EPRSS Prepaid Recharge Services India P. Ltd., Pune V. Income-tax Officer,

ITA 1204/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4998 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Retrospective amendment; Permanent establishment
• Section: 143(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 828 /P U N/201 6 / ASSESSMENT YEAR : 20 11 - 12 EPRSS PREPAID RECHARGE SERVICES INDIA P. LTD., 207, KPCT COMMERCIAL COMPLEX, FATIMA NAGAR, WANOWRIE, PUNE 411013 . / APPELLANT PAN:AABCE5025H VS. THE INCOME TAX OFFICER, WARD 1(4), PUNE . / RESPONDENT . / ITA NO. 1204 /P U N/201 6 / ASSESSMENT YEAR : 20 10 - 11 EPRSS PREPAID RECHARGE SERVICES INDIA P. LTD., 207, KPCT COMMERCIAL COMPLEX, FATIMA NAGAR, WANOWRIE, PUNE 4 11013 . / APPELLANT PAN:AABCE5025H VS. THE INCOME TAX OFFICER, WARD 1(4), PUNE . / RESPONDENT / APPELLANT BY : S HRI KISHORE PHADKE / RESPONDENT BY : S /S HRI AJAY MODI AND RAJEEV KUMAR, CIT / DATE OF HEARING : 11.09. 201 8 / DATE OF PRONOUNCEMENT: 24 . 1 0 .201 8 ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T H E APPEAL S FILED BY ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 1 , PUNE , DATED 04.02.2016 & 23.03.2016 RELATING TO ASSESSMENT YEAR S 2011 - 12 & 2010 - 11 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . BOTH THE APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, I N ORDER TO ADJUDICATE THE ISSUES, WE ARE REFERRING TO THE FACTS AND ISSUES IN ITA NO. 1204 /PUN/2016 RELATING TO ASSESSMENT YEAR 201 0 - 1 1 . 3. THE ASSESS EE IN ITA NO. 1204 /PUN/2016, RELATING TO ASSESSMENT YEAR 201 0 - 1 1 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT(A) - I, PUNE ERRED IN LAW AND ON FACTS IN CONFIRMING THE LEARNED AO'S DECISION OF DISALLOWING PAYMENT TOWARDS WEB HOSTING CHARGES TO AMAZON WEB SERVICES LLC (USA) AMOUNTING TO RS. 1 8, 6 1, 207 / - U/S 40(A)(I) OF ITA, 1961, ON THE ANALOGY THAT, THE PAYMENT IS IN THE NATURE OF ROYALTY AS PER NEWLY INSERTED EXPLANATION - 2 TO SECTION 9(1)(VI) OF ITA, 1961, HAVING RETROSPECTIVE EFFECT. 2. THE LEARNED CIT(A) - 1, PUNE & THE LEARNED AO ERRED IN LAW AND ON FACTS IN HOLDING THAT PAYMENT TOWARDS WEB HOSTING CHARGES TO AMAZON WEB SERVICES LLC (USA) AMOUNTING TO RS. 1 8, 6 1, 207 / - ACCRUES AS TAXABLE INCOME OF THE SAID PARTY IN INDIA, WITHOUT DEALING WITH TH E APPLICABILITY OF INDO - USA DTAA. THE LEARNED I - T AUTHORITIES OUGHT TO HAVE APPRECIATED THAT THE DTAA OVERRIDES THE PROVISIONS OF ITA, 1961 ANYWAY AND AS PER DTAA, NO ANY SUCH INCOME ACCRUES IN INDIA IN ABSENCE OF PE. 4. THE ISSUE RAISED IN THE PRESENT AP PEAL IS AGAINST DISALLOWANCE OF PAYMENT MADE TOWARDS WEB HOSTING CHARGES TO AMAZON WEB SERVICES LLC ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 3 (USA) (HEREINAFTER REFERRED TO AS AWS) BY INVOKING PROVISIONS OF SECTION 40(A)(I) OF THE ACT ON THE ANALOGY THAT PAYMENT WAS IN THE NATURE OF ROYALTY AS P ER NEWLY INSERTED EXPLANATION - 2 TO SECTION 9(1)(VI) OF THE ACT HAVING RETROSPECTIVE EFFECT. THE ASSESSEE IS ALSO AGGRIEVED BY THE ORDERS OF AUTHORITIES BELOW IN HOLDING THAT PAYMENT TOWARDS WEB HOSTING CHARGES TO AWS AMOUNTING TO 18,61,207/ - ACCRU ED AS TAXABLE INCOME OF SAID PARTY IN INDIA, WITHOUT DEALING WITH THE APPLICABILITY OF INDO - US DTAA. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING NIL INCOME. THE CASE OF ASSESSEE WAS PIC KED UP FOR SCRUTINY. THE ASSESSEE WAS A PRIVATE LIMITED COMPANY AND WAS ENGAGED IN DISTRIBUTION OF RECHARGE PENS OF VARIOUS DTH PROVIDERS LIKE SUN DIRECT TV (P.) LTD . AND IDEA CELLULAR, TO ITS DISTRIBUTORS VIA ONLINE NETWORK. THE NET PROFIT SHOWN WAS 18,16,439/ - AND THE INCOME COMPUTED UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION WAS 12,79,435/ - . THE ASSESSING OFFICER NOTED THAT UNDER THE HEAD ADMINISTRATIVE EXPENSES, THE ASSESSEE HAD CLAIMED WEB HOSTING CHARGES OF 24,92,342/ - . THE ASSESSEE EXPLAINED THE NATURE OF WEB HOSTING SERVICES I.E. IT REQUIRES SERVERS TO RUN VARIOUS ONLINE RECHARGES. DUE TO THIS, THERE WAS VERY HIGH REQUIREMENT OF SERVERS. SINCE PURCHASE/MAINTENANCE OF SERVERS AND ITS UPKEEP REQUIRE SKILLED MANPOWER A ND ASSESSEE DID NOT HAVE THE SAME, HENCE SERVERS WERE TAKEN ON HIRE FROM AMAZON, IN ITS CLOUD UNITS. THE ASSESSEE ALSO FURNISHED LEDGER COPY OF EXTRACT OF WEB AGREEMENT. THE ASSESSING OFFICER NOTED THAT TOTAL PAYMENTS MADE BY THE ASSESSEE TO AWS FOR WEB HOSTING CHARGES TOTALED TO 18,61,207/ - . THIS PAYMENT WAS AS PER AGREEMENT BETWEEN THE ASSESSEE AND AWS. THE ASSESSING OFFICER FURTHER NOTED THAT ASSESSEE WAS GRANTED LIMITED LICENCE AND SITE ACCESS TO THE AWS ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 4 WEBSITE FOR CONDUCT OF ITS ACTIVITIES, FO R WHICH THE ASSESSEE WAS BEING CHARGED BY AWS ON MONTHLY BASIS, THROUGH INVOICES RAISED BY IT , C OPIES OF SAME WERE ALSO FILED BY ASSESSEE. THE ASSESSING OFFICER NOTED THAT NO TAX WAS DEDUCTED BY THE ASSESSEE ON THE PAYMENTS MADE UNDER THE HEAD WEB HOSTIN G CHARGES. THE ASSESSEE WAS ASKED TO JUSTIFY THE SAME. THE ASSESSEE ARGUED THAT THERE WAS NO OBLIGATION ON ITS PART TO DEDUCT WITHHOLDING TAX ON THE PAYMENT AS THE SAID PAYMENT DID NOT FALL EITHER IN THE CATEGORY OF TECHNICAL FEES OR ROYALTY. THE ASSES SEE PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF BHARTI CELLULAR LTD. REPORTED IN 319 ITR 139 (DEL) TO SUPPORT ITS CASE OF PAYMENT NOT FALLING UNDER THE HEAD TECHNICAL SERVICES. THE ASSESSEE FURTHER RELIED ON THE RUL ING OF THE AAR IN THE CASE OF BHARTI AXA GENERAL INSUR ANCE COMPANY DATED 06.05.2010 FOR THE PROPOSITION THAT THE PAYMENT DID NOT FALL IN THE CATEGORY OF ROYALTY. THE ASSESSING OFFICER HOWEVER, REFERRED TO SUBSEQUENT AMENDMENT TO SECTION 9 OF THE ACT BY FI NANCE ACT, 2012 AND OBSERVED THAT PAYMENT MADE BY ASSESSEE TOWARDS WEB HOSTING CHARGES WAS THE PAYMENT TOWARDS ROYALTY, IN VIEW OF EXPLANATION - 2 TO SECTION 9(1)(VI) OF THE ACT. THE ASSESSING OFFICER OBSERVED THAT IT WAS APPARENT THAT THE ASSESSEE WAS USIN G SERVERS OF AWS THROUGH RIGHT TO USE AGREEMENT VIDE WHICH A LIMITED LICENCE HAD BEEN GRANTED TO IT. THUS, SERVERS WERE ESSENTIAL TO THE ASSESSEES BUSINESS AND EXIGENT FACTOR FOR ENTERING INTO SUCH AN AGREEMENT WITH AWS , WAS LACK OF SKILLED MANPOWER IN M AINTAINING SUCH SERVERS. HE MADE REFERENCE TO EXPLANATION GIVEN BY THE ASSESSEE IN THIS REGARD. IN VIEW THEREOF, THE ASSESSEE WAS HELD TO HAVE MADE PAYMENT BY WAY OF WEB HOSTING CHARGES FOR USE OF SERVERS, WHICH AS PER THE ASSESSING OFFICER WAS NOTHING B UT CHARGES PAID FOR USE OF COMMERCIAL EQUIPMENTS WITHIN MEANING OF SECTION 9(1)(VI) READ WITH EXPLANATION 2 AND EXPLANATION 5 OF THE SAID CLAUSE, THEREBY, ASSUMING THE ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 5 CHARACTER OF ROYALTY AND CONSEQUENTLY, LIABLE TO DEDUCT ION OF TAX AT SOURCE. SINCE THE ASSESSEE HAD NOT DEDUCTED WITHHOLDING TAX OUT OF AFORESAID PAYMENT OF 18,61,207/ - , THE SAME WAS NOT ALLOWED AS DEDUCTION IN THE HANDS OF ASSESSEE. 6. BEFORE THE CIT(A), THE ASSESSEE POINTED OUT THAT AMAZON WAS NOT HAVING PERMANENT ESTABLISHMENT (PE) IN INDIA AND THEREFORE, ITS INCOME WAS NOT TAXABLE IN INDIA. IT ALSO EXP LAINED THAT FROM THE NATURE OF SERVICES BEING RENDERED, IT COULD NOT BE SAID THAT WHAT ASSESSEE WAS PAYING TO THEM WAS ROYALTY UNDER SECTION 9(1)(VI) OF THE ACT AND / OR UNDER ANY OF ITS CLAUSES. THE ASSESSEE ALSO SUBMITTED PRECEDENTS IN RESPECT OF BILLIN G AND PAYMENT FOR VARIOUS SERVICES RECEIVED FROM AMAZON AND REITERATED THAT PAYEE HAS NOT CHARGEABLE TO TAX IN INDIA, HENCE THE ASSESSEE HAD NO OBLIGATION TO DEDUCT TAX UNDER SECTION 195 OF THE ACT. THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER IN HOLD ING THAT THE PAYMENT MADE BY ASSESSEE IS COVERED BY THE TERM ROYALTY AS PER AMENDED PROVISIONS OF EXPLANATION 2( I VA) OF SECTION 9(1)(VI) OF THE ACT. ACCORDINGLY, DISALLOWANCE MADE BY ASSESSING OFFICER WAS UPHELD. 7. THE ASSESSEE IS IN APPEAL AGAINST TH E ORDER OF CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE WAS ENGAGED MAINLY IN DISTRIBUTO R SHIP OF RECHARGES. HE REFERRED TO THE AMENDED DEFINITION OF SECTION 9(1)(VIA) OF THE ACT AND ALSO EXPLANATION 2( IV A) AND POINTED OUT THAT RETROSPECTIVE AMENDMENT CANNOT LEAD TO RETROSPECTIVE TDS OBLIGATION. IN THIS REGARD, HE RELIED ON THE DECISIONS OF THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. NGC NETWORKS (INDIA) PVT. LTD. IN ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 6 INCOME TAX APPEAL NO.397 OF 2015, JU DGMENT DATED 29.01.2018 AND THE HONBLE HIGH COURT OF DELHI IN DDIT VS. NEW SKIES SATELITE BV & OTHER (2016) 95 CCH 0032 (DEL). HE THEN, POINTED OUT THAT FIRST ISSUE WAS WHETHER TDS LIABILITY COULD BE FASTENED ON ANY PERSON RETROSPECTIVELY. THE LEARNED A UTHORIZED REPRESENTATIVE FOR THE ASSESSEE THEN REFERRED TO AGREEMENT BETWEEN THE ASSESSEE AND AMAZON, WHICH IS PLACED AT PAGE 3 OF PAPER BOOK AND REFERRED TO SERVICES OFFERED ONLINE BY AMAZON AND POINTED OUT THAT PAYMENT WAS FOR PACK OF SERVICES. HE THEN, REFERRED TO CLAUSE 5.1 OF AGREEMENT, WHEREIN CHARGES WERE RAISED MONTHLY FOR USE OF SERVICES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN ORDER TO AVAIL SERVICES, IT WAS LOGGING ON TO THE PORTAL, USING SERVICES OFFERED WHIC H WERE TECHNOLOGICALLY DRIVEN SERVICES. ON THE OTHER HAND, THE CHARGE OF ASSESSING OFFICER WAS THAT THE ASSESSEE WAS USING SERVERS/EQUIPMENT OF AMAZON. HE STRESSED THAT THE ASSESSEE WAS TRADER OF RECHARGE PENS AND COULD NOT USE HIGH END TECHNOLOGY EQUIPM ENTS I.E. SERVERS. SO IN THIS REGARD, HE DREW OU R ATTENTION TO AN EXAMPLE THAT WHEN ANY PERSON IS MAKING CALLS, THEN HE HAS ONLY TO USE SERVICES AND NOT HIGH END TECHNOLOGY PROVIDED BY SERVICE PROVIDER. ANOTHER EXAMPLE DRAWN BY HIM WAS THAT WHEN ANY PERS ON IS WATCHING BBC / CNN, THEN HE IS USING SERVICES BUT NOT TECHNOLOGY BEHIND IT. IN THIS ERA OF EVOLVING TO TECHNOLOGY, HE STRESSED THAT THE THING TO BE SEEN IS THAT WHAT THE ASSESSEE IS AVAILING. REFERRING TO EXPLANATION 5 TO SECTION 9(1)(VI) OF THE AC T, HE POINTED OUT THAT IT REFERS TO DEEMED ACCRUAL. HE STRESSED THAT EXPLANATION 2 TO SECTION 9(1)(VIA) OF THE ACT WAS NOT RELEVANT, WHERE IN EXPLANATION (IV) AND (V) WERE INSERTED BY FINANCE ACT, 2012. THE ASSESSING OFFICER HAD APPLIED EXPLANATION 2(IVA) R.W.S. EXPLANATION (V) TO SECTION 9(1)(VIA) OF THE ACT. HE FURTHER REFERRED THAT WHEN THE ASSESSEE LOGGING ON WEB, IT WAS USING SOFTWARE ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 7 BUT SOFTWARE WAS NOT COVERED BY EXPLANATION 2(IVA) UNDER SECTION 9 OF THE ACT. THEN, HE RELIED ON THE RATIO LAID DOW N BY MUMBAI BENCH OF TRIBUNAL IN DDIT VS. SAVVIS COMMUNICATION CORPORATION (2016) 69 TAXMANN.COM 106 (MUMBAI TRIB.) . ANOTHER POINT RAISED BY ASSESSEE WAS WHETHER IT WAS ROYALTY OR NOT, WHEREIN AMAZON WAS PROVIDING COMPUTING PLATFORM BUT IT WAS NOT THE O WNER OF ROYALTY ; IT MADE SUCH SERVICES AVAILABLE BUT IT CANNOT BE SAID TO BE A CASE OF ROYALTY. HE REFERRED TO GUIDELINES OF OECD IN THIS REGARD AND STRESSED THAT FUNDAMENTAL PRINCIPLE TO BE SEEN IS WHAT IS ROYALTY . ANOTHER ASPECT WHICH WAS RAISED BY L EARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT AMENDMENT MADE WAS UNDER THE INCOME TAX ACT, BUT NOT TO THE TREATY LAW. IN THIS REGARD, HE RELIED ON THE DECISION IN DDIT VS. NEW SKIES SATELITE BV & OTHER (SUPRA) AND THE HONBLE HIGH COURT OF DE LHI IN DIT VS. INFRASOFT LTD. (2014) 264 CTR 329 (DEL). THE LAST ASPECT RAISED BY ASSESSEE WAS WE HAVE TO LOOK AT THE TREATY LAW IN THIS REGARD. HE POINTED OUT THAT OBSERVATIONS OF CIT(A) IN PARA 10 AT PAGE 8 WERE INCORRECT. HE STRESSED THAT THE ISSUE O F ROYALTY BASED TAXATION WAS DECIDED IN THE BACKGROUND OF DTAA, HENCE ANALOGY OF CIT(A) THAT DTAA RELATED SUBMISSIONS WERE NOT MADE, WAS INCORRECT ON FACTS. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE STRONGLY OPPOSED THE CONTENTIONS PROPOS ED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. HE STATED THAT FIRST ISSUE HAS TO BE SEEN IS WHETHER ROYALTY WAS EMBEDDED IN SERVICE OFFERINGS . HE REFERRED TO AGREEMENT BETWEEN ASSESSEE AND AMAZON AND POINTED OUT THAT UNDER CLAUSE 1, IT WAS USE OF THE SERVICE OFFERINGS . HE THEN REFERRED TO OTHER CLAUSES AND POINTED OUT THAT IT WAS A CASE OF FTS BUT YES, HE ADMITTED THAT ASSESSING OFFICERS CASE WAS ROYALTY. ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 8 HE THEN REFERRED TO EXPLANATION 2(III), WHICH COVERS SUCH A SITUATION BUT WHEN C ONFRONTED, HE ADMITTED THAT IT WAS NOT APPLIED BY ASSESSING OFFICER. HE THEN POINTED OUT THAT ASSESSING OFFICER HAD APPLIED EXPLANATION 2(IVA) OF SECTION 9(1)(VIA) OF THE ACT, WHEREAS RENDERING OF SERVICES WAS AS PER CLAUSE (VI), WHICH WAS NOT APPLIED BY ASSESSING OFFICER. HE ALSO POINTED OUT THAT THERE WERE NO AMENDMENT S TO DTAA. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REJOINDER REFERRED TO PAGE 19 OF AGREEMENT AND POINTED OUT THAT WHAT WAS CHARGED WAS AS PER ANNEXURE - 1 TO SYNOPS IS I.E. TOTAL OF SERVERS MADE AVAILABLE. IN THE CASE OF ROYALTY, IT WAS ANY SERVICE WHICH WAS TO BE USED INDIVIDUALLY , USED BY IT. IN RESPECT OF EXPLANATION 2( I VA) OF SECTION 9 OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTE D OUT THAT FIRST I SHOULD AVAIL IN THE EARLIER REALM AND THEN PROVISIONS OF SAID SECTION CAN BE APPLIED, WHICH IN ANY CASE HAS NOT BEEN APPLIED BY AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES I N THE PRESENT APPEAL IS IN RESPECT OF CHARGES PAID BY ASSESSEE TO AWS. THE ASSESSEE WAS ENGAGED IN SALE OF RECHARGE PENS AND DID NOT HAVE THE FACILITY AVAILABLE WITH IT OF HIGH TECHNOLOGY EQUIPMENTS I.E. SERVERS. SO, IN ORDER TO CARRY ON ITS ACTIVITY OF DISTRIBUTORSHIP OF RECHARGE PENS, IT USED SERVERS OF AMAZON, FOR WHICH IT PAID WEB HOSTING CHARGES. BEFORE USING THE SERVICES AVAILABLE OF AMAZON ONLINE, IT ENTERED INTO AN AGREEMENT , UNDER WHICH FEES STRUCTURE WAS PROVIDED. COPY OF AGREEMENT IS PLACED A T PAGES 3 TO 22 OF PAPER BOOK. THE AGREEMENT IS CALLED AWS CUSTOMER AGREEMENT, WHICH CONTAINS THE TERMS AND CONDITIONS THAT GOVERNS ASSESSEES ACCESS TO AND USE OF SERVICE ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 9 OFFERINGS . IT WAS AGREEMENT BETWEEN AMAZON WEB SERVICES, INC. AND YOU I.E. ASSESSE E . IT IS PROVIDED THAT AGREEMENT TAKES EFFECT WHEN YOU CLICK AN I ACCEPT BUTTON . C LAUSE 1.1 LAYS DOWN THAT YOU (ASSESSEE) MAY ACCESS AND USE THE SERVICE OFFERINGS IN ACCORDANCE WITH AGREEMENT. IN CLAUSE 1.2, IT IS PROVIDED THAT TO ACCESS SERVICES, YOU (ASSESSEE) MUST CREATE AN AWS ACCOUNT ASSOCIATED WITH A VALID E - MAIL ADDRESS. CLAUSE 1.3 PROVIDES THAT IF YOU (ASSESSEE) WOULD LIKE SUPPORT FOR THE SERVICES OTHER THAN THE SUPPORT WE GENERALLY PROVIDE TO OTHER USERS OF THE SERVICES WITHOUT CHARGE, TH EN YOU CAN ENROLL FOR CUSTOMER SUPPORT IN ACCORDANCE WITH THE TERMS OF AWS SUPPORT GUIDELINES. CLAUSE 2.1 LAYS DOWN THAT AMAZON COULD CHANGE, DISCONTINUE, OR DEPRECATE ANY OF THE SERVICE OFFERINGS OR CHANGE OR REMOVE FEATURES OR FUNCTIONALITY OF THE SERVI CE OFFERINGS FROM TIME TO TIME. AS PER CLAUSE 4.1, YOU (ASSESSEE) ARE SOLELY RESPONSIBLE FOR THE DEVELOPMENT, CONTENT, OPERATION, MAINTENANCE AND USE OF YOUR CONTENT. NOW, COMING TO CLAUSE 5.5, WHICH PROVIDES THE SERVICE FEES TO BE PAID , A GREEMENT PROVID ED THAT AMAZON WOULD CALCULATE AND BILL FEES AND CHARGES MONTHLY. IT IS FURTHER AGREED THAT YOU (ASSESSEE) HAVE TO PAY APPLICABLE FEES AND CHARGES FOR USE OF SERVICE OFFERINGS AS DESCRIBED ON AWS SITE USING ONE OF THE PAYMENT MODE S THEY SUPPORT. WE MAY R EFER TO CLAUSE 8.4 WHICH LAYS DOWN THE SERVICE OFFERINGS LICENSE, UNDER WHICH IT IS PROVIDED THAT AMAZON OR ITS AFFILIATES OR LICENSORS OWN AND RESERVE ALL RIGHT, TITLE AND INTEREST IN AND TO THE SERVICE OFFERINGS. HOWEVER, LIMITED, REVOCABLE, NON - EXCLUSI VE, NON - SUBLICENSABLE, NON - TRANSFERRABLE LICENSE IS GRANTED TO YOU (ASSESSEE) TO DO THE FOLLOWING DURING THE TERM: - (I) ACCESS AND USE THE SERVICE SOLELY IN ACCORDANCE WITH THIS AGREEMENT; AND (II) COPY AND USE THE AWS CONTENT SOLELY IN CONNECTION WITH YO UR PERMITTED USE OF THE SERVICES. ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 10 12. IT IS FURTHER PROVIDED THAT NO RIGHTS UNDER THIS AGREEMENT ARE OBTAINED BY YOU (ASSESSEE) FROM AMAZON OR ITS LICENSOR TO THE SERVICE OFFERINGS, INCLUDING ANY RELATED INTELLECTUAL PROPERTY RIGHTS. THE TERMS BETWEEN THE PARTIES ARE DEFINED AS PER CLAUSE 14 AND THE TERMS WHICH ARE RELATABLE TO THE ISSUE RAISED ARE AS UNDER: - AWS CONTENT MEANS CONTENT WE OR ANY OF ITS AFFILIATES MAKE AVAILABLE IN CONNECTION WITH THE SERVICES OR ON THE AWS SITE TO ALLOW ACCESS TO AND U SE OF THE SERVICES, INCLUDING WSDLS; DOCUMENTATION; SAMPLE CODE; SOFTWARE LIBRARIES; COMMAND LINE TOOLS; AND OTHER RELATED TECHNOLOGY. AWS CONTENT DOES NOT INCLUDE THE SERVICES. AWS MARKS MEANS ANY TRADEMARKS, SERVICE MARKS, SERVICE OR TRADE NAMES, LOG OS, AND OTHER DESIGNATIONS OR AWS AND ITS AFFILIATES THAT WE MAY MAKE AVAILABLE TO YOU IN CONNECTION WITH THIS AGREEMENT. 13. THE ASSESSEE HAS USED SERVICES AND HAS MADE MONTHLY PAYMENTS TO AMAZON. THE ASSESSEE HAS ATTACHED SAMPLE INVOICE OF AMAZON AT P AGES 23 TO 41 OF PAPER BOOK AND LEDGER EXTRACT OF AMAZON IN ITS BOOKS AT PAGES 1 AND 2 OF PAPER BOOK. THE ASSESSEE HAD FILED SUBMISSIONS BEFORE THE ASSESSING OFFICER GIVING DETAILED NOTE ON WEB HOSTING CHARGES, WHICH WAS AS UNDER: - WEB HOSTING CHARGES: A ) PRIMARILY EPRSS REQUIRES SERVERS TO RUN THE VARIOUS ONLINE RECHARGES. DUE TO THIS THERE IS A VERY HIGH REQUIREMENT OF SERVERS. SINCE PURCHASE/MAINTENANCE OF SERVERS AND ITS UPKEEP REQUIRE SKILLED MANPOWER, BPRS DOES NOT HAVE THE SAME. HENCE SERVERS AR E TAKEN ON HIRE FROM AMAZON, IN IS CLOUD UNITS. LEDGER COPY ATTACHED EXTRACT OF WEB AGREEMENT ALSO ATTACHED. 14. FURTHER, THE ASSESSEE HAS ALSO POINTED OUT THE NATURE OF ITS BUSINESS VIDE WRITTEN NOTE BEFORE THE ASSESSING OFFICER AND EXPLAINED AS UNDER: - 1. PRIMARILY THE A REQUIRES SERVERS TO RUN THE VARIOUS ONLINE RECHARGES. DUE TO THIS THERE IS A VERY HIGH REQUIREMENT OF SERVERS. SINCE PURCHASE / MAINTENANCE OF SERVERS AND ITS UPKEEP REQUIRE SKILLED MANPOWER, THE A DOES NOT HAVE THE SAME. HENCE SERVERS ARE TAKEN ON HIRE FROM AMAZON, IN ITS CLOUD UNITS. INFORMATION ABOUT AMAZON WEB SERVICES AND ITS BENEFITS AS PROVIDED ON WEBSITE HTTP://AWS.AMAZON.COM/WHAT - IS - AWS IS ENCLOSED FOR YOUR REFERENCE. ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 11 15. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS WHETHER THE ASSESSEE IS LIABLE TO DEDUCT WITHHOLDING TAX OUT OF SUCH PAYMENTS MADE TO AMAZON ON ACCOUNT OF WEB HOSTING CHARGES. THE TOTAL AMOUNT INVOLVED FOR THE YEAR UNDER CONSIDERATION WAS 18,61,207/ - . IT MAY BE POINTED OUT THAT THE YEARS UNDER APPEAL ARE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. VARIOUS DECISIONS HAVE BEEN RENDERED ON THE ISSUE AND POSITION PRIOR TO 2012 AMENDMENT WAS THAT THE PAYMENTS MADE ON ACCOUNT OF WEB HOSTING CHARGE S WAS NOT LEADING TO ACCRUAL OF INCOME IN THE HANDS OF FOREIGN ENTERPRISES AND HENCE, NOT LIABLE TO DEDUCT OR WITHHOLDING OF TAX. THE LEAD DECISION ON THE ISSUE WAS BY THE HONBLE HIGH COURT OF MADRAS IN SKYCELL COMMUNICATIONS LTD. & ANR. VS. DCIT (2001) 251 ITR 0053 (MAD). THE CASE OF REVENUE AUTHORITIES IS THAT DUE TO AMENDMENT IN THE YEAR 2012 WITH RETROSPECTIVE EFFECT FROM 01.04.1976, UNDER WHICH EXPLANATION 5 HAS BEEN INSERTED UNDER SECTION 9(1)(VI) OF THE ACT, THE PAYMENTS MADE BY ASSESSEE WERE IN T HE NATURE OF ROYALTY AND HENCE, THE ASSESSEE WAS LIABLE TO DEDUCT WITHHOLDING TAX. THE FIRST AND FOREMOST IS WHETHER SUCH RETROSPECTIVE AMENDMENT IN THE ACT COULD LEAD TO RETROSPECTIVE TDS OBLIGATION ON THE PART OF ASSESSEE FOR DEDUCTING OR WITHHOLDING OF TAX. IT IS ADMITTED POSITION THAT LAW DOES NOT COMPEL A PERSON TO DO SOMETHING WHICH HE CANNOT POSSIBLY PERFORM. THE AMENDMENT TO SECTION 9(1)(VI) OF THE ACT HAS BEEN MADE EFFECTIVE FROM 01.04.1976 , WHEREAS THE YEARS UNDER APPEAL ARE ASSESSMENT YEARS 20 10 - 11 AND 2011 - 12. SO, EVEN IF RETROSPECTIVE AMENDMENT HAS BEEN MADE IN THE INCOME TAX ACT, BUT SUCH RETROSPECTIVE EFFECT CANNOT BE GIVEN TO THE YEARS WHICH HAD ALREADY BEEN CLOSED BEFORE AMENDMENT CAME INTO FORCE . FURTHER UNDER THE GARB OF RETROSPECTIVE AMENDMENT, THE ASSESSEE CANNOT BE FASTENED WITH AN OBLIGATION WHICH HE CANNOT PERFORM. THE ASSESSEE HA D MADE PAYMENTS TO FOREIGN PARTY I.E. AMAZON. THE PAYMENTS HAVE ALREADY BEEN ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 12 MADE IN FINANCIAL YEARS 2009 - 10 AND 2010 - 11 AND ONCE THE PAYMENTS HAVE ALR EADY BEEN RELEASED OR SHOWN TO HAVE ACCRUED TO THE SAID PARTY, THEN UNDER THE GARB OF RETROSPECTIVE AMENDMENT, SUCH PAYMENTS WHICH ARE DUE TO THE PERSON OR WHICH HAS ALREADY BEEN PAID, CANNOT BE WITHDRAWN. THERE IS NO MERIT IN THE ORDERS OF AUTHORITIES BE LOW IN HOLDING OTHERWISE. 16. IN THIS REGARD, WE FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. M/S. NGC NETWORKS (INDIA) PVT. LTD. (SUPRA). THE HONBLE HIGH COURT APPLIED THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIG H COURT ITSELF IN CIT VS. CELLO PLAST (2012) 209 TAXMANN 617 (BOM), WHEREIN THE LEGAL MAXIM LEX NON COGIT AD IMPOSSIBILLIA ( LAW DOES NOT COMPEL A MAN TO DO WHAT HE CANNOT POSSIBLY PERFORM ) WAS APPLIED AND UPHELD THE ORDER OF TRIBUNAL, WHEREIN IT WAS HELD T HAT A PARTY CANNOT BE CALLED UPON TO PERFORM AN IMPOSSIBLE ACT I.E. TO COMPLY WITH A PROVISION NOT IN FORCE AT THE RELEVANT TIME BUT INTRODUCED LATER BY RETROSPECTIVE AMENDMENT. THE HONBLE HIGH COURT NOTED THAT AMENDMENT BY INTRODUCTION OF EXPLANATION 6 TO SECTION 9(1)(VI) OF THE ACT TOOK PLACE IN THE YEAR 2012 WITH RETROSPECTIVE EFFECT FROM 1976. THE HONBLE HIGH COURT HELD THAT IT COULD NOT BE CONTEMPLATED BY THE RESPONDENT WHEN HE MADE THE PAYMENT WHICH WAS SUBJECT TO TAX DEDUCTION AT SOURCE UNDER SEC TION 194C OF THE ACT DURING THE SUBJECT ASSESSMENT YEAR, WOULD REQUIRE THE DEDUCTION UNDER SECTION 194J OF THE ACT DUE TO SOME FUTURE AMENDMENT WITH RETROSPECTIVE EFFECT. ANOTHER ASPECT WHICH WAS DECIDED BY THE HONBLE HIGH COURT WAS THAT DISALLOWANCE OF EXPENDITURE UNDER SECTION 40(A)(I) OF THE ACT COULD ONLY BE MADE IF THE PAYMENT WAS ROYALTY IN TERMS OF EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT BUT WHERE THE PAYMENT WAS NOT ROYALTY IN TERMS OF ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 13 SAID EXPLANATION, THEN NO DISALLOWANCE OF EXPENDITURE UND ER SECTION 40(A)(I) OF THE ACT COULD BE MADE IN THE PRESENT FACTS. 17. ACCORDINGLY, WE HOLD THAT AMENDMENT, IF ANY, TO THE SCOPE OF ROYALTY BY AN AMENDMENT IN 2012 BY FINANCE ACT WITH RETROSPECTIVE EFFECT CANNOT FASTEN THE ASSESSEE WITH LIABILITY TO WIT HHOLD TAX FOR THE YEARS WHICH HAVE ALREADY BEEN CLOSED PRIOR TO INSERTION OF AMENDMENT. HENCE, THE ASSESSEE HAS NOT DEFAULTED IN NOT DEDUCTING WITHHOLDING TAX AND FOR SUCH NON ACTS, THE PAYMENT MADE CANNOT BE DISALLOWED AS PROVISIONS OF SECTION 40(A)(I) O F THE ACT ARE NOT ATTRACTED. 1 8 . NOW, COMING TO THE NEXT ASPECT RAISED BY ASSESSEE WHICH IS LINKED TO AS TO WHETHER RETROSPECTIVE AMENDMENT IN INCOME TAX WOULD OVERRIDE THE TREATY LAWS WHERE NO AMENDMENT HAS BEEN MADE. IT IS CLEAR THAT RETROSPECTIVE AMEN DMENT HAS CHANGED THE DEFINITION OF ROYALTY FROM THE YEAR 2012 UNDER THE INCOME TAX ACT, BUT THE POSITION OF DTAA BETWEEN TWO COUNTRIES HAS NOT BEEN EFFECTED. NO SUCH AMENDMENT HAS BEEN MADE TO THE TREATY LAWS AND IN DTAA, POSITION SIMILAR TO EXPLANATIO N 5 IS NOT ENVISAGED AT ALL. THIS IS THE PLEA RAISED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. HE FURTHER PLEADED THAT IN ORDER TO CONSTRUE MEANING OF ROYALTY AS PER DTAA, SINCE THE PROVISIONS OF DTAA TAKES PRECEDENT OVER THE PROVISIONS OF INCOME TAX ACT, WHERE THE ASSESSEE DOES NOT POSSESS AND DOES NOT HAVE ANY CONTROL OVER THE SERVER OR SERVERS SPACE, BEING DEPLOYED BY AMAZON, WHILE PROVIDING E - SERVICES AS PER AGREEMENT, THEN THERE IS NO SCOPE TO CONSTRUE THAT E - SERVICE CHARGES PAID TO AMAZON COULD BE DESCRIBED AS ROYALTY. THERE IS MERIT IN THE PLEA OF ASSESSEE. IF WE CONSTRUE THE MEANING OF ROYALTY AS PER DTAA, THEN W E HAVE TO ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 14 CONSIDER THE POSSIBILITY OF POSITION AND CONTROL OF SERVER / SERVER SPACE, WHICH ADMITTEDLY, IS NOT POSSESSED BY THE ASSESSEE. HENCE, AS PER TREATY LAWS, THE ASSESSEE CANNOT BE HELD TO HAVE PAID ROYALTY TO AMAZON. CONSEQUENTLY, THE PAYMENT MADE BY ASSESSEE FOR WEB HOSTING SERVICES IS NOT TAXABLE IN ACCORDANCE WITH DTAA AND THE SAME CANNOT BE HELD TO BE TAXABLE , ONLY BECAUSE THERE WAS RETROSPECTIVE AMENDMENT TO SECTION 9(1)(VI) OF THE ACT. IN ANY CASE, THE COURTS HAVE HELD THAT WHEN THERE IS NO AMENDMENT TO THE TREATY LAWS, THEN THE SAID TREATY LAWS WOULD OVERRIDE THE AMENDMENT, IF ANY, WHETHER RETROSPECTIVE OR OTHERWISE TO THE INCOME TAX ACT . S UCH A VIEW HAS BEEN TAKEN IN DDIT VS. NEW SKIES SATELITE BV & OTHER (SUPRA) . CONSEQUENTLY, THERE IS NO MERIT IN HOLDING THAT THE ASSESSEE WAS LIABLE TO DEDUCT WITHHOLDING TAX OUT OF SUCH PAYMENTS MADE TO AMAZON AND FOR S UCH NON - DEDUCTION O R WITHHOLDING OF TAX, THE ASSESSEE CAN BE HELD TO BE AT DEFAULT AND THE PAYMENT MADE BY ASSESSEE BEING NOT ALLOWED AS DEDUCTION IN ITS HANDS, IN VIEW OF PROVISIONS OF SECTION 40(A)(I) OF THE ACT. WE REVERSE THE ORDERS OF AUTHORITIES BEL OW IN THIS REGARD. WE ARE NOT GOING INTO THE ISSUE RAISED BY ASSESSEE THAT AMAZON IS NOT HAVING PE IN INDIA AND HENCE, NO LIABILITY TO DEDUCT TAX IN INDIA. 1 9 . NOW, ANOTHER ISSUE WHICH NEEDS TO BE SEEN IS WHETHER CHARGES PAID TO AMAZON FOR VARIOUS SERVIC ES PROVIDED BY IT ARE IN THE NATURE OF ROYALTY, IF ANY, OR NOT. THE ASSESSEE HAS PLACED ON RECORD THE COPY OF AGREEMENT WITH AMAZON, WHICH WE HAVE REFERRED IN THE PARAS HEREINABOVE. HE HAS ALSO PLACED ON RECORD THE COPIES OF BILLS RAISED BY AMAZON ONLINE . THE PERUSAL OF DETAILS FILED BY ASSESSEE OF MONTHLY CHARGES PAID, IT TRANSPIRES THAT THE SAME ARE FLUCTUATING FROM MONTH TO MONTH AND THERE IS NO REGULAR PAYMENT BEING MADE TO AMAZON. IN CASE OF PROVISION OF ROYALTY TO A PERSON, THEN AS SEEN FROM THE T ERMS AND ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 15 CONDITIONS OF VARIOUS AGREEMENTS, THERE IS FIXATION OF PRICE TO BE PAID AND THERE MAY BE VARIATION ON ACCOUNT OF USE OF CERTAIN SERVICES BUT FIRST THERE HAS TO BE BASIC PRICE FIXED. HOWEVER, IN THE FACTS OF PRESENT CASE, LOOKING AT THE DOCUMENTAT ION, THE BILLING IS SEGREGATED INTO VARIOUS SERVICES I.E. AWS SERVICES, STORAGE SERVICES, ETC. AND THE ASSESSEE BEFORE US HAS FILED A CHART OF SUMMARY OF SERVICES AVAILED. THE FIRST SUCH SERVICES ARE ON ACCOUNT OF SERVICE CHARGES FOR ELASTIC COMPUTE CLOUD . AS PER CLAUSE 1, IT IS ON ACCOUNT OF USE OF SERVICE PROVIDER LINUX ; A S PER CLAUSE 1.2, WINDOWS AND AS PER CLAUSE 1.3, WINDOWS & SQL SERVER STANARD AND CLAUSE 1.4 OF BANDWIDTH. THE TOTAL SERVICE CHARGES FOR ELASTIC COMPUTE CLOUD ARE USD 40,253.17. THE MONTH - WISE DETAILS OF SAID PAYMENTS MADE BY ASSESSEE FROM SEPTEMBER, 2009 TO MARCH, 2010 REFLECTED THAT IN THE FIRST MONTH, CHARGES TOTALED TO USD 4269.02, IN OCTOBER AT USD 5599.36 AND THERE ON. 20 . THE HONBLE HIGH COURT OF MADRAS IN SKYCELL COMMUNICA TIONS LTD. & ANR. VS. DCIT (SUPRA) HAVE HELD THAT WEB HOSTING CHARGES ARE NOT IN THE NATURE OF ROYALTY. THE SAID PRINCIPLE HAS FURTHER BEEN APPLIED IN VARIOUS DECISIONS OF THE TRIBUNAL AS RELIED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE. 2 1. THE ASPECT WHICH NEEDS TO BE SEEN IS WHETHER THE ASSESSEE IS PAYING CONSIDERATION FOR GETTING ANY RIGHT IN RESPECT OF ANY PROPERTY. THE ASSESSEE CLAIMS THAT IT DOES NOT PAY FOR SUCH RIGHT BUT IT ONLY PAYS FOR THE SERVICES. THE CLAIM OF ASSESSEE BEFORE US WAS THAT IT WAS ONLY USING SERVICES PROVIDED BY AMAZON AND WAS NOT CONCERNED WITH THE RIGHTS IN TECHNOLOGY. THE FEES PAID BY ASSESSEE WAS FOR USE OF TECHNOLOGY AND CANNOT BE S AID TO BE FOR USE OF ROYALTY, ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 16 WHICH STANDS PROVED BY THE FACTUM OF CHARGES BEING NOT FIXED BUT VARIABLE I.E. IT VARIES WITH THE USE OF TECHNOLOGY DRIVEN SERVICES AND ALSO USE OF SUCH SERVICES DOES NOT GIVE RISE TO ANY RIGHT IN PROPERTY OF AMAZON AND CONSEQ UENTLY, EXPLANATION UNDER SECTION 9(1)(VI) OF THE ACT IS NOT ATTRACTED. IT MAY BE POINTED OUT HEREIN ITSELF THAT THE ASSESSING OFFICER HAD APPLIED EXPLANATION 2(IVA) UNDER SECTION 9(1)(VI) OF THE ACT IN ORDER TO HOLD THE ASSESSEE AS HAVING DEFAULTED FOR N ON DEDUCTING WITHHOLDING TAX. FIRST OF ALL, MAIN PROVISIONS OF SECTION 9(1)(VI) OF THE ACT ARE NOT ATTRACTED AS THE PAYMENT MADE BY ASSESSEE IS NOT IN THE NATURE OF ROYALTY. IN ANY CASE, EXPLANATION 2(IVA) OF SECTION 9(1)(VI) OF THE ACT COVERS CASES OF R OYALTY I.E. CONSIDERATION PAID FOR THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT BUT NOT INCLUDING THE AMOUNT REFERRED TO IN SECTION 44BB OF THE ACT. THE ASSESSEE IN THE PRESENT CASE DID NOT USE OR ACQUIRE ANY RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT WHILE USING THE TECHNOLOGY SERVICES PROVIDED BY AMAZON AND HENCE, THE PAYMENT MADE BY ASSESSEE CANNOT BE SAID TO BE COVERED UNDER CLAUSE (IVA) TO EXPLANATION 2 OF SECTION 9(1)(VI) OF THE ACT. IN OTHER WORDS, EVEN IF THE RETROSPECTIVE AMENDMENT IS HELD TO BE APPLICABLE, THE CASE OF ASSESSEE OF PAYMENT TO AMAZON BEING OUTSIDE THE SCOPE OF SAID EXPLANATION 2(IVA) TO SECTION 9(1)(VI) OF THE ACT, CANNOT MAKE THE ASSESSEE LIABLE TO DEDUCT TAX AT SOURCE. IN OTHER W ORDS, THE ASSESSEE IS NOT LIABLE TO DEDUCT WITHHOLD ING TAX AND SUCH NON DEDUCTION O F WITHHOLDING TAX DOES NOT RENDER THE ASSESSEE IN DEFAULT AND CONSEQUENTLY, NO DISALLOWANCE OF AMOUNT PAID AS WEB HOSTING CHARGES IS TO BE MADE IN THE HANDS OF ASSESSEE FOR SUC H NON DEDUCTION O F WITHHOLDING TAX AND HENCE, PROVISIONS OF SECTION 40(A)(I) OF THE ACT ARE NOT ATTRACTED. THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE THUS, ALLOWED. ITA NO. 828 /P U N/20 1 6 ITA NO.1204/PUN/2016 17 2 2 . THE FACTS AND ISSUES IN ITA NO. 828 /PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES I N ITA NO. 1204 /PUN/2016 AND OUR DECISION IN ITA NO. 1204 /PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 828 /PUN/2016. 2 3 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF OCTOBER , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 24 TH OCTOBER , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP ELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 , PUNE ; 4. THE PR. CIT - 1 , PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE