PPN POWER GENERATING CO. (P) LTD., CHENNAI V. ACIT CENTRAL CIRCLE 3(1), CHENNAI

ITA 2092/CHNY/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9752 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 14-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Business expenditure; Permanent establishment; TDS
• Section: 143(3); 195; 40a(ia); 13; 22; 20

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI Įी महावीर ͧसंह, उपाÚय¢ एवं Įी मनोज क ु मार अĒवाल, लेखा सदèय के सम¢ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 2092/CHNY/2019 िनधाᭅरण वषᭅ /Assessment Year: 2016 - 17 M/s. PPN Power Generating Company Pvt. Ltd., 1-A, 3 rd Floor, Jhavar Plaza, Nungambakkam High Road, Chennai – 600 034. PAN : AABCP 8131D v. The ACIT, Central Circle – 3(1), Chennai - 34. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA No.: 3015/CHNY/2018 िनधाᭅरण वषᭅ /Assessment Year: 2010 - 11 The ACIT, Central Circle – 3(1), Chennai - 34. v. M/s. PPN Power Generating Company Pvt. Ltd., 1-A, 3 rd Floor, Jhavar Plaza, Nungambakkam High Road, Chennai – 600 034. PAN : AABCP 8131D (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & C.O. No.: 1/CHNY/2019 (in I.T.A. No. 3015/CHNY/2018) िनधाᭅरण वषᭅ /Assessment Year: 2010 – 11 M/s. PPN Power Generating Company Pvt. Ltd., 1-A, 3 rd Floor, Jhavar Plaza, Nungambakkam High Road, Chennai – 600 034. PAN : AABCP 8131D v. The ACIT, Central Circle – 3(1), Chennai - 34. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) 2 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 अपीलाथᱮ कᳱ ओर से/Appellant by : Shri G. Baskar, Advocate ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Shri A. Sumanth Srinivas, CIT स ु नवाई कȧ तारȣख/Date of Hearing : 21.12.2021 घोषणा कȧ तारȣख/Date of Pronouncement : 25.01.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee in ITA No.2092/Chny/2018 is arising out of order of the order of Commissioner of Income Tax (Appeals) 18, Chennai in ITA No.422/18-19, vide order dated 03.06.2019. The assessment was framed by the ACIT, Central Circle-3(1), Chennai for the assessment year 2016-17 vide order dated 19.12.2018 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’). The appeal by the Revenue in ITA No.3015/Chny/2018 and cross objection by the assessee in CO No.1/Chny/2019 are arising out of order of the order of Commissioner of Income Tax (Appeals)-19, Chennai in ITA No.70/17-18, vide order dated 31.07.2018. The assessment was framed by the DCIT, Company Circle V(2), Chennai for the assessment year 2010-11 vide order dated 30.03.2014 u/s.143(3) r.w.s. 92CA(3) of the Act. 3 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 ITA No.3015/Chny/2018 2. The only issue in this appeal of Revenue is as regard to the order of CIT(A) deleting the addition made by the AO on account of disallowance of expenses by invoking provisions of section 40(a)(i) of the Act, on account of refurbishment charges paid to M/s. Marubeni Corporation, Japan. For this, Revenue has raised following grounds:- 2. The learned CIT(A) erred in directing the AO to delete the addition made on account of disallowance u/s 40(a)(i) amounting to Rs. 7,12,21,627/- in the assessment order passed u/s 143(3) r.w.s 92CA(3) of the Income Tax Act, 1961 on 30.03.2014 2.1 The learned CIT(A) ought to have appreciated the fact that the refurbishment charges paid to Marubeni Corporation, Japan cannot be segregated from the Technical Advisory charges paid to Marubeni Corporation because the technical experts from Maruben Corporation come to India and it is only the experts from Marubeni Corporation which conducts the inspection and it is only to Marubeni Corporation the parts are sent for refurbishment. 2.3 The learned CIT(A) ought to have appreciated the fact that the dominant object of the contract would be for provision of managerial and technical services and therefore, consideration paid for it would constitute fees for technical services. The actual work of refurbishment, etc, in such a case, would be incidental to the main object of contract. 2.4 The learned CIT(A) ought to have appreciated the decision of Hon’ble ITA Bangalore Bench ‘C’, in the case of M/s Bosch Ltd vs The Income Tax Officer, in ITA No. 552 to 558/Bang/2011 dated 11.10.2012, wherein it is held that the services of repairs by the non-residents rendered include its assistance in analyzing and solving technical problem and 4 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 disjunctions by locating and mending the cause of the disfunction by providing telephone advice, analysis and assistance to the operator and for preventive maintenance. These services clearly fall within the purview of definition of ’fees for technical services’. In these cases, the services are not mere repairs but are towards preventive maintenance which clearly show that the recipients are providing technical assistance and services to the assessee in India. In view of explanation 2 to clause (vii) of sec.9(1), the fees for technical services is chargeable to tax in India and the assessee is liable to deduct tax at source 3. Brief facts are that the assessee company is engaged in the business of generation of electric power supplying electricity of TamilNadu Electricity Board. The assessee’s plant is located at Pillaiperumal Nallur in Nagappatinam District, TamilNadu. The assessee runs Naphtha cum Gas based Power Plant having capacity of 330.5MW. The key spares components namely Hot Gas Path Spares (HGPS) are used in the gas turbine that are sent to M/s. Marubeni Corporation, Japan for refurbishment as and when required. The AO during the course of assessment proceedings noticed from the records that the assessee has made a provision of Rs.7,12,21,627/- towards refurbishment charges. The AO issued show cause notice as to why this sum should not be disallowed as it is a mere provision. The assessee furnished copies of invoices of advance payment towards refurbishment charges to M/s. Marubeni Corporation, Japan and explained that the said provision is in the 5 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 nature of ascertaining liability. The assessee explained the working by stating the fact of the matter is that the assessee company runs thermal power plant and the key components (Rotors/turbines) are periodically sent to Marubeni Corporation, Japan for refurbishment. In view of the above vide order sheet noting dated 18.02.2014 the assessee was required to show-cause why refurbishment charges payable to Japan’s parties should not be treated as fee for technical service and hence, why the said provision of Rs.7,12,21,627/- should not be disallowed for non-deduction of TDS u/s 195 r.w.s.9(1)(vii). The assessee replied to the same by stating that the amount paid towards refurbishment / reconstruction charges are not in the nature of fee for technical services covered u/s.9(1)(vii) of the Act, as the refurbishment activity is in the nature of reconstruction / repair and accordingly, no TDS is deductible on this expenditure / payment relating to reconstruction. It was explained that expenditure towards refurbishment is work done outside India by a non-resident having no permanent establishment in India. The refurbishment activity is carried out in the normal course of business and none of the employee of assessee is directly or indirectly involved in the activity of refurbishment / repair. It was also explained that no foreign technicians are deputed to India to carry out the refurbishment / repair task or assistance to the 6 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 employee of the company to carry out refurbishment / repair work. The assessee explained that it has entered into a separate agreement with M/s. Marubeni Corporation, Japan to cover for charges towards technical advisory services and payment towards refurbishment charges are outside the scope of technical advisory services agreement, since no intellectual aspect or managerial / consultancy or technical services is involved in the activity. Hence, it was explained that the payment towards refurbishment is not towards technical advisory fee but is only business expenditure in the hands of the assessee and business income in the hands of the non-resident recipient i.e., M/s. Marubeni Corporation. The AO has considered the explanation of assessee but not accepted for the following reasons:- “On perusal of the assessee’s submissions it is seen that refurbishment of Hot Gas Path Spares (HGPS) involves the following activities:  Receive and un-box Hot Gas Path Spares.  Perform incoming conditional evaluation of Not Seas Path Spares.  Perform incoming flow test: of Hot Gas Path Spares.  Disassemble Hot Gas Path Spares using OEM approved method.  Clean (chemical, ultrasonic, grit blast) bolts tubing, gas swozzles, oil/water, cartridges, end covers, and water manifold to remove dirt, rust foreign material and paint.  Disassemble, clean rebuilt and pressure test the distributor value.  Perform Non-destructive Evaluation of Hot Gas Path Spares components.  Perform boroscope inspection on end cover gas passage. 7 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019  Individually flow test Hot Gas Path Spares components according to OEM approved factory standard.  Complete evaluation of components and test results (OEM Engineering).  Utilize piece part flow data to best match Heat Gas Path Spares tips and oil/water cartridges to the end covers.  Re-assemble all Hot Gas Path Spares components smith new seals and lock plates.  Perform final flow check and leak Check of assembly to verify work.  Re-assembled all Hot Gas Path Spares components with new seals and lock plates.  Complete final Quality Assurance inspection (OEM Engineering).  Ship parts to customer with a copy of the test results.  Provide repair report.  Ship parts to the customer with a copy of the flow test results. The AO noted that the above activities are highly technical in nature and involves sophisticated machinery and done by qualified and trained technical personnel. The AO was of the view that refurbishment of HGPS are done by technically qualified people and the equipment used for flow test of HGPS, non-destructive evaluation of HGPS, boroscope inspection on end cover gas passage etc., are highly technologically advanced. He noted that Indian companies do not have the technology to manufacture or repair the turbine and it is merely because of this fact that the above components are purchased and serviced from Japan. According to him, the refurbishment of HGPS falls squarely within the meaning of technical services as envisaged u/s.9(1)(vii) of the Act and hence, the assessee has to deduct TDS on such payments u/s.195 of the 8 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 Act. As the assessee failed to deduct TDS, the AO disallowed the payment of Rs.7,12,21,627/- by invoking the provision of section 40(a)(i)of the Act. Aggrieved assessee preferred appeal before CIT(A). 4. The CIT(A) deleted the disallowance by observing in para 6.1 as under:- “6.1. As regards the ground relating to disallowance u/s.40(a)(i) of refurbishment charges the AO, after elaborate discussion held that these are technical services rendered to the appellant and accordingly the provisions of section 40(a)(i) do apply and inasmuch as TDS provisions were not adhered to, disallowed the expenditure. Contesting the above addition the appellant submitted that the major machinery comprised in the power generation operation are Gas and Steam Turbines The gas turbine has certain spare parts viz., Hot Gas Path Spares (HGPS) consisting of Combustor Baskets, Transition pieces, Fuel Nozzles, Turbine Static Blades and Turbine Moving Blades with each component having a pre- defined standard life based on Equivalent Operating Hours (EOH). As these machineries have a pre-defined standard life based or Equivalent Operating Hours (EOH), the continuous operation of the system results in wear and tear / damage and requires periodical reconstruction which in technical term called “refurbishment”. Thus, above work of refurbishment requires attendance by technical experts who bring back the machinery to its original position to enable the same to give optimum results. Thus, even though the technical term used is refurbishment, it is nothing but repair and maintenance of the machinery, the expenditure incurred on this process is certainly cannot be termed as technical services by any stretch of imagination entailing any deduction of tax at source. In the circumstances, the action of the AO in disallowing the expenditure on the plea that no 9 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 deduction of tax at source was made is incorrect and accordingly this addition is deleted. This ground of appeal is allowed.” Aggrieved, Revenue came in appeal before the Tribunal. 5. Before us the ld. Senior DR relied on the order of AO and argued that the assessee company runs thermal power plant and the key components i.e., HGPS (rotor/turbine) which are highly technical in nature and involves sophisticated machinery are periodically sent to Marubeni Corporation, Japan for refurbishment. The refurbishing is done by qualified and trained personnel. He argued that the technical experts from Marubeni Corporation visited India and in their presence, the parts are dismantled and inspected for the extent of damage and repair and then the technical experts of Marubeni Corporation recommends for refurbishment of parts. He narrated the various stages of refurbishment which are as follows:- (i) Visit of Technical experts from Marubeni Corporation to India. (ii) Inspection of the Turbines by the Technical experts from Marubeni Corporation. (iii) Identification of parts to be refurbished based on the technical inputs from Marubeni (iv) Shipment of the parts to Marubeni Corporation Japan. (v) Refurbishment (vi) Re-export of refurbished parts back to India. 10 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 In view of the above, he argued that all these stages are inter- related and constitutes a chain of events. Each stage is a natural consequence of the preceding stage and hence all the stages described above form part of a single process. The assessee itself has qualified the charges towards the first three stages as towards Technically Advisory Services and has deducted TDS on these payments but on refurbishment of parts, no TDS was deducted despite the fact that the nature of activity remains the same. In view of all these, the ld. Senior DR stated that the CIT(A) has deleted disallowance without going into the TDS. Hence, the order of CIT(A) be reversed. 6. On the other hand, the ld.counsel for the assessee stated that this HGPS is part of gas turbine which consists of Combustor Baskets, Transition pieces, Fuel Nozzles, Turbine Static Blades and Turbine Moving Blades with each component having a pre- defined standard life based on Equivalent Operating Hours (EOH). He explained the entire process by stating that depending on standard life in term of EOH, each part is inspected and reviewed for its wear and tear / damage and accordingly reconstructed / refurbished after completion of every 8,000 /10,500 EOH during the scheduled maintenance cycles of combustor inspection followed by turbine 11 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 inspection and so on. It was explained that the refurbishment is nothing but a process of reconstruction / repair of the machinery to ensure that the original standard life is achieved / utilized completely in the electricity generation process. The HGPS parts are exposed to a very high temperature of more than 1500 degrees and hence are subjected to extensive wear and tear like coating loss and some minor / medium / major cracks on the surface of the parts which requires reconstruction periodically. In view of the above process, ld.counsel stated that the assessee company carried out periodical preventive reconstruction / repair as per the maintenance procedure prescribed by the original equipment manufacturer. He explained the entire process involved in refurbishment of HGPS which is as under:-  Receive and un-box Hot Gas Path Spares.  Perform incoming conditional evaluation of Not Seas Path Spares.  Perform incoming flow test: of Hot Gas Path Spares.  Disassemble Hot Gas Path Spares using OEM approved method.  Clean (chemical, ultrasonic, grit blast) bolts tubing, gas swozzles, oil/water, cartridges, end covers, and water manifold to remove dirt, rust foreign material and paint.  Disassemble, clean rebuilt and pressure test the distributor value.  Perform Non-destructive Evaluation of Hot Gas Path Spares components.  Perform boroscope inspection on end cover gas passage.  Individually flow test Hot Gas Path Spares components according to OEM approved factory standard.  Complete evaluation of components and test results (OEM Engineering). 12 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019  Utilize piece part flow data to best match Heat Gas Path Spares tips and oil/water cartridges to the end covers.  Re-assemble all Hot Gas Path Spares components smith new seals and lock plates.  Perform final flow check and leak Check of assembly to verify work.  Re-assembled all Hot Gas Path Spares components with new seals and lock plates.  Complete final Quality Assurance inspection (OEM Engineering).  Ship parts to customer with a copy of the test results.  Provide repair report.  Ship parts to the customer with a copy of the flow test results. 6.1 In view of the above, he explained that the amount paid towards refurbishment / reconstruction is not in the nature of fee for technical services covered u/s.9(1)(vii) of the Act as refurbishment activity is in the nature of reconstruction / repair and accordingly no TDS is deductible on this expenditure. Furthermore, he explained that expenditure towards refurbishment is for work done outside India by a non-resident not having a permanent establishment in India and this refurbishment activity is carried out in normal course of business. He also explained that a separate agreement was entered with Marubeni Corporation covers for charges towards Technical Advisory Services where tax has to be deducted but payment towards refurbishment charges are outside the scope of Technical Advisory Services agreement / annexure, since no intellectual aspect or managerial or technical services is involved in this refurbishment. It was also explained that payment for 13 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 refurbishment is claimed as expenditure by assessee and in the hand of non-resident recipient, it is assessed as business income. The ld.counsel for the assessee took us through the decision of Co- ordinate Bench of Mumbai in the case of DCIT vs. VSNL Broadband Ltd., (2013) 96 DTR 0121 is exactly on same facts, wherein the Tribunal considered the repair and services agreement held that such payment do not constitute FTS and the relevant findings in para 9, 10 & 11 reads as under:- 9. We have heard both the parties, perused the orders of the Revenue Authorities and the material placed before us as well as the precedents cited by the Ld Representatives. We have also examined the list of the services promised vide the agreement between the parties under consideration involving India and USA. For AY 2005-06, the AMC Payment is for the period of 6 months from October, 2004 to March, 2005and the amount is Rs.23,73,621/- (equalant of USD 48,025/-). For AY 2006-07, the AMC payment is Rs. 42,84,949/- (equalant of USD 96,050/-) and the payment on account of Repair & replacement of CORDs, is Rs 8,96,147/- . The total payment made in this year works out to Rs. 51,81,096/-. Therefore, we have deal with the situations ie (i) AMC payments and (ii) payments for repairs and replacements. We shall take up the AMC payments and they constitute chargeable payments and therefore the applicability of the provisions TDS and the section 40a(ia) of the Act. Considering the discussion in the orders of the revenue, we restrict ourselves to the applicability of the provisions of the Treaty with USA in general and the provisions of the Article 12 of the DTAA with USA, in particular. To start with we shall examine the nature of services enlisted in the extended Service Agreement. The extraction of the said list from impugned order, vide para 3, is inserted and the same read as follows,- ― 3. ..........During the extended term of the agreement, the following services shall be provided to customer. Services : First Line Telephone Technical support via Sycamore‘s Technical Assistance Center (TAC) as described below. Technical Support – 7x24x365 access to Technical Assistance Center. 14 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 Tata Power Company Ltd [Tata] shall be entitled telephone access to Sycamore‘s Technical Assistance (TAC) which provides technical assistance related to problem diagnosis and trouble shooting of Sycamore‘s hardware and software products. Tata shall have telephone access to the TAC twenty-four hours a day, seven days a week, including Sycamore holidays with no restriction on the number of qualification of Tata‘s personnel who are eligible to place telephone calls to ask products related questions report or report problems with Sycamore‘s products. The TAC shall be the single point of contract for diagnosing and resolving technical issues related to operations, performance, reliability and support of Sycamore products covered within the Service Description. Sycamore may at its sole discretion, dispatch a field service engineer (or its authorized representative) to Tata site in order to facilitate Sycamore‘s diagnosis and resolution. Web-based Services via Sycamore‘s Online Assistant Resources (SOLAR): Tata shall be entitled to access Sycamore‘s problem reporting database (SOLAR) twenty four hours per day, seven days a week. Depending on the product, information available to Tata may include but not be limited to (i) problem case submittal and status, (ii) access to online technical documentation, (iii) status review of know defects and workarounds: and (iv) Return Material Authorization (RMA) processing. The above list of services refers to TAC, telephone access 24 hours for all 7days including holidays, single point contact, web-based SOLAR, etc and they constitutes the catchwords. There is provision for dispatch of AR/Field Service Engineers too in suitable cases. Now we shall take up the written submissions filed by the assessee‘s representative before us and the relevant portions read as follows, namely- 1. Tata Power Co. Ltd had purchased Dense Wave Division Multiplexing Equipment from M/s. Sycamore Networks Inc., USA (Sycamore, USA) 15 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 2. The service agreement was entered between Sycamore, USA and Tata Power Co. Ltd effective from April 2003 to March, 2004, with the option of automatic extension from April 2004 to March 2008 after the consent given by Sycamore USA. Exhibit B to the agreement dealt with the nature of the services to be provided Sycamore, USA for the extended period of service from April 2004 till March 2008. 3. For extended period of service Sycamore, USA will charge sum of USD 96,050 p a. 4. As per the agreement, the invoices will be raised two times in a year, first on or about March 1 and second on or about September, 1. 5. In AY 2005-06, the Tata Power Ltd., and Tata Power Broadband Co. Ltd. Entered into a Business Transfer Agreement dated 16 th August, 2004 for transfer of broadband division with effect from 1 July, 2004. 6. For the AY 2005-06, the first invoice was raised by Sycamore, USA on the Tata Power Co. Ltd. And the second invoice was raised by Sycamore on the Tata Power Broadband Co. Ltd. It is the subject matter of dispute in AY 2005-06 which dealt with the services rendered from October, 2004 till March, 2005. 7. On 16th November, 2004, Tata Power Broadband Ltd and Sycamore, USA amended the terms of the service agreement. Under the amended agreement, Sycamore, USA apart from the services that are mentioned in the revised Exhibit B-1 also agreed that the Tata Power Broadband Ltd can send the defective part of the machine to Sycamore, USA in USA on repaid and return basis. Sycamore will charge separately for the repaid services provided in USA. 8. Thus, the disallowance for the two years is an under. a. AY 2005-06: AMC Payment for October, 2004 to March, 2005 as per agreement Rs.23,73,621/- (i.e., USD 48,025).. b. AY 2006-07: AMC payment as per agreement Rs. 42,84,949/- Plus Repair and replacement Rs 8,96,147/- ..Total= Rs. 51,81,096/- 16 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 10. From the above, it is evident that the assessee purchased an equipment (ie Dense Wave Division Multiplexing Equipment from M/s. Sycamore Networks Inc., USA) and there must exist some Warranty provided by the supplied. Of course, there are no details mentioned in the orders. There is some reference to ―Service Agreementۅ, which is claimed to have been amended and revised time to time. Revision was done to accommodate the undertaking of the repairs by the supplier of the equipment on repayment basis. No such repairs reported in the AY 2005-06. Whereas in the AY 2006-07, assessee paid to the M/s Sycamore, USA amounting to Rs 8,96,147/- towards such repairs. To start, we shall take up the issue relating to repairs payments made by the assessee to Sycamore, USA and if they need to be subjected to TDS. 11. Allowability of the payments of Rs 8,96,147/- towards such repairs: As discussed in the paragraphs of this order where the arguments of the AR are discussed, it is the case of the assessee that the payments for the repairs should not be subjected to TDS as the said payments outside the scope. We have examined the cited decision of the Tribunal in the case of M/s. BHEL- GE-Gas Turbine Servicing (P) Ltd (supra) and find such payments do not constitutes FTS and relevant paragraph 16 is reproduced here as under: 16............Thus, the above decisions of the Tribunal are relevant for the proposition that the routine repairs do not constitute FTS as they are merely repair works and not technical services. Technical repairs are different from technical services‘. Thus, the payments made for technical services alone attract the provisions of section 9(1)(viii) of the Act and its Explanation 2. Further, it is also a settled issue at the level of the Tribunal that every consideration made for rendering of services do not constitute income within the meaning of section 9(1)(viii) of the Act and for considering the same, first of all the said consideration is for the FTS. Therefore, considering the above decision of Delhi Bench of the Tribunal, which explained the scope of the provisions, we are of the view that the impugned orders of the CIT (A), for the years under consideration, on this aspect of the matter, do not call for interference. Accordingly, the grounds raised in these appeals of Revenue are dismissed. 17 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 6.2 The ld.counsel for the assessee also relied on decision of another Co-ordinate Bench of Kolkata in the case ITO (International Taxation) vs. Emami Paper Mills Ltd., [2017] 163 ITD 212, wherein it was held as under:- 16. The above activities involve assembly, disassembly, inspection, reporting and evaluation. CIT(A) examined every activity enlisted above and came to the conclusion that none of the above works involve services of technical nature. The discussion given by the CIT(A) in para 5.4.2 is relevant. We agree with the same considering the settled legal position that routine maintenance repairs are not FTS as held by the Delhi Bench of the Tribunal in the case of Lufthansa Cargo India (P.) Ltd. (supra). For the purpose of completeness of this order, we reproduce below the relevant paragraph of the said decision in the context of the questions raised in the said decision- "In conclusion. Technik carried out the repair work in the normal course of its business in Germany, without an involvement or participation of the assessee's personnel. The overhaul repairs involved ere routine maintenance repairs. It cannot therefore be said that Technik rendered any managerial. technical or consultancy service to the assessee. In this view of the matter, we hold that the payments made by the assessee to non-residents workshops outside India do not constitute payment of fees for managerial, consultancy or Technical services as defined in Explanation 2 to section 9(1)(vii). The assessee succeeds on this ground." Regarding the decision of the Hyderabad in the case of Mannesmann Demag Lauchhammer (supra) which involves deputing of technicians to India for supervision of repairs to be carried out at the plant and machinery purchased by the NMDC, we find that the said decision is distinguishable on facts. Such deputation, whether deputation or supervision, is absent in both instant cases as well as the case before it, as observed by the Delhi Bench of the Tribunal in the cited case. The relevant para of the order of the Tribunal in that case reads as follows- "We find that in Demag's case, the foreign company rendered 'technical consultancy’ by way deputing a technician to India for supervising repairs 18 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 to be carried out on the plant and machinery purchased by National Mineral Development Corporation. It is not the repair work per se which has been held to be technical services but it is the provision of the consultant technician deputed to India for supervising the repairs which has been treated as consultancy services. The foreign technician stayed on in India for 44 days to advise and supervise repair work which was obviously carried out by the engineers and workers of the Indian Company. Thus, the nature of services rendered by the foreign company was consultancy of technical nature through the provision of its technician deputed to India. Our conclusion is supported by the decision of Andhra Pradesh high court in the same case reported in 238 ITR 861, wherein Hon'ble High Court affirming the aforesaid decision of the Tribunal held that the Explanation 2 has expanded the scope of Section 9(1)(vii)(b) by providing that the services of technical or other personnel would be taxable. It has been repeatedly stated by the assessee that no foreign Technician was ever deputed of India. The lower authorities and the DR have not pointed out any instance of a technician having been assigned of India. This decision therefore is of no assistance to the Revenue." Thus, the above decisions of the Tribunal are relevant for the proposition that the routine repairs do not constitute 'FTS' as they are merely repair works and not technical services. Technical repairs are different from 'technical services'. Thus, the payments made for 'technical services' alone attract the provisions of S.9(1)(vii) and its Explanation 2. Further, it is also a settled issue at the level of the Tribunal that every consideration made for rendering of services do not constitute income within the meaning of S.9(1)(viii) of the Act and for considering the same, first of all the said consideration is for the FTS. Therefore, considering the above, decision of Delhi Bench of the Tribunal, which explained the scope of the provisions, we are of the view that the impugned orders of the CIT(A), for the years under consideration, on this aspect of the matter, do not call for interference. Accordingly, the grounds raised in these appeals of the revenue are dismisses 7. We have heard rival contentions and gone through facts and circumstances of the case. From the above, it is evident that the 19 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 assessee company is in the business of generation and sale of electricity. The assessee owns and operates a 330.5MW combined cycle power plant. To run this cycle power plant, the necessary machinery like gas turbine including spare parts viz., HGPS consisting of Combustor Baskets, Transition pieces, Fuel Nozzles, Turbine Static Blades and Turbine Moving Blades with each component having a pre- defined standard life based on Equivalent Operating Hours (EOH) is purchased. The process as explained above including the details of machinery, there is service agreement for refurbishment / repair of these machines entered with Marubeni Corporation, Japan. This refurbishment from the above facts is clear that is only repairs and services of machinery. As discussed in the paragraph above of this order, where discussion of AR as well as ld.senior DR, we are of the belief that payments for repairs are outside the scope of FTS and such payment do not constitute FTS u/s.9(1)(vii) of the Act. These are simple refurbishment or repairs and payment made for these do not attract TDS provision u/s.195 of the Act. Accordingly, we are of the view that this issue stands covered in favour of the assessee. Hence, the CIT(A) has rightly deleted the addition and we confirm the same. Therefore, the Revenue’s appeal is dismissed. 20 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 ITA No.2092/Chny/2019 8. As regards to ITA No.2092/Chny/2019, the issue is exactly identical and facts and circumstances are also exactly identical to ITA No.3015/Chny/2018, except the quantum. Hence, taking a consistent view, we reverse the order of lower authorities and direct the AO to delete the addition made on account of disallowance of expenses by invoking provisions of section 40(a)(i) of the Act, on account of refurbishment charges paid to M/s. Marubeni Corporation, Japan and. The appeal of the assessee is allowed. CO No.1/Chny/2019 9. The only issue in this cross objection of the assessee is as regards to order of CIT(A) confirming the action of AO in regard to disallowing deduction claimed by assessee u/s.80IA of the Act in respect of interest on bank deposits. For this, assessee has raised following three grounds. 1.1 The CIT(A) has grossly erred in confirming the action of the AO denying deduction u/s.80IA in respect of interest on TRA deposits placed with the bank, as the same was a requirement of the financing document. 1.2 The CIT(A) ought to have considered the fact that the interest income on trust & retention account is inextricably linked to the eligible undertaking of the company and as such the same is not to be excluded while computing deduction u/s.80IA. 1.3 The CIT(A) failed to consider plethora of judgments which states that the interest income earned relating to a business undertaking is to be included while computing deduction u/s.80IA. 21 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 10. During the course of assessment proceedings, the AO noticed that the assessee has earned interest income of Rs.4,79,33,624/- from bank deposits and claimed deduction u/s.80IA of the Act. The AO during the course of assessment proceedings requested the assessee to show-cause as to why the interest income claimed should not be disallowed deduction u/s.80IA of the Act. The assessee replied that total interest on bank deposits relates to income earned pursuant to the provisions of Trust and Retention Agreement [TRA]. He referred to relevant provision of Trust and Retention Agreement which mandates the company to create a deposit as reserve for future debt obligation as is enshrined in the finance document of the project approved by the sole customer of the assessee i.e., TANGEDCO. The AO was not convinced and stated that issue is squarely covered by the decision of Hon’ble Supreme Court in the case of Pandian Chemicals vs. CIT, 262 ITR 278. Accordingly, he disallowed the claim of deduction u/s.80IA of the Act and treated the interest income as income from other sources. Aggrieved assessee carried the matter before CIT(A). 11. The CIT(A) also confirmed the action of AO following the decision of Tribunal in assessee’s own case for assessment years 2006-07 to 2008-09 in ITA Nos.569, 570/Mds/2012 & 22 I.T.A. Nos.2092/Chny/2019, 3015/Chny/2018 & C.O. No.1/Chny/2019 1188/Mds/2013, order dated 29.05.2015. Hence, this claim was dismissed. 12. We find that this issue is squarely covered by the Tribunal’s order in assessee’s own case for earlier assessment years 2006-07 to 2008-09 in ITA Nos.569, 570/Mds/2012 & 1188/Mds/2013, order dated 29.05.2015. Therefore, taking a consistent view, we confirm the order of lower authorities and dismiss the cross objection filed by the assessee. 13. To sum up, the appeal filed by the assessee in ITA No.2092/Chny/2019 for assessment year 2016-17 is allowed and the appeal filed by the Revenue in ITA No.3015/Chny/2018 as well as the cross objection filed by the assessee in C.O.No.1/Chny/2019 for assessment year 2010-11 are dismissed. Order pronounced in the open court on 25 th January, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अᮕवाल) (MANOJ KUMAR AGGARWAL) लेखा सद᭭य /ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 25 th January, 2022 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ (अपील)/CIT(A) 4. आयकर आयुᲦ /CIT 5. िवभागीय ᮧितिनिध/DR 6. गाडᭅ फाईल/GF.