M/s The Nilgiri Dairy Farm Pvt. Ltd., Bangalore V. ITO, Bangalore

ITA 11/BANG/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9472 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Double taxation relief; Advance ruling; Non-deduction of tax
• Section: 201(1); 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IT(IT)A NOS.11 TO 13/BANG/2015 ASSESSMENT YEARS : 2007-08 TO 2009-10 THE NILGIRI DAIRY FARM PVT. LTD., MFAR, SILVERLINE TECH PARK, NO.180, 1 ST FLOOR, EPIP, PHASE II, WHITE FIELD, BANGALORE 560 066. PAN: AAACT 8121A VS. THE INCOME TAX OFFICER (INTERNATIONAL TAXATION), WARD 2(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, CA RESPONDENT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) DATE OF HEARING : 30.05.2016 DATE OF PRONOUNCEMENT : 12.08.2016 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE ARE APPEALS PREFERRED BY THE ASSESSEE AGAIN ST THE COMMON ORDER DATED 15.12.2014 OF THE CIT(APPEALS)-12, BANG ALORE FOR THE ASSESSMENT YEARS 2007-08 TO 2009-10 INTER ALIA ON THE COMMON GROUNDS AND FOR THE SAKE OF REFERENCE, WE EXTRACT HEREUNDER THE GROUNDS RAISED IN IT(IT)A NO.11/BANG/2015 :- IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 2 OF 21 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR A S THEY ARE AGAINST THE APPELLANT ARE OPPOSED TO LAW, EQUITY, W EIGHT OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE CONSIDE RED AS AN ASSESSEE IN DEFAULT IN TERMS OF SEC. 201 [1] OF THE ACT AND CHARGED FOR THE ALLEGED FAILURE TO DEDUCT TAX U/S . 195 OF THE ACT UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANT'S CASE AND THEREFORE, THE LEARNED CIT [A] OUGHT TO HAVE CA NCELLED THE TAX AND CONSEQUENTIAL INTEREST LEVIED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT [A] IS NOT JUSTIFIED IN HOLDING THAT THE PAYMENTS MADE BY THE APPELLANT TO M/S. MJR CONSULTANCY PTE LTD., SINGAPORE, WAS FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF SECTION 9[ 1][VII] OF THE ACT AS WELL AS ARTICLE 12 OF THE DOUBLE TAXATION AV OIDANCE AGREEMENT [DTAA] BETWEEN INDIA AND SINGAPORE AND TH EREFORE, THE APPELLANT WAS REQUIRED TO DEDUCT TAX AT SOURCE U/S. 195 OF THE ACT BEFORE MAKING THE PAYMENT UNDER THE FACTS AND I N THE CIRCUMSTANCES OF THE APPELLANT'S CASE. 3.1 THE LEARNED CLT [A] FAILED TO APPRECIATE THAT T HE PAYMENTS MADE BY THE APPELLANT TO M/S. MJR CONSULTANCY PTE LTD., SINGAPORE, WAS NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES SINCE, THERE WAS NO TECHNICAL SERVICE REND ERED BY THE SAID COMPANY AND THE PAYMENTS SO MADE BY THE APPELLANT C OULD ONLY BE REGARDED AS BUSINESS PROFITS OF THE SAID COMPANY IN TERMS OF ARTICLE 7 OF THE DTAA SINCE, THERE WAS NO SUCH INCO ME WAS CHARGEABLE TO TAX IN INDIA IN THE HANDS OF THE SAID COMPANY, WHICH IS A RESIDENT OF SINGAPORE HAVING NO PERMANEN T ESTABLISHMENT IN INDIA AND THEREFORE, THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE. 3.2 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CLT [A] FAILED TO APPRECIATE THAT EVEN IF THE PAYMENTS MADE TO M/S. MJR CONSULTANCY PTE LTD., SINGAPORE, WERE REGARDED AS F EES FOR TECHNICAL SERVICES, THE SAME WAS NOT TAXABLE IN INDIA AS THE PAYMENTS MADE COULD. NOT BE REGARDED AS FEES FOR TE CHNICAL SERVICES WITHIN THE MEANING OF ARTICLE 12 OF THE DT AA AND THUS, THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE BE FORE MAKING THE PAYMENT SINCE, THERE WAS NO INCOME CHARGEABLE T O TAX AND THUS, THE DEMAND RAISED ON THE APPELLANT IS MISCONC EIVED AND ON ERRONEOUS APPRECIATION OF THE POSITION OF LAW AND F ACTS. IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 3 OF 21 4. WITHOUT PREJUDICE TO THE ABOVE, THE ORDER PASSED BY THE LEARNED A.O. IS BARRED BY LIMITATION AND REQUIRES T O BE CANCELLED. 5. WITHOUT PREJUDICE TO THE ABOVE, THE EXTENT OF TA X DEMANDED FROM THE APPELLANT U/S. 201 [1] OF THE ACT IS HIGHLY EXCESSIVE AND THE SAME IS LIABLE TO BE REDUCED SUBS TANTIALLY. 6. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WI TH THE HON'BLE CCIT/DG, THE APPELLANT DENIES ITSELF LIABLE TO BE CHARGED TO INTEREST U/S. 201 [1A] OF THE ACT AMOUNTING TO R S. 5,71,248/- ON THE TAX PAYABLE OF RS. 5,95,050/-, WHICH UNDER T HE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE IS UNWARR ANTED AND HENCE, THE LEVY DESERVES TO BE CANCELLED. 7. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBL Y PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLANT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO ORDER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE C OSTS.' 2. THOUGH VARIOUS GROUNDS ARE RAISED IN THESE APPEA LS, BUT THEY ALL RELATE TO THE LIABILITY OF TAX DEDUCTION AT SOURCE (TDS) ON PAYMENT MADE TO FOREIGN CONSTITUENTS I.E., M/S. MJR CONSULTANCY PTE LTD., SINGAPORE, U/S. 195 OF THE INCOME-TAX ACT, 1961 [THE ACT]. 3. ACCORDING TO THE ASSESSING OFFICER, AS PER THE P ROVISIONS OF SECTION 195 OF THE ACT, ANY PERSON RESPONSIBLE FOR MAKING P AYMENT TO A NON- RESIDENT, NOT BEING A COMPANY, OR TO A FOREIGN COMP ANY, ANY INTEREST OR ANY OTHER SUM CHARGEABLE UNDER THE PROVISIONS OF THE AC T (NOT BEING THE INCOME CHARGEABLE UNDER THE HEAD SALARIES) SHALL AT THE TI ME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR AT THE TIME O F PAYMENT THEREOF IN IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 4 OF 21 CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY AN Y OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATES IN FORCE. FURTHER, AS PER THE PROVISIONS OF SECTION 201(1) OF THE ACT, IF ANY PERSON FAILS TO DEDUCT TAX AS REQUIRED BY OR UNDER THE ACT, HE SHALL BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX. 3. SINCE THE ASSESSEE HAS NOT COMPLIED WITH THE PRO VISIONS OF SECTION 195 OF THE ACT, PROCEEDINGS U/S. 201(1) WERE INITIA TED AGAINST THE ASSESSEE AND IN RESPONSE TO THE SHOW CAUSE NOTICE, IT WAS SU BMITTED THAT IT CANNOT BE TREATED AS DEFAULTER U/S. 201(1) AS THE PAYMENTS IN QUESTION ARE NOT COVERED UNDER ARTICLE 7, 9 OR 12. 4. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY T HE ABOVE PAYMENTS TO M/S. MJR CONSULTANCY PTE LTD., SINGAPOR E TOWARDS CONSULTANCY CHARGES FOR THE ABOVE FINANCIAL YEARS S HOULD NOT BE TREATED AS FEES FOR TECHNICAL SERVICES AS PER THE PROVISIONS O F SECTION 9(1)(VII) OF THE ACT. IT WAS ALSO ASKED TO FURNISH FULL DETAILS OF PAYMENTS AND IN RESPONSE THERETO, THE ASSESSEE HAS FILED THE COMPLETE DETAIL S. HAVING EXAMINED THE DETAILS FURNISHED BY THE ASSESSEE AND THE SINGAPORE TREATY, THE AO WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE AND HAS HELD THE ASSESSEE TO BE IN DEFAULT IN RESPECT OF TAX NOT DEDUCTED AT SOURCE IN RESPECT OF FEES IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 5 OF 21 FOR TECHNICAL SERVICES PAYABLE TO M/S. MJR CONSULTA NCY PTE LTD., SINGAPORE FOR THE AYS 2007-08 TO 2009-10. THE RELEVANT OBSER VATIONS OF THE AO ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- FROM THE ABOVE DISCUSSION, IT HAS BEEN PROVED THA T THE PAYMENTS MADE BY THE ASSESSEE TO MJR CONSULTANCY PT E. LTD., SINGAPORE DURING THE F.Y.S 2006-07, 2007-08 AND 200 8-09 IN TERMS OF THE CONSULTANCY AGREEMENT ENTERED INTO BET WEEN THE TWO PARTIES CONSTITUTE FEES FOR TECHNICAL SERVICES BOTH UNDER SEC.9(1)(VI) OF THE INCOME TAX ACT, 1961, AND UNDER THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SINGAPORE AND IS CHARGEABLE TO TAX IN INDIA. SEC.19 5 OF THE INCOME TAX ACT, 1961, CASTS AN OBLIGATION ON THE PE RSON MAKING PAYMENT OF THE SUMS CHARGEABLE TO TAX TO A FOREIGN COMPANY TO DEDUCT TAX AT THE TIME OF MAKING SUCH PAYMENT, OR A T THE TIME OF CREDITING THE AMOUNT, WHICHEVER IS EARLIER. BUT NO TAX HAD BEEN DEDUCTED BY THE ASSESSEE THEREON EITHER AT THE TIME OF CREDITING OR SUBSEQUENTLY. AS THE ASSESSEE HAS FAILED TO DISCHAR GE ITS OBLIGATION TO DEDUCT TAX AT SOURCE AS STIPULATED U/ S.195 OF THE INCOME TAX ACT, 1961, FOR THE FINANCIAL YEAR 20 06-07,07- 8,08-09, I AM HOLDING THE ASSESSEE AS ASSESSEE IN D EFAULT IN RESPECT OF TAX NOT DEDUCTED AT SOURCE IN RESPECT OF FEES FOR TECHNICAL SERVICES PAYABLE TO MJR CONSULTANCY PTE L TD., SINGAPORE FOR THE ASSESSMENT YEARS 2007-08, 08-09 & 09-10 AS PER THE PROVISIONS OF SEC.201(1} OF THE INCOME TAX ACT, 1961. IT IS LIABLE TO PAY THE TAX DEDUCTIBLE IN THIS REGARD ALONG WITH THE INTEREST U/S. 201(LA) FOR THESE ASSESSMENT YEARS. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT(APPEALS) AND PLACED THE CONSULTANCY AGREEMENT. IT WAS ALSO CONTENDED THAT THE ASSESSEE IS AN INDIAN COMPANY EN GAGED IN THE BUSINESS OF DAIRY PRODUCTS. IT ENTERED INTO AGREE MENT WITH M/S. MJR CONSULTANCY PTE LTD., SINGAPORE TOWARDS THE CONSULT ANCY CHARGES FOR THE PURPOSE OF PROVIDING ADVICE TO THE ASSESSEE ON VARI OUS MATTERS OF STRATEGIC IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 6 OF 21 AND OPERATIONAL IMPORTANCE THROUGH PHONE CALLS AND PERSONAL MEETINGS HELD IN VARIOUS CENTRES LIKE BANGKOK, SINGAPORE AND BANGALORE AND THE ASSESSEE MADE PAYMENT TO SINGAPORE COMPANY TOWARDS THE CONSULTANCY CHARGES. SINCE THE ASSESSEE HAS NOT PAID FEES FOR TECHNICAL SERVICES, HE WAS NOT UNDER OBLIGATION TO DEDUCT TAX AT SOURCE AS REQUIRED BY THE ACT. THEREFORE, THE ORDER OF THE AO HOLDING ASSESSEE TO BE IN DEFAULT U/S. 201(1) OF THE ACT IS BAD IN LAW. 6. THE CIT(APPEALS) EXAMINED THE CLAIM OF THE ASSES SEE IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AT PAGE NOS. 3 TO 3 9 OF HIS ORDER AND HAS FINALLY CONCLUDED THAT THE SINGAPORE COMPANY AS A C ONSULTANT MADE AVAILABLE TO THE ASSESSEE TECHNICAL KNOWLEDGE IN TH E FORM OF EXPERTISE AND OPERATION OF BUSINESS WHICH WAS IN ITS POSSESSION A LONG WITH EXPERIENCE, SKILL AND KNOW-HOW. THUS, THE ASSESSEE WAS UNDER O BLIGATION TO DEDUCT TAX AT SOURCE AS IT MADE THE PAYMENT FOR TECHNICAL SERV ICES. THE RELEVANT OBSERVATIONS OF THE CIT(APPEALS) IS EXTRACTED HEREU NDER FOR THE SAKE OF REFERENCE:- 6. I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES O F THE CASE, IT IS CLEAR FROM THE AGREEMENT THAT THE SERVICES RE NDERED ARE IN THE CAPACITY OF A CONSULTANT WHO HAS SKILL, KNOWLEDGE & EXPERTISE AND IS A PROFESSIONAL IN THE CONCERNED FIELD. PASS ING ON KNOWLEDGE, EXPERTISE AND SKILL IN MATTER OF STRATEG IC AND OPERATIONAL IMPORTANCE AS WELL AS ANY OTHER ISSUES, CONNECTED WITH THE BUSINESS OF THE ASSESSEE COMPANY IS CERTAI NLY OF TECHNICAL NATURE. AS PER THE AGREEMENT, IT IS' THE DUTY OF THE CONSULTANT TO USE THE SKILL AND KNOWLEDGE IN ITS PO SSESSION TO PROVIDE PROFESSIONAL SERVICES BEING TECHNICAL IN NA TURE TO THE ASSESSEE COMPANY. MOREOVER SUCH TECHNICAL EXPERTIS E PASSED ON IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 7 OF 21 IS RETAINED BY THE ASSESSEE, EVEN AFTER THE AGREEME NT EXPIRES. AFTER CONSIDERING VARIOUS DECISIONS AS REPRODUCED A BOVE, I FIND THAT THE REASONING OF ALL APPLY TO THE ASSESSEE'S C ASE AND THAT THE ASSESSEE'S CASE IS VERY SIMILAR ON FACTS TO THE CAS E DECIDED BY THE AUTHORITY OF ADVANCE RULINGS IN INTERTEK TESTING SE RVICES (SUPRA). IN FACT ON PERUSAL OF A REPORT FILED BY MR . M.J, RAYCRAFT, DIRECTOR OF THE SINGAPORE CONSULTANT, WHICH IS PLAC ED ON RECORD, IT IS EVIDENT THAT HE HAS PROVIDED A SIMILAR SET OF A PROFESSIONAL SERVICES AS IN THIS CASE DECIDED BY AAR. THE FOLLOW ING OBSERVATIONS OF THE AAR REPRODUCED FROM ABOVE (PERF ETTI VAN MELLE HOLDING CASE) ARE DIRECTLY RELATED AND CAN BE FULLY APPLIED TO THE CASE AT HAND :- IT WAS HELD IN INTERTEK TESTING SERVICES (INDIA) (P.) LTD., IN RE [2008] 307 ITR 418 / 175 TAXMANN 375 (AAR-NEW DELHI), BY THE AUTHORITY THAT THE EXPRESSION TECHNI CAL SERVICES CANNOT BE CONSTRUED IN A NARROW SENSE. IT HAS BEEN OBSERVED THEREIN THAT THE TERM TECHNICAL OUG HT NOT TO BE CONFINED ONLY TO TECHNOLOGY RELATING TO ENGIN EERING, MANUFACTURING OR OTHER APPLIED SCIENCES. PROFESSIO NAL SERVICE IMBUED WITH EXPERTISE COULD BE REGARDED AS TECHNICAL SERVICE. HENCE, THESE SERVICES GIVING KNOWLEDGE AND EXPERIEN CE OF THE CONFECTIONARY INDUSTRY TO PERFETTI INDIA ARE TE CHNICAL IN NATURE, MORE SO, IN VIEW OF THE FACT THAT THE AG REEMENT CLEARLY BRINGS OUT THE INTENTION OF THE PARTIES TO ASSIST PERFETTI INDIA BY APPLYING THE EXPERIENCE OF ITS SI STER CONCERNS AND GROUP COMPANIES. THE SERVICES ARE PROVIDED UNDER THE HEADS OF ACCOUN TING, BUDGETING AND REPORTING, FOREX MANAGEMENT, GLOBAL C REDIT FACILITY ADMINISTRATION AND CO-ORDINATION OF GLOBAL FUNDING, ORGANIZATION OF INTERNATIONAL FINANCE MANA GERS MEETINGS, HUMAN RESOURCE SERVICES, SUPPORT IN CO- ORDINATION AND LOCAL STRATEGY, SUPPORT IN FINANCIAL CONTROLLING, CORPORATE SECRETARIAL AND LEGAL SUPPOR T, ENVIRONMENT HEALTH AND SAFETY AND SUPPORT ON RISK MANAGEMENT. . THE EXPRESSION MAKE AVAILABLE ONLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE I N A POSITION TO DERIVE AN ENDURING BENEFIT AND BE IN A POSITION TO UTILIZE THE KNOWLEDGE OR KNOW-HOW IN FUTURE ON H IS OWN. BY MAKING AVAILABLE THE TECHNICAL SKILLS OR KNOW- HOW, THE RECIPIENT OF THE SERVICE WILL GET EQUIPPED WITH IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 8 OF 21 THAT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER. S EE INTERTEK TESTING SERVICES INDIA (P) LTD. IN RE (SU PRA). SO WHEN THE EXPERTISE IN RUNNING THE INDUSTRY RUN BY T HE GROUP IS PROVIDED TO THE INDIAN ENTITY IN THE GROUP TO BE APPLIED IN RUNNING THE BUSINESS, THE EMPLOYEES OF T HE INDIAN ENTITY GET EQUIPPED TO CARRY ON THAT BUSINES S MODEL OR SERVICE MODEL ON THEIR OWN WITHOUT REFERENCE TO THE SERVICE PROVIDER, WHEN THE SERVICE AGREEMENT COMES TO AN END. IT IS NOT AS IF FOR MAKING AVAILABLE, THE REC IPIENT MUST ALSO BE CONVEYED SPECIFICALLY THE RIGHT TO CONTINUE THE PRACTICE PUT INTO EFFECT AND ADOPTED UNDER THE SERV ICE AGREEMENT ON ITS EXPIRY. 6.1 THUS, IT IS HELD THAT THE SINGAPORE COMPANY AS A CONSULTANT MADE AVAILABLE TO THE ASSESSEE COMPANY TECHNICAL KN OWLEDGE IN THE FORM OF EXPERTISE IN OPERATION OF BUSINESS WHIC H WAS IN ITS POSSESSION ALONG WITH EXPERIENCE, SKILL AND KNOW-HO W. IN THE AGREEMENT, THIS HAS BEEN CLASSIFIED AS PROFESSIONAL SERVICES. IT IS NOT OPEN TO THE ASSESSEE TO TAKE REFUGE BEHIND CRYP TIC CLAUSES OF THE AGREEMENT TO ESTABLISH THAT THERE IS NO TRANSFE R OF TECHNICAL KNOWLEDGE, SKILL, EXPERIENCE, ETC. 7. AGGRIEVED, THE ASSESSEE HAS PREFERRED APPEALS IN ALL THE THREE YEARS BEFORE THE TRIBUNAL. BESIDES ASSAILING THE ORDERS ON MERIT, THE ASSESSEE HAS ALSO RAISED A NEW GROUND THAT THE ORDER PASSED BY THE AO IS BARRED BY LIMITATION AND REQUIRES TO BE CANCELLED. 8. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED O N THE POINT OF LIMITATION THAT THE ORDER U/S. 201(1) WAS NOT PASSE D IN REASONABLE TIME PRESCRIBED UNDER THE ACT. IN SUPPORT OF HIS CONTEN TION, HE HAS PLACED RELIANCE UPON SUB-SECTION (3) OF SECTION 201(1) OF THE ACT WITH THE SUBMISSION THAT THE LEGISLATURE HAS FIXED THE TIME FRAME WITHIN WHICH THE ORDER U/S. 201(1) HAS TO BE PASSED. AS PER SUB-SEC TION (3), NO ORDER SHALL IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 9 OF 21 BE MADE UNDER SUB-SECTION (1) DEEMING THE PERSON TO BE AN ASSESSEE IN DEFAULT FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX FROM A PERSON RESIDENT IN INDIA, AT ANY TIME AFTER THE EXPIRY OF SEVEN YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH PAYMENT IS MADE OR CRED IT IS GIVEN. THIS AMENDMENT WAS MADE W.E.F. 1.10.2014 AND AT THE RELE VANT POINT OF TIME, NO TIME LIMIT WAS SPECIFIED AND VARIOUS AUTHORITIES HAVE HELD THAT REASONABLE TIME SHOULD BE FOUR YEARS AND THEREAFTER NO ACTION CAN BE TAKEN U/S. 201(1). 9. REFUTING THE CONTENTION OF THE ASSESSEE, THE LD. DR SUBMITTED THAT TIME LIMIT HAS BEEN PRESCRIBED TO THE RESIDENT IN I NDIA AND NOT TO THE NON- RESIDENTS. THE OBJECT BEHIND IS THAT PAYMENTS MADE TO RESIDENTS OF INDIA CAN BE TRACED OR IDENTIFIED WITHIN A REASONABLE TIM E, BUT IN THE CASE OF NON- RESIDENTS TIME LIMIT WAS NOT SPECIFICALLY PRESCRIBE D BY THE LEGISLATURE AS IT IS NOT CLEAR AS TO WHEN SUCH TYPE OF PERSONS CAN BE ID ENTIFIED. THEREFORE, TIME LIMIT PRESCRIBED UNDER SUB-SECTION (3) TO SECT ION 201(1) CANNOT BE APPLIED IN THE CASE OF NON-RESIDENTS. 10. HAVING CAREFULLY EXAMINED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE LEGISLATURE HAS CONSCIOUSL Y USED THE WORD RESIDENT IN INDIA. HAD IT BEEN THE INTENTION OF THE LEGISL ATURE TO PRESCRIBE THE TIME PERIOD FOR THE NON-RESIDENTS, THEY WOULD HAVE COMFO RTABLY USED THE WORD PAYEE, BUT THEY HAVE USED THE WORD RESIDENT IN I NDIA. THEREFORE, THE IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 10 OF 21 INTENTION OF THE LEGISLATURE IS VERY CLEAR THAT THE Y DO NOT WANT TO FIX THE TIME LIMIT FOR INITIATING ACTION U/S. 201(1) FOR NON-RES IDENTS. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSMENT IS NO T BARRED BY LIMITATION AS NO TIME FRAME HAS BEEN SPECIFIED FOR INITIATING ACT ION U/S. 201(1) OF THE ACT AGAINST THE NON-RESIDENTS. 11. SO FAR AS THE MERITS OF THE CASE IS CONCERNED, WE HAVE CAREFULLY EXAMINED THE ORDER OF THE AUTHORITIES BELOW AND AGR EEMENT EXECUTED BETWEEN THE ASSESSEE AND FOREIGN CONSTITUENT I.E., MJR CONSULTANCY PTE LTD., SINGAPORE. COPY OF THE AGREEMENT IS AVAILAB LE AT PAGES 9 TO 11 OF THE COMPILATION OF THE ASSESSEE. SINCE CERTAIN CLA USES OF THE AGREEMENT ARE RELEVANT IN ORDER TO ADJUDICATE THE CONTROVERSY RAISED BEFORE US, WE EXTRACT THE CONSULTANCY AGREEMENT AS UNDER:- AGREEMENT EXECUTED DECEMBER 18, 2006 BETWEEN THE NILGIRI DAIRY FARM PRIVATE LIMITED ('NILGIRIS'), A COMPANY INCORPORATED IN INDIA WITH ITS REGISTERED OFFICE AT 171, BRIGADE ROAD, BANGALORE - 560025, INDIA, AND MJR CONSULTANC Y PTE. LTD, A COMPANY INCORPORATED IN SINGAPORE, HAVI NG OFFICES AT 73A, KHEAM HOCK ROAD, SINGAPORE 298850 ('CONSULTANT'), THE ABOVE PARTIES DESIRE TO SET FORTH THE TERMS AND CONDITIONS UPON WHICH NILGIRIS MAY FROM TIME TO TIME OBTAIN CONSULTANT'S SERVICES, AND THE PARTIES AGREE AS FOL LOWS: 1) SERVICES . WHILE THIS AGREEMENT IS IN EFFECT AND AS REQUESTE D BY NILGIRIS, CONSULTANT, THROUGH ITS PERSONNEL SHAL L PROVIDE PROFESSIONAL SERVICES (THE 'SERVICES') AS M ORE DESCRIBED BELOW: IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 11 OF 21 A) ATTENDING BOARD MEETINGS OF NILGIRIS IN BANGALORE AND SPENDING TIME WITH THE NILGIRIS MANAGEMENT; B) ADVISING THE CEO OF NILGIRIS ON VARIOUS MATTERS OF STRATEGIC AND OPERATIONAL IMPORTANCE; C) ADVISING THE MANAGEMENT OF NILGIRIS ON ANY OTHER ISSUES IN CONNECTION WITH THE BUSINESS OF NILGIRIS. 2) ACCEPTANCE OF THE WORK . ACCEPTANCE OF THE WORK ('ACCEPTANCE') SHALL BE BASED ON NILGIRIS' REASONAB LE SATISFACTION WITH THE SERVICES PERFORMED. 3) TERM . THIS AGREEMENT SHALL BE EFFECTIVE FROM OCTOBER 1, 2006 (THE 'EFFECTIVE DATE'). THIS AGREEMENT WILL CO NCLUDE ON SEPTEMBER 30, 2009; PROVIDED, HOWEVER, THIS AGREEME NT MAY BE CONCLUDED BY EITHER PARTY BY GIVING FIFTEEN (15) DAYS WRITTEN NOTICE TO THE OTHER PARTY. THIS AGREEMENT M AY, AT NILGIRIS' SOLE OPTION, BE EXTENDED FOR ADDITIONAL T ERM(S) VIA A WRITTEN ADDENDUM EXECUTED BY BOTH PARTIES. CONSULTANT MAY CONCLUDE THIS AGREEMENT BY GIVING NILGIRIS WRITTEN NOTICE, SUCH TERMINATION TO BE EFF ECTIVE UPON COMPLETION OF ANY AND ALL OUTSTANDING STATEMEN TS OF WORK. 4) FEES AND PAYMENT TERMS . CONSULTANT SHALL BE COMPENSATED ON A FIXED PRICE BASIS FOR THE SERVICES TO BE PERFORMED UNDER THIS AGREEMENT. A) CONSULTANT SHALL BE COMPENSATED AT A RATE EQUAL TO US $85,000 (EIGHTY FIVE THOUSAND U.S. DOLLARS) PER ANN UM, FOR A MINIMUM OF 21 (TWENTY ONE) DAYS PER ANNUM, AND CONSULTANT'S ANNUAL FEE SHALL BE DEPOSITED IN U.S. FUNDS INTO THE FOLLOWING BANK ACCOUNT AND SHALL BE PAYABL E IN EQUAL MONTHLY INSTALMENTS: I) BANK NAME: OVERSEAS CHINESE BANKING CORPORATION LTD , 65 CHULIA STR, OCBC CENTRE, SINGAPORE 049513 II) ACCOUNT NUMBER: 621837111001 III) SWIFT CODE: OCBC SG SG THE FIRST MONTHLY FEE PAYMENT WILL BE MADE TO CONSULTANT IN JANUARY 2007, FOR SERVICES PROVIDED IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 12 OF 21 DURING THE MONTHS OF OCTOBER - DECEMBER 2006; THERE AFTER, MONTHLY FEE PAYMENTS WILL BE MADE IN THE FIRST WEEK OF EVERY MONTH UNTIL EXPIRATION OF THE TERM, WITH THE FINAL MONTHLY PAYMENT TO BE MADE ON SEPTEMBER 30, 2009. THE TOTAL FEE THAT WILL BE PAID TO CONSULTANT DURING THE FULL TER M IS NOT TO EXCEED US $255,000 (TWO HUNDRED AND FIFTY-FI VE THOUSAND U.S. DOLLARS). B) FURTHER, THE CONSULTANT SHALL BE REIMBURSED FOR REASONABLE AND NECESSARY EXPENSES, INCLUDING OFFICE SUPPLIES AND REASONABLE PHONE EXPENSES THAT ARE REQUIRED IN ORDER FOR CONSULTANT TO COMPLETE THE SERVICES ASSIGNED. CONSULTANT SHALL ALSO BE REIMBURSED FOR TRAVEL COST S TO AND FROM SINGAPORE AND INDIA, OR AS OTHERWISE DESIG NATED BY THE MANAGING DIRECTOR OF NILGIRIS. TRAVEL AND LODGI NG EXPENSE MUST HAVE NILGIRIS' CONCURRENCE. CONSULTANT WILL PROVIDE COPIES OF RECEIPTS / VOUCHERS FOR ALL EXPENDITURES, ALONG WITH AN INVOICE / STATEMENT, WHEN REQUESTING REIMBURSEMENT. ALL INVOICES SHOULD BE SENT BY CONSULTANT DIRECTLY TO: NILGIRIS DAIRY FARM PRIVATE LIMITED, FINANCE DEPARTMENT, 171, BRIGADE ROAD, BAN GALORE - 560 025. SUCH REIMBURSEMENTS WILL BE SETTLED WITHIN 30 (THIRTY) DAYS OF RECEIPT BY NILGIRIS. C) CONSULTANT AGREES THAT NO COMPENSATION WILL BE DUE FROM NILGIRIS BEYOND WHAT HAS BEEN EXPRESSLY OUTLIN ED HEREIN. 5. TAXES, BENEFITS AND LICENSES . CONSULTANT AGREES THAT CONSULTANT IS SOLELY RESPONSIBLE FOR THE FOLLOWING: A) THE PAYMENT OF ALL FEDERAL, STATE, AND LOCAL TAX ES AND ALL APPROPRIATE DEDUCTIONS OR WITHHOLDINGS, UNLESS OTHE RWISE PROVIDED FOR IN EXHIBIT A TO THIS AGREEMENT; B) THE PAYMENT OR PROVISION OF ANY UNEMPLOYMENT INS URANCE BENEFITS, STATE DISABILITY BENEFITS, VACATION, OVER TIME OR HOLIDAY PAY, HEALTH, MEDICAL, DENTAL OR GROUP INSUR ANCE OR ANY PENSION OR PROFIT SHARING; C) OBTAINING ANY APPLICABLE BUSINESS OR OTHER COMM ERCIAL LICENSES; AND IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 13 OF 21 D) THE HIRING, SUPERVISING, CONCLUSION OF EMPLOYMEN T AND PAYMENT OF COMPENSATION OR OTHER BENEFITS TO ANY AG ENT, INDEPENDENT CONTRACTOR, EMPLOYEE OR ASSISTANT ENGAG ED BY CONSULTANT (WITH THE APPROVAL OF NILGIRIS' PROJECT MANAGER / MANAGING DIRECTOR) TO PERFORM ANY WORK. 6) STATUS OF PARTIES, INSURANCE . CONSULTANT SHALL BE, AND AT ALL TIMES DURING THIS AGREEMENT SHALL REMAIN INDEPE NDENT VIS- A-VIS NILGIRIS, INCLUDING EMPLOYEES OF THE CONSULTANT, IF ANY. CONTRACT OF AGENCY EMPLOYMENT I S NOT INTENDED UNDER THIS AGREEMENT. CONSULTANT SHALL MAINTAIN SUCH PUBLIC LIABILITY INSURANCE IN AS MAY BE NECESSARY. CONSULTANT SHALL COMPLY WITH ALL APPLICA BLE LAWS IN INDIA. 7) DUTIES . CONSULTANT'S DUTIES SHALL INCLUDE, AS APPLICABLE , THE USE OF SKILL AND KNOWLEDGE IN COMPLETING THE SE RVICES REFERRED TO EARLIER HEREIN AND REASONABLE DOCUMENTA TION AS SHALL BE REQUIRED BY NILGIRIES. 8) INTELLECTUAL PROPERTY . CONSULTANT SHALL IMMEDIATELY ASSIGN, TRANSFER, AND SET OVER TO NILGIRIS ALL RIGH T, TITLE AND INTEREST OF CONSULTANT IN AND TO ANY PRODUCT, IMPROVEMENT, OR PROCESS WHICH MAY DIRECTLY OR INDIR ECTLY BE UTILIZED IN CONNECTION HEREWITH, WHICH CONSULTANT M AY CONTRIBUTE TO OR DEVELOP DURING PERFORMANCE OF WORK ON NILGIRIS' TIME OR AT THE EXPENSE OF NILGIRIS AND CONSULTANT SHALL DO ALL DOCUMENTATION NECESSARY IN THIS CONNECTION. CONSULTANT MAY NOT USE ANY SUCH WORK FO R ANY OTHER PURPOSES WITHOUT PRIOR NILGIRIS CONCURREN CE. 9) CONSULTANT SHALL HOLD CONFIDENTIAL INFORMATION O F NILGIRIS, ITS CUSTOMERS, AND LICENSORS IN CONFIDENC E, AND WITHOUT WRITTEN PERMISSION FROM NILGIRIS WILL NOT D ISCLOSE TO ANY PERSON OR USE ANY SUCH INFORMATION. 'CONFIDE NTIAL INFORMATION' INCLUDES COMPUTER SOFTWARE PROGRAMS DEVELOPED OR LICENSED BY NILGIRIS, ANY OTHER INFORM ATION IDENTIFIED BY NILGIRIS AS PROPRIETARY OR CONFIDENTI AL, OR WHICH WOULD REASONABLY BE UNDERSTOOD UNDER THE CIRCUMSTANCES TO BE CONFIDENTIAL. ALL CONFIDENTIAL INFORMATION SHALL REMAIN THE SOLE PROPERTY OF NILGI RIS. IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 14 OF 21 A) CONSULT ANT AGREES THAT, DURING THE TIME THAT CONSULTANT IS RETAINED BY NILGIRIS, CONSULTANT WILL NOT ENGAGE IN INDIA IN ANY BUSINESS ACTIVITY DIRECTLY RELATED TO THE BUSINESS IN WHICH NILGIRIS IS NOW INVOLVED OR BECOMES INVOLVED, IF SU CH AGREEMENT WOULD IN ANY MANNER NEGATIVELY IMPACT NILGIRIS. CONSULTANT ALSO AGREES THAT HE WILL NOT ISSUE A PRESS RELEASE OR OTHER PUBLIC STATEMENT REG ARDING CONSULTANT'S RELATIONSHIP WITH NILGIRIS OR THIS AGREEMENT WITHOUT CLEARANCE OF NILGIRIS. B) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETE D UNDER THE LAWS OF INDIA.' 12. IN THIS AGREEMENT, THE NATURE OF SERVICES AND D UTIES OF THE CONSULTANT HAVE BEEN SPECIFIED. THE RESPONSIBILITY OF THE CONSULTANT WITH RESPECT TO INTELLECTUAL PROPERTY HAS ALSO BEEN SPEC IFIED. THOUGH ASSESSEE HAS CONTENDED THAT NO TECHNICAL KNOW-HOW WAS MADE A VAILABLE TO THE ASSESSEE WHILE RENDERING THE CONSULTANCY SERVICES B Y THE CONSULTANT AND THEREFORE IT CANNOT BE HELD THAT FEES FOR TECHNICAL SERVICES WERE PAID BY THE ASSESSEE; BUT THE LD. DR INVITED OUR ATTENTION TO VARIOUS CLAUSES WITH THE SUBMISSIONS THAT WHATEVER CONSULTANCY SERVICES WERE REQUIRED UNDER DIFFERENT FIELD AND WHATEVER CONSULTANCY INPUT WAS GIVEN TO THE ASSESSEE, IT WAS USED BY THE ASSESSEE EVEN AFTER THE TERMINATION OF THE CONTRACT AND ASSESSEE HAS THE PRIVITY OF ALL THE INFORMATION, CO NSULTANCY OR OPINIONS RECEIVED IN RESPECT OF THE OPERATION AND BUSINESS M ANAGEMENT, ETC. 13. DURING THE COURSE OF HEARING, OUR ATTENTION WAS INVITED TO THE FOLLOWING JUDICIAL PRONOUNCEMENTS:- IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 15 OF 21 I) CIT V. DE BEERS INDIA MINERALS P. LTD., 346 ITR 467 (KARN) II) DIT V. GUY CARPENTER AND CO. LTD., 346 ITR 504 (DEL HI) III) DCIT V. BOSTON CONSULTING GROUP P. LTD., 280 ITR (A T) 1 (MUMBAI) IV) DCIT V. ANADAMAN SEA FOOD PVT. LTD., ITA NO.1412/KOL/2011 DATED 19.6.2012. V) ACIT V. VICEROY HOTELS LTD., ITA NO.401/HYD/2007 & ORS. DATED 27.05.2011. 14. IN ALL THESE JUDGMENTS, WE FIND THAT EMPHASIS W AS MADE ON AN ISSUE AS TO WHETHER TECHNICAL KNOW-HOW WAS MADE AVAILABLE TO THE ASSESSEE. IN THE CASE OF DE BEERS INDIA MINERALS P. LTD. (SUPRA) , THEIR LORDSHIPS HAVE OBSERVED THAT IN VIEW OF SECTION 90 THE DEFINITION OF FEES FOR TECHNICAL SERVICES CONTAINED IN THE AGREEMENT OVERRIDES THE S TATUTORY PROVISIONS CONTAINED IN THE ACT. IN THE LATEST DECISION IN TH E CASE OF ANDAMAN SEA FOOD PVT. LTD. (SUPRA) , THE MEANING OF THE WORD MAKE AVAILABLE IS EXPLAINED. ACCORDING TO THE AFORESAID DECISION, F EES FOR TECHNICAL SERVICES MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDE RATION FOR SERVICES OF A MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE, IF S ERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. IT HAS FURTHER BEEN OBSERVED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DE BEERS INDIA MINERALS P. LTD. (SUPRA) THAT THE TECHNICAL OR CONSULTANCY SERVICES RENDERED SHOULD BE OF SUCH NATURE THAT IT MAKES AVAILABLE TO THE RECIPIEN T TECHNICAL KNOWLEDGE, IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 16 OF 21 KNOW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC. SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDG E OR KNOW-HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVID ER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY MAKING AVAILABLE THE TECHNIC AL KNOWLEDGE, SKILLS, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT T HE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE IN TO IT. THE RELEVANT OBSERVATIONS OF THE HON'BLE JURISDICTIONAL HIGH COU RT ARE EXTRACTED HEREUNDER:- 21. WHAT IS THE MEANING OF 'MAKE AVAILABLE'. THE T ECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NA TURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNOWLE DGE, KNOW- HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AN D RESULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZ E THE KNOWLEDGE OR KNOW-HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO T HE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILLS , ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOU GH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOL OGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 17 OF 21 THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANI NG OF PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT W HICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE T HE TECHNOLOGY AVAILABLE. IN OTHER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' O NLY IF THE TWIN TEST OF RENDERING SERVICES AND MAKING TECHNICAL KNO WLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. 15. THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT V. GUY CARPENTER AND CO. LTD., 346 ITR 504 (DELHI) HAS ALSO EXPRESSED SIMILAR VIEWS. IN THE CASE OF DCIT V. ANADAMAN SEA FOOD PVT. LTD. (SUPRA) AND VICEROY HOTELS LTD. (SUPRA) , THE TRIBUNAL HAS ALSO HELD THAT RENDERING TECHNI CAL OR CONSULTANCY SERVICES OR SERVICES MAKE AVAILABLE MEA NS THAT TECHNICAL OR CONSULTANCY SERVICES RENDERED SHOULD BE OF SUCH NAT URE THAT MAKES AVAILABLE TO THE RECIPIENT TECHNICAL KNOWLEDGE, KN OW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSMITTI NG THE TECHNICAL KNOWLEDGE, ETC. SO THAT THE PAYER OF SERVICES COULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW-HOW IN FU TURE ON ITS OWN WITHOUT THE AID OF THE SERVICE PROVIDER. BY MAKING AVAILAB LE TECHNICAL SKILLS OR KNOW-HOW, THE RECIPIENT OF SERVICE WILL GET EQUIPPE D WITH THAT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER. 16. HAVING CAREFULLY EXAMINED THE AFORESAID JUDGMEN TS, WE FIND THAT IT HAS BEEN REITERATED BY VARIOUS JUDICIAL AUTHORITIES ONE AFTER THE OTHER, THAT WHEREVER TECHNICAL OR CONSULTANT SERVICES ARE RENDE RED AND MADE AVAILABLE TO THE ASSESSEE OR THE RECIPIENT, AND THE ASSESSEE DERIVES AN ENDURING IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 18 OF 21 BENEFIT AND UTILIZES THE KNOWLEDGE OR KNOW-HOW IN F UTURE ON ITS OWN WITHOUT THE AID OF THE SERVICE PROVIDER. BY MAKING AVAILABL E TECHNICAL SKILLS OR KNOW- HOW, THE RECIPIENT OF KNOW-HOW WILL GET EQUIPPED WI TH THE KNOWLEDGE OR EXPERTISE AND WILL BE ABLE TO MAKE USE OF IT IN FUT URE INDEPENDENT OF THE SERVICE PROVIDER. THE SERVICES OFFERED MAY BE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT OF TECHNICAL KNOWLED GE AND EXPERIENCE OF THE SERVICE PROVIDER WOULD HAVE GONE INTO IT. THE TECH NICAL KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHN IQUES IN FUTURE WITHOUT DEPENDING ON THE PROVIDER. 17. IN LIGHT OF THIS PROPOSITION, IF WE EXAMINE THE FACTS OF THE CASE IN HAND, WE WOULD FIND FROM THE CONSULTANCY AGREEMENT THAT THE ASSESSEE ENTERED INTO AGREEMENT WITH THE FOREIGN CONSTITUENT , I.E., MJR CONSULTANCY PTE LTD., A COMPANY INCORPORATED IN SINGAPORE FOR R ENDERING THE FOLLOWING SERVICES:- 1) ATTENDING BOARD MEETINGS OF NILGIRIS IN BANGALORE A ND SPENDING TIME WITH THE NILGIRIS MANAGEMENT; 2) ADVISING THE CEO OF NILGIRIS ON VARIOUS MATTERS OF STRATEGIC AND OPERATIONAL IMPORTANCE; 3) ADVISING THE MANAGEMENT OF NILGIRIS ON ANY OTHER IS SUES IN CONNECTION WITH THE BUSINESS OF NILGIRIS. 4) UNDER THE HEAD DUTIES, THE CONSULTANTS DUTY SHAL L INCLUDE, AS APPLICABLE, THE USE OF SKILL AND KNOWLEDGE IN CO MPLETING THE SERVICES REFERRED TO EARLIER AND REASONABLE DOC UMENTATION AS SHALL BE REQUIRED BY NILGIRIS. IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 19 OF 21 5) UNDER THE HEAD INTELLECTUAL PROPERTY, THE CONSULT ANT SHALL IMMEDIATELY ASSIGN, TRANSFER AND SET OVER TO NILGIR IS ALL RIGHT, TITLE AND INTEREST OF CONSULTANT IN AND TO A NY PRODUCT, IMPROVEMENT, OR PROCESS WHICH MAY DIRECTLY OR INDIR ECTLY BE UTILIZED IN CONNECTION THEREWITH, WHICH CONSULTANT MAY CONTRIBUTE TO OR DEVELOP DURING PERFORMANCE OF WORK ON NILGIRISS TIME OR AT THE EXPENSE OF NILGIRIS AND CONSULTANT SHALL DO ALL DOCUMENTATION NECESSARY IN THIS CONNECTION. 18. FROM A CAREFUL READING OF THIS AGREEMENT, WE FI ND THAT THE CONSULTANT WAS REQUIRED TO RENDER CONSULTANCY SERVI CES ON DIFFERENT ISSUES BY APPLYING HIS TECHNICAL KNOW-HOW AND WHATEVER SER VICES ARE RENDERED, ADVISORIES WERE ISSUED TO THE ASSESSEE, THE CONSULT ANT SHALL IMMEDIATELY ASSIGN AND TRANSFER THE RIGHTS IN THAT CONSULTANCY SERVICES TO THE ASSESSEE AND THE ASSESSEE WOULD BE ABLE TO USE THAT SERVICES FOR ITS ENDURING BENEFIT IN THE SUCCEEDING YEARS WITHOUT ANY ASSISTANCE OF T HE CONSULTANT. THOUGH IT HAS NOT BEEN SPELT OUT THE SPECIFIC NATURE OF TH E CONSULTANCY SERVICES RENDERED BY THE CONSULTANT, BUT FROM A CAREFUL PERU SAL OF THIS AGREEMENT AND DOCUMENTS AVAILABLE ON RECORD, IT APPEARS THAT WHATEVER CONSULTANCY SERVICES WERE RENDERED BY THE CONSULTANT, IT WAS MA DE AVAILABLE TO THE ASSESSEE FOR ITS ENDURING BENEFIT AND THE SAME CONS ULTANCY ADVISORIES, OPINIONS OR SERVICES RECEIVED BY THE ASSESSEE CAN B E USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES IN THE SUCCEEDIN G YEARS WITHOUT ANY AID AND ASSISTANCE OF THE CONSULTANT. THEREFORE, IN T HE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE CONSULTANCY SERVICES HAVIN G BEEN MADE AVAILABLE TO THE ASSESSEE, THE REVENUE HAS RIGHTLY HELD THAT THE SINGAPORE COMPANY IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 20 OF 21 AS A CONSULTANT HAS MADE AVAILABLE TO THE ASSESSEE COMPANY TECHNICAL KNOWLEDGE IN THE FORM OF EXPERTISE IN THE OPERATION OF ITS BUSINESS WHICH WAS IN ITS POSSESSION ALONG WITH EXPERIENCE AND KNO W-HOW AND THE SAME TECHNICAL KNOW-HOW CAN BE USED BY THE ASSESSEE FOR ITS ENDURING BENEFIT AND THUS SINCE THE ASSESSEE HAS MADE THE PAYMENT FO R FEES FOR TECHNICAL SERVICES, IT WAS REQUIRED TO DEDUCT TAX AT SOURCE A ND FOR NON-DEDUCTION OF THE SAME, HE CAN BE DECLARED TO BE AN ASSESSEE IN D EFAULT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(APPEALS) AND DISMIS S THE APPEALS OF THE ASSESSEE. 19. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF AUGUST, 2016. SD/- SD/- ( ABRAHAM P. GEORGE ) (SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE, DATED, THE 12 TH AUGUST, 2016. /D S/ IT(IT)A NOS.11 TO 13/BANG/2015 PAGE 21 OF 21 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.