The ITO, (Intl. Taxation)), Ahmedabad V. Cadila Health Care Ltd., Ahmedabad

ITA 2765/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9266 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 10-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 27-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIGAR M PATEL
• Keywords: Business income; Double taxation relief; Advance ruling
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD I BENCH BEFORE: R. P. TOLANI , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO (INTERNATIONAL TAXATION), 210, 2 ND FLOOR, NAVJEEVAN TRUST BUILDING, B/H GUJARAT VIDYAPITH, ASHRAM ROAD, AHMEDABAD (APPELLANT) VS CADILA HEALTH CARE LTD. ZYDUS TOWER, OPP: ISKON TEMPLE, SATELLITE CROSS ROAD, AHMEDABAD P AN: A ACCB4535A (RESPONDENT) REVENUE BY : S H RI DILEEP KUMAR , D . R. ASSESSEE BY: S H RI JIGAR M. PATEL , A.R. DATE OF HEARING : 10 - 01 - 2 017 DATE OF PRONOUNCEMENT : 06 - 02 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2008 - 09 , AR IS ES FROM ORDER OF THE CIT(A) , GANDHINAGAR DATED 10 - 09 - 2013 IN APPEAL NO. CIT(A) /GNR/0 4 /INTL. TAXN./2011 - 12 , IN PROCEEDINGS UNDER SEC TION 201(1) & 201(1A) RW S 195 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2765 / A HD/20 13 A SSE SSMENT YEAR 2008 - 09 I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I) THE ID. CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW AS ENVISAGED IN ARTICLE 12(4)(B ) OF INDO - CANADA AND INDO - US TREATY WERE NOT MADE AVAILABLE TO THE ASSESSEE COMPANY BY THE NON - RESIDENT IN SPITE OF SUBSTANTIAL EVIDENCES TO THE CONTRARY. II) THE ID CIT(A) ERRED ON FACTS AND IN LAW IN HOLDING THAT THE PAYMENTS MADE TO LINKLATES LLP, BELG IUM AND PRICEWATERHOUSE COOPERS, BELGIUM WERE NOT IN THE NATURE OF FEE FOR TECHNICAL SERVICES. THE LD. CIT(A) ALSO ERRED ON FACTS AND IN LAW IN HOLDING THAT THESE SERVICES DID NOT CONSTITUTE FEE FOR TECHNICAL SERVICES UNDER INDO - BELGIUM DTAA. III) THEREF ORE THE ORDER OF THE LD. CIT(A) DESERVES TO BE DELETED AND THAT OF THE AO RESTORED. 3. IN THIS CASE , THE ASSESSING OFFICER ON VERIFICATION OF REMITTANCES MADE DURING THE YEAR BY THE ASSESSEE FOUND THAT THE FOLLOWING REMITTANCES TOWARDS TECHNICAL CON SULTANCY AND PROFESSIONAL SERVICES WERE MADE WITHOUT WITHHOLDING TAX IN TERMS OF SECTION 195 OF THE INCOME TAX ACT: - SR. NO. NAME OF THE PAYEE AMOUNT OF REMITTANCE DATE OF REMITTANCE NATURE OF REMITTANCE 1 B. A. RESEARCH INTERNATION AL L P, USA 20,48,570 13,34,008 20,71,912 AUG., 2007 SEPT.,2007 SEPT.,2007 FEES FOR BIOANALYSIS OF SAMPLES FOR CLINICAL TRIALS. 2 B. A. RESEARCH COMPANY, CANADA 19,90,912 AUG., 2007 FEES FOR BIOANALYSIS OF SAMPLES FOR CLINICAL TRIALS. I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 3 3 LINK LATTERS L LP, BRUSSELS 13,32,323 OCT., 2007 PROFESSIONAL FEES 4 PRICE WATER HOUSE COOPERS ASESOD C NEGOCIES, BELGIUM 60,06,188 NOV., 2007 PROFESSIONAL FEES THE ASSESSING OFFICER HAD PASSED ORDER UNDER SECTION 201(1)(1) AND 201( 1A) R.W.S. 195 DATED 28/03/2012 STATING THAT PAYMENTS MADE BY THE ASSESSEE T O B.A RESEARCH INTERNATIONAL L .P USA, B.A. RESEARCH COMPANY CANADA, LINKLATERS LLP, BRUSSELS AND PRICEWATERHOUSE COOPERS, BELGIUM WERE IN THE NATURE OF FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF SECTION 9 (1)(VII) OF THE ACT. THE ASSESSING OFFICER OBSERVED T HAT THE PAYMENT MADE TO THE FOREIGN PARTIES WERE TAXABLE IN INDIA WITHIN THE LANGUAGE OF THE DTAA WITH USA AND CANADA AS THE SERVICES WERE M ADE AVAILABLE IN THE FORM OF REPORT ON ANALYTIC AL STUDY AS PER THE AGREEMENTS. HE FURTHER STATED THAT THE SERVICES PROVIDED BY THE BELGIAN PARTIES WERE FEES FOR TECHNICAL SERVICES AS PER AR TICLE 12(3)(B) OF THE BELGIAN DT AA. T HE REFORE, THE ASSESSING OFFIC ER CONCLUDED THAT ASSESSEE WAS LIABLE TO PAY TAX U/S. 201(1) AFTER GROSSING UP U/S. 195A AS THE ENTIRE AMOUNT HAD BEEN REMITTED WITHOUT TAX BEING DEDUCTED AT SOURCE. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED APPEAR BEFOR E I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 4 THE LD. CIT(A). THE LD. CIT(A) HELD THAT THAT THE SERVICES PROVIDED TO THE ASSESSEE BY THE ABOVE STATED NON - RESIDENT PARTIES DID NOT FALL WITHIN THE PURVIEW OF INCLUDED SERVICES/TECHNICAL SERVICES AND HENCE THERE WAS NO LIABILITY ON THE ASSESSEE TO DEDU CT TDS U/S. 195 . THE DECISION OF THE LD.CIT(A) IS REPRODUCED AS UNDER: - 6. I HAVE GONE THROUGH THE ORDER OF THE AO AND SUBMISSIONS OF THE APPELLANT. THE ISSUE TO BE DECIDED IS WHETHER THE INCOME IS EXEMPT FROM TAXATION IN INDIA UNDER THE DTAAS WITH USA, CANADA AND BELGIUM. IT IS AN UNDISPUTED FACT THAT NONE OF THE NON - RESIDENT PARTIES HAVE ANY PE IN INDIA. THEREFORE, IT WOULD HAVE TO BE EXAMINED WHETHER THE S ERVICES PROVIDED BY THEM ARE TAXABLE AS 'FEES FOR TECHNICAL SERVICES' UNDER THE RESPECTIVE DTAAS. WITH REFERENCE TO THE PAYMENTS MADE BY THE APPELLANT TO B.A. RESEARCH INTERNATIONAL LP, USA AND B.A. RESEARCH COMPANY, CANADA, THE AR HAS CONTENDED THAT ARTICLE 12(4)(B) OF THE DTAAS WITH USA AND CANADA IS NOT APPLICABLE SINCE THE NON - RESIDENT PAR TIES DID NOT 'MAKE AVAILABLE' ANY TECHNICAL KNOWLEDGE, SKILL, EXPERIENCE, KNOW - HOW OR PROCESS. IN THE FACTS OF THIS CASE, THE USA AND CANADIAN PARTY WERE CONDUCTING TESTS ON THE DRUGS AND REPORTS WERE SUBMITTED TO THE APPELLANT. ON PERUSAL OF THE SUBMISSIO NS OF THE AO AND THE APPELLANT AND THE DECISIONS RELIED THEREUPON, IT CAN BE CONCLUDED THAT SERVICES, ALTHOUGH TECHNICAL IN NATURE, CAN BE SAID TO BE 'FEES FOR INCLUDED SERVICES' ONLY WHEN THEY 'MAKE AVAILABLE' TECHNICAL KNOWLEDGE OR SKILL TO THE RECIPIENT OF SERVICE OR THE RECIPIENT CAN APPLY THE SAME ON HIS OWN. IN THIS CONNECTION, THE OBSERVATIONS MADE IN THE DECISION OF THE HYD. TRIBUNAL AS LAID DOWN IN THE CASE OF DR. REDDY'S LABORATORIES LTD. 35 TAXMANN.COM 339 SQUARELY APPLIES TO THE FACTS OF THE APP ELLANT'S CASE, SINCE IT RELATES TO RENDERING OF BIO - ANALYTICAL SERVICES BY THE NON - RESIDENT PARTY AND UNDER THE FRAMEWORK OF THE SAME LANGUAGE OF ARTICLE 12(4)(B) OF THE INDIA - USA AND INDIA - CANADA DTAAS: 'IN THIS CASE, AS RIGHTLY CONSIDERED BY THE LEARNED CIT(A), THE ASSESSEE WAS CONDUCTING CLINICAL TRIALS THROUGH THE CROS IN USA TO COMPLY WITH THE REGULATIONS THEREIN AND THE CROS WHO ARE EXPERTS IN THIS FIELD WERE ONLY CONDUCTING STUDIES AND I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 5 SUBMITTING THE REPORTS IN RELATION THERETO. THEY ARE NEITHER TRA NSFER OF TECHNICAL PLAN OR TECHNICAL DESIGN NOR MAKING AVAILABLE OF TECHNICAL KNOWLEDGE, EXPERIENCE OR KNOW - HOW BY THE CROS TO THE ASSESSEE COMPANY. IN FACT, THE ASSESSEE COMPANY DID NOT GET ANY BENEFIT OUT OF THE SAID SERVICES IN USA AND ASSESSEE WAS ONLY GETTING A REPORT IN RESPECT OF FIELD STUDY ON ITS BEHALF, WHICH WOULD HELP IT IN GETTING REGISTERED WITH THE REGULATORY AUTHORITY. SINCE THERE IS NO MAKING AVAILABLE OF TECHNICAL SKILL, KNOWLEDGE OR EXPERTISE OR PLANS OR DESIGNS IN THE PRESENT CASE, THE AMOUNTS PAID BY THE ASSESSEE DO NOT FALL UNDER ARTICLE 12, BUT COME WITHIN THE PURVIEW OF ARTICLE 7 OF THE DTAA. THEREFORE, THE AMOUNTS PAID ARE TO BE 'CONSIDERED AS BUSINESS RECEIPTS OF THE SAID CROS AND SINCE THEY DO N OT HAVE ANY PE IN INDIA ON WHICH ASPECT THERE IS NO DISPUTE, THERE IS NO NEED TO DEDUCT TAX AT SOURCE. SIMILAR ISSUE WAS ANALYSED AND CONSIDERED BY THE AAR IN THE CASE OF ANAPHARM INC. (SUPRA), WHICH IS ONE OF THE RECIPIENTS IN THE ASSESSEE'S CASE ALSO.' THEREFORE, THE SERVICES PROVIDED TO THE APPELLANT BY THE NON - RESIDENT PARTIES DID NOT FALL WITHIN THE PURVIEW OF 'INCLUDED SERVICES' / 'TECHNICAL SERVICES' UNDER ARTICLE 12(4)(B) AND HENCE THERE WAS NO LIABILITY ON THE APPELLANT TO DEDUCT TDS U/S. 195, WHILE MAKING PAYMENT FOR S UCH BIO ANALYTICAL SERVICES RENDERED TO IT. MOREOVER, THE RATIO OF THE AUTHORITY FOR ADVANCE RULING (AAR) AS LAID DOWN IN THE CASE OF ANAPHARM INC. 305 ITR 394 AND THE RATIO OF THE MUMBAI ITAT IN THE CASE OF WOCKHARDT LTD. 10 TAXMANN.COM 208 (MUM.), AS RE LIED UPON BY THE APPELLANT, ALSO SQUARELY APPLIES TO THE FACTS OF ITS CASE. IN RELATION TO THE PAYMENTS MADE TO LINKLATERS LLP, BRUSSELS AND PRICEWATERHOUSECOOPERS BELGIUM, THE APPELLANT HAS CONTENDED THAT IT WAS ENTITLED TO THE BENEFIT OF THE 'MOST FAVOU RED NATION' (MFN) CLAUSE OF THE DTAA WITH BELGIUM. I HAVE CONSIDERED THE APPELLANT'S SUBMISSIONS AND THE RELEVANT JUDICIAL PRONOUNCEMENTS GIVEN BY 'THE APPELLANT IN SUPPORT OF THE SAME. AS PER THE SAID MFN CLAUSE, SINCE THE SCOPE OF FEES FOR TECHNICAL SERV ICES UNDER THE INDIA - CANADA DTAA AND THE INDIA - USA DTAA IS MORE RESTRICTED THAN THAT UNDER I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 6 THE INDIA - BELGIUM DTAA, THE LANGUAGE OF ARTICLE 12 OF THE AFORESAID TWO DTAAS SHALL APPLY TO THE DTAA BETWEEN INDIA AND BELGIUM. ACCORDINGLY, THE SERVICES PROVIDED B Y THE TWO BELGIAN PARTIES CANNOT NOT BE CONSIDERED 'TECHNICAL SERVICES,' IN AS MUCH AS THERE WAS NO AVAILABLE' OF TECHNOLOGY BY THE SAID TWO NON - RESIDENT PARTIES. IN VIEW OF THE S AME, I AM INCLINED TO AGREE WITH THE APPELLA NT THAT NO TDS LIABILITY ARISES U /S. 195 IN RESPECT OF THE P AYMENTS MADE TO LINKLATERS LLP, BRUSSELS AND PRICEWATERHOUSECOOPERS, BELGIUM. THE APPELLANT HAS ALSO RELIED ON THE APPELLATE ORDER DATED 02/09/2011 IN THE CASE OF ONE OF THE APPELLANT'S GROUP COMPANIES, B.A. RESEARCH INDIA LTD., WHEREIN MY PREDECESSOR HAD OCCASION TO DECIDE AN IDENTICAL ISSUE, AS IN THE CASE OF THE APPELLANT, IN FAVOUR OF THE ASSESSEE. HAVING GONE THROUGH THE SAID APPELLATE ORDER, I AM ALSO INCLINED TO FOLLOW THE SAME. IN VIEW OF THE PROVISIONS OF 'FEES FOR TECHN ICAL SERVICES' OF THE DTAAS WITH USA, CANADA AND BELGIUM, AS LOGICALLY INTERPRETED BY THE ABOVE REFERRED JUDICIAL PRECEDENTS, THE RATIO OF WHICH CAN BE SQUARELY APPLIED ON THE FACTS OF THE APPELLANT'S CASE, I AM INCLINED TO AGREE WITH THE SUBMISSIONS OF TH E APPELLANT THAT THE SERVICES PROVIDED TO THE APPELLANT BY THE NON - RESIDENT PARTIES, DID NOT FALL WITHIN THE PURVIEW OF 'TECHNICAL SERVICES' UNDER THE SAID ARTICLES. THEREFORE, THERE WAS NO LIABILITY ON THE APPELLANT TO DEDUCT TDS U/S. 195 OF THE IT. ACT A ND ACCORDINGLY, THE APPELLANT COULD NOT BE HELD LIABLE TO PAY TAX AS AN 'ASSESSEE IN DEFAULT' U/S. 201(1). IT IS PERTINENT TO NOTE THAT *HE AO, HAS IN HIS ORDER U/S. 201(1), HELD THE ABOVE PAYMENT TO BE ALSO TAXABLE WITHIN THE MEANING OF SEC. 9(1)(VII) OF THE IT. ACT. HOWEVER, AS PER THE PROVISIONS OF SECTION 90(2), WHERE THERE IS A DTAA BETWEEN INDIA AND ANY COUNTRY OUTSIDE INDIA, THE MORE FAVOURABLE OF THE TWO PROVISIONS, VIZ., UNDER THE DTAA OR UNDER THE IT. ACT, WHICH ARE IN FAVOUR OF THE ASSESSEE, AR E TO BE APPLIED. IN VIEW OF THE SAME, EVEN IF THE PAYMENT TO THE NON - RESIDENT IS HELD TO BE TAXABLE U/S. 9(1)(VII), BY VIRTUE OF THE OVERRIDING PROVISIONS OF SEC. 90(2), THE APPELLANT DESERVES TO SUCCEED IN RESPECT OF THE DEMAND RAISED U/S. 201(1). THEREFO RE, THE GROUND OF APPEAL ON THE : ISSUE OF CHARGEABILITY OF TAX UNDER THE PROVISIONS OF SEC. 201(1) IS DECIDED IN FAVOUR OF THE APPELLANT. I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 7 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER O F THE ASSESSING OFFICER AND CONTENDED THAT THE CIT(A) IS NOT CORRECT IN ALLOWING THE RELIEF TO THE ASSESSEE. ON THE OTHER HAND, LD. COUNSEL SUPPORTED THE ORDER OF THE CIT(A) AND AL S O SUBMITTED PAPER BOOK CONTAINING JUDICIAL PRONOUNCEMENTS AND THE ORDER OF CO - ORDINATE BENCH OF ITAT, AHMEDABAD IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2010 - 2011 DECIDED IN ITS FAVOUR. 5. WE HAVE HEARD BOTH THE SIDES AND PERU SED THE MATERIAL ON RECORD. REGARDING PAYMENT MADE BY THE ASSESSEE TO BA RESEARCH INTERNATI ONAL LP, USA AND TOWARDS BIO AN ALYTICAL SERVICES WAS CANADA TOWARDS BIO - ANALYTICAL SERVICES , T HE ASSESSEE SUBMITTED THAT BOTH THE RENDERING OF SERVICES AS WELL AS UTILIZATION OF SERVICES W ERE TAKEN PLACE OUTSIDE INDIA AND F URTHER, IT HAD NOT MADE AVAILA BLE TECHNICAL KNOWLEDGE . FURTHER , WE FIND THAT THE CO - ORDINATE BENCH OF ITAT, AHMEDABAD IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2010 - 11 IN ITA NO. 486/AHD/2016 ORDER DATED 03 /01/2017 DECIDED THE SIMILAR ISSUE IN FAVOR OF THE ASSESSEE STATING THAT THE SERVI CES PROVIDED BY NON - RESIDENT DID NOT INVOLVE ANY TRANSFER OF TECHNOLOGY. THE DECISION OF THE CO - ORDINATE BENCH IS REPRODUCED AS UNDER: - 8. WE FIND THAT THE COMMON THREAD IN ALL THESE TAX TREATIES IS THE REQUIREMENT OF 'MAKE AVAILABLE' CLAUSE. A S LEARNED COUNSEL RIGHTLY PUTS IT, ITS NOT SIMPLY THE RENDITION OF A TECHNICAL SERVICE WHICH IS SUFFICIENT TO INVOKE THE TAXABILITY OF TECHNICAL SERVICES UNDER THE MAKE AVAILABLE CLAUSE. ADDITIONALLY, THERE HAS TO BE A TRANSFER OF TECHNOLOGY IN THE SENSE T HAT THE USER OF SERVICE SHOULD BE ENABLED TO DO THE SAME THING NEXT TIME WITHOUT RECOURSE TO THE SERVICE PROVIDER. THE SERVICES PROVIDED BY NON RESIDENTS DID NOT INVOLVE ANY I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 8 TRANSFER OF TECHNOLOGY. IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT THE SERVICES WERE SUCH THAT THE RECIPIENT OF SERVICE WAS ENABLED TO PERFORM THESE SERVICES ON ITS OWN WITHOUT ANY FURTHER RECOURSE TO THE SERVICE PROVIDER. IT IS IN THIS CONTEXT THAT WE HAVE TO EXAMINE THE SCOPE OF EXPRESSION 'MAKE AVAILABLE'. 9. AS FOR THE C ONNOTATIONS OF MAKE AVAILABLE CLAUSE IN THE TREATY, THIS ISSUE IS NO LONGER RES INTEGRA, THERE ARE AT LEAST TWO NON - JURISDICTIONAL HIGH COURT DECISIONS, NAMELY HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS GUY C ARPENTER & CO LTD ([(2012) 346 I TR 504 (DEL)] AND HONBLE KAMATAKA HIGH COURT IN THE OF CIT VS DE BEERS INDIA PVT LTD [(2012) 346 ITR 467 (KAR)] IN FAVOUR OF THE ASSESSEE, AND THERE IS NO CONTRARY DECISION BY HONBLE JURISDICTIONAL HIGH COURT OR BY HONBLE SUPREME COURT. IN DE BEERS CASE (SUPRA), THEIR LORDSHIPS POSED THE QUESTION, AS TO ''WHAT IS MEANING OF MAKE AVAILABLE', TO THEMSELVES, AND PROCEEDED TO DEAL WITH IT AS FOLLOWS: THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NATURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICA L KNOWLEDGE, KNOW - HOW THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW - HOW ON HIS OWN IN FUTURE WITHOUT THE A ID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL?, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE GONE INTO IT. THE KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN D EPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE TH AT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANING O F PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE TO THE TECHNOLOGY I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 9 AVAILABLE. IN OTHER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TEST OF RENDERING SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. 10. AS WE HAV E NOTED EARLIER, IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE, I.E. RECIPIENT OF SERVICES, WAS ENABLED TO USE THESE SERVICES IN FUTURE WITHOUT RECOURSE TO THE SERVICE PROVIDERS. THE TESTS LAID DOWN BY HON'BLE COURT WERE CLEARLY NOT SA TISFIED. THERE MERE FACT THAT THERE WERE CERTAIN TECHNICAL INPUTS OR THAT THE ASSESSEE IMMENSELY BENEFITED FROM THESE SERVICES, EVEN RESULTING IN VAL UE ADDITION TO THE EMPLOYEES OF THE ASSESSEE, IS WHOLLY IRRELEVANT. THE EXPRESSION 'MAKE AVAILABLE' HAS A S PECIFIC MEANING IN THE CONTEXT OF THE TAX TREATIES AND THERE IS, THUS, NO NEED TO ADOPT THE DAY TO DAY MEANING OF THIS EXPRESSION, AS HAS BEEN DONE BY THE ASSESSING OFFICER. WE ALSO FIND THAT THE ISSUE REGARDING TAXABILITY OF THESE SERVICES IS ALSO COVERED , IN FAVOUR OF THE ASSESSEE, BY THE ORDER DATED 30 TH NOVEMBER 2015 PASSED BY A COORDINATE BENCH. IN VIEW OF THESE DISCUSSIONS, AND AS WE CONCUR WITH THE WELL REASONED FINDINGS OF THE LEARNED CIT(A), WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT( A) AND DECLINE TO INTERFERE IN THE MATTER ON THIS COUNT AS W ELL. THE ORDER OF THE C IT(A) STANDS CONFIRMED. 6. WE NOTICED THAT NON - RESIDENT PARTIES HAVE NO PE IN INDIA. WE FIND THAT ARTICLE 12(4)(B) OF THE DTAAS WITH USA AND CANADA IS NOT APPLICABLE SINC E THE NON - RESIDENT PARTIES DID NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, AND THE SERVICES RENDERED TO THE ASSESSEE BY THE ABOVE FOREIGN PARTIES HAS NOT TRANSMITTED ANY TECHNICAL KNOWLEDGE. WE NOTICED THAT MERE PROVISION OF BIO - AVAILABILITY SERVICES CA NNOT BE SAID TO RESULT IN A TRANSFER OF TECHNOLOGY AS THE ASSESSEE HAS NOT DERIVED ENDURING BENEFITS TO UTILIZE THIS KNOWLEDGE ON HIS OWN IN FURTHER. REGARDING REMITTANCE TO LINKALTERS LLP, BELGIUM AND P RICE WATER H OUSE COOPER, BELGIUM, WE OBSERVED THAT SERVICES REND ERED BY THE NON - RESIDENT WERE FOR THE PURPOSE OF DUE I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 10 DILIGENCE IN CONNECTION WITH THE PROPOSED ACQUISITION OUTSIDE INDIA. THE SERVICES WERE RENDERED OUTSIDE INDIA AND UTILIZED OUTSIDE INDIA. WE FIND THAT THE ASSESSING OFFICER FAILED TO PROVE THAT THE BELGIUM NON - RESIDENT PARTIES HAVE MADE AVAILABLE ANY TECHNICAL KNOWLEDGE OR KNOW - HOW TO THE ASSESSEE. THE ASSESSING OFFICER HAS NOT ACCEPTED ASSESSEE S SUBMISSION AND STATED REMITTANCE TO THE PROFESSIONAL FIRM/COMPANY WERE CHARGEABLE FOR TAX DED UCTION AS TECHNICAL CONSULTANCY SERVICES A S PER SECTION 9(I)(VII) OF THE ACT AS WELL AS ARTICLE 12 OF THE TAX TREATY WITH BELGIUM. WE NOTICED THAT THE ASSESSEE HAS CONTENDED THAT IT WAS ENTITLED TO THE BENEFIT OF THE MOST FAVOURED NATION (MFN) CLAUSE OF T HE D T AA WITH BELGIUM. WE ALSO NOTICED THAT THE SERVICES PROVIDED BY TWO BELGIUM PARTIES CANNOT BE CONSIDERED AS TECHNICAL SERVICES AS THERE WAS NO MAKING AVAILABLE OF TECHNOLOGY BY THE SAID TWO NON - RESIDENT PARTIES. WE HAVE ALSO CONSIDERED THE FIND INGS O F THE LD. CIT(A) THAT BECAUSE OF THE MFN CLAUSE , THE SCOPE OF FEES FOR TECHNICAL SERVICES UNDER THE INDIA - CANADA DTAA AND THE INDIA - USA DTAA WAS M ORE RESTRICTED THAN THAT UNDER INDIA - BELGIUM DTAA, THEREFORE, THE LANGUAGE OF ARTICLE 12 OF THE AFORESAID TWO TREATIES SHALL APPLY TO THE DTAA BETWEEN INDIA AND BELGIUM. IN VIEW OF THE ABOVE STATED FACTS AND FINDINGS, WE JUSTIFY THE FINDINGS OF THE LD. CIT(A) THAT THE SERVICES PROVIDED TO THE ASSESSEE BY THE ABOVE STATED NON - RESIDENT PARTIES DID NOT FALL WITHIN T HE PURVIEW OF INCLUDED SERVICES/TECHNICAL SERVICES AND HENCE THERE WAS NO LIABILITY ON THE ASSESSEE TO DEDUCT TDS U/S. 195 . IN VIEW OF THE ABOVE FACTS AND FINDINGS, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD.CIT(A), THEREFORE ,WE U PHOLD THE SAME. I.T.A NO. 2765 /AHD/2 0 13 A.Y. 2008 - 2009 PAGE NO ITO (INTERNATIONAL TAXATION) VS. CADILA HEALTH CARE LTD. 11 7. IN THE RESULT , THE APPEAL OF THE REVENUE AS PER GROUND NO.1 TO 3 IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 06 - 02 - 201 7 SD/ - SD/ - ( R. P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 06 /02 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,