Sandvik AB, Pune V. Assistant Commissioner of Income-tax, (IT),Circle -2, , Pune

ITA 1311/PUN/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3026 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-04-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 27-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Principle of natural justice; Question of law; Reassessment proceedings; Set aside
• Section: 201; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C CC C BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.1311/PUN/2019 / ASSESSMENT YEAR : 201 6-17 SANDVIK AB, C/O. SANDVIK ASIA PRIVATE LIMITED, MUMBAI PUNE ROAD, DAPODI, PUNE, MAHARASHTRA. PAN : AAHCS7486E. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), CIRCLE 2, PUNE. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK. REVENUE BY : SHRI A.M. MAHADEVAN KRISHNAN. / DATE OF HEARING : 16.06.2021 / DATE OF PRONOUNCEMENT : 17.06.2021 / ORDER PER PARTHA SARATHI CHAUDHURY, JM THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP) DATED 27.06.2019 FOR A.Y. 2 016-17 AS PER THE FOLLOWING GROUNDS OF APPEAL : 1. GROUND 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED DISPUTE RESOLUTION PANEL ('LD. DRP') AND THE LEARNED ASSESS ING OFFICER ('LD, AO') HAVE ERRED IN NOT FOLLOWING THE FAVOURABLE ORDER OF THE HON'BLE ITAT FOR AY 2004- 05, AY 2007-08, AY 2008-09, AY 2009-10, AND AY 2010 -11 IN APPELLANT'S OWN CASE PERTAINING TO THE TAXABILITY OF RECEIPTS T OWARDS MANAGEMENT SERVICE FEES C'MSF'), MERELY ON THE GROUND THAT THE TAX DEP ARTMENT HAS PREFERRED AN APPEAL BEFORE HON'BLE HIGH COURT AGAINST THE AFORES AID ORDERS. 2 IT IS PRAYED THAT, THE HON'BLE ITAT'S ORDER IS BIND ING ON THE LD. AO AND HENCE, THE ENTIRE ADDITION MADE BY THE LD. AO AND CONFIRME D BY THE LD . DRP, BE DELETED. 2. GROUND 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. DRP HAS ERRED IN CONFIRMING THE ACTION OF THE LD. AO IN TAX ING THE RECEIPTS TOWARDS MSF PROVIDED TO ITS INDIAN AFFILIATE AMOUNTING TO I NR 50,04,75,842 TO BE IN THE NATURE OF 'FEES FOR TECHNICAL SERVICES' C'FTS') WITHIN THE MEANING OF ARTICLE 12 OF THE INDIA- SWEDEN DOUBLE TAXATION AVOIDANCE A GREEMENT C'DTAA') READ WITH INDIA- PORTUGAL DTAA (VIA PROTOCOL). IT IS PRAYED THAT THE ADDITION MADE BY THE LD . AO AND CONFIRMED BY THE LD . DRP, BE DELETED. 3. GROUND 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. DRP HAS ERRED IN CONFIRMING THE ACTION OF LD. AO TO TAX REC IPTS OF INR 45,14,326 TOWARDS HRS SERVICES (INR 4,72,405) AND LEADERSHIP TRAINING (INR 40,41,921) PROVIDED BY THE APPELLANT TO ITS INDIAN AFFILIATE AS FTS WITHIN THE MEANING OF ARTICLE 12 OF THE INDIA-SWEDEN DTAA READ WITH INDIA- PORTUGAL DTAA (VIA PROTOCOL). IT IS PRAYED THAT THE ADDITION MADE BY THE LD . AO AND CONFIRMED BY THE LD. DRP , BE DELETED. 2. THE GROUNDS 1 AND 2 PERTAINS TO THE ISSUE OF MANAG EMENT SERVICE FEES (MSF) THE BRIEF FACTS IN RESPECT OF THESE GROUNDS ARE THAT TH E ASSESSEE IS A NON-RESIDENT FOREIGN COMPANY INCORPORATED IN SWEDEN. THE ASSESSEE HAS EARNED MANAGEMENT SERVICE FEES, PURSUANT TO THE TERMS OF AGREEMENT BETWEEN SANDVIK AB (SAB) AND SANDVIK ASIA PRIVATE LIMITED (S APL). SAB HAS RENDERED SERVICES WHICH ARE IN NATURE OF COMMERCIAL, MAN AGEMENT, MARKETING AND ADMINISTRATIVE SERVICES WHICH ARE RENDERED TO SUPPO RT DAY-TO-DAY FUNCTIONING AND TO SHARE THE BENEFIT OF SPECIALIZATION TO SA PL TO IMPROVE THE QUALITY OF PERFORMANCE. THE ASSESSEE HAS STATED THAT TH E AMOUNT RECEIVED ARE NOT LIABLE TO TAX AS FTS IN INDIA UNDER THE TAX TREATY B ETWEEN INDIA AND PORTUAL (REFERRED TO VIA PROTOCOL ATTACHED TO DOUBLE TAX ATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND SWEDEN). FURTHER, IT IS CLAIMED THAT THESE SERVICES DO NOT MAKE AVAILABLE ANY TECHNICAL KNOWLED GE, EXPERIENCE, 3 SKILL, KNOWHOW, PROCESS TO SAPL AND THESE SERVICES DO NOT FALL WITHIN THE AMBIT OF FTS AS DEFINED UNDER ARTICLE 12 OF DTAA BETWEEN INDIA AND SWEDEN READ WITH PROTOCOL THERETO. ASSESSEE ALSO HAS QUOTED V ARIOUS DECISIONS OF PUNE BENCH OF THE TRIBUNAL IN ITS OWN CASE WHEREIN THE IT AT, PUNE BENCH HAS HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAX ABLE IN NATURE AS IT DO NOT MAKE AVAILABLE IN TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KN OWHOW TO SAPL. 3. IN FACT, THE LEARNED COUNSEL FOR THE ASSESSEE PLACED BE FORE US A DETAILED CHART IN RESPECT OF RECEIPTS OF MANAGEMENT SERVICE FEES AND THEREIN IT CAN BE OBSERVED THAT STARTING FROM A.YS. 2004-05 TO A.Y. 2014-15 , THE MATTER HAS BEEN DECIDED ALWAYS IN FAVOUR OF THE ASSESSEE AS FOR THE MATTER OF FACT THAT MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED. THE S AID LIST IS MADE PART OF THIS ORDER FOR READY REFERENCE. AY AMOUNT OF MANAGEMENT SERVICE FEES RECEIVED FROM SANDVIK ASIA PVT. LTD (SAPL) (IN INR) DECISION OF THE ASSESSING OFFICER (AO) DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP) / DECISION OF CIT(A) DECISION OF THE HONBLE INCOME- TAX APPELLATE TRIBUNAL (ITAT) 2004-05 48,582,800 TAXABLE APPEAL WAS FILED BEFORE CIT(A) AND THE ADDITION WAS CONFIRMED BY CIT(A) NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) 2005-06 44,144,973 TAXABLE NOT TAXABLE (THE HONBLE DRP DELETED THE DISALLOWANCE ON THE GROUND THAT THE INITIATION OF REASSESSMENT PROCEEDINGS WAS INVALID) NOT TAXABLE DEPARTMENT APPEAL (THE HONBLE ITAT DELETED THE DISALLOWANCE ON THE GROUND THAT THE INITIATION OF REASSESSMENT 4 PROCEEDINGS WAS INVALID. 2006-07 56,774,012 TAXABLE NOT TAXABLE (THE HONBLE DRP DELETED THE DISALLOWANCE ON THE GROUND THAT THE INITIATION OF REASSESSMENT PROCEEDINGS WAS INVALID) NOT TAXABLE DEPARTMENT APPEAL (THE HONBLE ITAT DELETED THE DISALLOWANCE ON THE GROUND THAT THE INITIATION OF REASSESSMENT PROCEEDINGS WAS INVALID. 2007-08 59,297,919 TAXABLE TAXABLE NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) 2008-09 86,002,251 TAXABLE TAXABLE NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED) 2009-10 188,690,886 TAXABLE TAXABLE NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) 2010-11 189,469,420 TAXABLE TAXABLE NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN 5 INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) 2011-12 222,968,588 TAXABLE NOT TAXABLE. (THE HONBLE DRP HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) NOT TAXABLE. (THE HONBLE ITAT HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) 2012-13 268,682,650 TAXABLE NOT TAXABLE. (THE HONBLE DRP HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) NOT APPLICABLE 2013-14 364,560,456 TAXABLE NOT TAXABLE. (THE HONBLE DRP HELD THAT THE MANAGEMENT SERVICE FEES ARE NOT TAXABLE IN INDIA, SINCE MANAGERIAL IN NATURE AND ALSO THE MAKE AVAILABLE CLAUSE IS NOT SATISFIED.) NOT APPLICABLE 2014-15 262,867,769 NOT TAXABLE NOT APPLICABLE NOT APPLICABLE 2015-16 499,849,243 ASSESSMENT NOT INITIATED NOT APPLICABLE NOT APPLICABLE 4. THE ASSESSING OFFICER IN HIS DRAFT ASSESSMENT ORDER HAS DISCUSSED THIS ISSUE AT PARA 2 OF PAGE NO.1, WHEREAS THE FINDINGS HAVE BEEN GIVEN AT PARA 4 OF PAGE 19 ONWARDS AND AS PER THE REASONING CONTAINE D THEREIN ALREADY ON RECORD. THAT AT PARA 6.1 OF THE DRAFT ASSESSMENT ORDE R, IT IS EVIDENT THAT SINCE 6 THE DEPARTMENT HAS PREFERRED AN APPEAL BEFORE THE HON BLE BOMBAY HIGH COURT WHICH IS AS ON DATE SUBJUDICE IN RESPECT OF THE SU BSTANTIAL QUESTION OF LAW RAISED IN THAT CASE OF SAPL WITH REGARD TO MANAGEME NT SERVICE FEES AGAINST THE FINDINGS OF TRIBUNAL. THEREFORE, IN ORDER TO KEE P THE ISSUE ALIVE, THE ADDITION WAS MADE BY THE ASSESSING OFFICER. NONETHELE SS, THE DEMAND DETERMINED WOULD NOT BE ENFORCED SINCE THE DECISION OF DISP UTE RESOLUTION PANEL (DRP) AND TRIBUNAL ARE IN FAVOUR OF THE ASSESSEE IN THE EARLIER YEARS. THE DRP HAS DISCUSSED THIS ISSUE FROM PAGE 4 ONWARDS AN D CONCLUDED ITS FINDINGS AT PAGE 6 OF ITS ORDER. THAT AGAIN HERE ALSO, THE DRP THOUGH REALIZING THAT THE ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSE E IN THE EARLIER YEARS BUT FOR THE FACT THAT THE DEPARTMENT CANNOT CHALLENGE T HE DECISION OF DRP AND CONSIDERING THAT THE APPEALS OF THE DEPARTMENT AGAIN ST THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE ARE PENDING BEFORE THE H ONBLE BOMBAY HIGH COURT, THE ADDITION MADE BY THE ASSESSING OFFICER IN THE D RAFT ASSESSMENT ORDER WAS SUSTAINED. 5. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CO NTENTIONS, ANALYZED THE FACTS AND CIRCUMSTANCES ON THIS ISSUE. WE HAVE ALSO C ONSIDERED THE JUDICIAL PRONOUNCEMENTS PLACED ON RECORD. THE FACT A S ON DATE IS THAT THE ISSUE IN RESPECT OF MANAGEMENT SERVICE FEES IS WELL COVERE D IN FAVOUR OF THE ASSESSEE. THE REVENUE HAS PREFERRED APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT ON THE SUBSTANTIAL QUESTION OF LAW ON THE SAME ISSUE. THAT HOWEVER, THE MATTER HAS NOT YET ATTAINED FINALITY AT THE HIGH COURT LEVEL NOR WE FIND ANY CONTRARY DIRECTION GIVEN BY THE HON'BLE HIGH C OURT IN RESPECT OF THE ISSUE OF MANAGEMENT SERVICE FEES VIS--VIS THE ITAT ORDERS IN FAVOUR OF THE ASSESSEE. THEREFORE, IT IS CLEAR THAT AS ON DATE, THE ISSUE DECIDED IS IN FAVOUR OF THE ASSESSEE. THAT ON THIS ISSUE FOR A.Y. 2011-1 2 IN ITA NO.498/PUN/2016 THE TRIBUNAL HAS HELD AS FOLLOWS : 7 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW PERUSED. THE SOLITARY ISSUE RAISED BY THE REVENUE IN APPEAL IS AGAINST TH E FINDINGS OF ASSESSING OFFICER/DRP IN HOLDING THAT THE SERVICES PROVIDED B Y THE ASSESSEE TO SANDVIK ASIA LTD. AND WALTER TOOLS INDIA PVT. LTD. DO NOT F ALL WITHIN THE AMBIT OF FEE FOR TECHNICAL SERVICES UNDER CLAUSE (B) OF PARA 4 OF ARTICLE 12 OF DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND PORTUG UESE REPUBLIC. WE FIND THAT THE ADDITIONS ON THIS COUNT WERE MADE BY ASSES SING OFFICER IN EARLIER ASSESSMENT YEARS AS WELL. THE MATTER TRAVELLED TO T HE TRIBUNAL FOR THE FIRST TIME IN ASSESSMENT YEAR 2007-08. THE TRIBUNAL AFTER ANAL YZING THE FACTS OF CASE, DTAA BETWEEN INDIA AND PORTUGUESE REPUBLIC, PROTOCO L TO THE TAX TREATY BETWEEN INDIA AND SWEDEN AND VARIOUS CASE LAWS HELD THAT THE PAYMENTS RECEIVED BY ASSESSEE ON ACCOUNT OF MANAGEMENT SERVI CES FEE FROM SANDVIK ASIA LTD. AND TECHNICAL SERVICES FEE FROM WALTER TOOLS I NDIA PVT. LTD. CANNOT BE BROUGHT TO TAX IN VIEW OF PRINCIPLE OF THE MOST FAV OURED NATION (MFN) CLAUSE IN THE TAX TREATY. IT IS AN UNDISPUTED FACT THAT THE N ATURE OF PAYMENTS RECEIVED BY ASSESSEE IN ASSESSMENT YEAR UNDER APPEAL IS IDENTIC AL TO THE ONE RECEIVED IN EARLIER ASSESSMENT YEARS. FOR THE SAKE OF COMPLETEN ESS THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL IN ASSESSEE S OWN CASE IN IMMEDIATELY PRECEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010-11 ARE RE PRODUCED HERE-IN BELOW : 12. WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW THAT ALTERNATIVELY THE RECEIPTS FOR MANAGEMENT SERVICES BE TREATED IN THE NATURE OF DIVIDEND AND TAXED UNDER ARTICLE 10 TO THE TAX TREATY BETWEE N INDIA AND SWEDEN AS WELL AS UNDER SECTION 9(1)(IV) OF THE ACT. THE T RIBUNAL IN THE CASE OF PAYER I.E. SANDVIK ASIA PVT. LTD. IN ITA NO.1750/PU N/2013 WITH CROSS APPEAL IN ITA NO.1804/PUN/2013, RELATING TO ASSESSM ENT YEAR 2005-06 VIDE ORDER DATED 14.06.2017 HELD THAT MANAGEMENT FE ES PAID TO SANDVIK AB, SWEDEN I.E. THE ASSESSEE BEFORE US WAS INCOME O N ACCOUNT OF RENDERING OF MANAGEMENT SERVICES AND COULD NOT BE T REATED AS DIVIDEND. FOLLOWING THE SAME PARITY OF REASONING, WE DISMISS THE ALTERNATIVE STAND OF THE DRP/ASSESSING OFFICER IN TAXING THE MANAGEME NT SERVICE CHARGES IN THE HANDS OF ASSESSEE. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. 5 ITA NO. 498/PUN/2016, A.Y. 2011-12 7. THUS, FOR THE AFORESAID REASONS WE FIND THAT NO MER IT IN THE APPEAL BY THE DEPARTMENT. ACCORDINGLY, THE IMPUGNED ORDER IS UPHE LD AND THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. 6. THEREFORE, AS ON THE FACT OF THE MATTER STANDS AS ON DATE, THE TRIBUNAL HAD ANALYZED THE DTAA BETWEEN INDIA AND PORTUGUESE T AX TREATY RENDERED TO (VIA PROTOCOL) ATTACHED TO THE TAX TREATY BETWEEN INDIA AND SWEDEN AND HAD HELD THAT THE PAYMENTS RECEIVED BY THE ASSESSEE ON AC COUNT OF MANAGEMENT SERVICE FEES CANNOT BE BROUGHT TO TAX IN VIEW OF THE P RINCIPLE OF MOST FAVOURED NATION (MFN) CLAUSE IN THE TAX TREATY. IN VIEW OF THE AFORESAID DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT MANAGEMENT SERVICE FEES CANNOT BE BROUGHT TO TAX IN INDIA. THUS, GROUNDS 1 AND 2 ARE ALLOWED. 8 7. GROUND NO.3: IN GROUND NO.3, THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE LEARNED DRP IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER TO TAX RECEIPTS OF INR 45,14,326/- TOWARDS HRS SERVICE (INR 4,72,405) AND LEADER SHIP TRAINING FEE (INR 40,41,921). 8. THAT AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THEY ARE NOT PRESSING THE GROUND ON HRS SERVICE FEE. AFTER HEARING THE COUNSEL FOR THE ASSESSEE THIS PART OF THE GROUND NO.3 I.E., HRS SERVICE FEES IS DISMISSED AS NOT PRESSED. THEREFORE, THE ONLY AREA OF CONTENTION IS WITH REGARD TO THE LEADERSHIP TRAINING FEES OF RS.40,41,921/-. 9. THE ASSESSING OFFICER IN HIS DRAFT ASSESSMENT ORDER VIDE PARA 7 RELIED ON THE OBSERVATIONS OF THE LEARNED DRP IN THE CASE OF S ANDVIK AB (SAB) FOR A.YS. 2013-14 AND A.Y. 2014-15 WHEREIN THEY HAVE HELD THA T SINCE THE SERVICES PROVIDED ARE IN THE NATURE OF EITHER TECHNICAL OR CONSULTANCY AND CONSIDERING THAT THE CONDITION OF MAKE AVAILABLE IS BEING SA TISFIED, HENCE THE RECEIPTS OF THE ASSESSEE ON ACCOUNT OF IMPARTING TRAINING ARE CLEARLY TAXABLE AS FTS AND DIRECTED THE ASSESSING OFFICER TO TAX ON THE AMOUNTS RECEIVED ON ACCOUNT OF TRAINING FEES AS FTS. THE ASSESSING OFFICER AC CORDINGLY DIRECTED TO TAX AN AMOUNT OF RS.40,41,921/- ON ACCOUNT OF TRAINING FEES AS FTS. THE DRP HAS GIVEN ITS FINDING AT PAGES 24 TO 26 OF ITS ORDER O N THIS ISSUE. THE DRP IN ITS FINDING REITERATED ITS OWN ORDER IN THE CASE OF T HE ASSESSEE FOR A.YS. 2013-14 AND 2014-15 AND HAD HELD THAT THE ESSENTIAL CONDITION OF MAKE AVAILABLE WAS SATISFIED AND MORE SO, BECAUSE THE CONDITIO N MAKE AVAILABLE IS IN BUILT WHEN THE SERVICES THAT HAVE BEEN PROVIDED A RE OF THE NATURE OF TRAINING. 9 10. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING VEHEMENTLY SUBMITTED THAT IN THIS CASE MAKE AVAILABLE CLAUSE WAS N OT SATISFIED. THE BASIC ESSENCE OF MAKE AVAILABLE HAS BEEN DISCUSSED BY T HE TRIBUNAL IN ITS ORDER DATED 06.01.2021 IN ITA NO.2524/PUN/2017 FOR A.Y. 20 14-15 IN THE CASE OF M/S. SANDVIK AB VS. DCIT (IT), PUNE. IN THIS C ASE, ON THE SIMILAR FACTS, THE TRIBUNAL OBSERVED THAT THE ASSESSEE IS A SWED EN BASED COMPANY AND IT HAD RECEIVED AMOUNT FROM SAPL TOWARDS TRAINING CH ARGES, THE SAME WAS DESIGNATED AS TRAINING FEE (NON-TECHNICAL SERVICES) NOT CHARGEABLE TO TAX AS FEE FOR TECHNICAL SERVICES IN INDIA UNDER THE DTAA REA D WITH (VIA PROTOCOL) AS EXTENDING TO DTAA BETWEEN INDIA AND PORTUGUESE. 11 THAT SINCE THE ASSESSEE IS A SWEDEN BASED COMPANY AND SAPL HAS ITS REGISTERED OFFICE IN INDIA, BASICALLY THEY ARE COVERED BY TH E INDIA SWEDEN TAX TREATY. THAT HOWEVER, IN THE SAID TAX TREATY, THERE IS A SPECIAL PROTOCOL WITH RESPECT TO THE MOST FAVOURED NATION (MFN) CLAUSE AND T HERE IS DTAA ENTERED INTO BETWEEN INDIA AND SWEDEN AND NOW THE PAR TIES OF ORIGINAL DTAA AGREEMENT BETWEEN INDIA AND SWEDEN WOULD BE GOVERNED BY THE PROVISIONS OF DTAA BETWEEN INDIA AND PORTUGUESE REPUBLIC WHICH THEY E NTERED INTO THROUGH MFN CLAUSE. IN THIS BACKDROP, THE TRIBUNAL IN T HE AFORE-STATED DECISION HAS HELD AS FOLLOWS : 15 WE HAVE EXTRACTED ABOVE ARTICLE 12(4) OF THE DTAA BETWEEN INDIA AND PORTUGUESE, WHICH DEFINES THE TERM FEES FOR INCLUD ED SERVICES. WE ALSO NOTED TWO STRIKING DISSIMILARITIES BETWEEN THE LANGUAGE O F THE INDIAN DTAA WITH SWEDEN POR UNA PARTE AND PORTUGUESE POR OTRA PARTE AND REFERRED TO THE SECOND DISSIMILARITY OF THE PORTUGUESE CONVENTION CONTAINI NG A `MAKE AVAILABLE CLAUSE, WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. THIS INDICATES THAT IN ORDER TO FALL WITHIN THE PURVIEW OF ARTICLE 12(4) OF THE DTAA BETWEEN INDIA AND PORTUGU ESE, IT IS FOREMOST IMPORTANT THAT THE SERVICES RENDERED MUST NOT ONLY BE CONSULT ANCY OR TECHNICAL IN NATURE, BUT SHOULD ALSO MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW- HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN WHICH ENABLES THE PERSON ACQUIR ING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. 16. THE TERMS TECHNICAL AND CONSULTANCY SERVICES HA VE NOT BEEN DEFINED EITHER UNDER THE RELEVANT SECTION OR THE DTAA. TECHNICAL S ERVICES GENERALLY REQUIRE USE OF SKILL AND SPECIALIZED KNOWLEDGE ORDINARILY IN EN GINEERING FIELD. ITEMS MENTIONED IN CLAUSE 4(B) OF ARTICLE 12 BETWEEN INDI A AND PORTUGUESE AFTER THE 10 WORDS `MAKE AVAILABLE, SUCH AS, TECHNICAL KNOWLEDG E, EXPERIENCE, SKILL, KNOW- HOW OR PROCESSES OR A TECHNICAL PLAN OR TECHNICAL D ESIGN, STRENGTHEN THE VIEW THAT THE TECHNICAL SERVICES HERE LARGELY CATER TO E NGINEERING FIELD. SUCH A KNOWLEDGE IS ACQUIRED THROUGH A RIGOROUS PROCESS OF LEARNING, SOMETIMES ALSO INVOLVING CERTAIN TECHNICAL QUALIFICATIONS IN SPECI ALIZED FIELDS. IN COMMON PARLANCE, CONSULTANCY SERVICES ARE ADVISORY SERVICE S. TO SEEK ADVICE FROM THE EXPERT IN THE FIELD IS ORDINARILY VIEWED AS AVAILIN G CONSULTANCY SERVICES. IF A PATIENT GOES TO A DOCTOR AND CONSULTS HIM OF HIS IL LNESS, HE IS CONSULTING A DOCTOR. SIMILARLY, IF A CLIENT GOES TO AN ADVOCATE AND SEEKS HIS OPINION, HE CAN BE CONSIDERED AS AVAILING CONSULTANCY SERVICES FROM THE ADVOCATE. HOWEVER, WHAT IS PERTINENT TO NOTE HERE IS THAT THE COMMON C ONNOTATION OF CONSULTANCY SERVICES AS NOTICED HEREIN DOES NOT HOLD GOOD IN TH E CONTEXT OF THE LANGUAGE OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND PORTUGUESE . EVEN A CURSORY READING OF PARA 4 OF ARTICLE 12 OF INDIA PORTUGUESE CONVENTION DECIPHERS THAT THE CLAUSE (B) IS ATTACHED TO BOTH THE TECHNICAL AND CONSULTANCY S ERVICES. THUS THE `CONSULTANCY SERVICES IN THE PRESENT CONTEXT WOULD NOT BE OF THE NATURE AS UNDERSTOOD COMMONLY, BUT DRAW THEIR COLOUR FROM THE ITEMS MENTIONED AFTER THE TERM `MAKE AVAILABLE, MORE SPECIFICALLY, WHEN THES E ARE ALSO COMPREHENDED IN THE SENSE OF MAKING AVAILABLE EXPERIENCE OR SKILL E TC. TO THE RECIPIENT FOR USING IT AT HIS OWN END. THIS SHOWS THAT THE TECHNICAL KNOWL EDGE, EXPERIENCE OR SKILL ETC., MUST BE HANDED OVER TO THE ACQUIRER FOR ITS L ATER USE BY SELF AS A PRE- CONDITION FOR FALLING WITHIN THE PURVIEW OF THIS AR TICLE. 17. COMING BACK TO THE FACTUAL POSITION PREVAILING BEFORE US, WE FIND THAT THE LEADERSHIP TRAINING PROVIDED BY THE ASSESSEE DID NO T RESULT IN MAKING AVAILABLE ANY TECHNICAL KNOWLEDGE, EXPERIENCE OR SKILL ETC. T O THE EMPLOYEES OF SAPL, WHICH COULD ENABLE THEM TO USE IT LATER ON. IN THAT VIEW OF THE MATTER, IT IS HELD THAT THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN CONSIDERING TRAINING FEE AS A CONSIDERATION FOR RENDERING CONSULTANCY OR TECHNICA L SERVICES WITHIN THE MEANING OF ARTICLE 12(4)(B) OF THE DTAA BETWEEN IND IA AND PORTUGUESE. 12. THAT FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT LET THE MATTER BE REMANDED TO THE FILE OF ASSESSING OFFICER TO RE-ADJUDICATE THIS ISSUE AFTER FACTUAL VERIFICATION AS PER THE LEGAL PROPOSITION L AID DOWN BY THE ORDER OF THE TRIBUNAL (SUPRA). THE LEARNED DEPARTMENTAL R EPRESENTATIVE DID NOT RAISE ANY OBJECTION. IN VIEW OF THE ABOVE FACTS, WE SET ASIDE THE FINDINGS OF THE DRP ON THIS ISSUE OF LEADERSHIP TRAINING SERVICE FEES TO THE FILE OF ASSESSING OFFICER TO RE-ADJUDICATE WHILE COMPLYING WITH TH E PRINCIPLES OF NATURAL JUSTICE AND AS PER LAW AS INDICATED HEREINABOVE. THUS, THIS PART OF GROUND NO.3 IS ALLOWED FOR STATISTICAL PURPOSES. 11 13. IN THE COMBINED RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 17 TH DAY OF JUNE, 2021. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S. SYAL) JUDICIAL MEMBER VICE PRESIDENT / PUNE; / DATED : 17 TH JUNE, 2021. YAMINI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-13, PUNE. 4. THE PRL.CIT(5)-PUNE. 5. , , , / DR, ITAT, C BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.