Decore Exxoils Private Limited, Bhopal V. Income Tax Officer (IT &TP), Bhopal

ITA 197/Ind/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4726 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-01-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 06-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; TDS
• Section: 201(1); 195; 43; 48; 20

Judgement Text

DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 43 THE QUANTUM. ACCORDINGLY, THE SUBMISSION MADE ABOVE IN RESPECT OF A.Y. 2015-16 IN ITANO.197/IND/2018 ARE A DOPTED MUTATIS AND MUTANDIS IN THE INSTANT CASE ALSO. THER EFORE, LD. COUNSEL SUBMITTED THAT IN THE LIGHT OF THE JUDGMENT S RELIED BY THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX AT SOUR CE. 20. PER CONTRA LD. DR OPPOSED THE SUBMISSION AND AD OPTED THE SAME ARGUMENTS AS WERE IN ITANO.197/IND/2018. 21. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORDS. IN RESPECT OF PAYMENT MADE TO CAE SIMUFLITE INC. USA, THE FACTS ARE IDENTICAL AS WERE ITANO.197 /IND/2018. WE HAVE DECIDED THE ISSUE IN PAR 10 TO 14 BY DISPOSING OF GROUND NO.2 TO 4 OF THE ASSESSEES APPEAL HELD AS UNDER: 10. NOW COMING TO GROUND NO.2 TO 4 ARE AGAINST APPL ICABILITY OF PROVISIONS OF SECTION 195 OF THE ACT ON PAYMENTS TO WARDS MANDATORY TRAINING FOR PILOTS, TO CAE SIMUFLITE INC ., USA (CAE)- RS.61,80,162/-. LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY ARGUED THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIE D IN MAKING THE ADDITION AND SUSTAINING THE SAME IN RESPECT OF PA YMENTS MADE TOWARDS MANDATORY TRAINING FOR PILOTS. LD. COU NSEL FURTHER REITERATED THE SUBMISSIONS AS MADE IN THE WR ITTEN SUBMISSIONS FOR THE SAKE OF CLARITY SUBMISSION ARE REPRODUCED AS UNDER: A. APROPOS GROUND NO. 02 TO 04 ON PAYMENTS MADE T O NON RESIDENTS IN THE USA TOWARDS PILOT TRAINING MANDATORI LY REQUIRED BY DGCA, PROVIDING ALERTS ON AIRCRAFT MAINT ENANCE, PROVIDING ROUTE NAVIGATION, PROVIDING COMPONENTS UN DER SMART DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 44 PARTS PLUS AGREEMENT AND SERVICE BULLETINS [S. NO. 2 TO 4 IN TABLE ABOVE] 1. CAE SIMUFLITE INC. USA IS ENGAGED IN THE BUSINESS OF PROVIDING TRAININGS TO PILOTS. IT PROVIDED TRAINING TO THE PILOTS OF THE APPELLANT IN COMPLIANCE TO THE MANDATORY REQUIR EMENT BY THE DIRECTORATE GENERAL OF CIVIL AVIATION (DGCA). 2. AS PER THE DGCA MANUAL, THE OPERATOR I.E. THE AP PELLANT COMPANY HAS TO MANDATORILY ARRANGE FOR THE TRAINING AND PROFICIENCY TESTS OF THE PILOTS IT HAS ENGAGED FOR ITS FLIGHT OPERATIONS. THE TRAINING TO PILOTS WAS GIVEN OUTSID E INDIA AND PAYMENTS FOR THE SAME ARE ALSO MADE OUTSIDE INDIA. AL L THE INGREDIENTS OF THE TRANSACTION ARE OUTSIDE INDIA. 3. THE DGCA MANUAL, CIVIL AVIATION REQUIREMENT (C AR) SPECIFIES THE FLIGHT CREW TRAINING AND QUALIFICATION REQUIREMENTS FOR SCHEDULED AND NON-SCHEDULED OPERATORS. THIS MANUAL C ASTS AN ONEROUS RESPONSIBILITY ON THE OPERATOR TO ENSURE ALL OF ITS COMPLIANCE SO AS TO HOLD A VALID FLIGHT OPERATOR PER MIT. IN THE INSTANT CASE, APPELLANT COMPANY IS ENGAGED AS AN OPERATOR OF LEARJET AIRCRAFT HAVING NON-SCHEDULED OP ERATOR PERMIT. FROM THE DGCA MANUAL, CERTAIN KEY ASPECTS WHICH ARE MANDATORILY REQUIRED TO BE COMPLIED BY AN OPERATOR AR E LISTED FOR REFERENCE [PB 114 139] Q. CLAUSE 4.3 ALL FLIGHT CREW MEMBERS HOLD AN APPLICABLE AND VALID LICENSE ACCEPTABLE TO DGCA AND AR E SUITABLY QUALIFIED AND COMPETENT TO CONDUCT DUTIES ASSI GNED TO THEM. [PB 116] R. CLAUSE 6.1.6 EACH FLIGHT CREW MEMBER UNDERGOES THE CHECKS REQUIRED BY PARA 9.2 (PPC) AND THE TRAININ G AND CHECKS REQUIRED BY PARA 9.5 (SEP) BEFORE COMMENCING SUPERVISED LINE FLYING (SLF). [PB 117] S. CLAUSE 8.1.2 FOR MULTI-CREW OPERATIONS, THE PILOT COMPLETES AN APPROPRIATE COMMAND COURSE. [PB 118] T. CLAUSE 8.2.3 UNDERGO MINIMUM TRAINING AND CHECKS AS STIPULATED IN APPENDIX 2 (PARA 5) TO THIS CAR [PB 119] U. CLAUSE 9.2 PILOTS PROFICIENCY CHECK (PPC): [PB 120] V. CLAUSE 9.2.3 THE PERIOD OF VALIDITY OF A PPC SHALL BE SIX MONTHS[PB 120] W. CLAUSE 9.3 INSTRUMENT RATING (IR) CHECK: [PB 120] DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 45 X. CLAUSE 9.3.3 THE PERIOD OF VALIDITY OF AN INSTRUMENT RATING CHECK SHALL BE 12 MONTHS FROM THE DATE OF ISSUE. [PB 120] Y. CLAUSE 9.4 LINE ROUTE CHECK: .THE PERIOD OF VALIDITY OF A LINE ROUTE CHECK SHALL BE 12 MONTHS. [PB 120-121] Z. CLAUSE 9.5 SAFETY AND EMERGENCY (SEP) PROCEDURES TRAINING AND CHECKING: . THE PERIOD OF VALIDITY OF A LINE ROUTE CHECK SHALL BE 12 MONTHS. [PB 121] AA. CLAUSE 9.6 CRM: AN OPERATOR SHALL ENSURE THAT I. 9.6.1 ELEMENTS OF CRM (REFER APPENDIX 5) ARE INTEGRATED INTO ALL APPROPRIATE PHASES OF THE RECURR ENT TRAINING AND; II. 9.6.2 EACH FLIGHT CREW MEMBER UNDERGOES SPECIFIC MODULAR CRM TRAINING. ALL MAJOR TOPICS OF CRM TRAINI NG SHALL BE COVERED OVER A PERIOD NOT EXCEEDING THREE YEARS; [PB 1 21] BB. CLAUSE 9.7 GROUND REFRESHER TRAINING: AN OPERATOR SHALL ENSURE THAT EACH FLIGHT CREW MEMBER UNDERGOES GROUND AND REFRESHER TRAINING AT LEAST EVERY 12 MON THS. [PB 121] CC. CLAUSE 10 PILOT QUALIFICATION TO OPERATE IN EITHE R PILOTS SEAT [PB 122] DD. CLAUSE 11 RECENT EXPERIENCE [PB 122] EE. CLAUSE 12.5 THE OPERATOR SHALL MAINTAIN A RECORD SUFFICIENT TO SATISFY THE DGCA OF THE QUALIFICATION OF THE PILOT AND OF THE MANNER IN WHICH SUCH QUALIFICATION HAS BE EN ACHIEVED. [PB 123] FF. APPENDIX 5 TO CAR THE TABLE GIVEN IN THE SAID APPENDIX LISTS DOWN ALL THE CORE ELEMENTS OF TRAININ G WHICH ARE COVERED UNDER THE HEAD RECURRENT TRAINING FOR OVERV IEW. IT IS STATED IN THE NOTE AT THE BOTTOM OF THE TABLE THAT R ECURRENT CRM TRAINING SHALL BE CARRIED OUT ANNUALLY. [PB 134] .COPIES OF INVOICES RAISED BY CAE SIMUFLITE INC., USA FOR PROVIDING DIFFERENT TRAININGS TO THE PILOTS OF THE APPELLANT OPERATOR WERE FURNISHED BEFORE THE LD. TDS OFFICER. [P B 140 145] 5.THE DESCRIPTION IN THE INVOICE STATES INDIAN D GCA STANDALONE CHECK; INDIAN DGCA CHECK PILOT TRAININ G INCLUDING 20 HRS GROUND SCHOOL [NOTES: PPC + CHECK PI LOT TRAINING] [PB 140] DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 46 THE INVOICE IS ISSUED FROM US AND REMITTANCE DETAILS A LSO CONTAINS PLACE AS DALLAS TX, US. ANOTHER INVOICE STATES TRAINING DESCRIPTION LEAR JET 60XR PILOT RECURRENT. [PB 141 AND 145] OTHER INVOICES STATES TRAINING DESCRIPTION LEAR J ET 60XR PILOT INITIAL / INTERNATIONAL PROCEDURES INITIAL. [PB 142 - 144] 6. IT IS EVIDENT FROM THE INVOICES THAT THE TRAININ G TO PILOTS OF THE OPERATOR APPELLANT HAVE BEEN ARRANGED TO MEET THE MA NDATORY REQUIREMENTS OF DGCA. THERE IS A DEPENDENCY FACTOR INHERENT IN THE FLIGHT OPERATING BUSINESS OF THE APPELLANT FOR MAINTAINING AN EFFECT IVE FLIGHT CREW OF PILOT. THE OPERATOR IS MANDATORILY REQUIRED TO SATISFY DGCA SUFFICIENTLY FOR THE QUALIFICATIONS OF ITS PIL OT CREW AS STATED IN CLAUSE 12.5 OF THE CAR. THE TRAINING AVAIL ED BY A PILOT DOES NOT GO FOR PERPETUITY AND RECURRENT TRAINING IS COMPULSORY FOR FLIGHT OPERATIONS. [PB 123] 7. INSTANT ISSUE IS DIRECTLY COVERED BY THE DECISION OF HONBLE MUMBAI ITAT IN THE CASE OF UNITED HELICHARTERS PVT L TD IN ITA NO. 5135 & 5136/MUM/2011. [CLPB 28 31] PARA 5 HE HAS REFERRED PARA 4 OF ARTICLE 12 AND SUBMITTED THAT AS PER THE MEANING GIVEN IN PARA 4 OF THE ARTICLE 12 OF THE INDO-US DTAA THE FEES FOR INCLUDED SERVICE S MEANS INTER ALIA IF SUCH SERVICES MAKE AVAILABLE TECHNICA L KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSI STS OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHN ICAL DESIGN. THE TRAINING WAS GIVEN TO THE PILOTS AND OTH ER ENGINEERING STAFF AS PER THE REQUIREMENT OF DGCA TH EREFORE IT DOES NOT AMOUNT TO SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW ETC. [EMPHA SIS SUPPLIED] PARA 9 ..WE FURTHER NOTED THAT AS PER PAR A 4(B) OF ARTICLE 12 OF INDO-US DTAA FEES FOR INCLUDED S ERVICES MEANS IF SUCH SERVICES MADE AVAILABLE TECHNICAL KNO WLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSI STS OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHN ICAL DESIGN. THE TRAINING IN THE CASE IN HAND WAS GIVEN TO THE PILOTS AND OTHER STAFF AS PER THE REQUIREMENT OF THE DGCA R ULES THEREFORE, IT WAS ONLY A PART OF THE ELIGIBILITY OF THE PILOTS AND OTHER STAFF FOR WORKING IN THE INDUSTRY OF AVIATION AND SUCH TRAINING WOULD NOT FALL UNDER THE TERM SERVICE MAKE AVAILABLE. [EMPHASIS SUPPLIED] DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 47 8. FURTHER, THESE ARE STANDARD TRAINING SERVICES WH ICH ARE PROVIDED AS PER THE DGCA NORMS REFERRED IN THE INVOI CES ITSELF. ACCORDINGLY, RELIANCE IS PLACED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF KOTAK SECURITIES LTD (S UPRA). 9. LD. TDS OFFICER RELIED ON ARTICLE 12, PARA 4(B) OF THE INDIA USA DTAA TO ADOPT AN ADVERSE VIEW ON THE SUBJECT MAT TER. [AO PAGE 39 43] PARA 4(B) OF ARTICLE 12 OF THE SAID DTAA STATES ABO UT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, K NOW-HOW OR PROCESS. THE MOU OF DTAA VERY CATEGORICALLY STATES THAT THE FACT THAT THE PROVISION OF THE SERVICE MAY REQUIRE TECHN ICAL INPUT BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEA N THAT TECHNICAL KNOWLEDGE, SKILL, ETC. ARE MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE WITHIN THE MEANING OF PARA 4(B). [EMPHASIS SUPPLIED] LD. TDS OFFICER RELIED ON THE DECISION OF HONBLE KARNA TAKA HIGH COURT IN THE CASE OF DE BEERS [2012] 21 TAXMANN .COM 214 (KAR) WHICH IN FACT RULES IN FAVOR OF THE APPELLANT . IT IS STATED THAT THE HONBLE COURT HELD THAT THE TECHNICAL KNOWL EDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSOR BED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. 10. AS ALREADY STATED ABOVE, THE APPELLANT AS AN OPER ATOR IS DEPENDENT ON THE SERVICE PROVIDER TO COMPLY WITH THE MANDATORY REQUIREMENTS OF DGCA. THERE IS NO MAKE A VAILABLE OF TECHNOLOGY BY THE SERVICE PROVIDER TO THE APPELLA NT TO MAKE IT INDEPENDENT FOR ITS FUTURE TECHNICAL REQUIREMENTS. T HE DECISIVE FACTOR IS NOT THE FACT OF TRAINING SERVICES PER SE BUT THE TRAINING SERVICES BEING OF SUCH A NATURE THAT IT RESULTS IN TRANSFER OF TECHNOLOGY. IN THE INSTANT CASE, THERE IS NO TRANSF ER OF TECHNOLOGY IN THE DGCA MANDATED TRAINING OF PILOTS. NOTHING REMAINS WITH THE APPELLANT OPERATOR AFTER THE EXPIR Y OF PERIOD AFTER WHICH THE NEED TO RECURRENT TRAINING ARISES AS PER THE CAR OF DGCA. 11. TRAINING GIVEN BY THE NON-RESIDENT COMPANY IS P ART OF ITS ROUTINE BUSINESS AND DOES NOT INVOLVE TRANSFER OF AN Y TECHNOLOGY. THE TRAINING INVOLVES USE OF TECHNOLOGY BY THE TRAINING COMPANY BUT THERE IS NO TECHNOLOGY TRANSFE R TO THE PILOTS OF THE ASSESSEE COMPANY. CONSEQUENTLY, THE S ERVICES CANNOT BE REGARDED AS TECHNICAL IN NATURE. FURTHER, EVEN IN THE DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 48 DTAA WITH USA, TECHNICAL SERVICES IS DEFINED ON 'INCL UDED SERVICES' BASIS. IN SUCH CASES BOTH HARDWARE AND TEC HNOLOGY HAVE TO BE TRANSFERRED TOGETHER WHICH IS NOT THE CAS E WITH PARTY CONCERNED HEREIN. ABOVE DECISION OF HONBLE KARNATAKA HIGH COURT HAS B EEN FOLLOWED BY HONBLE ITAT AHMEDABAD BENCH IN THE CASE OF VEEDA CLINICAL RESEARCH (P) LTD [2013] 35 TAXMANN.COM 577 (AHD) HOLDING IN FAVOR OF THE ASSESSEE BY DEALING WI TH THE ISSUE OF MAKE AVAILABLE ASPECT OF TECHNICAL SERVICES AN D REFERRING TO THE MOU TO INDIA-US DTAA. [CLPB 26 27] 12. ARTICLE 7 OF THE INDIA USA DTAA IS ALSO NOT AT TRACTED OWING TO ABSENCE OF A PE OF THE NON-RESIDENT IN INDI A TO CREATE A BUSINESS CONNECTION IN INDIA. TAX RESIDENCY CERTIF ICATE (TRC) AND FORM 10F REQUIRED UNDER SECTION 90(5) OF THE ACT WERE FURNISHED BEFORE THE LD. ITO. [PB 160 161] 13. ACCORDINGLY, THE APPELLANT WAS NOT REQUIRED TO D EDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT ON THE PAYMEN T MADE TO CAE SIMUFLITE INC. USA, AND HENCE NOT AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. 14. IN RESPECT OF PAYMENT TO CAMP SYSTEMS INTERNATI ONAL INC., USA, IT IS THE WORLDS LEADING AIRCRAFT MAINTENANCE T RACKING SOLUTION PROVIDER. APPELLANT AVAILED SUBSCRIPTION FO R MAINTENANCE TRACKING SERVICES AND ELECTRONIC LOG BOO KS FOR ITS AIRCRAFT LEAR JET 60. 15. COPY OF INVOICE RAISED BY CAMP SYSTEMS INTERNAT IONAL INC, USA FOR PROVIDING SUBSCRIPTION FOR MAINTENANCE TRACK ING SERVICES AND ELECTRONIC LOG BOOKS FOR ITS AIRCRAFT L EAR JET 60 WAS FURNISHED BEFORE THE LD. TDS OFFICER WHICH IS REPRODU CED IN THE IMPUGNED ORDER ALSO. [AO PAGE 44 AND PB 203] 16. THE DESCRIPTION IN THE INVOICE STATES CAMP M AINTENANCE TRACKING SERVICES FOR LEAR 60, UPDATES AND SUPPORT TO CAMPS ELECTRONIC LOG BOOKS [AO PAGE 44 AND PB 203] THE INVOICE ALSO STATES THE START DATE AND END DAT E ALONG WITH SUBSCRIPTION ID. 17. CLAUSE 4.10 OF THE SMART PARTS PLUS AGREEMENT W ITH LEARJET INC, USA ALSO REQUIRES THE APPELLANT OPERATOR TO PRO PERLY RECORD IN THE AIRCRAFT LOG BOOK ALL THE DETAILS RELATING TO AIRCRAFT FLIGHT. [PB 58] DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 49 18. ANNUAL SUBSCRIPTION CHARGES PAID TO CAMP SYSTEMS INTERNATIONAL INC, USA TOWARDS FOR OBTAINING STANDAR D MAINTENANCE TRACKING SERVICES FOR LEAR 60, UPDATES AND SUPPORT TO CAMPS ELECTRONIC LOG BOOKS DOES NOT FALL WITHIN THE TERM FEES FOR TECHNICAL SERVICES UNDER THE PROVIS IONS OF THE ACT. NOTHING REMAINS WITH THE APPELLANT OPERATOR AFTER T HE EXPIRY OF SUBSCRIPTION FOR THE SERVICE PROVIDED. ARTICLE 12 OF THE INDIA USA DTAA ALSO DOES NOT COVE R THE INSTANT TRANSACTION WITHIN THE MEANING OF INCLUDED SE RVICES OF MANAGERIAL, TECHNICAL OR CONSULTANCY. IN THE INSTAN T CASE, THERE IS NO TRANSFER OF TECHNOLOGY IN THE SUBSCRIPTION OF SERVICES SO AVAILED BY THE APPELLANT OPERATOR. THE MOU OF DTAA VERY CATEGORICALLY STATES THAT THE FACT THAT THE PROVISION OF THE SERVICE MAY REQUIRE TECHN ICAL INPUT BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEA N THAT TECHNICAL KNOWLEDGE, SKILL, ETC. ARE MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE WITHIN THE MEANING OF PARA 4(B). [EMPHASIS SUPPLIED] 19. ARTICLE 7 OF THE INDIA USA DTAA IS ALSO NOT AT TRACTED OWING TO ABSENCE OF A PE OF THE NON-RESIDENT IN INDI A TO CREATE A BUSINESS CONNECTION IN INDIA. TAX RESIDENCY CERTIF ICATE (TRC) AND FORM 10F REQUIRED UNDER SECTION 90(5) OF THE ACT WERE FURNISHED BEFORE THE LD. ITO. [PB 162 164] 20. ACCORDINGLY, THE APPELLANT WAS NOT REQUIRED TO D EDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT ON THE PAYMEN T MADE TO CAMP SYSTEMS INTERNATIONAL INC. USA, AND HENCE NOT AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) OF THE ACT. 21. IN RESPECT OF PAYMENT TO ROCKWELL COLLINS, USA, IT IS ENGAGED IN PROVIDING AVIONICS AND INFORMATION TECHNO LOGY SYSTEMS AND SERVICES AND ENHANCED MAP OVERLAY SERVICE S. APPELLANT AVAILED SUBSCRIPTION FOR ENHANCED MAP OVERL AYS AND ROUTE NAVIGATION SERVICES. 22. COPY OF INVOICE RAISED BY ROCKWELL COLLINS, USA FOR PROVIDING SUBSCRIPTION FOR ENHANCED MAP OVERLAYS AND ROUTE NAVIGATION SERVICES FOR ITS AIRCRAFT LEAR JET 60 WA S FURNISHED BEFORE THE LD. TDS OFFICER WHICH IS REPRODUCED IN THE IMPUGNED ORDER ALSO. [PB 204] THE DESCRIPTION IN THE INVOICE STATES ENHANCED MAP OVERLAYS SUBSCRIPTION. THE INVOICE ALSO STATES THE START DA TE AND END DATE. DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 50 23. ANNUAL SUBSCRIPTION CHARGES PAID TO ROCK COLLINS , USA TOWARDS FOR OBTAINING STANDARD ENHANCED MAP OVERLAYS AND ROUTE NAVIGATION SERVICES FOR ITS AIRCRAFT LEAR JET 60 DOES NOT FALL WITHIN THE TERM FEES FOR TECHNICAL SERVICES UNDER THE PROVISIONS OF THE ACT. NOTHING REMAINS WITH THE APPELLANT OPERATOR AFTER T HE EXPIRY OF SUBSCRIPTION FOR THE SERVICE PROVIDED. ARTICLE 12 OF THE INDIA USA DTAA ALSO DOES NOT COVE R THE INSTANT TRANSACTION WITHIN THE MEANING OF INCLUDED SE RVICES OF MANAGERIAL, TECHNICAL OR CONSULTANCY. IN THE INSTAN T CASE, THERE IS NO TRANSFER OF TECHNOLOGY IN THE SUBSCRIPTION OF SERVICES SO AVAILED BY THE APPELLANT OPERATOR. THE MOU OF DTAA VERY CATEGORICALLY STATES THAT THE FACT THAT THE PROVISION OF THE SERVICE MAY REQUIRE TECHN ICAL INPUT BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEA N THAT TECHNICAL KNOWLEDGE, SKILL, ETC. ARE MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE WITHIN THE MEANING OF PARA 4(B). [EMPHASIS SUPPLIED] 24. IN AVAILING THE ABOVE SUBSCRIPTIONS FROM THE NO N-RESIDENTS, THERE WAS NO HUMAN INTERACTION OR INTERVENTION. LD. TDS OFFICER RELIED ON THE DECISION OF BHARTI CELLULAR LTD BY HON BLE DELHI HIGH COURT [2008] 175 TAXMAN 573 (DEL) WHICH DEALS WI TH THE REQUIREMENT OF HUMAN ELEMENT IN PROVIDING SERVICES SO AS TO GIVE THEM THE COLOR OF TECHNICAL SERVICES AS ENVISA GED IN SECTION 9(1)(VII) OF THE ACT. HONBLE SUPREME COURT IN ITS DECISION OF BHARTI CELLU LAR LTD [2010] 193 TAXMAN 97 (SC) STATED IN RESPECT OF HUMAN INVOLVEMENT IN PARA 7 WHETHER AT THAT STAGE, ANY HUMAN INTERVENTION IS INVOLVED IS REQUIRE D TO BE EXAMINED, WHICH AGAIN NEEDS A TECHNICAL DATA. WE ARE ONLY HIGHLIGHTING THESE FACTS TO EMPHASISE THAT THESE TY PES OF MATTERS CANNOT BE DECIDED WITHOUT ANY TECHNICAL ASSIST ANCE AVAILABLE ON RECORD. [EMPHASIS SUPPLIED] IN THE INSTANT CASE, THERE IS NO HUMAN ELEMENT INVO LVED WHEN CAMPS SYSTEMS INTERNATIONAL INC, USA AND ROCKWELL COLLI NS, USA SUPPLIED THEIR SUBSCRIPTION SERVICES TO THE APPEL LANT OPERATOR FOR OPERATION OF ITS AIRCRAFT. [AO PAGE 19] 25. ARTICLE 7 OF THE INDIA USA DTAA IS ALSO NOT AT TRACTED OWING TO ABSENCE OF A PE OF THE NON-RESIDENT IN INDI A TO CREATE A BUSINESS CONNECTION IN INDIA. TAX RESIDENCY CERTIF ICATE (TRC) AND FORM 10F REQUIRED UNDER SECTION 90(5) OF THE ACT WERE FURNISHED BEFORE THE LD. ITO. [PB 165 167] DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 51 26. ACCORDINGLY, THE APPELLANT WAS NOT REQUIRED TO D EDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT ON THE PAYMEN T MADE TO ROCK COLLINS USA, AND HENCE NOT AN ASSESSEE IN DEFAUL T UNDER SECTION 201(1) OF THE ACT. 11. LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED THE ORDERS OF AUTHORITIES BELOW. LD. DR SUBMITTED THAT E SSENTIALLY THE SERVICES PROVIDED BY THE ASSESSEE FALL WITHIN TH E TECHNICAL SERVICES. 12. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF L OWER AUTHORITIES. THE ASSESSEE COMPANY MADE PAYMENTS TOW ARDS FOR PILOTS MANDATORILY REQUIRED AS PER DIRECTORATE G ENERAL OF CIVIL AVIATION (DGCA) MANUAL TO CAE SIMUFLITE INC. USA OF RS. 61,80,162/-. FURTHER, THE ASSESSEE COMPANY MADE PAY MENTS TO ROCKWELL COLLINS, USA FOR PROVIDING SERVICES IN R ESPECT OF ROUTE NAVIGATION OF RS.3,82,186/-. IT IS CONTENDED TH AT AS PER THE DGCA GUIDELINES THAT ALL FLIGHT CREW MEMBERS HOL D AN APPLICABLE AND VALID LICENSE ACCEPTABLE TO DGCA AND W ERE SUITABLY QUALIFIED AND COMPETENT TO CONDUCT DUTIES ASSI GNED TO THEM. FURTHER, EACH FLIGHT CREW MEMBER UNDERGOES TH E CHECKS REQUIRED BY PARA 9.2 (PPC) AND THE TRAINING AND CHECKS REQUIRED BY PARA 9.5(SEP) BEFORE COMMENCING SUPERVIS ED LINE FLYING (SLF) AND FOR MULTI-CREW OPERATIONS, THE PILOT COMPLETED AN APPROPRIATE COMMAND COURSE. IT IS CONTENDED THAT CO PIES OF INVOICE RAISED BY CAE SIMUFLITE INC. USA FOR PROVIDIN G DIFFERENT TRAINING TO THE PILOTS OF THE ASSESSEE OPERATOR WER E FURNISHED BEFORE THE LD. TDS OFFICER. THE DISCRETION IN THE INV OICE STATED THAT INDIAN DGCA STANDALONE CHECK, INDIAN DGCA C HECK PILOT TRAINING INCLUDING 20 HRS GROUND SCHOOL. THE INVOICES WAS ISSUED FROM US AND REMITTANCE DETAILS ALSO CONTAINS P LACE AS DALLAS TX, US. IT IS FURTHER SUBMITTED THAT IT IS EVI DENT FROM THE INVOICE THAT THE TRAINING TO PILOTS OF THE OPERATOR APPELLANT HAVE BEEN ARRANGED TO MEET THE MANDATORY REQUIREMENT OF D GCA. IT IS CONTENDED THAT THE ISSUE IS SQUARELY COVERED BY TH E DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL RENDERED I N THE CASE OF UNITED HELICHARTERS PVT. LTD. IN ITANO. 5135 & 5136/MUM/2011. IT IS ALSO CONTENDED THAT THE DECISIO N RELIED BY THE LD. CIT(A) AND TDS OFFICER OF HON'BLE KARNATA KA HIGH COURT IN THE CASE OF DE BEERS (2012) 21 TAXMANN.COM 214(KAR) WHICH IN FACT RULES IN FAVOUR OF THE ASSESSEE. HOWE VER, LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE. DECORE EXXOILS P. LTD. /ITANOS.196 & 197/IND/2018 52 9. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE, ORDER AND THE SUBMISSIONS OF THE APPELLANT INCLUDIN G THE CASE LAWS RELIED UPON AND DONOT AGREE WITH THE CONTENTIONS OF THE APPELLANT ON ACCOUNT OF THE FOLL OWING REASONS; 9.1. CAE HAS PROVIDED TRAINING TO THE PILOTS OF THE APPELLANT AND THE AO HAS RELIED ON THE MOU TO INDIA - USA TAX TREATY TO WHEREIN PROVISIONS OF 'TECHNICAL TRAINING' IS CONSIDERED AS MAKING AVAILABLE TECHNIC AL KNOWLEDGE TO THE RECIPIENT OF INCOME. 9.2. DECISION OF HON'BLE AHMEDABAD TRIBUNAL IN THE CASE OF ITO V VEEDA CLINICAL RESEARCH PRIVATE LIMITED (I TA NO. 1406/ AHDJ2009), RELIED UPON BY THE APPELLANT IS DISTINGUISHABLE ON FACTS. THE SAID JUDGMENT WAS RUL ED IN THE CONTEXT OF TRAINING PERTAINING TO MARKET AWARENESS AND DEVELOPMENT. THESE ARE SOFT SKILLS TRAINING AND NOT TECHNICAL TRAININGS. IT WAS ON THE CONTEXT OF THESE SOFT SKILLS TRAININGS, HON'BLE AHMEDABAD TRIBUNAL RULED THAT NO TECHNOLOGY IS INVOLVED AND I T IS NOT MAKING AVAILABLE ANY TECHNICAL KNOWLEDGE AND SKILLS TO THE RECIPIENT OF SERVICES. IN VIEW OF THE SAME, THE RELIANCE PLACED BY THE APPELLANT ON THE DECISION OF HON'BLE AHMEDABAD TRIBUNAL IN CASE OF VEEDA CLINICAL RESEAR CH IS DISTINGUISHABLE AS IN THE PRESENT CASE, SERVICE INVOLVED ARE TECHNICAL IN NATURE AND IMPARTING OF TRAINING H AS RESULTED IN TRANSFER OF TECHNOLOGY, KNOWLEDGE AND / OR EXPERIENCE. 9.3 DECISION OF HORI'BLE MUMBAI TRIBUNAL IN THE CASE OF UNITED HELICHARTERS PRIVATE LIMITED VS ACIT (ITA NO . 5136/ MUM/2011 & ITA NO. 5135/MUM/2011) DEALT WITH THE ISSUE OF TRAINING SERVICES TAXABILITY WHIC H WAS MANDATED BY THE DGCA. IN THE CASE OF UNITED HELICHARTERS, THE MUMBAI TRIBUNAL HAS NOT CONSIDERE D THE ASPECT WHETHER THE TRAINING RESULTED IN TRANSFER OF KNOWLEDGE, AND MERELY ON THE BASIS THAT THE TRAININ G WAS MANDATORILY REQUIRED UNDER DGCA RULES PROCEEDED TO HOLD THAT THE SERVICES WERE NOT MADE AVAILABLE. FOR THIS REASON, I AM OF THE CONSIDERED OPINION THAT TH ESE