FEBRUARY 2013 2 ?: ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND FEBRUARY 2013 SD/- . .. . B. RAMAKOTAIAH ACCOUNTANT MEMBER SD/- '# '# '# '# $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, >) >) >) >) DATED: 22 ND FEBRUARY 2013 HARVARD MEDICAL INTERNATIONAL INC. 22 $ 2 .&#'@ A@+# / COPY OF THE ORDER FORWARDED TO : (1) &) *1# / THE ASSESSEE; (2) 4 ! / THE REVENUE; (3) B () / THE CIT(A); (4) B / THE CIT, MUMBAI CITY CONCERNED; (5) @!E? .&#&) , , / THE DR, ITAT, MUMBAI; (6) ?F* G / GUARD FILE. /@# .&# / TRUE COPY $) / BY ORDER . 4. HI / PRADEEP J. CHOWDHURY !1J &)4 H! / SR. PRIVATE SECRETARY K / 8 4 / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI