The DCIT, Circle-1, Ahmedabad V. M/s. Cliantha Research Ltd. ( Formerly known as B.A. Research India Ltd.), Ahmedabad

ITA 2170/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6262 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDRA UPMANYU
• Keywords: Recovery proceedings; Double taxation relief; Deemed to accrue or arise in india; Retrospective amendment; Advance ruling
• Section: 80IB; 201(1); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2170/AHD/2015 (ASSESSMENT YEAR: 2011-12) DCIT, CIRCLE-1(1)(2), AHMEDABAD V/S M/S. CLIANTHA RESEARCH LTD. (FORMERLY KNOWN AS M/S. BA RESEARCH INDIA LTD.) BA RESEARCH HOUSE, OPP. PUSHPARAJ TOWERS, NR. JUDGES BUNGLOWS, AHMEDABAD-380015 (APPELLANT) (RESPONDENT) PAN: AACCB 4535A APPELLANT BY : SMT. VASUNDRA UPMANYU, CIT /DR RESPONDENT BY : SHRI JIGAR PATEL, A.R. ( )/ ORDER DATE OF HEARING : 03 -01-201 8 DATE OF PRONOUNCEMENT : 11-01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-6, AHMEDABAD DATED 07.05.2015 PERTAINING TO A.Y. 2011- 12. ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.26,06,19,390/- MADE U/S 80IB OF THE ACT AND IN N OT APPRECIATING THAT THE ASSESSEE COMPANY IS NOT A COMPANY ENGAGED EXCLUSIVE LY IN SCIENTIFIC AND INDUSTRIAL RESEARCH FOR DEVELOPMENT AND TRANSFER OF TECHNOLOGY AS ENVISAGED IN SECTION 80IB(8A)(II) OF THE ACT AND RULE 18DA(L)(E) OF THE RULES. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF DISALLOWANCE MADE U/S 40(A)(I) OF THE ACT AND IN NOT APPRECIATIN G THAT THE SERVICES RENDERED BY THE NON-RESIDENT ARE IN THE NATURE OF TECHNICAL SER VICES AND THE PAYMENT MADE FOR THE SAID SERVICES ARE COVERED BY THE DEFINITION OF THE 'FEES FOR TECHNICAL SERVICES' AS DEFINED IN EXPLANATION (2) TO SECTION 9(L)(VII) OF SECTION 9(L)(VII) OF THE ACT. 3. INSOFAR AS GROUND NO. 1 IS CONCERNED, AT THE VERY O UTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT AN IDENTICAL ISSUE WAS DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y. 2010-11 VIDE ORDER DATED 20.06.201 7 IN ITA NO. 160/AHD/2015. THE LD. D.R. FAIRLY CONCEDED TO THIS. 4. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW QUA THE ISSUE. A PERUSAL OF THE ORDER OF THE CO-ORD INATE BENCH IN ITA NO. 160/AHD/2015 WAS SEIZED WITH AN IDENTICAL GROUND AN D HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- 8.1 WE FURTHER OBSERVE THAT IN THE PRECEDING YEARS, I.E. AYS 2008-09 AND 2009-10, THE ISSUE OF ASSESSEES CLAIM UNDER SECTIO N 80IB(8A) OF THE ACT TRAVELLED UP TO THE HONBLE JURISDICTIONAL HIGH COU RT AND THE REVENUES APPEALS WERE DISMISSED BY THE HONBLE COURT BY OBSERVING AS UNDER:- 15. IT CAN THUS BE SEEN THAT DETAILED PROVISIONS H AVE BEEN MADE UNDER RULE 18D AND RULE 18DA OF THE RULES FOR THE PRESCRIBED AUTHO RITY TO EXAMINE THE NATURE OF RESEARCH AND SCIENTIFIC DEVELOPMENT, PROPOSED TO BE OR BEING CARRIED OUT BY THE COMPANY WHO SEEKS APPROVAL OR EXTENSION OF APPROVAL . FOR EXAMPLE, UNDER SUB- RULE (2), APPROVAL ONCE GRANTED HAS VALIDITY FOR A PERIOD OF THREE YEARS AND NO MORE. IT COULD BE EXTENDED ONLY UPON SATISFACTORY P ERFORMANCE OF THE COMPANY ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 3 WHICH WOULD BE JUDGED ON PERIODIC REVIEW BY THE PRE SCRIBED AUTHORITY. WHILE GRANTING APPROVAL IN ADDITION TO INFORMATION PRESCR IBED UNDER SUB-RULE (5) OF RULE 18DA, THE PRESCRIBED AUTHORITY IS EMPOWERED TO CALL FOR SUCH OTHER INFORMATION OR DOCUMENTS, WHICH MAY BE FOUND NECESS ARY FOR CONSIDERATION OF THE APPLICATION FOR GRANT OF APPROVAL. EVEN DURING THE CURRENCY OF THE APPROVAL GRANTED BY THE PRESCRIBED AUTHORITY, IN TERMS OF SU B-RULE (2) OF RULE 18DA, THE COMPANY HAS TO SATISFY SEVERAL CONDITIONS INCLUDING , AS NOTED ABOVE, TO SELL ITS PROTOTYPE OR OUTPUT, ONLY WITH THE PERMISSION OF TH E PRESCRIBED AUTHORITY AND INTIMATE ANY CHANGE IN ITS MEMORANDUM OF ASSOCIATIO N AND ARTICLES OF ASSOCIATION. THIS LATER CONDITION WOULD ENABLE THE PRESCRIBED AUTHORITY TO EXAMINE WHETHER IN VIEW OF ANY CHANGE IN MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION RELATING TO THE MAIN OBJECT S OF THE COMPANY, THE FUNDAMENTAL REQUIREMENT I.E. THE COMPANY'S MAIN OBJ ECT OF SCIENTIFIC AND INDUSTRIAL RESEARCH AND DEVELOPMENT HAS BEEN MAINTA INED. 16. AS NOTED, IF AT ANY STAGE, THE PRESCRIBED AUTHO RITY FINDS EITHER THAT THE APPROVAL GRANTED TO THE COMPANY WAS TO AVOID PAYMEN T OF TAXES BY ITS GROUP COMPANIES OR COMPANIES RELATED TO ITS DIRECTORS OR MAJORITY OF ITS SHAREHOLDERS OR THAT THERE HAS BEEN BREACH OF ANY OF THE PROVISI ONS OF THE ACT OR THE RULES, THE PRESCRIBED AUTHORITY WOULD BE EMPOWERED TO WITH DRAW THE APPROVAL. 17. THUS THE STATUTORY SCHEME ENVISAGES THE PRESCRI BED AUTHORITY AS A BODY WHICH CAN MINUTELY EXAMINE ALL THESE HIGHLY TECHNIC AL AND SCIENTIFIC REQUIREMENTS IN CASE OF A COMPANY. WE MAY RECALL TH AT THE PRESCRIBED AUTHORITY IS THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESE ARCH, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA. IT HAS EXPERTS AT ITS COMMAND IN THE FIELD OF SCIENTIFIC RESEARCH TO ADVISE IT ON VARIOUS EXTREME LY COMPLEX SCIENTIFIC ISSUES WHICH MAY ARISE WHILE GRANTING, EXTENDING OR RECALL ING THE APPROVAL. IN THIS CONTEXT, THE REQUIREMENTS CONTAINED IN CLAUSES (C) TO (E) OF SUB-RULE (1) OF RULE 18DA WOULD ALSO HAVE TO BE NECESSARILY EXAMINED BY THE SAID AUTHORITY. WHEN THESE CLAUSES REFER TO REQUIREMENT OF ADEQUATE INFR ASTRUCTURE SUCH AS LABORATORY FACILITIES, WELL FORMULATED RESEARCH AND DEVELOPMEN T PROGRAMME AND ENGAGEMENT OF THE COMPANY EXCLUSIVELY IN SCIENTIFIC RESEARCH AND DEVELOPMENT ACTIVITIES, THE SAME WOULD BE WITHIN THE REALM OF T HE SAID PRESCRIBED AUTHORITY. 18. UNDER THE CIRCUMSTANCES, ONCE SUCH AUTHORITY GR ANTS APPROVAL AND SUCH APPROVAL HOLDS THE FIELD, IT WOULD NOT BE OPEN FOR THE ASSESSING OFFICER OR ANY OTHER REVENUE AUTHORITY TO GO BEHIND SUCH APPROVAL CERTIFICATE AND RE-EXAMINE FOR HIMSELF, THE FULFILMENT OF THE CONDITIONS CONTA INED IN SUB-RULE (1) OF RULE 18DA. THESE CONDITIONS ARE PRESCRIBED IN TERMS OF C LAUSE NO.(IV) OF SUB-SECTION (8A) OF SECTION 80-IB OF THE ACT. THE COMMISSIONER WAS THEREFORE, COMPLETELY IN ERROR IN OBSERVING THAT EVEN THOUGH THE ASSESSEE CO MPANY HAD VALID APPROVAL ISSUED BY THE PRESCRIBED AUTHORITY, THE ASSESSING O FFICER STILL HAD TO EXAMINE WHETHER SUCH COMPANY HAD FULFILLED THE CONDITIONS R EFERRED TO IN CLAUSE (IV), AS ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 4 SUCH OTHER CONDITIONS AS MAY BE PRESCRIBED, REFEREN CE TO WHICH WE FIND IN RULE 18DA. ANY OTHER VIEW WOULD CREATE CONFLICT OF DECIS ION MAKING PROCESS. EVEN COUNSEL FOR THE REVENUE COULD NOT DISPUTE THAT MANY OF THESE REQUIREMENTS PRESCRIBED UNDER RULE 18DA ARE TO BE EXAMINED BY TH E PRESCRIBED AUTHORITY. IF ONCE THE PRESCRIBED AUTHORITY EXAMINES SUCH CONDITI ONS AND UPON BEING SATISFIED THAT THE CONDITIONS ARE FULFILLED, GRANTS APPROVAL, CAN THE ASSESSING OFFICER TAKE A DIFFERENT VIEW? THE ANSWER OBVIOUSLY HAS TO BE IN THE NEGATIVE. FIRST AND FOREMOST, THE PRESCRIBED AUTHORITY IS A SPECIALISED BODY HAVING EXPERTISE IN THE FIELD OF SCIENTIFIC RESEARCH AND DEVELOPMENT. THE R EQUIREMENTS ARE EXTREMELY COMPLEX SCIENTIFIC REQUIREMENTS AND HAVE THEREFORE, BEEN RIGHTLY PLACED IN THE HANDS OF AN EXPERT BODY TO JUDGE. SECONDLY, THERE I S NO REASON WHY ONCE AN AUTHORITY WHICH IS PRESCRIBED UNDER THE RULES FOR A SPECIFIC PURPOSE HAS BEEN INVESTED WITH STATUTORY FUNCTIONS, THE ASSESSING OF FICER SHOULD BE ALLOWED TO OVERRULE THE DECISION OF THE SAID BODY. THIRDLY, TH ERE ARE MULTIPLE INDICATIONS WITHIN THE RULES THEMSELVES. WE MAY RECALL, UNDER S UB-RULE (2) OF RULE 18D, EXTENSION OF APPROVAL ONCE GRANTED IS SUBJECT TO SA TISFACTORY PERFORMANCE OF THE COMPANY, TO BE JUDGED ON PERIODIC REVIEW. FURTHER, SUB-RULE (3) OF RULE 18DA GIVES WIDE POWERS TO THE PRESCRIBED AUTHORITY TO WI THDRAW THE APPROVAL IF IT IS FOUND THAT THE SAME WAS TO AVOID PAYMENT OF TAXES B Y ITS GROUP COMPANIES OR COMPANIES RELATED TO ITS DIRECTORS OR MAJORITY OF I TS SHAREHOLDERS OR THAT ANY PROVISIONS OF THE ACT OR THE RULES HAVE BEEN VIOLAT ED. THUS ONCE AGAIN THE TASK OF JUDGING WHETHER THE PROVISIONS OF THE ACT OR THE RULES HAVE BEEN VIOLATED OR NOT, HAS ENTRUSTED TO THE PRESCRIBED AUTHORITY WITH MATCHING POWERS FOR WITHDRAWAL OF THE APPROVAL, IF THE AUTHORITY IS SAT ISFIED ABOUT SUCH BREACH. 19. THE WORD 'MAY' USED WHILE EMPOWERING THE PRESCR IBED AUTHORITY, ACCORDING TO THE COUNSEL FOR THE REVENUE, WOULD BE OF SOME SI GNIFICANCE. HE CONTENDED THAT EVEN IF THERE HAS BEEN A VIOLATION OF THE ACTS AND THE RULES, THE PRESCRIBED AUTHORITY IS NOT DUTY-BOUND TO WITHDRAW THE APPROVA L SINCE THE LEGISLATURE HAS USED THE WORD 'MAY' AND NOT 'SHALL'. ACCORDING TO H IM THEREFORE, IT WOULD BE OPEN TO THE ASSESSING OFFICER TO DISALLOW THE DEDUC TION ON THE GROUND OF BREACH OF THE PROVISIONS OF THE ACT AND THE RULES EVEN IF THE PRESCRIBED AUTHORITY HAS NOT WITHDRAWN THE APPROVAL ON THAT BASIS. TO OUR MI ND, THIS IS NOT THE CORRECT POSITION. SUB-RULE (3) IS AN ENABLING POWER EMPOWER ING THE PRESCRIBED AUTHORITY TO WITHDRAW THE APPROVAL, IF IT FINDS VIOLATION OF PROVISIONS OF THE ACT OR THE RULES. HOWEVER, THE ACT AND THE RULES MAKE VARIOUS PROVISIONS, BREACH OF MANY OF THEM MAY BE PURELY TECHNICAL. IT IS NOT NECESSAR Y THEREFORE, IN EVERY SUCH BREACH, IRRESPECTIVE OF THE NATURE OF THE BREACH, T HE PRESCRIBED AUTHORITY MUST WITHDRAW THE APPROVAL, THE MOMENT IT IS POINTED OUT THAT THERE HAS BEEN A VIOLATION OF ANY OTHER PROVISIONS OF THE ACT OR THE RULES. IT IS POSSIBLY THEREFORE, THAT THE LEGISLATURE HAS WHILE CLOTHING THE PRESCRI BED AUTHORITY WITH SUFFICIENT POWERS TO WITHDRAW THE APPROVAL, USED THE WORD 'MAY ' RATHER THAN 'SHALL' GIVING DISCRETION IN APPROPRIATE CASES TO THE AUTHORITY NO T TO WITHDRAW THE APPROVAL. THIS HOWEVER, WOULD NOT MEAN THAT THE ASSESSING OFF ICER WOULD HAVE ANY ROLE IN ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 5 THE CONTEXT OF VERIFYING REQUIREMENTS RELATABLE TO GRANT, EXTEND OR WITHDRAW THE APPROVAL. THESE ISSUES SOLELY REST WITHIN THE JURIS DICTION OF THE PRESCRIBED AUTHORITY. 20. JUDGED FROM SUCH ANGLE, IN OUR OPINION, ONCE TH E APPROVAL IS GRANTED BY THE PRESCRIBED AUTHORITY AND SUCH APPROVAL IS VALID, IT WOULD NO LONGER BE OPEN FOR THE ASSESSING OFFICER TO VERIFY THE SATISFACTION OF THE CONDITIONS PRESCRIBED UNDER RULE 18DA IN ORDER TO REFUSE DEDUCTION UNDER SUB-SE CTION (8A) OF SECTION 80-IB OF THE ACT. THIS HOWEVER, DOES NOT MEAN THAT OTHER ISS UES RELEVANT TO THE CLAIM OF DEDUCTION BY THE ASSESSEE WOULD BE TAKEN AWAY FROM THE JURISDICTION OF THE ASSESSING OFFICER. WE DO NOT SHARE THE ANXIETY OF T HE COUNSEL FOR THE REVENUE THAT INTERPRETATION THAT WE HAVE ADOPTED WOULD DIVE ST THE ASSESSING OFFICER FROM EXAMINING ANY CLAIM OF DEDUCTION UNDER THE SAI D PROVISIONS AND GRANT DEDUCTION MECHANICALLY WITHOUT VERIFYING THE CLAIM. FOR EXAMPLE, IN THIS VERY CASE, THE ASSESSING OFFICER HAD DOUBT ABOUT THE SAM PLE STORAGE INCOME BEING PART OF THE INCOME FROM ELIGIBLE BUSINESS. AFTER HE ARING THE ASSESSEE, HE DISALLOWED THE DEDUCTION HOLDING THAT THE SAME DOES NOT FORM PART OF THE INCOME OF THE ASSESSEE'S BUSINESS OF SCIENTIFIC RES EARCH AND DEVELOPMENT. 21. BEFORE CLOSING, WE MAY REFER TO THE DECISION CI TED BY SHRI BHATT FOR THE REVENUE. IN CASE OF SOUTHERN TECHNOLOGIES LTD.(SUPR A), THE ISSUE WAS REGARDING THE TAXABILITY OF INCOME IGNORING THE PROVISIONS CO NTAINED IN THE COMPANIES ACT CONCERNING NON BANKING FINANCIAL COMPANY WHICH PERM ITTED ADJUSTMENT OF A PROVISION FOR POSSIBLE DIMINUTION OF VALUE OF ASSET S OF THE COMPANY ALLOWING THE COMPANY TO SHOW ONLY THE NET FIGURE IN THE BALANCE SHEET. 22. IN THE RESULT, WHILE ANSWERING THE QUESTION IN FAVOUR OF THE ASSESSEE, WE CLARIFY THAT THE POWER OF THE ASSESSING OFFICER TO VERIFY THE CLAIM OF DEDUCTION IS NOT TAKEN AWAY. HE CAN CERTAINLY VERIFY THE ACCOUNT S AND REFUSE DEDUCTION WHICH DOES NOT FORM PART OF SECTION 80-IB(8A) AND THE INC OME WHICH DOES NOT ARISE OUT OF THE ELIGIBLE BUSINESS. 8.2 FROM GOING THROUGH THE ABOVE JUDGMENT OF HONBL E JURISDICTIONAL HIGH COURT, IT IS ESTABLISHED BEYOND DOUBT THAT THE ASSE SSEES ACTIVITIES OF SCIENTIFIC AND INDUSTRIAL RESEARCH AND DEVELOPMENT ARE COVERED UNDER SECTION 80IB(8A) OF THE ACT AND THE PROFITS AND GAINS FROM THESE ACTIVI TIES ARE ELIGIBLE FOR DEDUCTION @ 100%. TO THIS EXTENT, WE FIND NO ERROR IN THE OR DER OF LD. CIT(A). 5. RESPECTFULLY FOLLOWING THE AFOREMENTIONED FINDINGS OF THE CO-ORDINATE BENCH WHICH IS BASED UPON THE FINDINGS OF THE HONBLE JUR ISDICTIONAL HIGH COURT, WE ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 6 DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. C IT(A). GROUND NO. 1 IS DISMISSED. 6. COMING TO THE GRIEVANCE RAISED VIDE GROUND NO. 2, F ACTS SHOW THAT DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS DEBITED RS. 30.47 LAKHS ON ACCOUNT OF CLINICAL AND ANALYTICAL EXPENSES IN THE PROFIT AND LOSS ACCOUNT. THE ASSESS EE WAS ASKED TO FURNISH THE TDS DETAILS. ON VERIFICATION OF THE SAME, THE A.O. NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE FOLLOWING FOR EIGN PAYMENT. (I) CELECRION INC. RS. 14,39,798/- (II) MINIMAX CONSULTING LLC RS. 1,55,448. 7. THE A.O. WAS OF THE OPINION THAT THE PAYMENTS MADE TO FOREIGN PARTIES WERE ON ACCOUNT OF TECHNICAL SERVICES AND ACCORDINGLY T HE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE. THE ASSESSEE WAS ASKED TO J USTIFY THE PAYMENTS WITHOUT TDS. IN ITS REPLY, THE ASSESSEE STATED THAT UNDER T HE AGREEMENT, THE OVERSEAS SERVICE PROVIDERS HAVE PERFORMED THEIR SERVICES OU T OF INDIA AND THEY HAVE NOT VISITED INDIA FOR PERFORMANCE OF THE SERVICES I N INDIA. RELYING UPON THE PROVISIONS OF SECTION 9 OF THE ACT IN THE LIGHT OF ARTICLE 12 OF DTAA WITH USA, THE ASSESSEE CLAIMED THAT IT WAS NOT LIABLE TO DEDUCT TAX AT SOURCE. THE A.O. DISCARDED THE CONTENTION OF THE ASSESSEE HOLDI NG THAT TECHNICAL SERVICES WERE PROVIDED AND THE PAYMENT FOR TECHNICAL SERVICE S ARE DEEMED TO ACCRUE OR ARISE IN INDIA, THEREFORE, PROVISIONS OF SECTION 19 5 ARE APPLICABLE. THE A.O. ACCORDINGLY DISALLOWED RS. 15,95,246/- U/S 40(A)(I) OF THE ACT. ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 7 8. PROCEEDING FURTHER, THE A.O. FOUND THAT THE ASSESSE E HAS NOT DEDUCTED TAX AT SOURCE ON THE FOLLOWING FOREIGN PAYMENT FOR CONSULT ANCY EXPENSES AND TECHNICAL EXPENSES.:- 'SR. NO. NAME OF P ARTY NATURE OF PAYMENT AMOUNT ON WHICH TDS NOT DEDUCTED CONSULTANCY FEES 1 HARPER & ASSOCIATES CONSULTANCY/ TECHNICAL FEES RS.11,18,771/ - 2 MAIBACH CONSULTANCY/ TECHNICAL FEES RS.10,84,440/ - 3 BIOSTUDY SOLUTIONS CONSULTANCY/ TECHNICAL FEES RS. 85,4817 - 4 SHANNON WALAKER CONSULTANCY/ TECHNICAL FEES RS. 2,32,589/ - PERSONNEL EMPLOYMENT EXPENSES 1 ARTHUMAN DIRECCIONANND TALENTOS, S.C. CONSULTANCY/ TECHNICAL FEES RS.22,000/ - + RS.3,50,465/- PR OFESSIONAL FEES 1 GAIA TECH INC. CONSULTANCY/ TECHNICAL FEES RS.2,02,726/ - 2 KPMG CARDENAS DOSAL CONSULTANCY/ TECHNICAL FEES RS.2,05,645/ - 3 MPMG LTD. CONSULTANCY/ TECHNICAL FEES RS.57,39,775/ - 4 MERCER US INC. CONSULTANCY/ TECHNICAL FEES RS.7 ,54,631 / - 5 PEPPER HEMILTON LLP CONSULTANCY/ TECHNICAL FEES RS.10,93,248/ - TRAINING EXPENSES ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 8 1 LC - MS PHARMACEUTICA DEVELOPMENT INC. CONSULTANCY/ TECHNICAL FEES RS.84,964/ - 2 SATYAM RATHOD, EMP CONSULTANCY / TECHNICAL FEES RS.44,280/ - TOTAL RS.1,10,19,015/ - 9. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE AFOREMENT IONED EXPENSES SHOULD NOT BE DISALLOWED. ASSESSEE FILED A DETAILED REPLY ALONG WITH CERTIFICATE IN FORM 15CB. IT WAS CONTENDED THAT THE SERVICES HAS B EEN RENDERED OUTSIDE INDIA AND THE SAME ARE NOT TAXABLE IN INDIA. THERE FORE, THERE IS NO LIABILITY FOR DEDUCTING TAX AT SOURCE. THE CONTENTION OF THE ASSE SSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THA T AS THE INCOME ACCRUES AND ARISES IN INDIA AS PER THE PROVISIONS OF SECTIO N 9(1)(VII) OF THE ACT, THE PROVISIONS OF SECTION 195 ARE FULLY APPLICABLE. AS THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE, THE A.O. DISALLOWED RS. 1,1 0,19,015/- U/S 40(A)(I) OF THE ACT. 10. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. 11. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT AN IDENTICAL ISSUE WAS CONSIDERED IN THE IMMEDIATELY P RECEDING ASSESSMENT YEAR 2010-11 WHEREIN THE FIRST APPELLATE AUTHORITY VIDE ORDER DATED 03.11.2014 HAS HELD THAT THE IMPUGNED PAYMENTS ARE NOT SUBJECT TO TAX U/S 9(1)(VII) OF THE ACT AND THEREFORE THERE IS NOT LIABILITY TO DEDUCT TAX AND THE PROVISIONS OF SECTION 40(A)(I) ARE NOT ATTRACTED. ON FINDING PARITY ON TH E FACTS OF THE IMPUGNED PAYMENTS, THE LD. CIT(A) DELETED THE ENTIRE DISALLO WANCE U/S 40(A)(I) OF THE ACT. ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 9 12. BEFORE US, THE LD. D.R. STRONGLY CONTENDED THAT THE LD. CIT(A) HAS NOT GONE INTO THE MERITS OF THE CASE NOR HE HAS VERIFIED THE DETAILS IN THE LIGHT OF ARTICLE 12 OF THE INDIA-USA DTAA. IT IS THE SAY OF THE LD. D.R. THAT THE FIRST APPELLATE AUTHORITY HAS SIMPLY FOLLOWED THE ORDER O F HIS PREDECESSOR. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT THE ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL IN IT A NO. 160/AHD/2015. IT IS THE SAY OF THE LD. COUNSEL THAT SINCE THE FACTS ARE IDENTICAL, THEREFORE, THE VIEW ALREADY TAKEN BY THE CO-ORDINATE BENCH SHOULD BE FOLLOWED. 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW AND HAVE CAREFULLY PERUSED THE ORDER OF THE C O-ORDINATE BENCH IN ITA NO. 160/AHD/2015. THE FOLLOWING PAYMENTS ARE UNDER DISPUTE. SR. .NO. NAME OF PARTY & COUNTRY AMOUNT (IN RS.) NATURE OF PAYMENT GIST OF RE ASONS FOR NON - DEDUCTION OF TAX 1 CELERION INC. USA 14,39,798 CLINICAL TRIALS & TESTING CHARGES NOT FTS AS 'MA;E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA-USA DTAA APPLIES 2 MINIMAX CONSULTING LLC USA 1, 55 ,448 CLINICAL TRIALS & TESTI NG CHARGES NOT FTS AS 'MA - E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES 3 HARPER & ASSOCIATES USA 11,18,771 CONSULLANCY FEES BEN EFICIAL LANGUAGE UNDER ARTICLE 1 5 - INDEPENDENT PERSONAL SERVICES OF INDIA-US DTAA APPLIES 4 SH ANNON WALAKER USA 2,2.2,589 CONSULTANCY FEES BEN EFICIAL LANGUAGE UNDER ARTICLE 1 5 - INDEPENDENT PERSONAL SERVICES OF INDIA-US DTAA APPLIES 5 KPMG LJP USA 57,39,775 PROFESSIONAL FEES FOR DU DILIGENCE NOT FTS AS 'MA<.E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES 6 MAIBACH USA 10,54,440 CONSULLANCY FEES NOT FTS AS 'MA - .E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 10 14. THE CO-ORDINATE BENCH WHILE CONSIDERING AN IDENTICA L ISSUE HAS HELD AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ISSUE RAISED BY THE REVENUE IS REGARDING DELETI ON OF DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(I) OF THE ACT OF RS.1,64,42,023/- TOWARDS NON-DEDUCTION OF TDS ON CLINICAL AND ANALYT ICAL CHARGES PAID TO PARTIES OUTSIDE INDIA WITHOUT DEDUCTION OF TAX U/S 195 OF T HE ACT. WE OBSERVE THAT THE ASSESSEE INCURRED CERTAIN EXPENDITURE TOWARDS CLINI CAL AND ANALYTICAL STUDY EXPENSES AT RS.1,54,55,000/- PAID THROUGH FOREIGN A GENTS TO PARTIES BASED AT USA AND CANADA. WE FURTHER OBSERVE THAT THE ISSUE AS TO WHETHER TAX WAS DEDUCTIBLE ON SUCH PAYMENTS U/S 195 OF THE ACT OR N OT HAS ALREADY BEEN DEALT 7 BIO STUDY SOLUTIONS USA 85,481 CONSULLANCY FEES NOT FTS AS 'MA - E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES 8 GAIA TECH INC. USA 2,02,726 PROFESSIONAL FEES NOT FTS AS 'MA<;E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES 9 MERCER US INC. USA 7,54,631 CONSULTING FEES FOR DUE DILIGENCE NOT FTS AS 'MA;E AVAILABLE' EXCEPTION UNDER ARTICLE 12 OF INDIA- USA DTAA APPLIES 10 ART HUMAN DIRECCIONANDO S.C. MEXICO 3,72,465 CONSULLANCY FEES FOR SERVICES RENDERED IN MEXICO PAYMENT NOT SUBJECT TO TAX U/S. 9(T)(VII) OF L.T. ACT AS FALLS WITHIN THE EXCEPTION UNDER CLAUSE (B) TO SEC. 9(1)(VII) 11 KPMG CARDENAS DOSAL MEXICO 2,05,645 PROFESSIONAL FEES PAYMENT NOT SUBJECT TO TAX U/S. 9(1)(VII) OF L.T. ACT AS FALLS WITHIN THE EXCEPTION UNDER CLAUSE (B) TO SEC. 9(1)(VII) 12 PEPPER HAMILTON LLP USA 10,93,248/- PROFESSIONAL FEES BENEFICIAL LANGUAGE UNDER ARTICLE- 15-INDEPENDENT PERSONAL SERVICES OF INDIA US DTAA APPLIES 13 LC-MS PHARMACEUTICAL DEVELOPMENT INC. CANADA 84,964/- WORKHSOP REGISTRATION CHARGES PAYMENT IS IN THE NATURE OF BUSINESS PROFITS AND SINCE NON-RESIDENT DOES NOT HAVE PE IN INDIA, NO LIABILITY TO DEDUCT TDS 14 SATYAM RATHOD INDIA 44,280 REIMBURSEMENT OF TRAINING WORKSHOP FEES MADE TO EMPLOYEES PAYMENT MADE TO ITS EMPLOYEE IS IN THE NATURE OF REIMBURSEMENT EXPENSES ACTUALLY INCURRED BY THE EMPLOYEE AND THERE IS NO ELEMENT OF INCOME INVOLVED IN THE SAME. TOTAL 1,26,261 ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 11 WITH BY THE CO-ORDINATE BENCH IN ITA NO. 3106/AHD/2 011 IN ASSESSEES OWN CASE FOR THE VERY SAME ASSESSMENT YEAR WHEN THE REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF LD. CIT(A) DELETING T HE DEMAND RAISED BY THE ASSESSING OFFICER IN THE ORDER PASSED BY THE ASSESS ING OFFICER U/S 201(1) AND 201(1A) R.W.S. 195 OF THE ACT. WE OBSERVE THAT TH E CO-ORDINATE BENCH DISMISSED THE REVENUES APPEAL AND CONFIRMED THE FINDINGS OF THE LD. CIT(A) BY OBSERVING AS FOLLOWS:- 5. I HAVE GONE THROUGH THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE. THE GROUND OF APPEAL AGAINST DEMAND RAISE D U/S.201(L) REQUIRES CONSIDERATION OF THE FOLLOWING 3 ISSUES: (A) WHETHER THE PAYMENTS MADE TO THE NON RESIDENTS ARE INCOME DEEMED TO ACCRUE OR ARISE IN INDIA UNDER THE PROVISIONS OF SECTION 9(2)(VII) AS BEING 'FEES FOR TECHNICAL SERVICES'. (B) WHETHER THE INC OME EVEN IF DEEMED TO ACCRUE OR ARISE IN INDIA UNDE R SECTION 9(2)(VII) IS OF THE NATURE WHICH IS EXEMPT FROM TAXATION IN INDIA UNDER THE DTA AGREEMENTS WITH THE USA AND CANADA RE SPECTIVELY. (C) WHETHER THE TAX HAS TO BE DEDUCTED U/S.195 EVEN WHE N THE IN COME IN THE HAND OF NON - RESIDENT IS NOT TAXABLE. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSES SEE HAS MADE PAYMENTS TO CONCERNS TO (I) B.A. RESEARCH INTERNATIONAL (USA), (II) ALLIED RESEARCH INTERNATIONAL INC. (CANADA) AND (III) MDS PHARMA SE RVICES INC. (USA), WHO ARE RESIDENTS OF USA AND CANADA FOR PROVIDING ANALYTICA L SERVICES AND TESTING CHARGES. THE NON-RESIDENT COMPANIES HAD NO PE IN IN DIA. THESE SERVICES WERE UNDISPUTEDLY PROVIDED OUTSIDE INDIA, BUT WERE UTILI ZED FOR EARNING INCOME FROM SOURCE IN INDIA WHICH IS MANUFACTURING OF DRUGS IN INDIA AND SUBSEQUENT SALES. NOW, COMING TO THE FIRST ISSUE, I.E. WHETHER THE PA YMENTS MADE TO THE NON RESIDENTS ARE INCOME DEEMED TO ACCRUE OR ARISE IN I NDIA UNDER THE PROVISIONS OF SECTION 9(2)(VII) AS BEING 'FEES FOR TECHNICAL S ERVICES'. THE SERVICES ARE DEFINITELY OF THE NATURE OF TECHNICAL SERVICES AND AS THE SERVICES ARE UTILIZED FOR EARNING INCOME FROM SOURCE IN INDIA, THESE ARE NOT EXEMPTED U/S.9(2)(VII)(B). THE APPELLANT HAS PLEADED THAT EVEN AFTER THE INTRO DUCTION OF THE EXPLANATION TO SEC. 9(2) INSERTED BY THE FINANCE ACT 2007 W.E.F . 1.6.1976, THE RATIO OF THE SUPREME COURT DECISION IN THE CASE OF 'ISHIKAWAJIMA -HARIMA HEAVY INDUSTRIES LTD. V. DIT, 158 TAXMAN 259 (SC)' IS APPLICABLE. TH E APPELLANT HAD PLACED RELIANCE ON THE DECISION OF 'JINDAL THERMAL POWER C OMPANY ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 12 LIMITED V. DOT[2009] 225 CTR 220', WHEREIN IT HAS B EEN CLEARLY HELD 'THAT THE CRITERIA OF RENDERING SERVICE IN INDIA AND THE UTIL IZATION OF SERVICE IN INDIA LAID DOWN BY THE SUPREME COURT IN ISHIKAWAJIMA'S CASE (S UPRA) TO ATTRACT TAX LIABILITY U/S. 9(L)(VII) REMAINS UNTOUCHED AND UNAF FECTED BY EXPLANATION TO SEC. 9(2). IT IS SEEN THAT THE APPELLANT HAS NOT NOTED THE FAC T THAT THE EXPLANATION TO SECTION 9 HAS BEEN AGAIN SUBSTITUTED BY THE FINANCE ACT, 2010 WITH RETROSPECTIVE EFFECT FROM 1/6/1976. NOW, THE INCOME IS TO BE INCLUDED IN THE TOTAL INCOME OF THE NON-RESIDENT, WHETHER OR NOT TH E NON-RESIDENT HAS RENDERED SERVICES IN INDIA. THE DECISION IN THE CAS E OF 'JINDAL THERMAL POWER COMPANY LIMITED V. DOT[2009] 225 CTR 220', ON THE I SSUE THEREFORE IS NO LONGER GOOD LAW. AFTER THE AMENDMENT WITH RETROSPEC TIVE EFFECT, THE PAYMENTS MADE BY THE APPELLANT ARE DEFINITELY FALLI NG UNDER THE DEFINITION OF FEES FOR TECHNICAL SERVICES' AND THE INCOME IS DEEM ED TO ACCRUE OR ARISE IN INDIA UNDER THE PROVISIONS OF SECTION 9(2)(VII). THE NEXT ISSUE TO BE DECIDED IS WHETHER THE INCOME WHICH HAS BEEN DECIDED TO BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER SECTION 9(2)(VII) IS OF THE NATURE WHICH IS EXEMPT FROM TAXATION IN INDIA UNDER THE DT A AGREEMENTS WITH THE USA AND CANADA RESPECTIVELY. AS THERE IS NO PE IN I NDIA IT WOULD HAVE TO BE SEEN WHETHER, IN WHICH COUNTRY AND HOW THE 'FEES FO R TECHNICAL SERVICES' ARE TAXABLE AS PER THE DTA AGREEMENTS. THE APPELLANT'S CONTENTION IS THAT ARTICLE 12(4)(B) OF THE DTAA BETWEEN INDIA AND USA/CANADA I S NOT APPLICABLE SINCE THE NON-RESIDENT PARTIES DID NOT 'MAKE AVAILABLE' A NY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES. IN THIS C ASE THE CONCERNS IN USA AND CANADA WERE CONDUCTING TESTS ON THE DRUGS WHICH WER E ALREADY RESEARCHED AND AFTER ANALYZING THE DRUGS ON THE REQUIRED PARAM ETERS FINAL REPORTS WERE SUBMITTED TO THE ASSESSEE. I HAVE PERUSED THE SUBMI SSIONS MADE BY THE APPELLANT AS WELL AS THE ORDER PASSED BY THE AO. ON PERUSAL OF THE DECISIONS CITED BY THE APPELLANT IT CAN BE CONCLUDED THAT SER VICE, WHICH IS TECHNICAL IN NATURE CAN BE SAID TO BE 'FEES FOR INCLUDED SERVICE S' ONLY WHEN IT 'MAKE AVAILABLE' TECHNICAL KNOWLEDGE OR SKILLS TO THE RECI PIENT OF SERVICES IE ONLY WHEN RECIPIENT OF SERVICES CAN APPLY THE SAME ON HI S OWN. IN THIS CONNECTION OBSERVATIONS MADE BY THE AUTHORITY FOR ADVANCE RULI NG (AAR) AS LAID DOWN IN THE CASE OF ANAPHARM INC. (2008) 305 JTR 394 SQUARE LY APPLIES TO THE FACTS OF THE APPELLANT'S CASE, SINCE IT RELATED TO RENDERING OF BIO-ANALYTICAL SERVICES BY THE NON-RESIDENT APPLICANT AND UNDER THE FRAMEWORK OF THE SAME LANGUAGE OF ARTICLE 12(4)(B) OF THE CANADA-INDIA DTAA, WHICH IS PARI-MATERIA WITH THE U.S.- INDIA DTAA AS WELL: 'PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TEST OF RENDERING SERVIC ES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. IN THE PRESENT CASE, THE ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 13 APPLICANT RENDERS BIO-ANALYTICAL SERVICES WHICH, NO DOUBT, ARE VERY SOPHISTICATED IN NATURE, BUT THE APPLICANT DOES NOT REVEAL TO ITS CLIENTS AS TO HOW IT CONDUCTS THOSE TESTS OR THE INPUTS THAT HAVE GONE INTO IT, SO AS TO ENABLE THEM TO CARRY OUT THOSE TESTS THEMSELVES IN FUTURE. A BROAD DESCRIPTION OR INDICATION OF THE TYPE OF TEST CARRIED OUT TO RE ACH THIS CONCLUSION DOES NOT ENABLE THE APPLICANT'S CLIENT TO DERIVE REQUISITE K NOWLEDGE TO CONDUCT THE TESTS OR TO DEVELOP THE TECHNIQUE BY ITSELF.' THEREFORE, THE SERVICES PROVIDED TO THE APPELLANT B Y THE NON-RESIDENT PARTIES OF USA AND CANADA DID NOT FALL WITHIN THE PURVIEW OF ' INCLUDED SERVICES' UNDER ARTICLE 12(4)(B) AND HENCE THERE WAS NO LIABILITY O N THE APPELLANT TO DEDUCT TDS U/S. 195 OF THE I.T. ACT, WHILE MAKING PAYMENT FOR SUCH BIO-ANALYTICAL SERVICES RENDERED TO IT. FURTHER THE RATIO MUMBAI ITAT DECISION IN THE CASE OF WOCKHARDT LTD. V. ACIT (2010) 10 TAXMANN.COM 208 (MUM.), ALSO SQUARELY APPLIES TO THE FACTS OF THE APPELLANT'S CASE. THE SAME VIEW HAS BEEN FOLLOWED IN VARIOUS DECISION S INCLUDING DECISION OF MUMBAI SPECIAL BENCH IN THE CASE OF MAHINDRA & MAHI NDRA LIMITED (313 UR 263). IN VIEW OF THE PROVISIONS OF ARTICLE 12 OF DT AA READ WITH ABOVE REFERRED JUDICIAL PRECEDENTS, I AM INCLINED TO AGREE WITH TH E SUBMISSIONS THAT SERVICES CANNOT BE CATEGORISED AS 'FEES FOR INCLUDED SERVICE S' UNDER THE DTA AGREEMENTS WITH USA AND CANADA AND THEREFORE ARE NO T TAXABLE IN INDIA AS THE MORE FAVOURABLE DTA A PROVISIONS ARE TO BE APPL IED. THEREFORE, IT IS HELD THAT THE INCOME OF THE NON-RESIDENT CONCERN IN THE FACTS AND CIRCUMSTANCES OF THE CASE ARE NOT TAXABLE IN INDIA. THE NEXT ISSUE TO BE DECIDED IS WHETHER THE TAX HAS TO BE DEDUCTED U/S. 195 EVEN WHEN THE INCOME IN THE HAND OF NON-RESIDENT IS NOT TAXABLE. AS THE REMITTANCE MADE IS NOT CHARGEABLE TO TAX IN INDIA, I AM OF THE VIEW THAT, IN THE GIVEN CASE PROVISIONS OF SECTION 195 ARE ALSO NOT A PPLICABLE. THE HON'BLE SUPREME COURT HAS DECIDED THE VERY ISSU E IN GE TECHNOLOGY CENTRE P. LTD.327 ITR 456. IT HAS HELD THAT U/S. S 195 PAYER IS BOUND TO DEDUCT TAX ONLY IF THE SUM PAYABLE IS ASSESSABLE TO TAX IN INDIA. FURTHER, AS PROVISIONS OF SECTION 195 OF THE ACT ARE NOT APPLICABLE THERE IS NO QUESTION OF RECOVERY OF TAX IN ACCORDANCE WITH PROVISIONS OF SECTION 201 OF THE ACT. RELIANCE PLACED BY THE AO ON THE DECISION OF TRANSMISSION CORPORATION OF INDIA 239 ITR 587 IS MISPLACED. THEREFORE, THE APPELLANT SUCCEEDS ON THE ISSUE OF CHARGEABILITY OF TAX UNDER THE PROVISIONS OF SEC. 201(L). 6. NEXT GROUND IS AGAINST THE CHARGING OF INTEREST U/S. 201(1A). THIS GROUND IS CONSEQUENTIAL TO THE RAISING OF DEMAND U/S. 201(1) AND IS DECIDED ACCORDINGLY.' ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 14 4.1 FROM THE ABOVE, IT IS EVIDENT THAT THE LD. CIT (A) HAVE GIVEN A FINDING ON FACT THAT THE SERVICE WHICH IS TECHNICAL IN NATURE CAN BE SAID TO BE 'FEES FOR INCLUDED SERVICES' ONLY WHEN IT HAS 'MADE AVAILABLE' T ECHNICAL KNOWLEDGE OR SKILLS TO THE RECIPIENT OF SERVICES, I.E. RECIPIENT OF SERVICES CAN APPLY THE SAME ON HIS OWN. WE ARE IN FULL AGREEMENT OF THE ABOVE V IEW OF THE LD. CIT (A). IN THE PRESENT CASE, THE ASSESSEE HAD SENT SAMPLES TO THE EXPERTS OUTSIDE INDIA AND THOSE EXPERTS SUBMITTED THEIR REPORT. THERE IS NOTH ING ON RECORD SUGGESTING THAT THE SERVICES RENDERED TO THE ASSESSEE WERE MAD E AVAILABLE TO THE ASSESSEE AND ALSO THE ASSESSEE WAS ABLE TO APPLY TH E SAME OF HIS OWN. IN THE ABSENCE OF THE SAME, SUCH SERVICE WOULD NOT FALSE W ITHIN THE AMBIT OF THE INCLUDED SERVICE IN THE LIGHT OF DECISION OF THE AU THORITY FOR ADVANCE RULINGS (INCOME-TAX), NEW DELHI IN THE CASE OF ANAPHARM INC ., INRE (SUPRA), THE DECISION OF THE COORDINATE BENCH IN THE CASE OF WOC KHARDT LTD. V. ACIT (SUPRA) AND THE DECISION OF HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF DE BERS INDIA MINERALS (P.) LTD. (SUPRA). THE REVENUE HAS N OT PLACED ANY MATERIAL ON RECORD TO REBUT THE FINDINGS OF THE LD. CIT (A) THA T THE SERVICES WERE ACTUALLY MADE AVAILABLE TO THE ASSESSEE AND WOULD BE TAXABLE . UNDER THESE FACTS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDING S OF THE LD. CIT (A), SAME IS HEREBY UPHELD. THUS, GROUND RAISED BY THE REVENUE I S REJECTED. 15. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECIS ION OF THE CO-ORDINATE BENCH (SUPRA), ARE OF THE VIEW THAT ASSESSEE WAS NO T REQUIRED TO DEDUCT TDS ON THE EXPENSES RELATING TO CLINICAL AND ANALYTICAL ST UDY EXPENSES INCURRED DURING THE YEAR AND THEREFORE, NO DISALLOWANCE WAS CALLED FOR UNDER SECTION 40(A)(I) OF THE ACT. 15. AS REGARDS, THE REQUEST OF THE LD. D.R. FOR SETTIN G ASIDE THE ISSUE FOR RE- VERIFICATION IN THE LIGHT OF ARTICLE 12/15 OF THE I NDIA-USA DTAA, WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE LD. D.R. A S THE ASSESSEE HAD FURNISHED THE DETAILS BEFORE THE ASSESSING OFFICER EXPLAINING WHY THE IMPUGNED PAYMENTS ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOU RCE AS THE FIRST APPELLATE AUTHORITY AFTER VERIFICATION WAS CONVINCED WITH THE NON APPLICABILITY OF TDS PROVISION AND AS THE CO-ORDINATE BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, RESPECTFULLY FOLL OWING THE SAME, WE DO NOT ITA NO. 2170 /AHD/2015 . A.Y. 2011-12 15 FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF T HE LD.CIT(A). GROUND NO. 2 IS ALSO DISMISSED. 16. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 11- 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACC OUNTANT MEMBER AHMEDABAD: DATED 11/01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD