The Dy. Commissioner of Income Tax, Circle, (Intl. Taxn.), Baroda V. M/s. Sun Pharmaceuticals Industries Limited, Vadodara

ITA 1343/AHD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7903 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: misc
• Appeal Filed On: 19-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Double taxation relief; Opportunity of being heard; Additional evidence; Permanent establishment; Right to appeal

Judgement Text

ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MAHAVIR PRASAD JM] ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION), VADODARA ..... ......APPELLANT VS SUN PHARMACEUTICAL INDUSTRIES LTD ...... .RESPONDENT SPARC, TANDALJA, VADODARA 390020 [PAN: AADCS3124K] APPEARANCES BY KEYUR PATEL, FOR THE APPELLANT S N SOPARKAR, FOR THE RESPONDENT DATES OF HEARING OF THE APPEAL : APRIL 12, 2018 DATE OF PRONOUNCING THIS ORDER : JULY 11, 2018 O R D E R PER PRAMOD KUMAR, AM: 1. THESE THREE APPEALS DEAL WITH A COMMON QUESTION, ARISING ON THE SAME SET OF FACTS AND IN THE CASE OF THE SAME ASSESSEE. AS A MATTER OF CO NVENIENCE, THEREFORE, WE WILL TAKE UP THESE THREE APPEALS TOGETHER. THESE APPEALS ARE DIRECTED AGAINST A CONSOLIDATED ORDER DATED 12 TH FEBRUARY 2016 PASSED BY THE CIT(A) IN THE MATTER OF ASCERTAINMENT OF TAX WITHHOLDING LIABILITY FROM THREE FOREIGN REMITTANCES MADE BY TH E ASSESSEE, UNDER A COMMON MANUFACTURING SERVICES AGREEMENT DATED 1 ST APRIL 2013, TO AN ENTITY FISCALLY DOMICILED IN ISRAEL. THE GRIEVANCES RAISED BY THE APPELLANT, WHI CH ARE COMMON IN ALL THE APPEALS, ARE AS FOLLOWS: 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ISSUING THE DIRECTION U/S.248 OF THE ACT THAT THERE IS NO LIABILITY TO WI THHOLD TAX UNDER SEC.195 OF THE ACT ON THE FOREIGN REMITTANCES MADE TO ADITYA ACQUISITI ON COMPANY LIMITED, ISRAEL. 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ADMITTING THE APPEAL U/S.248 OF THE ACT THOUGH THE ASSESSEE HAD NEITHER DEDUCTED TAX AT SOURCE U/S.195 OF ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 2 OF 11 THE ACT AT THE TIME OF CREDIT OF REMITTANCES NOR PA ID ANY TAXES TO THE GOVERNMENT ACCOUNT, AS SUCH THIS APPEAL WAS NOT MAINTAINABLE. 3. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DECIDING THE APPEAL U/S.248 OF THE ACT WITHOUT PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSING OFFICER AND IN ADMITTING THE ADDITIONAL EVIDENCES I N CONTRAVENTION OF RULE 46A(3) OF THE I.T. RULES, 1962. 4. THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE SERVICES PROVID ED BY ADITYA ACQUISITION COMPANY LIMITED, ISRAEL HAD NOT RESULTED IN IMPARTING AND M AKING AVAILABLE TECHNOLOGICAL SKILL, KNOW-HOW TO THE ASSESSEE, MERELY CONSIDERING THE CO NTRACT PERIOD OF 5 YEARS. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ADITYA ACQUISITION COMPANY LIMITED, ISRAEL MERELY PROVIDED SUPERVISORY AND MANAGERIAL SERVICES WHEREAS TERMS OF AGREEMENT CLEARLY REFLECT SHARING OF TECHNICAL KNOWLEDGE AND PERMANENT BENEFIT TO THE ASSESSEE. 2. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATEV ER WE DECIDE IN EXACTLY SIMILARLY WORDED DEPARTMENTAL APPEALS IN THE CASES OF DCIT V S SUN PHARMACEUTICAL LABORATORIES LIMITED (ITA NOS. 1345, 1346 AND 1347), A GROUP EN TITY OF THE ASSESSEE, WILL APPLY MUTATIS MUTANDIS ON THESE APPEALS AS WELL, AS ADMITTEDLY MATERIAL F ACTS OF THE CASE ARE SIMILAR. 3. VIDE OUR ORDER OF EVEN DATE, WE HAVE DISMISSED T HE AFORESAID APPEALS IN THE CASES OF THE GROUP ENTITY, AND OBSERVED AS FOLLOWS: SCOPE OF APPEAL UNDER SECTION 248 2. THESE ARE SOMEWHAT UNIQUE CASES IN THE SENSE THA T THE ASSESSEE WAS NOT ACTUALLY CALLED UPON TO WITHHOLD TAXES IN RESPECT OF INCOME EMBEDDED IN CERTAIN PAYMENTS TO THE NON- RESIDENT ENTITIES MADE BY THE ASSESSEE, AND YET THE ASSESSEE WAS IN APPEAL BEFORE THE CIT(A) FOR A DECLARATION THAT NO TAX WAS DEDUCTIBLE ON SU CH INCOME. BEFORE MAKING THE PAYMENTS, THE ASSESSEE APPROACHED A FIRM OF CHARTERED ACCOUNT ANTS FOR CERTIFICATION UNDER SECTION 195 AND THE SAID FIRM CONFIRMED, FOR THE DETAILED REASO NS SET OUT IN ANNEXURE TO THE CERTIFICATE, THAT THE ASSESSEE IS NOT REQUIRED TO WITHHOLD ANY T AXES. YET, THE ASSESSEE HAS MADE THE PAYMENT OF TAXES, APPARENTLY AS A MEASURE OF ABUNDA NT CAUTION, AND PROCEEDED TO FILE AN APPEAL BEFORE THE CIT(A) ON THE FOLLOWING GROUND: 1.1. THE APPELLANT SEEKS DECLARATION FROM YOUR H ONOUR U/S. 248 THAT NO TAX IS DEDUCTIBLE IN RESPECT OF THE PAYMENT MADE TO AACL I N RESPECT OF RENDERING OF MANAGERIAL SERVICES AS THE SAID MANAGERIAL SERVICES DO NOT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TEC HNICAL DESIGN WHICH ENABLES THE APPELLANT TO APPLY THE TECHNOLOGY CONTAINED THEREIN IN TERMS OF THE DOUBLE TAX AVOIDANCE AGREEMENT ('DTAA') BETWEEN INDIA, AND ISR AEL READ WITH THE MOST ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 3 OF 11 FAVOURED NATION CLAUSE CONTAINED THEREIN IN LIGHT O F THE SUBSEQUENT DTAA BETWEEN INDIA-PORTUGAL. 3. THE QUESTION THEN ARISES WHETHER AN ASSESSEE CAN GO IN APPEAL WHEN STATUTORILY HE HAS NO OBLIGATION TO WITHHOLD TAX AT SOURCE AND YET HE PROCEEDED TO WITHHOLD THE TAXES. 4. SECTION 248 OF THE INCOME TAX ACT, 1961, PROVIDE S AS FOLLOWS: APPEAL BY PERSON DENYING LIABILITY TO DEDUCT TAX IN CERTAIN CASES WHERE UNDER AN AGREEMENT OR OTHER ARRANGEMENT, THE TAX DEDUCTIBLE ON ANY INCOME, OTHER THAN INTEREST, UNDER SECTION 195 IS TO BE BOR NE BY THE PERSON BY WHOM THE INCOME IS PAYABLE, AND SUCH PERSON HAVING PAID SUCH TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT, CLAIMS THAT NO TAX WAS REQUIRED TO BE D EDUCTED ON SUCH INCOME, HE MAY APPEAL TO THE COMMISSIONER (APPEALS) FOR A DECLARAT ION THAT NO TAX WAS DEDUCTIBLE ON SUCH INCOME. 5. WHILE ON THIS ISSUE, IT IS USEFUL TO TAKE NOTE O F A COORDINATE BENCH OF THIS TRIBUNAL, IN THE CASE OF MAHINDRA & MAHINDRA LTD VS ADDL DIT [(2006) 106 ITD 521 (BOM)]. IN THIS DECISION, IT WAS HELD THAT UNLESS THERE IS AN ORDER HOLDING ASSESSEE LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 195, THERE IS NO OCCASION T O APPEAL UNDER SECTION 248. THAT WAS A CASE IN WHICH THE ASSESSEE HAD FILED AN APPEAL UNDE R SECTION 248 ON THE GROUND THAT THE CHARTERED ACCOUNTANT ISSUING CERTIFICATE WITH RESPE CT TO ASCERTAINMENT OF TAX WITHHOLDING LIABILITY FROM PAYMENT MADE TO NON-RESIDENT ENTITIE S HAD HELD THAT THE ASSESSEE WAS LIABLE TO WITHHOLD TAXES AT SOURCE. DENYING THIS LIABILITY, A SSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), AND, THEREAFTER, BEFORE THIS TRIBUNAL. ON THESE FACTS, THE CO-ORDINATE BENCH, SPEAKING THROUGH ONE OF US, DECLINED TO CONSIDER TH E APPEAL AND OBSERVED THAT IF WE ARE TO UPHOLD CIT(A)S STAND, WHENEVER AN ASS ESSEE TAX DEDUCTOR IS AGGRIEVED OF THE STAND TAKEN BY A CHARTERED ACCOUNTANT, WHILE CERTIFYING THE WITHHOLDING TAX LIABILITY OF THE ASSESSEE TAX DEDUCTOR, THE ASSESSE E CAN FILE AN APPEAL AGAINST THE SAID CERTIFICATE, ON THE GROUND OF DENYING LIABILITY TO DEDUCT TAX AT SOURCE, UNDER S. 248 OF THE ACT. THE OFFICE OF THE AO IS THUS COMPLETELY BYPASSED. SEC. 248 OF THE ACT DOES PROVIDE THAT, 'ANY PERSON, HAVING IN ACCORDANC E WITH THE PROVISIONS OF SS. 195 AND 200, DEDUCTED AND PAID TAX IN RESPECT OF ANY SU M CHARGEABLE UNDER THIS ACT, OTHER THAN INTEREST WHO DENIES HIS LIABILITY TO MAK E SUCH DEDUCTION, MAY APPEAL TO THE CIT(A) TO BE DECLARED NOT LIABLE TO MAKE SUCH D EDUCTION', BUT TO DENY A LEGAL LIABILITY, THERE HAS TO BE A LEGAL LIABILITY FIRST. THE LEGAL REMEDIES CANNOT BE SOUGHT IN VACUUM OR ON THE BASIS OF AN OPINION HELD BY A P ERSON OTHER THAN THE AUTHORITY CONCERNED. IF X IS SOMEONES AO (TDS), IT IS XS OP INION ABOUT THAT PERSONS WITHHOLDING TAX LIABILITY, WHICH ALONE CAN GIVE RIS E TO A CAUSE OF ACTION FOR APPEAL . 6. LET US, IN THIS LIGHT, REVERT TO THE FACTS OF TH IS CASE IN THE LIGHT OF THE LEGAL POSITION AS IT EXISTS NOW. INTERESTINGLY, SECTION 248, AS IT EX ISTED PRIOR TO 1 ST JUNE 2007 PROVIDED THAT (A)NY PERSON HAVING IN ACCORDANCE WITH THE PROVISI ONS OF SECTIONS 195 AND 200 DEDUCTED AND PAID TAX IN RESPECT OF ANY SUM CHARGEABLE UNDER THIS ACT, OTHER THAN INTEREST, WHO DENIES HIS LIABILITY TO MAKE SUCH DEDUCTION, MAY APPEAL TO THE COMMISSIONER (APPEALS) TO BE DECLARED NOT LIABLE TO MAKE SUCH DEDUCTION. WHILE EXPLAINING THE CHANGE IN THE STATUTORY PROVISION, CBDT CIRCULAR DATED 12 TH MARCH 2008 STATES AS FOLLOWS: ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 4 OF 11 63. PROVISION OF APPEAL BY A PERSON DENYING LIABILI TY TO DEDUCT TAX. 63.1 THE PROVISIONS OF SECTION 248, PROVIDED THAT W HERE ANY PERSON HAS DEDUCTED AND PAID TAX IN ACCORDANCE WITH THE PROVISIONS OF SECTI ONS 195 AND 200 IN RESPECT OF ANY SUM CHARGEABLE UNDER THE ACT, OTHER THAN INTEREST A ND WHO DENIES HIS LIABILITY TO MAKE SUCH DEDUCTIONS, MAY MAKE AN APPEAL TO THE COM MISSIONER (APPEALS) TO BE DECLARED NOT LIABLE TO MAKE SUCH DEDUCTIONS. 63.2 SECTION 248 HAS BEEN SUBSTITUTED, SO AS TO PRO VIDE THAT WHERE UNDER AN AGREEMENT OR OTHER ARRANGEMENT, THE TAX DEDUCTIBLE ON ANY INCOME, OTHER THAN INTEREST, UNDER SECTION 195 IS TO BE BORNE BY THE P ERSON BY WHOM THE INCOME IS PAYABLE, AND SUCH PERSON HAVING PAID SUCH TAX TO TH E CREDIT OF THE CENTRAL GOVERNMENT, CLAIMS THAT NO TAX WAS REQUIRED TO BE D EDUCTED ON SUCH INCOME, HE MAY APPEAL TO THE COMMISSIONER (APPEALS) FOR A DECLARAT ION THAT NO TAX WAS DEDUCTIBLE ON SUCH INCOME. 63.3 APPLICABILITYTHESE AMENDMENTS WILL TAKE EFFEC T FROM THE 1ST DAY OF JUNE, 2007. 7. AS A PLAIN READING OF THE PRESENT STATUTORY PROV ISION INDICATES, THE RIGHT TO APPEAL UNDER SECTION 248 THUS COVERS ONLY SUCH PERSONS MAK ING THE PAYMENTS WHO, UNDER AN AGREEMENT OR OTHER ARRANGEMENT, ARE BEAR THE TAX DE DUCTIBLE ON ANY INCOME PAID TO THE NON- RESIDENT. IN OTHER WORDS, UNLESS A PERSON BEARS THE TAX LIABILITY OF THE RECIPIENT, BY AGREEMENT OR OTHERWISE, HE DOES NOT HAVE A RIGHT TO APPEAL UN DER SECTION 248. IN THE PRESENT CASE, HOWEVER, IT IS AN UNDISPUTED POSITION THAT THE APPE LLANT BEFORE US, UNDER CLAUSE 4.3 OF THE AGREEMENT UNDER WHICH THE SERVICES WERE RECEIVED FR OM THE NON-RESIDENT ENTITY, HAD THE OBLIGATION TO BEAR THE TAX LIABILITY, IF ANY, OF TH E RECIPIENT. 8. THE OTHER ASPECT OF THE MATTER IS THAT SUCH PER SON (I.E. THE PERSON MAKING THE PAYMENT WHO HAS AN OBLIGATION, UNDER AN AGREEMENT O R OTHERWISE, TO BEAR THE TAX DEDUCTIBLE) HAVING PAID SUCH TAX TO THE CREDIT OF THE CENTRAL G OVERNMENT, CLAIMS THAT NO TAX WAS REQUIRED TO BE DEDUCTED ON SUCH INCOME. THE LANGUAGE NOW EM PLOYED BY SECTION 248 IS A DEPARTURE FROM THE EARLIER REFERENCE TO THE PERSON MAKING PAY MENT HAVING, IN ACCORDANCE WITH THE PROVISIONS OF SS. 195 AND 200, DEDUCTED AND PAID TA X IN RESPECT OF ANY SUM CHARGEABLE UNDER THIS ACT. WHAT WAS EARLIER THUS THE CONDITION PREC EDENT FOR INVOKING SECTION 248 IS THAT THE PERSON MAKING PAYMENT TO THE NON-RESIDENT ENTITIES COMPLIES WITH THE PROVISIONS OF, INTER ALIA, SECTION 195- WHICH, IN TURN, REQUIRED THE ASSESSEE TO APPROACH THE ASSESSING OFFICER FOR DETERMINATION OF TAX LIABILITY. THAT PRECONDITION I S NO LONGER RELEVANT. THEREFORE, AS LONG AS A PERSON MAKING PAYMENT HAS THE OBLIGATION TO BEAR TH E TAX LIABILITY AND SUCH A PERSON PAYS TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT, SUCH A PER SON HAS THE STATUTORY RIGHT TO APPROACH THE COMMISSIONER (APPEALS) FOR A DECLARATION THAT NO T AX WAS DEDUCTIBLE ON SUCH INCOME. THERE IS, THUS, A CLEAR DEPARTURE FROM THE EARLIER LEGAL PROVISION, AND, TO THIS EXTENT, THE DECISION OF THE COORDINATE BENCH IN THE CASE OF MAH INDRA & MAHINDRA LTD (SUPRA) DOES NOT HOLD GOOD IN LAW. 9. OF COURSE, IT IS A SOMEWHAT UNIQUE SITUATION IN WHICH THE ASSESSEE HAS NO CAUSE OF ACTION AT ALL, AND IT IS ONLY TO PRE-EMPT THE POSSI BLE TAX DEMANDS UNDER SECTION 201 R.W.S. 195 THAT THE ASSESSEE WAS IN APPEAL BEFORE THE COMMISSI ONER (APPEALS), BUT THEN, AS A PLAIN READING OF THE PRESENT SECTION 248 INDICATES, SUCH A COURSE OF ACTION IS PERMISSIBLE FOR THE ASSESSEE. THE ASSESSEE HAS AVAILED A STATUTORY REME DY AVAILABLE TO HIM AND THERE CANNOT BE ANY OBJECTION TO THE SAME. IN ANY CASE, THE APPELLA NT HAS NOT RAISED ANY SPECIFIC ISSUES, OR TAKEN ANY SPECIFIC ARGUMENTS, ON THIS POINT- BEFORE US OR EVEN BEFORE THE LEARNED CIT(A). ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 5 OF 11 THE QUESTIONS REQUIRING OUR ADJUDICATION: 10. DURING THE COURSE OF HEARING BEFORE US, AND ON THE FACTS WITH RESPECT TO THE PAYMENT OF TAXES BEING POINTED OUT BY THE LEARNED COUNSEL O F THE ASSESSEE, LEARNED DEPARTMENTAL REPRESENTATIVE ACCEPTS THAT IT IS NOT IN DISPUTE TH AT THE ASSESSEE HAD DULY PAID THE TAXES, BEFORE FILING OF THE APPEAL, AND, AS SUCH, THERE WA S NO BAR ON THE CIT(A) IN ADMISSION OF APPEAL. TO THIS EXTENT, THE GRIEVANCES RAISED BEFOR E US ARE ILL CONCEIVED. 11. LEARNED REPRESENTATIVES FAIRLY AGREED THAT THE ISSUES REQUIRING OUR ADJUDICATION ARE TWO NEATLY IDENTIFIED ISSUES- ONE LEGAL ISSUE AND O NE FACTUAL ISSUE. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID FEES FOR CERTAIN SERVICES TO AN I SRAELI ENTITY AND THAT THE DETERMINATION OF TAXABILITY OF THE SAID REMUNERATION IS TO BE EXAMIN ED IN THE LIGHT OF THE PROVISIONS OF THE INDO ISRAEL DOUBLE TAXATION AVOIDANCE AGREEMENT [(2000) 254 ITR (STAT) 245; INDO ISRAEL TAX TREATY, IN SHORT]. WHILE THE LEARNED CIT(A) HAS GRA NTED THE IMPUGNED RELIEF BY INVOKING MOST FAVOURED NATION (MFN) CLAUSE READ WITH ARTICLE 13, DEALING WITH FEES FOR TECHNICAL SERVICES) AND BY HOLDING THAT THE SERVICES RENDERED BY THE IS RAELI ENTITY DID NOT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES . WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONT AINED THEREIN, IN SUBSTANCE, THE STAND OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT (A) THE MFN CLAUSE IN THE INDO ISRAELI TAX TREATY IS ONLY AN ENABLING PROVISION AND CANNOT, IN THE LIGHT OF ANOTHER DTAA ENTERED INTO SUBSEQUENTLY BY AN OECD MEMBER JURISDICTION I.E. PO RTUGAL IN THIS CASE, AUTOMATICALLY ALTER THE FTS CLAUSE IN THE SAID TREATY; AND THAT (B) THE SERVICES RENDERED BY THE ISRAELI ENTITY DID IN FACT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE , SKILL AND KNOW HOW. LEARNED REPRESENTATIVES FAIRLY AGREE THAT IT IS OUR TAKE ON THESE TWO QUESTIONS THAT WILL EVENTUALLY DECIDE OUTCOME OF THE APPEAL. THE NATURE OF PAYMENTS: 11. THE ASSESSEE BEFORE US IS A LARGE PHARMACEUTICA L COMPANY. THE ASSESSEE HAS MADE PAYMENTS TO AN ISRAEL BASED ENTITY, I.E. ADITYA ACQ UISITIONS COMPANY LTD (AACL, IN SHORT) ON ACCOUNT OF API (ACTIVE PHARMACEUTICAL INGREDIENT) A ND FORMULATION SERVICES. AS REGARDS THE API SERVICES, THE AACL RENDERS THE FOLLOWING SERVIC ES: REVIEW, GUIDE, DIRECT AND FACILITATE ENGINEER ING SERVICES OF ALL API MANUFACTURING SITES AND ITS OPERATIONS AND MARKETING AND SALES TH EREOF REVIEW THE SELECTION OF THE PRODUCTS FOR FUTURE DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION, WORKING TOGETHER WITH BUSINESS D EVELOPMENT TO ACHIEVE APPROPRIATE MANUFACTURING, IMPROVEMEN T IN CAPACITY UTILIZATION AND COST OBJECTIVES WHILE ENSURING COMPLIANCE WITH ALL REGULATORY ISSUES PLANNING MANUFACTURING FOR REGULAR, CAMPAIGN, N EW PRODUCTS AND LAUNCH PRODUCTS MONITOR PROCUREMENT OF RAW MATERIAL BY KEEPING Q UALITY, INVENTORY AND PRICE UNDER CHECK BY INTERFACING WITH COMMERCIAL (PURCHAS E); ACHIEVE COST LEADERSHIP; REDUCE COST OF API BY YIELD IMPROVEMENT AND ELIMINA TION OF INEFFICIENCIES ENVIRONMENT COMPLIANCE: ESTABLISH AND MAINTAIN M ANUFACTURING ENVIRONMENTS AND PROCESSES IN COMPLIANCE WITH REGULATORY, PLANT AND CORPORATE POLICIES AND ENSURE ENERGY CONSERVATION ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 6 OF 11 12. THE SERVICES RENDERED BY THE AACL, SO FAR AS F ORUMULATION SERVICES ARRANGEMENT IS CONCERNED, ARE AS FOLLOWS: REVIEW, GUIDE, DIRECT AND FACILITATE ENGINEERING ISSUES OF ALL FORMULATION MANUFACTURING SITES AND ITS OPERATIONS IN COMPLIANC E WITH GLOBAL REGULATORY REQUIREMENTS AND ENGINEERING ISSUES OF SUPPLY CHAIN FUNCTION TO DEVELOP STRATEGIC AND OPERATIONAL PLANS TO IN SURE THAT THE COMPANY HAS THE APPROPRIATE RESOURCES TO SUPPORT CURRENT FORECASTED BUSINESS AND PROJECTED GROWTH ENSURING THAT ALL MANUFACTURING FACILITIES ARE PROPERLY MAINTAINED TO COMPLY WITH CGMP NORMS AND THE ENVIRONMENTAL, REGULATORY LAWS A ND CORPORATE AND SAFETY POLICIES THE RELEVANT TAX TREATY PROVISIONS: 13. ARTICLE 13 OF THE INDO ISRAEL TAX TREATY, WHICH DEALS WITH THE TAXATION OF FEES FOR TECHNICAL SERVICES, PROVIDES AS FOLLOWS: ARTICLE 13- FEES FOR TECHNICAL SERVICES 1. FEES FOR TECHNICAL SERVICES ARISING IN A CONTRAC TING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXED IN THAT OT HER STATE. 2. HOWEVER, SUCH FEES FOR TECHNICAL SERVICES MAY AL SO BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE AND ACCORDING TO THE LAWS OF THAT STATE, BUT IF THE RECIPIENT IS THE BENEFICIAL OWNER OF THE FEES FOR TECHNICAL SERV ICES, THE TAX SO CHARGED SHALL NOT EXCEED 10 PER CENT OF THE GROSS AMOUNT OF THE FEES FOR TECHNICAL SERVICES. 3. THE TERM 'FEES FOR TECHNICAL SERVICES' AS USED I N THIS ARTICLE MEANS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR SERVICES O F A MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE, INCLUDING THE PROVISION OF SERV ICES BY TECHNICAL OR OTHER PERSONNEL, BUT DOES NOT INCLUDE PAYMENTS FOR SERVIC ES MENTIONED IN ARTICLE 16 OF THIS CONVENTION. 4. THE PROVISIONS OF PARAGRAPHS 1 AND 2 SHALL NOT A PPLY IF THE BENEFICIAL OWNER OF THE FEES FOR TECHNICAL SERVICES, BEING A RESIDENT OF A CONTRACTING STATE, CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE IN WHICH TH E FEES FOR TECHNICAL SERVICES ARISE, THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORMS IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FIXED BASE SIT UATED THEREIN, AND THE RIGHT, PROPERTY OR CONTRACT IN RESPECT OF WHICH THE FEES F OR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISH MENT OR FIXED BASE. IN SUCH CASE, THE PROVISIONS OF ARTICLE 7, OR ARTICLE 15, AS THE CASE MAY BE, SHALL APPLY. 5. FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO A RISE IN A CONTRACTING STATE WHEN THE SERVICES ARE RENDERED IN THAT STATE AND THE PAY ER IS THAT STATE ITSELF, A POLITICAL SUBDIVISION, A LOCAL AUTHORITY OR A RESIDENT OF THA T STATE. WHERE, HOWEVER, THE PERSON PAYING THE FEES FOR TECHNICAL SERVICES, WHETHER HE IS A RESIDENT OF A CONTRACTING STATE OR NOT, HAS IN A CONTRACTING STATE A PERMANENT ESTA BLISHMENT OR A FIXED BASE IN CONNECTION WITH WHICH THE LIABILITY TO PAY THE FEES FOR TECHNICAL SERVICES WAS INCURRED, AND SUCH FEES FOR TECHNICAL SERVICES ARE BORNE BY S UCH PERMANENT ESTABLISHMENT OR ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 7 OF 11 FIXED BASE, THEN SUCH FEES FOR TECHNICAL SERVICES S HALL BE DEEMED TO ARISE IN THE STATE IN WHICH THE PERMANENT ESTABLISHMENT OR FIXED BASE IS SITUATED. 6. WHERE, BY REASON OF SPECIAL RELATIONSHIP BETWEEN THE PAYER AND THE BENEFICIAL OWNER OR BETWEEN BOTH OF THEM AND SOME OTHER PERSON , THE AMOUNT OF FEES FOR TECHNICAL SERVICES PAID EXCEEDS THE AMOUNT WHICH WO ULD HAVE BEEN PAID IN THE ABSENCE OF SUCH RELATIONSHIP, THE PROVISIONS OF THI S ARTICLE SHALL APPLY ONLY TO THE LAST- MENTIONED AMOUNT. IN SUCH CASE, THE EXCESS PART OF THE PAYMENTS SHALL REMAIN TAXABLE ACCORDING TO THE LAWS OF EACH CONTRACTING STATE, DU E REGARD BEING HAD TO THE OTHER PROVISIONS OF THIS CONVENTION. 7. THE PROVISIONS OF PARAGRAPHS 1 TO 6 OF THIS ARTI CLE SHALL NOT APPLY TO PAYMENTS RELATING TO SERVICES MENTIONED HEREINBELOW : (I) SERVICES THAT ARE ANCILLARY AND SUBSIDIARY, AND INEXTRICABLY AND ESSENTIALLY LINKED, TO A SALE OF PROPERTY; (II) SERVICES THAT ARE ANCILLARY AND SUBSIDIARY TO THE RENTAL OF SHIPS, AIRCRAFT, CONTAINERS OR OTHER EQUIPMENT USED IN CONNECTION WI TH THE OPERATION OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC; (III) TEACHING IN OR BY AN EDUCATIONAL INSTITUTION; (IV) SERVICES FOR THE PERSONAL USE OF THE INDIVIDUA L OR INDIVIDUALS MAKING THE PAYMENTS; OR (V) PROFESSIONAL SERVICES AS DEFINED IN ARTICLE 15. 14. THE STAND OF THE ASSESSEE, HOWEVER, IS THAT THI S PROVISION IS TO BE READ ALONGWITH SECOND PARAGRAPH OF THE PROTOCOL TO THE INDO ISRAEL TAX TREATY WHICH PROVIDES THAT, THE COMPETENT AUTHORITIES OF THE CONTRACTING STATES SHA LL INITIATE THE PROPER PROCEDURE TO REVIEW THE PROVISIONS OF ARTICLES 12 AND 13 (ROYALTIES AND FEES FOR TECHNICAL SERVICES RESPECTIVELY) AFTER A PERIOD OF FIVE YEARS FROM THE DATE OF ENTRY INTO FORCE OF THIS CONVENTION. HOWEVER, IF UNDER ANY CONVENTION OR AGREEMENT BETWEEN INDIA AND ANY THIRD STATE WHICH ENTERS INTO FORCE AFTER 1ST JANUARY, 1995, INDIA LIMITS ITS TAX ATION AT SOURCE ON ROYALTIES OR FEES FOR TECHNICAL SERVICES OR INTEREST OR DIVIDENDS TO A RA TE LOWER OR A SCOPE MORE RESTRICTED THAN THE RATE OR SCOPE PROVIDED FOR IN THIS CONVENTION, THE SAME RATE OR SCOPE AS PROVIDED FOR IN THAT CONVENTION OR AGREEMENT ON THE SAID ITEMS OF I NCOME SHALL ALSO APPLY UNDER THIS CONVENTION WITH EFFECT FROM THE DATE ON WHICH THE P RESENT CONVENTION COMES INTO FORCE OR THE RELEVANT INDIAN CONVENTION OR AGREEMENT, WHICHE VER ENTERS INTO FORCE LATER . IT IS POINTED OUT THAT THE SAID INDO ISRAEL TAX TREATY, A S ALSO THE PROTOCOL, WERE SIGNED ON 29 TH JANUARY 1996, AND SUBSEQUENT TO THE SAID DATE, THE INDIA PORTUGAL DOUBLE TAXATION AVOIDANCE AGREEMENT HAS COME INTO FORCE VIDE NOTIFI CATION NO. GSR 542(E), DATED 16-6- 2000 WHICH PROVIDES AS FOLLOWS: ARTICLE 12- ROYALTIES AND FEES FOR INCLUDED SERVICE S 1.ROYALTIES AND FEES FOR INCLUDED SERVICES ARISING IN A CONTRACTING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXE D IN THAT OTHER STATE. ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 8 OF 11 2.HOWEVER, SUCH ROYALTIES AND FEES FOR INCLUDED SER VICES MAY ALSO BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE AND ACCORDING TO THE LAWS OF THAT STATE, BUT IF THE BENEFICIAL OWNER OF THE ROYALTIES AND FEES FOR INCLUDED SERVICES IS A RESIDENT OF THE OTHER CONTRACTING STATE, THE TAX SO CHARGED SHALL N OT EXCEED 10 PER CENT OF THE GROSS AMOUNT. THE COMPETENT AUTHORITIES OF THE CONTRACTIN G STATES SHALL BY MUTUAL AGREEMENT SETTLE THE MODE OF APPLICATION OF THIS LI MITATION. 3.THE TERM 'ROYALTIES' AS USED IN THIS ARTICLE MEAN S PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE , ANY COPYRIGHT OF LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS OR TA PES OR ANY OTHER MEANS OF REPRODUCTION FOR USE IN CONNECTION WITH RADIO OR TE LEVISION BROADCASTING, ANY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, SECRET FORMULA O R PROCESS, OR FOR THE USE OF, OR THE RIGHT TO USE, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL, OR SCIENTIFIC EX PERIENCE. 4.FOR THE PURPOSES OF THIS ARTICLE, ' FEES FOR INCLUDED SERVICES' MEANS PAYMENTS OF ANY KIND, OTHER THAN THOSE MENTIONED IN ARTICLES 14 AND 15 OF THIS CONVENTION, TO ANY PERSON IN CONSIDERATION OF THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISIONS OF SERVI CES OF TECHNICAL OR OTHER PERSONNEL) IF SUCH SERVICES : (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PAR AGRAPH 3 IS RECEIVED, OR (B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKI LL, KNOW-HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TEC HNICAL PLAN OR TECHNICAL DESIGN WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. (REMINING PORTION OF THIS ARTICLE NOT RELEVANT FOR PRESENT PURPOSES) 15. IN EFFECT, THUS, THE STAND OF THE ASSESSEE IS T HAT THE MAKE AVAILABLE PROVISIONS, WHICH FIND PLACE IN INDO PORTUGUESE TAX TREATY, MUST BE R EAD INTO THE INDO ISRAEL TAX TREATY AS WELL IN THE LIGHT OF THE MFN CLAUSE SET OUT IN THE INDO ISR AELI TAX TREATY. IT IS THEN CONTENTED THAT THE GIVEN THE NATURE OF SERVICES THAT THE ASSESSEE HAS RECEIVED UNDER THE AGREEMENT, NOTHING IS MADE AVAILABLE TO THE ASSESSEE IS THE SENSE THAT THESE SERVICES ARE CONSULTANCY SERVICES IN NATURE AND THE ASSESSEE IS NOT ENABLED TO PERFORM T HESE SERVICES WITHOUT RECOURSE TO THE SERVICE PROVIDER. THESE ARE THE CONTENTION WHICH H AS FOUND FAVOUR WITH THE CIT(A), AND THE ASSESSING OFFICER IS NOT CONTENT WITH THE STAND SO TAKEN BY THE CIT(A). THE ASSESSING OFFICER IS, THEREFORE, IN APPEAL BEFORE US. 16. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED T HE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. OUR ANALYSIS 17. IT IS ONLY ELEMENTARY THAT A PROTOCOL IS AN INT EGRAL PART OF A TAX TREATY AND WHEN PROTOCOL PROVIDES FOR A MOST FAVOURED NATION (MFN) CLAUSE, THE SAME IS TO BE GIVEN DUE EFFECT. IN OUR CONSIDERED VIEW, IT IS SETTLED POSITION IN L AW THAT PROTOCOL IS AN INDISPENSABLE PART OF THE TREATY WITH THE SAME BINDING FORCE AS T HE MAIN CLAUSES THEREIN. THE PROVISIONS OF THE AFORESAID DTAA ARE, THEREFORE, REQUIRED TO BE R EAD WITH THE PROTOCOL CLAUSES AND ARE SUBJECT TO THE PROVISIONS CONTAINED IN SUCH PROTOCO L, INCLUDING THE ONE REPRODUCED ABOVE. IN ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 9 OF 11 THE PRESENT CASE, THE PROTOCOL CLAUSE PUTS INTO PLA CE A MFN TREATMENT PROSPECTIVELY AS IT PROVIDES THAT IN THE EVENT OF INDIA ENTERING INTO A NY TAX TREATY, AFTER 1 ST JANUARY 1995, INDIA RESTRICTS ITS SOURCE TAXATION OF, INTER ALIA, FEES FOR TECHNICAL SERVICES TO A RATE LOWER OR A SCOPE MORE RESTRICTED THAN THE RATE OR SCOPE PROVID ED FOR IN THE INDO ISRAEL TAX TREATY, THE SAME RATE OR SCOPE AS PROVIDED FOR IN THE SAID TRE ATY SHALL ALSO APPLY UNDER INDO ISRAEL TAX TREATY WITH EFFECT FROM THE DATE ON WHICH THE INDO ISRAEL OR SUCH OTHER TAX TREATY COMES INTO FORCE- WHICHEVER IS LATER. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT THE MFN CLAUSE SET OUT IN THE PROTOCOL TO INDO ISRAEL TAX TREATY DOES NOT REQUIRE ANYTHING MORE THAN SUCH A MORE FAVOURABLE TAX TREATY COMING INTO FORCE. WHILE ON THIS ASPECT OF THE MATTER, WE MAY REFER TO THE OBSERVATIONS MADE BY HONBLE DELHI HIGH COURT, IN THE CASE OF STERIA INDIA LTD VS DCIT [(2016) 386 ITR 390 (DEL)] , WHEREIN APPROVING THE STAND OF A COORDINATE BENCH , THEIR LORDSHIPS HAVE OBSERVED THAT, .DECISION OF THE ITAT IN DCIT V. ITC LTD. (2002) 8 2 ITD 239 (ITAT KOLKATA), WHERE THE PROTOCOL SEPARATELY E XECUTED BETWEEN THE INDIA AND FRANCE WHICH FORMED PART OF THE DTAA BETWEEN THE TWO COUNT RIES WAS INTERPRETED. IT WAS HELD BY THE ITAT, AND IN THE VIEW OF THIS COURT CORRECTLY , THAT THE BENEFIT OF THE LOWER RATE OR RESTRICTED SCOPE OF FEE FOR TECHNICAL SERVICES UNDE R THE INDO-FRENCH DTAA WAS NOT DEPENDENT ON ANY FURTHER ACTION BY THE RESPECTIVE G OVERNMENTS . OF COURSE, IT IS NOT, AND IT CANNOT BE, THE LAW THAT EVERY MFN CLAUSE TRIGGERS I TS APPLICATION WITHOUT ANY FURTHER ACTION ON THE PART OF THE CONTRACTING PARTIES. THERE ARE S ITUATIONS, SUCH AS IN THE CASES OF INDIA SWITZERLAND DTAA [(1995) 214 ITR STAT 223] WHICH PR OVIDES THAT IF AFTER THE SIGNATURE OF THIS AGREEMENT UNDER ANY CONVENTION OR AGREEMENT BE TWEEN INDIA AND A THIRD STATE WHICH IS A MEMBER OF THE OECD INDIA SHOULD LIMIT ITS TAXATIO N AT SOURCE ON DIVIDENDS, INTEREST, ROYALTIES OR FEES FOR INCLUDED SERVICES TO A RATE L OWER OR A SCOPE MORE RESTRICTED THAN THE RATE OR SCOPE PROVIDED FOR IN THIS AGREEMENT ON THE SAID ITEMS OF INCOME, THEN, SWITZERLAND AND INDIA SHALL ENTER INTO NEGOTIATIONS WITHOUT UNDUE D ELAY IN ORDER TO PROVIDE THE SAME TREATMENT TO SWITZERLAND AS THAT PROVIDED TO THE THIRD STATE AND INDIA PHILIPPINES DTAA [(1996) 219 ITR ST 60] WHICH PROVIDES THAT WITH REFERENCE TO ARTICLES 8 AND 9 IF AT ANY TIME AFTER THE DATE OF SIGNATURE OF THE CONVENTION THE PHILIPPINES AGREES TO A LOWER OR NIL RATE OF TAX WITH A THIRD STATE THE GOVERNMENT OF THE REPUBLIC OF THE P HILIPPINES SHALL WITHOUT UNDUE DELAY INFORM THE GOVERNMENT OF INDIA THROUGH DIPLOMATIC C HANNELS AND THE TWO GOVERNMENTS WILL UNDERTAKE TO REVIEW THESE ARTICLES WITH A VIEW TO P ROVIDING SUCH LOWER OR NIL RATE TO PROFITS OF THE SAME KIND DERIVED UNDER SIMILAR CIRCUMSTANCES B Y ENTERPRISES OF BOTH CONTRACTING STATES. THE EFFECT OF THESE MFN CLAUSES IS THUS NE GOTIATIONS AND REVIEW BY THE PARTIES SO AS TO BRING THE PARITY IN THE PROVISIONS, RATHER THAN BRINING THE PARITY IN THE PROVISIONS. IN THE PRESENT CASE, THE MFN CLAUSE BRINGS THE PARITY INTO EFFECT. 18. THE DEFINITION OF FEES FOR TECHNICAL SERVICES, UNDER THE INDO PORTUGUESE TAX TREATY- EXTRACTS FROM WHICH HAVE BEEN REPRODUCED ABOVE, COV ERS RENDITION OF ONLY SUCH TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISI ONS OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) AS (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3 IS RECEIVED, OR AS (B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIE NCE, SKILL, KNOW-HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNI CAL PLAN OR TECHNICAL DESIGN WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECH NOLOGY CONTAINED THEREIN. THIS IS A TYPICAL MAKE AVAILABLE CLAUSE WITH RESPECT TO THE FEES FOR TECHNICAL SERVICES IN THE TAX TREATIES. AS FOR THE CONNOTATIONS OF MAKE AVAILABL E CLAUSE IN THE TREATY, THIS ISSUE IS NO LONGER RES INTEGRA. THERE ARE AT LEAST TWO NON-JURI SDICTIONAL HIGH COURT DECISIONS, NAMELY HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS GUY CARPENTER & CO LTD ([(2012) 346 ITR 504 (DEL)] AND HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS DE BEERS INDIA PVT LTD [(2012) 346 ITR 467 (KAR)] IN FAVOUR OF THE ASSESSEE, AND THERE IS NO CONTRARY DECISION BY HONBLE JURISDICTIONAL HIGH COURT OR BY HONBLE SUPRE ME COSURT. IN DE BEERS CASE (SUPRA), ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 10 OF 11 THEIR LORDSHIPS POSED THE QUESTION, AS TO WHAT IS MEANING OF MAKE AVAILABLE, TO THEMSELVES, AND PROCEEDED TO DEAL WITH IT AS FOLLOW S: THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOUL D BE OF SUCH A NATURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNOWLE DGE, KNOW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSM ITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN EN DURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW-HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLO GY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL?, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EF FORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HA VE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN D EPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRI NG THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION O F THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN TH AT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANI NG OF PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECH NOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTH ER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNIC AL/INCLUDED SERVICES' ONLY IF THE TWIN TEST OF RENDERING SERVICES AND MAKING TECHNICA L KNOWLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. 19. THE QUESTION THUS ARISES AS TO WHETHER THE ASSE SSEE CAN BE SAID HAVE RECEIVED ANY SERVICES WHICH MAKES AVAILABLE ANY TECHNICAL KNOW LEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFE R OF A TECHNICAL PLAN OR TECHNICAL DESIGN WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN IN THE SENSE THAT THERE IS A TRANSFER OF TECHNOLOGY . WE FIND THAT IT IS AN ONGOING CONTRACT THAT THE ASSESSEE HAS ENTERED INTO WITH THE SERVICE PROV IDER, I.E. ISRAELI ENTITY, AND THE THRUST OF THE ARRANGEMENT IS ESSENTIALLY FOR SUPERVISORY AND CONS ULTANCY SERVICES. THESE SERVICES CANNOT, BY ANY STRETCH OF LOGIC, BE CONSIDERED TO HAVE TRAN SFERRED THE TECHNOLOGY IN THE SENSE THAT THE RECIPIENT OF SERVICE CAN BE SAID TO HAVE BEEN ENABL ED TO PERFORM THESE SERVICES, WITHOUT RECOURSE TO THE SERVICE PROVIDER, ON ITS OWN. IN AN Y EVENT, SUPERVISORY AND CONSULTANCY SERVICES ARE INHERENTLY OF SUCH NATURE THAT THESES CANNOT BE SAID TO BE COVERED BY THE MAKE AVAILABLE CLAUSE IN THE TAX TREATIES FOR THE SIMPL E REASON THAT WHILE THESE SERVICES, ON FACTS OF A PARTICULAR CASE, MAY REQUIRE TECHNICAL INPUTS, ME RE RENDITION OF THESE SERVICES DOES NOT, BY ITSELF, RESULT IN TRANSFER OF SUCH TECHNICAL KNOWLE DGE, SKILLS OR EXPERIENCE. AN INCIDENTAL BENEFIT, BY WAY OF ENRICHMENT OF EXPERIENCE, TO THE RECIPIENT OF A CONSULTANCY SERVICE OR SUPERVISION SERVICE DOES NOT AMOUNT TO MAKING AVAI LABLE TECHNICAL KNOWLEDGE, SKILLS OR EXPERIENCE. THE PAYMENT IS NOT FOR INCIDENTAL ENRIC HMENT OF EXPERIENCE OF THE ASSESSEE, EVEN IF THAT BE SO, BUT FOR RECEIPT OF SERVICES BY WAY OF R EVIEW, SUPERVISION AND CONSULTANCY. THE CONSIDERATION FOR THE PAYMENTS IN QUESTION IS THE R EVIEW, SUPERVISION AND CONSULTANCY SERVICES AND NOT FOR SUCH AN INCIDENTAL ENRICHMENT, EVEN IF THAT BE, OF EXPERIENCE. THESE SERVICES DONOT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENC E, SKILL, KNOW-HOW OR PROCESSES LEARNED DEPARTMENTAL REPRESENTATIVE, IN ANY CASE, HAS NOT B ROUGHT ON RECORD ANY MATERIAL TO ETC IN THE SENSE OF TRANSFER OF SUCK KNOWLEDGE, EXPERIENCE , SKILL, KNOW HOW OR PROCESS ETC. IN ANY CASE, LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT B ROUGHT ON RECORD ANY MATERIAL TO DEMONSTRATE THAT THERE WAS ANY TRANSFER OF THE SKIL LS OF SERVICE PROVIDER TO THE RECIPIENT OF ITA NOS. 1342,1343 AND 1344/AHD/2016 ASSESSMENT YEARS: 2014-15 AND 2015-16 PAGE 11 OF 11 SERVICES. THE ARGUMENTS RAISED BY THE APPELLANT ARE BASED ON SWEEPING GENERALIZATIONS AND ARE NOT SUPPORTED BY ANY SPECIFIC EVIDENCES IN SUPP ORT OF THE SAME. AS REGARDS THE OBJECTION AGAINST ADMISSION OF ADDITIONAL EVIDENCE, ONE HAS T O BEAR IN MIND THE FACT THAT EVERY EVIDENCE PRODUCED IN AN APPEAL AGAINST 248, WHEN IT IS NOT I N THE BACKDROP OF A SPECIFIC ORDER UNDER SECTION 195, IS A NEW EVIDENCE IN THE SENSE THAT SU CH APPELLATE PROCEEDINGS ARE THE ORIGINAL PROCEEDINGS IN THAT EXTENT. WHEN NO OBJECTIONS ARE RAISED BY THE ASSESSING OFFICER TO THE ADMISSION OF THESE APPEAL BY THE CIT(A) UNDER SECT ION 248, WITHOUT A SPECIFIC ORDER PASSED UNDER SECTION 195, GRIEVANCES RAISED AGAINST THE AD MISSION OF ADDITIONAL EVIDENCE BY THE CIT(A) ARE DEVOID OF LEGALLY SUSTAINABLE MERITS. WE REJECT THE SAME. 20. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARI NG IN MIND ENTIRETY OF THE CASE, WE SEE NO INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE CI T(A) AND WE DECLINE TO INTERFERE IN THE MATTER. NONE OF THE GRIEVANCES RAISED BEFORE US ARE SHOWN TO HAVE ANY LEGALLY SUSTAINABLE MERITS. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS GRIEVAN CES RAISED BY THE APPELLANT AND DECLINE TO INTERFERE IN THE MATTER. 5. IN THE RESULT, THE APPEALS ARE DISMISSED. PRONOU NCED IN THE OPEN COURT TODAY ON THE 11 TH TH DAY OF JULY, 2019. SD/- SD/- MAHAVIR PRASAD PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, THE 11 TH DAY OF JULY, 2018. COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD