The DCIT, Circle-1(1)(2), Ahmedabad V. Bio Tech Vision Care Pvt. Ltd., Ahmedabad

ITA 3154/AHD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8423 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 28-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Double taxation relief; Permanent establishment; Advance ruling; Question of law; Commercial expediency
• Section: 143(3)

Judgement Text

ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 1 OF 21 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 1388,2766 AND 3154/AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 DEPUTY COMMISSIONER OF INCOME TAX OSD RANGE 1, AHMEDABAD ...........APPE LLANT VS BIO TECH VISION CARE PVT LTD .......RES PONDENT 401, SARTHAK COMPLEX OPP RAJPATH CLUB, SG HIGHWAY AHMEDABAD 380 015 [PAN: AABCB3639E] CO NOS. 208 AND 328 /AHD/2014 ARISING OUT OF ITA NOS. 1388 AND 3154/AHD/2014 ASSESSMENT YEAR 2009-10 AND 2011-12 BIO TECH VISION CARE PVT LTD ...CROSS OB JECTOR 401, SARTHAK COMPLEX OPP RAJPATH CLUB, SG HIGHWAY AHMEDABAD 380 015 [PAN: AABCB3639E] VS DEPUTY COMMISSIONER OF INCOME TAX OSD RANGE 1, AHMEDABAD .......RESPONDE NT APPEARANCES BY MUDIT NAGPAL, FOR THE REVENUE- APPELLANT BANDISH SOPARKAR, FOR THE ASSESSEE- RESPONDENT AND CROSS OBJECTOR DATES OF HEARING : FEBRUARY 9, 2018 DATE OF PRONOUNCEMENT : APRIL 18, 2018 O R D E R PER PRAMOD KUMAR, AM: 1. THESE THREE APPEALS AND TWO CROSS OBJECTIONS PER TAIN TO THE SAME ASSESSEE, INVOLVE SOME COMMON ISSUES AND WERE HEARD TOGETHER. AS A MA TTER OF CONVENIENCE, THEREFORE, ALL THE THREE APPEALS AND TWO CROSS OBJECTIONS ARE BEING DI SPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 2 OF 21 2. WE WILL FIRST TAKE UP THE ASSESSMENT YEAR 2009-1 0. 3. THE APPEAL FILED BY THE ASSESSING OFFICER, AS AL SO CROSS OBJECTION FILED BY THE ASSESSEE, CALL INTO QUESTION CORRECTNESS OF THE ORD ER DATED 12 TH MARCH 2014 PASSED BY THE LEARNED CIT(A), IN THE MATTER OF ASSESSMENT UNDER S ECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2009-10. 4. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE IS A GGRIEVED THAT THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS 3,10,195 ON THE GRO UND THAT THESE EXPENSES PERTAINED TO A PERIOD PRIOR TO THE RELEVANT PREVIOUS YEAR. 5. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. DURIN G THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS CLAIMED THE DEDUCTION FOR EXPENSES PERTAINING TO A PERIOD PRIOR TO THE RELEVA NT PREVIOUS YEAR. THE ASSESSEES EXPLANATION, JUSTIFYING DEDUCTIBILITY OF THESE EXPE NSES, THAT THE LIABILITY TO PAY FOR THESE EXPENSES CRYSTALLIZED DURING THE (RELEVANT PREVIOUS) YEAR WAS REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THESE EXPENSES ARE TO B E DISALLOWED SINCE THEY DONOT PERTAIN TO THE CURRENT YEAR AND THE MATCHING PRINCIPLE DOES NO T GET FULFILLED AND THAT HERE THE EXPENDITURE INCURRED IS NOT MATCHING WITH THE YEAR OF EARNING REVENUE. HE ALSO OBSERVED THAT THE ACCOUNTS ARE GENERALLY FINALIZED AFTER SU FFICIENTLY LONG PERIOD OF TIME SO AS TO MAKE ADEQUATE PROVISION FOR EXPENSES. AS FOR THE INCOME OF THE PRIOR YEAR ALSO BEING OFFERED TO TAX, THE ASSESSING OFFICER OBSERVED THAT AS THE AS SESSEE HAS ITSELF INCLUDED THE INCOME OF THE EARLIER YEAR IN THE TAXABLE INCOME, NO DISPUTE REMA INS ABOUT THE SAME. IT WAS IN THIS BACKDROP THAT THE DISALLOWANCE OF RS 3,10,195 WAS M ADE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE MAINLY ON THE GROUND THAT THE PRIOR PERIOD INCOME BOOKED BY THE ASSESSEE WAS MUCH MORE THAN PRIOR PERIOD EXPENSES, AND THAT, IN THE LIGHT OF THIS TRIBUNALS DECISION IN THE CASE OF ADVANI EXPORTS LTD VS DCIT, WHAT CAN AT BEST BE DISALLOWED IS THE PRIOR PERIOD EXPENSES, AS REDUCED BY THE PRIOR PERIOD EXPENSES. THE DISALLOWANCE WAS THUS DELETED. THE AS SESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEAL BEFORE US . 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 7. LEARNED COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO HONBLE JURISDICTIONAL HIGH COURTS JUDGMENT DATED 20 TH JULY 2016, IN THE CASE OF PCIT VS ADANI ENTERPRISE S LTD (TAX APPEAL NO. 566 OF 2016) WHEREIN THEIR LORDSHIP S HAVE UPHELD THE DECISION AND REASONING OF THE TRIBUNAL, AS RELIED UPON BY THE CI T(A), AND HAVE ALSO OBSERVED THAT EVEN THE REVENUE DOES NOT DISPUTE THAT THE COMPANY WOULD BE TAXED AT THE SAME RATE IN THE PRESENT ASSESSMENT YEAR AS IN THE EARLIER YEAR. WHEN THEIR LORDSHIPS ARE OF SUCH AN OPINION AND TAKING A BROAD VIEW OF THE MATTER IN THIS WHOLLY TA X NEUTRAL SITUATION, IT WAS FUTILE FOR THE ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 3 OF 21 ASSESSING OFFICER TO TAKE A PEDANTIC VIEW OF THE MA TTER AS HE DID. WHETHER THE AMOUNT IS DEDUCTIBLE IN YEAR X OR YEAR Y, AS LONG AS DELAYED CLAIM IS NOT MALAFIDE, NOTHING MUCH REALLY TURNS ON THE SAME, THAT APART, EVEN ON THE FIRST PR INCIPLES AND UNDER THE MERCANTILE METHOD OF ACCOUNTING, THE EXPENSES ARE DEDUCTIBLE IN THE YEAR IN WHICH THE LIABILITY TO PAY CRYSTALLIZES- PARTICULARLY WHEN EXPENSES ARE OF VERY SMALL AMOUNT S HAVING REGARD TO THE SCALE OF OPERATIONS AND IN VIEW OF THE ACCOUNTING CONCEPT OF MATERIALIT Y. LEARNED DEPARTMENTAL REPRESENTATIVE VERY FAIRLY ACCEPTS THAT IT IS NEITHER A CASE OF DO UBLE DEDUCTION OF SAME EXPENSES NOR THERE IS AN ISSUE ABOUT BONAFIDES OF THESE EXPENSES WHICH WE RE ADMITTEDLY NOT CLAIMED IN ANY OF THE EARLIER YEARS AS WELL. IN VIEW OF THESE DISCUSSIONS , AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT HYPER TECHNICAL AND PEDANTIC VIEW ADOPTED BY THE ASSESSING OFFICER HAS RIGHTLY BEEN REVERSED BY THE CIT(A). THE RELIEF GRANTED BY THE CIT(A) WAS, THEREFORE, QUITE JUSTIFIED. WE APPROVE THE SAM E AND DECLINE TO INTERFERE IN THE MATTER. 8. GROUND NO. 1 IS THUS DISMISSED. 9. IN GROUND NO. 2, THE ASSESSING OFFICER IS AGGRIE VED THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS 30,85,947 DESPITE THE FACT T HAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE RELATED PAYMENTS TO NON-RESIDENTS. IN A CONNECTED GROUND NO. 2 IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE GRIEVANCE OF T HE ASSESSEE IS THAT LEARNED CIT(A) ERRED IN UPHOLDING, TO THE EXTENT OF RS 4,09,927, DISALLOWAN CE UNDER SECTION 40(A)(I) IN RESPECT OF PAYMENTS TO NON-RESIDENTS. 10. THE RELEVANT MATERIAL FACTS ARE AS FOLLOWS. DUR ING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAS MADE PAYMENTS, AGGREGATING RS 34,95,874, TO VARIOUS NON-RESIDENTS BUT HAS NOT DEDUCTED ANY TAX AT SOURCE FROM THE SAME. THE EXPLANATION OF THE ASSESSEE, AS NOTED BY THE AS SESSING OFFICER, WAS THAT OUT OF THESE FOUR PAYMENTS, TWO PAYMENTS- NAMELY TO M E SHREIFF AND P AUL JENSER, WERE ON ACCOUNT OF SALARIES AND, IN TERMS OF THE RELATED TAX TREATY PROVISIONS, THESE PAYMENTS DID NOT HAVE ANY TAX LIABILITY IN INDIA. AS REGARDS THE PAYMENT MADE TO O&O MDC LT D UK, THE CASE OF THE ASSESSEE WAS THAT SINCE THE RECIPIENT DID NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, AND SINCE THESE PAYMENTS COULD NOT BE BROUGHT TO TAX IN INDIA, IN T HE ABSENCE OF THE PE, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT ANT TAX AT SOURCE. WITH THESE EX PLANATIONS, THE ASSESSEE URGED THE ASSESSING OFFICER NOT TO DISALLOW THESE EXPENSES UN DER SECTION 40(A)(I). THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE. THE PAYMENT MADE T O O&O WAS, ACCORDING TO THE AO, TAXABLE AS FEES FOR TECHNICAL SERVICES UNDER ARTI CLE 13 OF THE INDO UK DOUBLE TAXATION AVOIDANCE AGREEMENT, AND THAT THERE WAS NO EVIDENCE ON RECORD TO SUGGEST THAT M E SHREIFF AND PAUL JENSER WERE EMPLOYEES OF THE ASSESSEE. HE ALSO NOTED THAT THERE WAS ABSOLUTELY NO EXPLANATION WITH RESPECT TO PAYMENT MADE TO PHARMA ACTION. HE THUS DISALLOWED ENTIRE PAYMENTS OF RS 34,95,874 UNDER SECTION 40(A)(I). AG GRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). THE COPIES OF AGREEMENTS, EMPLOYMENT LETTERS AND INVOICES RAISED BY THE RECIPIENTS WERE DULY FURNISHED TO THE CIT(A) . WHILE CIT(A) AGREED THAT THE SERVICES ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 4 OF 21 RENDERED BY O&O MDC LTD ARE SIMPLY IN THE NATURE OF CONSULTANCY SERVICES, WHICH DONOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, SKILL OR KN OWHOW- AS IS THE CONDITION PRECEDENT FOR INVOKING TAXABILITY UNDER ARTICLE 13 OF INDO UK DTA A, THE CIT(A) DECLINED TO ADMIT EVIDENCES IN SUPPORT OF NON TAXABILITY OF PAYMENTS MADE TO PHARMA ACTION FRANCE. TO THAT EXTENT, I.E. RS 4,09,927, THE DISALLOWANCE WAS UPHE LD. AS REGARDS THE PAYMENTS FOR SALARIES TO M E SHREIFF AND PAUL JENSER, LEARNED CIT(A) ACCEPTE D THE CONTENTIONS OF THE ASSESSEE AND, HOLDING THAT THESE AMOUNTS WERE NOT TAXABLE IN INDI A ANYWAY, RELATED DISALLOWANCES UNDER SECTION 40(A)(I) WERE DELETED. NONE OF THE PARTIES IS SATISFIED. WHILE THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF OF RS 30,85,947 GRANTED BY THE CIT(A), THE ASSESSEE IS AGGRIEVED OF THE LEARNED CIT(A) UPHOLDING DISALLOWANCE TO THE EX TENT OF RS 4,09,927 ON A HYPER TECHNICAL GROUND REGARDING INADMISSIBILITY OF ADDITIONAL EVID ENCE FILED BEFORE THE CIT(A). BOTH THE PARTIES ARE IN APPEAL BEFORE US. 11. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 12. WE HAVE NOTED THAT THE ASSESSEE HAS DULY FURNIS HED REQUISITE DETAILS, ABOUT THE NATURE OF THESE PAYMENTS, BEFORE THE CIT(A), AND COPIES OF THESE DETAILS WERE ALSO FILED BEFORE US AT PAGES 90 TO 95 OF THE PAPER-BOOK AS WELL. AS REGARD S THE PAYMENT TO O&O, A UK BASED COMPANY, THERE IS NO DISPUTE THAT THE PAYMENTS ARE IN THE NATURE OF PAYMENTS FOR CONSULTANCY SERVICES. AS THE CONSULTANCY AGREEMENT STIPULATES, THE O&OS OBLIGATION IS TO PROVIDE TECHNICAL ADVICES ON PHONE/FAX/ EMAIL AS AND WHEN R EQUIRED AND TO PROVIDE FOR CONSULTANCY SERVICES IN THE SPECIFIED AREAS. AS TO THE QUESTIO N WHETHER CONSIDERATION FOR SUCH SERVICES CAN BE TAXED UNDER ARTICLE 13 OF INDO UK DTAA, WE F IND GUIDANCE FROM THE THIRD MEMBER DECISION OF THIS TRIBUNAL, IN THE CASE OF CESC LTD VS DCIT [(2003) 87 ITD TM 653 (KOL)] WHEREIN ONE OF US, I.E. THE ACCOUNTANT MEMBER, ARTI CULATING THE MAJORITY VIEWS, HAD OBSERVED AS FOLLOWS: 9. LET US FIRST TAKE A LOOK AT THE SCOPE OF EXPRESS ION FEES FOR TECHNICAL SERVICES SO FAR AS APPLICABLE INDIA UK DOUBLE TAXATION AVOIDANCE AG REEMENT IS CONCERNED. 10. ARTICLE 13(4) OF THE INDIA UK DTAA DEFINES 'FEE S FOR TECHNICAL SERVICES' AS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISIONS O F SERVICES OF TECHNICAL OR OTHER PERSONNEL) WHICH : ( A )ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGR APH 3( A ) OF THIS ARTICLE IS RECEIVED; OR ( B )ARE ANCILLARY AND SUBSIDIARY TO THE ENJOYMENT OF T HE PROPERTY FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3( B ) OF THE ARTICLE IS RECEIVED; OR ( C )MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SK ILL, KNOW-HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNI CAL PLAN OR TECHNICAL DESIGN. ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 5 OF 21 11. AS FAR AS SERVICES COVERED BY 13(4)( A ) AND ( B ) ARE CONCERNED, THE PROVISIONS ARE SELF EXPLANATORY AND THERE IS NO CONTROVERSY ABOUT SCOPE OF THESE TWO CATEGORIES. THE CONTROVERSY, HOWEVER, ARISES ABOUT THE SCOPE OF SER VICES COVERED BY 13(4)( C ) AND IN PARTICULAR BY THE SCOPE OF EXPRESSION MAKE AVAILAB LE USED THEREIN. WE MAY ALSO MENTION THAT, ACCORDING TO THE LEARNED COMMISSIONER , THE SERVICES RENDERED BY THE MEP ARE COVERED BY THE SCOPE OF ARTICLE 13(4)( C ) OF THE DTAA. 12. THE PROVISIONS OF ARTICLE 13(4)( C ) CLEARLY DEPART FROM THE NORMAL DEFINITION OF FEES FOR TECHNICAL SERVICES IN DTAAS THAT INDIA H AS ENTERED INTO WITH FOREIGN COUNTRIES WHICH IS SOMEWHAT ON THE LINES OF DEFINIT ION GIVEN IN EXPLANATION 2 TO SECTION 9(1)( VII ) OF THE INCOME TAX ACT. THE KEY DIFFERENCE, IN OUR CONSIDERED VIEW, IS THAT AS AGAINST REFERENCE TO RENDERING OF TECHNIC AL SERVICES IN THE STATUTE AND MOST OF THE DTAAS, THE STRESS HERE IS ON MAKING AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES ETC. THIS PARADIGM SHI FT IN THE DEFINITION OF TECHNICAL SERVICES IS NOTICED IN THE INDO USA DOUBLE TAXATIO N AVOIDANCE AGREEMENT DATED 12TH SEPTEMBER, 1989. THE PROVISIONS OF ARTICLE 13( 4)( C ) OF THE INDO UK DTAA ARE IN PARI MATERIA WITH THE DEFINITION OF FEES FOR INCLUDED SERVICES UNDER ARTICLE 12(4)( B ) OF INDO US DTAA WHICH IS AS FOLLOWS : '(4) FOR THE PURPOSES OF THIS ARTICLE, 'FEES FOR IN CLUDED SERVICES' MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISI ON OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) IF SUCH SERVICES. ****** ( B )MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SK ILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSF ER OF A TECHNICAL PLAN OR TECHNICAL DESIGN.' 13. IN THE PROTOCOL NOTE ATTACHED TO AND FORMING PA RT OF THE AFORESAID DTAA, GOVERNMENT OF INDIA HAS CONFIRMED THAT MEMORANDUM O F UNDERSTANDING BETWEEN THE INDIA AND USA WITH REGARD TO INTERPRETATION OF ARTI CLE 12 (ROYALTIES AND FEES FOR INCLUDED SERVICES) ALSO REPRESENTS THE VIEW OF THE INDIAN GOVERNMENT. THIS MEMORANDUM INTER ALIA PROVIDES AS FOLLOWS : 'PARAGRAPH 4( B ) OF ARTICLE 12 REFERS, TO TECHNICAL OR CONSULTANCY SERVICES THAT MAKE AVAILABLE TO THE PERSON ACQUIRING THE SERVICE TECHN ICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DE VELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN TO SUCH PERSON. (FOR THIS PURPOSE, THE PERSON ACQUIRING THE SERVICE SHALL BE DEEMED TO INCLUDE AN AGENT, NOMINEE, . . . OR TRANSFEREE OF SUCH PERSON.) THIS CATEGORY IS NARROW ER. . . BECAUSE IT EXCLUDES ANY SERVICE THAT DOES NOT MAKE TECHNOLOGY AVAILABLE TO THE PERSON ACQUIRING THE SERVICE. GENERALLY SPEAKING, TECHNOLOGY WILL BE CON SIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPL Y THE TECHNOLOGY. THE FACT THAT THE PROVISIONS OF THE SERVICE MAY REQUIRE TECHNICAL INPUT BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEANS THAT TECHNICAL KNOWLEDGE, SKILLS, ETC., ARE M ADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WIT HIN THE MEANING OF PARAGRAPH 4( B ).' 14. WE HAVE NO REASONS TO BELIEVE THAT GOVERNMENT O F INDIA HAD ANY OTHER VIEWS FOR IDENTICAL PROVISIONS IN INDIA UK DTAA. WHEN PROVISI ONS ARE IN PARI MATERIA, THERE ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 6 OF 21 CANNOT BE DIFFERENT MEANINGS ASSIGNED TO THE PROVIS IONS, UNLESS THERE IS ANYTHING REPUGNANT IN THE CONTEXT. WE FIND NOTHING TO SUPPOR T ANY DEVIATION FROM THE INTERPRETATION CANVASSED IN THE MEMORANDUM OF UNDER STANDING, ATTACHED TO AND FORMING PART OF INDO US DTAA, EXTRACTS FROM WHICH H AVE BEEN REPRODUCED ABOVE. AS STATED BY LORD MANSFIELD, 'WHERE THERE ARE DIFFEREN T STATUTES IN PARI MATERIA THOUGH MADE AT DIFFERENT TIMES, OR EVEN EXPIRED, AND NOT R EFERRING TO EACH OTHER, THEY SHALL BE TAKEN TOGETHER, AS ONE SYSTEM AND AS EXPLANATORY OF EACH OTHER'. R. V. LOXDALE 97 ER 394 AT PAGE 395. IN OUR CONSIDERED VIEW, PRINCIPLE OF INTERPRETATION OF STATUTES SHOULD ALSO GOVERN THE INTERPRETATION OF DTAAS, PARTICULAR LY WHEN THOSE DTAAS DEAL WITH THE SAME THING AND ARE IDENTICAL IN MATERIAL RESPEC TS. WE MAY ALSO REFER TO THE OBSERVATIONS OF GRIFFITH, CJ. IN THE CASE OF WEBB V. OUTRIM AC 81 PC, AT PAGE 89 THAT, 'WHEN A PARTICULAR FORM OF LEGISLATIVE ENACTMENT, W HICH HAS RECEIVED AUTHORITATIVE INTERPRETATION WHETHER BY JUDICIAL DECISION OR BY A LONG COURSE OF PRACTICE, IS ADOPTED IN FRAMING A LATER STATUTE, IT IS A SOUND RULE OF C ONSTRUCTION TO HOLD THAT THE WORDS SO ADOPTED BY THE LEGISLATURE TO BEAR THE MEANING WHIC H HAS BEEN SO PUT ON THEM.' A FORTIORARI , WHEN A PARTICULAR DTAA CLAUSE HAS RECEIVED AN AUT HORITATIVE INTERPRETATION, FROM AN AUTHORITY NO LESS THAN THE GOVERNMENT OF INDIA ITSELF, AND IDENTICAL CLAUSE IS ADOPTED IN FRAMING A LATER DTAA , IT IS TO BE HELD THAT THE CLAUSE SO ADOPTED IN THE LATER DTAA WILL ALSO NORMALLY HAVE T HE SAME MEANING AS ASSIGNED TO THAT CLAUSE. 15. WE, THEREFORE, FIND THAT IT IS A FAIRLY SETTLED POSITION THAT CONSIDERATION FOR RENDERING OF TECHNICAL SERVICES, AS IS THE THRUST O F EXPLANATION 2 TO SECTION 9(1)( VII ) OF THE ACT AND DEFINITION OF FEES FOR TECHNICAL SERVI CES AS ADOPTED IN MOST OF THE DTAAS THAT INDIA HAS ENTERED INTO WITH VARIOUS COUN TRIES, IS MATERIALLY DISTINCT FROM CONSIDERATION FOR TECHNICAL OR CONSULTANCY SERVICE S THAT MAKE AVAILABLE TO THE PERSON ACQUIRING THE SERVICE TECHNICAL KNOWLEDGE, EXPERIEN CE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TEC HNICAL PLAN OR TECHNICAL DESIGN TO SUCH PERSON AS IS THE EXPRESSION USED IN INDIA UK AND INDIA USA DTAAS. 16. WE MAY ALSO MENTION THAT THIS PARADIGM SHIFT IN DEFINITION OF THE FEES FOR TECHNICAL SERVICES, SO FAR AS ARTICLE 13(4)( C ) OF INDIA UK DTAA IS CONCERNED, IS A CONSCIOUS DEPARTURE FROM THE TRADITIONAL MODEL WHIC H REPRESENTED BROADLY BY THE DEFINITION OF TECHNICAL SERVICES AS GIVEN IN THE IN DIAN INCOME-TAX ACT. EVEN AFTER INDIA ENTERED INTO DTAA WITH UNITED STATES ON 12-9-1989, WHEREIN THIS DEPARTURE FROM TRADITIONAL DEFINITION WAS MADE FOR THE FIRST ( SIC ) ENTERED INTO SEVERAL DTAAS WHEREIN TRADITIONAL DEFINITION, ON THE LINES OF DEFINITION IN INDIAN INCOME-TAX ACT, 1961, CONTINUES TO FIND THE PLACE, SUCH AS IN INDIA AUSTR ALIA DTAA DATED 25-7-1991, INDIA BELGIUM DTAA DATED 26-4-1993, INDIA FRANCE DTAA DAT ED 29-9-1992, INDIA GERMANY DTAA AND INDIA ISRAEL DTAA DATED 29-1-1996. ON THE OTHER HAND, THERE ARE SEVERAL DTAAS WHEREIN THE NARROWER DEFINITION O F TECHNICAL SERVICES, AS IN THE CASE BEFORE US, HAS BEEN ADOPTED E.G., IN INDIA SWITZERLAND DTAA DATED 2-11-1994 AND, OF COURSE, INDIA UK DTAA DATED 25-1-1993. THE CHOICE OF NARROWER DEFINITION FOR THE EXPRESSION FEES FOR TECHNICAL SERVICES IN INDIA UK DTAA, THEREFORE, IS CLEARLY A CONSCIOUS DEPARTURE FROM, WHAT CAN BE TER MED AS, TRADITIONAL DEFINITION OF FEES FOR TECHNICAL SERVICES. IN THIS VIEW OF THE MATTER, WE GET NO ASSISTANCE FROM THE CONSTRUCTION THE EXPRESSION FEES FOR TECHNICAL SER VICES HAS RECEIVED, IN THE CONTEXT OF ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 7 OF 21 TRADITIONAL DEFINITION OF THAT EXPRESSION. THE QUES TION THEN ARISES AS TO WHAT IS THE PRECISE SCOPE OF DEFINITION OF TECHNICAL SERVICES R EFERRED TO IN ARTICLE 13(4)( C ) OF THE INDIA UK DTAA. 17. IN OUR CONSIDERED VIEW, IN ORDER TO BE COVERED BY THE PROVISIONS OF ARTICLE 13(4)( C ) OF THE INDIA UK DTAA, NOT ONLY THE SERVICES SHOUL D BE OF TECHNICAL IN NATURE BUT SUCH AS TO RESULT IN MAKING THE TECHNOLOGY AVAI LABLE TO THE PERSON RECEIVING THE TECHNICAL SERVICES. WE ALSO AGREE THAT MERELY BECAU SE THE PROVISION OF THE SERVICE MAY REQUIRE TECHNICAL INPUT BY THE PERSON PROVIDING THE SERVICE, IT CANNOT BE SAID THAT TECHNICAL KNOWLEDGE, SKILLS, ETC., ARE MADE AVAILAB LE TO THE PERSON PURCHASING THE SERVICE. AS TO WHAT ARE THE CONNOTATIONS OF MAKING THE TECHNOLOGY AVAILABLE TO THE RECIPIENT OF TECHNICAL SERVICES, AS IS APPROPRIATE LY SUMMED UP IN PROTOCOL TO INDO US DTAA, 'GENERALLY SPEAKING, TECHNOLOGY WILL BE CONSI DERED MADE AVAILABLE WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY TH E TECHNOLOGY.' WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS SO EXPRESSED IN THE PROTOC OL TO INDO USA DTAA WHICH, AS WE HAVE MENTIONED EARLIER, ALSO REPRESENTS VIEWS OF THE GOVERNMENT OF INDIA ON THIS SUBJECT. 18. IT TAKES US TO THE KEY QUESTION WHETHER, ON THE FACTS OF THE CASE BEFORE US, IT COULD BE SAID THAT PAYMENT TO MEP WAS IN CONSIDERATION FO R THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES WHICH 'MADE AVAILABLE TECHN ICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMEN T AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN.' 13. THE VIEWS SO EXPRESSED BY THE TRIBUNAL NOW HAVE THE APPROVAL OF AT LEAST TWO NON- JURISDICTIONAL HIGH COURT DECISIONS, NAMELY HON'BLE DELHI HIGH COURT IN THE CASE OF DIT V. GUY CARPENTER & CO LTD. [2012] 207 TAXMAN 121/ 20 T AXMANN.COM 807 AND HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. DE BEERS INDIA MINERALS (P.) LTD. [2012] 21 TAXMANN.COM 214, AND THERE IS NO CONTRARY DECISION BY HON'BLE JURISDICTIONAL HIGH COURT OR BY HON'BLE SUPREME COURT. WE, THEREFORE, HOLD THAT UNLESS THERE IS A TRANSFER OF TECHNOLOGY IN THE SENSE THAT RECIPIENT OF SERVICE IS ENABLED TO P ROVIDE THE SAME SERVICE ON HIS OWN, WITHOUT RECOURSE TO THE ORIGINAL SERVICE PROVIDER, THE 'MAK E AVAILABLE' CLAUSE IS NOT SATISFIED AND, ACCORDINGLY, THE CONSIDERATION FOR SUCH SERVICES CA NNOT BE TAXED UNDER ARTICLE 13 (4) OF INDO UK DTAA. 14. THE QUESTION THEN ARISES WHETHER RENDITION OF C ONSULTANCY SERVICES MAKES AVAILABLE ANY TECHNICAL KNOWLEDGE, SKILL, KNOW HOW SO AS THE RECIPIENT OF SERVICES CAN RENDER THE SAME SERVICES WITHOUT RECOURSE TO THE SERVICE PROVIDER. THE ANSWER IS CLEARLY IN NEGATIVE. MERELY BECAUSE CONSULTANCY SERVICES HAS TECHNICAL INPUTS, THESE SERVICES DONOT BECOME TECHNICAL SERVICES AND SIMPLY BECAUSE THE RECIPIENT OF A TECH NICAL CONSULTANCY SERVICES LEARNS SOMETHING WITH EACH CONSULTANCY, THERE IS NO TRANSF ER OF TECHNOLOGY IN THE SENSE THAT RECIPIENT OF SERVICE IS ENABLED TO PROVIDE THE SAME SERVICE W ITHOUT RECOURSE TO THE SERVICE PROVIDER. OUR ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 8 OF 21 CAREFUL PERUSAL OF THE CONSULTANCY SERVICES AGREEME NT DOES NOT HELP US FIND ANY PROVISION FOR TRANSFER OF TECHNOLOGY EITHER. IN VIEW OF THESE DIS CUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD THE RELIEF GRANTED BY THE CIT(A ) WITH RESPECT TO PAYMENTS MADE TO O&O, PARTICULARLY AS IT IS NOT EVEN REVENUES CASE THAT O&O HAD ANY PE IN INDIA. ON THIS POINT, THE CONCLUSIONS ARRIVED AT BY THE CIT(A) ARE CONFIRMED. 15. AS REGARDS THE PAYMENTS MADE TO M E SHREIFF, EG YPT, AND PAUL JENSER, PHILIPPINES, WE FIND THAT THE APPOINTMENT LETTERS ARE ON RECORD, TH AT THERE IS NO DISPUTE THAT THE SERVICES ARE RENDERED IN THE RELATED JURISDICTIONS, AND THAT, IN TERMS OF THE THEN APPLICABLE INDIA EGYPT DTAA (ARTICLE 16) AND INDIA PHILIPPINES DTAA (ARTI CLE 16), THE SERVICES SO RENDERED BY THESE GENTLEMEN DID NOT LEAD TO ANY TAX IMPLICATION S IN INDIA. WHEN THE INCOME EMBEDDED IN THE PAYMENTS DID NOT HAVE ANY TAX IMPLICATIONS IN I NDIA, THERE WAS NO QUESTION OF ANY TAX WITHHOLDINGS, AND, ACCORDINGLY, DISALLOWANCE UNDER SECTION 40(A)(I) COULD NOT HAVE COME INTO PLAY. WE, THEREFORE, UPHOLD THE RELIEF GRANTED BY T HE CIT(A) ON THIS POINT AS WELL. 16. AS FOR THE PAYMENT MADE TO PHARMA ACTION, WE FI ND THAT THE DETAILS PLACED ON RECORD ARE NOT REALLY SUFFICIENT TO FORM ANY OPINION ONE W AY OR THE OTHER. PRIMA FACIE THESE DETAILS SHOW THAT THE PAYMENT IS MADE TO A FRENCH RESIDENT FOR CONSULTANCY SERVICES BUT HAVING REGARD TO THE FACT THAT AL THAT THE ASSESSEE HAS FU RNISHED IS A COPY OF INVOICE WITHOUT ANY FURTHER DETAILS ON FACTS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION ON MERITS AFTER GIVING YET ANOTHER OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH THE LAW AND AFTER TAKING INTO ACCOUNT, ON MERITS, ALL SUCH MATERIAL THAT THE ASSESSEE IS ABLE TO FURN ISH. TO THIS EXTENT, THE MATTER STANDS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 17. GROUND NO. 2 IN REVENUES APPEAL IS THUS DISMIS SED, AND GROUND NO. 2 IN ASSESSEES CROSS OBJECTION IS THUS ALLOWED FOR STATISTICAL PUR POSES. 18. IN GROUND NO. 3, THE ASSESSING OFFICER IS AGGRI EVED THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE TO THE EX TENT OF RS 44.75 LAKHS DESPITE THE FACT THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES TO THE T UNE OF RS 56.28 LAKHS AND HAS ALSO GIVEN INTEREST FREE LOANS. IN A CONNECTED GRIEVANCE RAISE D BY THE ASSESSEE IN GROUND NO. 3 IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVED THAT THE CIT(A) HAS ERRED IN SUSTAINING THE INTEREST DISALLOWANCE TO THE EXTENT OF RS 4,18,139 (OUT OF R S 48,93,930) MADE BY THE ASSESSING OFFICER, EVEN THOUGH, AS AGAINST THE INTEREST FREE ADVANCE OF RS 4.08 CRORES, THE ASSESSEE HAD INTEREST FREE FUNDS AGGREGATING TO OVER RS 34 CRORE S. 19. IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT LAW ON THIS ISSUE IS VERY WELL SETTLED INASMUCH AS IN A CASE IN WHICH THE INTEREST FREE AD VANCES GRANTED BY THE ASSESSEE ARE LESS THAN INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE, THE PRESUMPTION TO BE NORMALLY DRAWN IS THAT NO PORTION OF INTEREST ON BORROWINGS COULD BE DISALLOW ED ON THE GROUND THAT THE ASSESSEE HAS ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 9 OF 21 GRANTED INTEREST FREE LOANS AND BORROWINGS, TO THAT EXTENT, HAVE BEEN DIVERTED. IN THE CASE OF CIT VS RAGHVIR SYNTHETICS LTD [(2013) 354 ITR 222 ( GUJ)], HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED AS FOLLOWS: 5. AS CAN BE NOTED FROM THE ORDER OF THE TRIBUNAL, THE ASSESSING OFFICER DISALLOWED THE INTEREST SOLELY ON THE GROUND THAT THE ASSESSEE HAD GIVEN INTEREST-FREE LOANS TO THE ASSOCIATE CONCERNS, VIZ., R. R. FAMILY TRUST AND SA GAR TEXTILE MILLS AND THIS DISALLOWANCE, IN APPEAL THE COMMISSIONER OF INCOME- TAX (APPEALS) DELETED BY HOLDING THAT THE AMOUNT ADVANCED TO BOTH R. R. FAMI LY TRUST AND SAGAR TEXTILES MILS WERE NOT GIVEN DURING THE YEAR UNDER CONSIDERATION, BUT THE SAME WAS GIVEN IN THE EARLIER YEARS. THE COMMISSIONER OF INCOME-TAX (APPE ALS) HAD ALSO TAKEN NOTE OF THE FACT THAT THERE WAS SUFFICIENT FUNDS AVAILABLE WITH THE ASSESSEE-RESPONDENT ON WHICH THERE WAS NO INTEREST LIABILITY THAT HAD BEEN INCUR RED. IN SUCH CIRCUMSTANCES, RELYING ON THE CASE OF TORRENT FINANCIERS (SUPRA), IT FOUND THAT THE DISALLOWANCE WAS NOT JUSTIFIABLE. 6. THE TRIBUNAL ON NOTING THESE DETAILS, IN TERMS H ELD THAT THERE WAS NOTHING CONTRARY THAT COULD BE BROUGHT ON RECORD BY THE DEPARTMENT. THE ASSESSEE'S EQUITY SHARE CAPITAL RS. 3.85 CORES AND RESERVE AND SURPLUS OF RS. 5.52 CRORES ALSO WERE NOTED BY THE TRIBUNAL. IT FOUND THAT THE INTEREST-FREE FUNDS AVA ILABLE WITH THE ASSESSEE WAS FAR GREATER THAN THE LOAN ADVANCED TO THE SISTER CONCER NS AND AS A COROLLARY TO THAT, IT CONCLUDED THAT THE BORROWED MONEY WAS NOT UTILIZED FOR THE PURPOSE OF ADVANCE TO THE SISTER CONCERNS, AS HAD BEEN NOTED BY THE ASSESSING OFFICER. WHAT HAD WEIGHED WITH THE TRIBUNAL IS THE FACT THAT THE ENTIRE INTEREST-F REE FUNDS INCLUDED OWNER'S OWN CAPITAL AND ACCUMULATED PROFITS AND OTHER INTEREST-FREE CRE DITS AND LOANS AND IF THE TOTAL INTEREST-FREE ADVANCES INCLUDING THE DEBIT BALANCE OF THE PARTNERS DID NOT EXCEED THE TOTAL INTEREST-FREE FUNDS AVAILABLE WITH THE ASSESS EE, INTEREST WAS NOT DISALLOWABLE MERELY ON ACCOUNT OF THE UTILIZATION OF THE FUNDS F OR NON-BUSINESS PURPOSES. 7. THUS, AS CAN BE SEEN THE TRIBUNAL ACTUALLY RELIE D ON THE FINDINGS GIVEN IN CASE OF TORRENT FINANCIERS (SUPRA) AND FURTHERMORE THERE WA S NOTHING CONTRARY THAT COULD BE BROUGHT ON RECORD BY THE DEPARTMENT FOR IT TO HOLD OTHERWISE. FACTUALLY, IT FOUND HUGE FUNDS WERE AVAILABLE WITHOUT ANY INTEREST LIABILITY WITH THE ASSESSEE AND THAT THERE WAS NO EVIDENCE TO HOLD THAT THE BORROWED MONEY WAS UTI LIZED FOR THE PURPOSE OF ADVANCE TO THE SISTER CONCERNS. ALL THESE ASPECTS CUMULATIV ELY LED THE TRIBUNAL TO HOLD THAT THE DISALLOWANCE MADE ONLY ON THE GROUND THAT ADVANCES WERE GIVEN OUT OF THE BORROWED FUNDS, HOLDING THE ASSESSEE INELIGIBLE FOR ALLOWANC E OF INTEREST BY THE ASSESSING OFFICER OF THE SUM OF RS. 18.66 LAKHS WAS NOT SUSTA INABLE. 8. THE TRIBUNAL HAS CORRECTLY APPROACHED THE ISSUE WHICH HAS BEEN PROPOSED IN THE PRESENT TAX APPEAL. WHEN THERE WAS NO EVIDENCE BROU GHT ON RECORD BY THE DEPARTMENT FOR THE TRIBUNAL TO HOLD OTHERWISE THAN WHAT HAS BE EN CONCLUDED BY WAY OF ANY MATERIAL, WE HOLD THAT THE ISSUE IS APPROPRIATELY C ONCLUDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 9. WE MAY REFER TO THE JUDGMENT OF THE APEX COURT A T THIS STAGE GIVEN IN CASE OF S. A. BUILDERS LTD. V. CIT [2007] 288 ITR 1/158 TAXMAN 74 (SC) WHERE THE QUESTION WAS ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 10 OF 21 WHETHER INTEREST ON FUNDS BORROWED BY THE ASSESSEE TO GIVE AN INTEREST-FREE LOAN TO SISTER CONCERN SHOULD BE ALLOWED AS DEDUCTION AND T HE APEX COURT RULED THUS (PAGES 7 AND 8) : 'WE HAVE CONSIDERED THE SUBMISSION OF THE RESPECTIV E PARTIES. THE QUESTION INVOLVED IN THIS CASE IS ONLY ABOUT THE ALLOWABILITY OF THE INTEREST ON BORROWED FUNDS AND, HENCE, WE ARE DEALING ONLY WITH THAT QUESTION. IN O UR OPINION, THE APPROACH OF THE HIGH COURT AS WELL AS THE AUTHORITIES BELOW ON THE AFORESAID QUESTION WAS NOT CORRECT. . . . IN OUR OPINION, THE HIGH COURT IN THE IMPUGNED JUDG MENT, AS WELL AS THE TRIBUNAL AND THE INCOME-TAX AUTHORITIES HAVE APPROACHED THE MATT ER FROM AN ERRONEOUS ANGLE. IN THE PRESENT CASE, THE ASSESSEE BORROWED THE FUND FROM T HE BANK AND LENT SOME OF IT TO ITS SISTER CONCERN (A SUBSIDIARY) ON INTEREST-FREE LOAN . THE TEST, IN OUR OPINION, IN SUCH A CASE IS REALLY WHETHER THIS WAS DONE AS A MEASURE O F COMMERCIAL EXPEDIENCY. . . THE EXPRESSION 'COMMERCIAL EXPEDIENCY' IS AN EXPRES SION OF WIDE IMPORT AND INCLUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FO R THE PURPOSE OF BUSINESS. THE EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LE GAL OBLIGATION, BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCUR RED ON GROUNDS OF COMMERCIAL EXPEDIENCY.. . . WE AGREE WITH THE VIEW TAKEN BY THE DELHI HIGH COUR T IN CIT V. DALMIA CEMENT (B.) LTD. [2002] 254 ITR 377 (DELHI), THAT ONCE IT IS ES TABLISHED THAT THERE WAS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSI NESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENU E CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINESSMAN OR IN TH E POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE ROLE TO DECIDE HOW MUCH IS REASONABL E EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. NO BUSINESSMAN CAN B E COMPELLED TO MAXIMIZE ITS PROFIT. THE INCOME-TAX AUTHORITIES MUST PUT THEMSEL VES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AU THORITIES MUST NOT LOOK AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUD ENT BUSINESSMAN. AS ALREADY STATED ABOVE, WE HAVE TO SEE THE TRANSFER OF THE BORROWED FUNDS TO A SISTER CONCERN FROM THE POINT OF VIEW OF COMMERCIAL EXPEDIENCY AND NOT FROM THE POINT OF VIEW WHETHER THE AMOUNT WAS ADVANCED FOR EARNING PROFITS.' 10. ACCORDINGLY, THE QUESTION IS ANSWERED IN FAVOUR OF THE ASSESSEE BY THE APEX COURT. IN THIS TAX APPEAL IT IS TO BE SPECIFIED HERE THAT CONSIDERING THE MATERIAL ON RECORD AND KEEPING IN VIEW SUBSTANTIAL INTEREST-FREE FUNDS AND BUSINESS EXPEDIENCY THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE TRIBUN AL HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. 11. THERE IS ABSOLUTELY NO PERVERSITY IN SUCH FINDI NGS. ON THE CONTRARY, THEY ARE CONFORMING TO THE WELL LAID DOWN GUIDING PRINCIPLE ON THE SUBJECT. IN THE PREMISE, THE QUESTION OF LAW NEEDS TO BE ANSWERED IN FAVOUR OF A SSESSEE AND AGAINST THE REVENUE. ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 11 OF 21 20. WE, THEREFORE, UPHOLD THE PLEA OF THE ASSESSEE IN PRINCIPLE AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITE D VERIFICATION TO THE EFFECT THAT INTEREST FREE LOANS GRANTED BY THE ASSESSEE ARE LESS THAN INTERES T FREE FUNDS AVAILABLE TO HIM OR NOT. IF THE FACTUAL ELEMENTS EMBEDDED IN THE PLEA OF THE ASSESS EE ARE INDEED CORRECT, ENTIRE DISALLOWANCE WILL HAVE TO BE DELETED. WE, THEREFORE, REMIT THE M ATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION, AS DIRECTED ABOVE, IN ACCORDANCE WITH THE LAW AND AFTER GIVING A FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE ON TH IS POINT. 21. GROUND NOS. 3 OF THE APPEAL BY THE ASSESSING OF FICER AND GROUND NO. 3 OF THE CROSS OBJECTION FILED BY THE ASSESSEE ARE THUS ALLOWED FO R STATISTICAL PURPOSES. 22. GROUND NO. 1 OF THE CROSS OBJECTION BY THE ASSE SSEE WAS NOT PRESSED, AND IS DISMISSED AS SUCH. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSIN G OFFICER, AS ALSO CROSS OBJECTION FILED BY THE ASSESSEE, FOR THE ASSESSMENT YEAR 2009-10 ARE T HUS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 24. WE NOW TAKE UP APPEAL OF THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2010-11. 25. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OF FICER IS AGGRIEVED OF THE CIT(A) DELETING THE DISALLOWANCE OF RS 1,38,757 ON EQUIPME NT NOT INCLUDED IN PARA 3 OF THE NEW APPENDIX I. 26. THE DISALLOWANCE OF DEPRECIATION @ 5% WAS MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @ 15% WHEREAS, GOING BY THE STAND OF THE ASSESSING OFFICER, THE ASSESSEE IS ELIGIBLE FOR DEP RECIATION @10% AS THE ASSETS ARE NOT COVERED BY THE SPECIFIC ITEMS SET OUT UNDER PLANT AND MACHINERY AND ARE IN THE NATURE OF OFFICE EQUIPMENT. THE SHORT CASE OF THE ASSESSEE, W HICH HAS BEEN ACCEPTED BY THE CIT(A), IS THAT FUNCTIONALITY TEST NEEDS TO BE APPLIED IN THIS CONTEXT AND WHEN EQUIPMENT IS RELATABLE TO PLANT AND MACHINERY, DEPRECIATION AT THE RATE ADMIS SIBLE FOR PLANT AND MACHINERY NEEDS TO BE APPLIED. IN COMING TO THIS CONCLUSION, LEARNED CITI (A) HAS FOLLOWED HONBLE BOMBAY HIGH COURTS JUDGMENT IN THE CASE OF CIT VS PARK DAVIS I NDIA LTD (214 ITR 587). THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED AND I S IN APPEAL BEFORE US. 27. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE ARE NOT INCLINED TO DISTURB WELL REASONED FINDINGS OF T HE LEARNED CIT(A). WE HAVE ALSO NOTED THAT THE AMOUNT INVOLVED IN THE APPEAL ON THIS ISSUE IS ALSO VERY SMALL. WE CONFIRM AND APPROVE THE STAND OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER . 28. GROUND NO. 1 IS THUS DISMISSED. ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 12 OF 21 29. IN GROUND NO. 2, THE ASSESSING OFFICER HAS RAIS ED GRIEVANCE AGAINST LEARNED CIT(A)S DELETING THE DISALLOWANCE OF RS 15.38 LAKHS UNDER S ECTION 40(A)(I) ON ACCOUNT OF NON DEDUCTION AT SOURCE FROM CERTAIN PAYMENTS MADE TO N ON-RESIDENT, NAMELY MOATAZ EL SHERIF, IN RESPECT OF HIS SALARIES. 30. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATE VER WE DECIDE FOR THE ASSESSMENT YEAR 2009-10 WILL APPLY MUTATIS MUTANDIS FOR THIS ASSESS MENT YEAR AS WELL, AS ALL THE RELEVANT MATERIAL FACTS ARE THE SAME. VIDE OUR DISCUSSIONS EARLIER IN THIS ORDER, DEALING WITH THE ASSESSMENT YEAR 2009-10, WE HAVE UPHELD SIMILAR REL IEF GRANTED BY THE CIT(A) FOR THE ASSESSMENT YEAR 2009-10. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER FOR THIS ASSESSMENT YEAR. FOLLOWING OUR ORDER FOR 2009-10, W E REJECT THE GRIEVANCE OF THE ASSESSING OFFICER AND CONFIRM THE RELIEF GRANTED BY THE CIT(A ) ON THIS POINT. 31. GROUND NO. 2 IS THUS DISMISSED. 32. IN GROUND NO. 3, THE ASSESSING OFFICER IS AGGRI EVED OF THE CIT(A) DELETING THE DISALLOWANCE OF RS 47.74 LAKHS ON ACCOUNT OF INTERE ST RELATABLE TO INTEREST FREE ADVANCES GRANTED BY THE ASSESSEE. 33. VIDE OUR ORDER FOR THE ASSESSMENT YEAR 2009-10 ON THIS ISSUE, WE HAVE REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR LIM ITED VERIFICATION AS TO WHETHER THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE ARE MORE THAN INTEREST FREE LOANS GRANTED BY THE ASSESSEE, AND, IF SO, THE DELETION OF DISALLOWANCE WILL STAND CONFIRMED FOR THIS SHORT REASON ALONE. THESE OBSERVATIONS WILL APPLY MUTATIS MUTANDIS FOR THIS A SSESSMENT YEAR AS WELL. 34. GROUND NO. 3 THUS STANDS ALLOWED FOR STATISTICA L PURPOSES. 35 IN GROUND NO. 4, THE ASSESSING OFFICER IS AGGRIE VED THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF R 12,81,593 ON ACCOUNT OF ADDIT IONAL DEPRECIATION EVEN THOUGH THE PRODUCT HAS NOT UNDERGONE ANY TRANSFORMATION AND NO NEW DISTINCTIVE ARTICLE HAS COME INTO EXISTENCE. 36. THE GRIEVANCE OF THE ASSESSING OFFICER IS ILL C ONCEIVED INASMUCH AS UNDISPUTEDLY WHAT THE ASSESSEE DOES IS THAT IT MANUFACTURE INTRA OCULAR LENSES OUT OF THE ACRYLIC SHEETS. THE OUTPUT AND INPUT ARE OF DIFFERENT USE, CHARACTER AN D TRADE DESCRIPTION. IN THE CASE OF INDIA CINE AGENCIES VS CIT (308 ITR 98), HONBLE SUPREME COURT HAS, INTER ALIA, OBSERVED AS FOLLOWS: 4. MANUFACTURE IMPLIES A CHANGE BUT EVERY CHANGE IS NOT MANUFACTURE, YET EVERY CHANGE OF AN ARTICLE IS THE RESULT OF TREATMENT, LA BOUR AND MANIPULATION. NATURALLY, ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 13 OF 21 MANUFACTURE IS THE END RESULT OF ONE OR MORE PROCES SES THROUGH WHICH THE ORIGINAL COMMODITIES ARE MADE TO PASS. THE NATURE AND EXTENT OF PROCESSING MAY VARY FROM ONE CLASS TO ANOTHER. THERE MAY BE SEVERAL STAGES O F PROCESSING, A DIFFERENT KIND OF PROCESSING AT EACH STAGE. WITH EACH PROCESS SUFFERE D, THE ORIGINAL COMMODITY EXPERIENCES A CHANGE. WHENEVER A COMMODITY UNDERGOE S A CHANGE AS A RESULT OF SOME OPERATION PERFORMED ON IT OR IN REGARD TO IT, SUCH OPERATION WOULD AMOUNT TO PROCESSING OF THE COMMODITY. BUT IT IS ONLY WHEN TH E CHANGE OR A SERIES OF CHANGES TAKES THE COMMODITY TO THE POINT WHERE COMMERCIALLY IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT INSTEAD IS RECOGNIZED AS A NEW AND DISTINCT ARTICLE THAT A MANUFACTURE CAN BE SAID TO TAKE PLACE. PROCESS IN M ANUFACTURE OR IN RELATION TO MANUFACTURE IMPLIES NOT ONLY THE PRODUCTION BUT ALS O VARIOUS STAGES THROUGH WHICH THE RAW MATERIAL IS SUBJECTED TO CHANGE BY DIFFERENT OP ERATIONS. IT IS THE CUMULATIVE EFFECT OF THE VARIOUS PROCESSES TO WHICH THE RAW MATERIAL IS SUBJECTED TO THAT THE MANUFACTURED PRODUCT EMERGES. THEREFORE, EACH STEP TOWARDS SUCH PRODUCTION WOULD BE A PROCESS IN RELATION TO THE MANUFACTURE. WHERE ANY PARTICULAR PROCESS IS SO INTEGRALLY CONNECTED WITH THE ULTIMATE PRODUCTION O F GOODS THAT BUT FOR THAT PROCESS PROCESSING OF GOODS WOULD BE IMPOSSIBLE OR COMMERCI ALLY INEXPEDIENT, THAT PROCESS IS ONE IN RELATION TO THE MANUFACTURE. (SEE COLLECTOR OF CENTRAL EXCISE V. RAJASTHAN STATE CHEMICAL WORKS [1991] 4 SCC 473). 5. 'MANUFACTURE' IS A TRANSFORMATION OF AN ARTICLE, WHICH IS COMMERCIALLY DIFFERENT FROM THE ONE, WHICH IS CONVERTED. THE ESSENCE OF MA NUFACTURE IS THE CHANGE OF ONE OBJECT TO ANOTHER FOR THE PURPOSE OF MAKING IT MARK ETABLE. THE ESSENTIAL POINT THUS IS THAT, IN MANUFACTURE SOMETHING IS BROUGHT INTO EXIS TENCE, WHICH IS DIFFERENT FROM THAT, WHICH ORIGINALLY EXISTED IN THE SENSE THAT THE THIN G PRODUCED IS BY ITSELF A COMMERCIALLY DIFFERENT COMMODITY WHEREAS IN THE CAS E OF PROCESSING IT IS NOT NECESSARY TO PRODUCE A COMMERCIALLY DIFFERENT ARTIC LE. (SEE SARASWATI SUGAR MILLS V. HARYANA STATE BOARD [1992] 1 SCC 418). 6. THE PREVALENT AND GENERALLY ACCEPTED TEST TO ASC ERTAIN THAT THERE IS 'MANUFACTURE' IS WHETHER THE CHANGE OR THE SERIES OF CHANGES BROUGHT ABOUT BY THE APPLICATION OF PROCESSES TAKE THE COMMODITY TO THE POINT WHERE, CO MMERCIALLY, IT CAN NO LONGER BE REGARDED AS THE ORIGINAL COMMODITY BUT IS, INSTEAD, RECOGNIZED AS A DISTINCT AND NEW ARTICLE THAT HAS EMERGED AS A RESULT OF THE PROCESS . THERE MIGHT BE BORDERLINE CASES WHERE EITHER CONCLUSION WITH EQUAL JUSTIFICATION CA N BE REACHED. INSISTENCE ON ANY SHARP OR INTRINSIC DISTINCTION BETWEEN 'PROCESSING AND MANUFACTURE', RESULTS IN AN OVERSIMPLIFICATION OF BOTH AND TENDS TO BLUR THEIR INTERDEPENDENCE. (SEE UJAGAR PRINTS V. UNION OF INDIA [1989] 3 SCC 488). 7. TO PUT IT DIFFERENTLY, THE TEST TO DETERMINE WHE THER A PARTICULAR ACTIVITY AMOUNTS TO 'MANUFACTURE' OR NOT IS: DOES A NEW AND DIFFERENT G OOD EMERGE HAVING DISTINCTIVE NAME, USE AND CHARACTER. THE MOMENT THERE IS TRANSF ORMATION INTO A NEW COMMODITY COMMERCIALLY KNOWN AS A DISTINCT AND SEPARATE COMMO DITY HAVING ITS OWN CHARACTER, USE AND NAME, WHETHER BE IT THE RESULT OF ONE PROCE SS OR SEVERAL PROCESSES 'MANUFACTURE' TAKES PLACE AND LIABILITY TO DUTY IS ATTRACTED. ETYMOLOGICALLY THE WORD 'MANUFACTURE' PROPERLY CONSTRUED WOULD DOUBTLESS CO VER THE TRANSFORMATION. IT IS THE TRANSFORMATION OF A MATTER INTO SOMETHING ELSE AND THAT SOMETHING ELSE IS A QUESTION OF ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 14 OF 21 DEGREE, WHETHER THAT SOMETHING ELSE IS A DIFFERENT COMMERCIAL COMMODITY HAVING ITS DISTINCT CHARACTER, USE AND NAME AND COMMERCIALLY K NOWN AS SUCH FROM THAT POINT OF VIEW, IS A QUESTION DEPENDING UPON THE FACTS AND CI RCUMSTANCES OF THE CASE. (SEE EMPIRE INDUSTRIES LTD. V. UNION OF INDIA [1985] 3 S CC 314). 8. THE AFORESAID ASPECTS WERE HIGHLIGHTED IN KORES INDIA LTD. V. CCE [2005] 1 SCC 385 IN THE BACKGROUND OF CENTRAL EXCISE ACT, 1944 ( IN SHORT THE 'EXCISE ACT') AND CENTRAL EXCISE RULES, 1944 (IN SHORT THE 'EXCISE RU LES') AND CENTRAL EXCISE TARIFF ACT, 1985 (IN SHORT THE 'TARIFF ACT'). THE STAND OF THE REVENUE WAS THAT IT AMOUNTED TO 'MANUFACTURE', CONTRARY TO WHAT HAS BEEN PLEADED IN THESE CASES. THIS COURT HELD THAT IT AMOUNTED TO MANUFACTURE. 9. THE MATTER CAN BE LOOKED AT FROM ANOTHER ANGLE. IN CIT V. SESA GOA LTD. [2004] 271 ITR 331, THIS COURT CONSIDERED THE MEANING OF W ORD 'PRODUCTION'. THE ISSUE IN THAT CASE WAS WHETHER THE EXTRACTION AND PROCESSING OF IRON ORE AMOUNTED TO MANUFACTURE OR NOT IN VIEW OF THE VARIOUS PROCESSES INVOLVED AND THE VARIOUS PROCESSES WOULD INVOLVE PRODUCTION WITHIN THE MEANI NG OF SECTION 32A OF THE ACT. IT WAS INTER ALIA OBSERVED AS UNDER: '...THERE IS NO DISPUTE THAT THE PLANT IN RESPECT O F WHICH THE ASSESSEE CLAIMED DEDUCTION WAS OWNED BY IT AND WAS INSTALLED AFTER 3 1-3-1976, IN THE ASSESSEE'S INDUSTRIAL UNDERTAKING FOR EXCAVATING, MINING AND P ROCESSING MINERAL ORE. MINERAL ORE IS NOT EXCLUDED BY THE ELEVENTH SCHEDULE. THE ONLY QUESTION IS WHETHER SUCH BUSINESS IS ONE OF MANUFACTURE OR PRODUCTION OF ORE. THE ISS UE HAD ARISEN BEFORE DIFFERENT HIGH COURTS OVER A PERIOD OF TIME. THE HIGH COURTS HAVE HELD THAT THE ACTIVITY AMOUNTED TO 'PRODUCTION' AND ANSWERED THE ISSUE IN QUESTION IN FAVOUR OF THE ASSESSEE. THE HIGH COURT OF ANDHRA PRADESH DID SO IN CIT V. SINGARENI COLLIERIES CO. LTD. [1996] 221 ITR 48, THE CALCUTTA HIGH COURT IN KHALSA BROTHERS V. CIT [1996] 217 ITR 185 AND CIT V. MERCANTILE CONSTRUCTION CO. [1994] 74 TAXMAN 41 (CAL.) AND THE DELHI HIGH COURT IN CIT V. UNIVMINE (P.) LTD. [1993] 202 ITR 8 25. THE REVENUE HAS NOT QUESTIONED ANY OF THESE DECISIONS, AT LEAST NOT SUC CESSFULLY, AND THE POSITION OF LAW, THEREFORE, WAS TAKEN AS SETTLED. THE REASONING GIVEN BY THE HIGH COURT, IN THE DECIS IONS NOTED BY US EARLIER, IS, IN OUR OPINION, UNIMPEACHABLE. THIS COURT HAD, AS EARLY AS IN 1961, IN CHRESTIAN MICA INDUSTRIES LTD. V. STATE OF BIHAR [1961] 12 STC 150 , DEFINED THE WORD 'PRODUCTION', ALBEIT, IN CONNECTION WITH THE BIHAR SALES TAX ACT, 1947. THE DEFINITION WAS ADOPTED FROM THE MEANING ASCRIBED TO THE WORD IN THE OXFORD ENGLISH DICTIONARY AS MEANING 'AMONGST OTHER THINGS THAT WHICH IS PRODUCED; A THI NG THAT RESULTS FROM ANY ACTION, PROCESS OR EFFORT, A PRODUCT; A PRODUCT OF HUMAN AC TIVITY OR EFFORT'. FROM THE WIDE DEFINITION OF THE WORD 'PRODUCTION', IT HAS TO FOLL OW THAT MINING ACTIVITY FOR THE PURPOSE OF PRODUCTION OF MINERAL ORES WOULD COME WITHIN THE AMBIT OF THE WORD 'PRODUCTION' SINCE ORE IS 'A THING', WHICH IS THE RESULT OF HUMA N ACTIVITY OR EFFORT. IT HAS ALSO BEEN HELD BY THIS COURT IN CIT V. N.C. BUDHARAJA & CO. [ 1993] 204 ITR 412 THAT THE WORD 'PRODUCTION' IS MUCH WIDER THAN THE WORD 'MANUFACTU RE'. IT WAS SAID (PAGE 423): ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 15 OF 21 'THE WORD 'PRODUCTION' HAS A WIDER CONNOTATION THAN THE WORD 'MANUFACTURE'. WHILE EVERY MANUFACTURE CAN BE CHARACTERISED AS PRODUCTIO N, EVERY PRODUCTION NEED NOT AMOUNT TO MANUFACTURE.... THE WORD 'PRODUCTION' OR 'PRODUCE' WHEN USED IN JUX TAPOSITION WITH THE WORD 'MANUFACTURE' TAKES IN BRINGING INTO EXISTENCE NEW GOODS BY A PROCESS WHICH MAY OR MAY NOT AMOUNT TO MANUFACTURE. IT ALSO TAKES IN ALL THE BY-PRODUCTS, INTERMEDIATE PRODUCTS AND RESIDE R 37. VIEWED THUS, CONVERSION OF ACRYLIC SHEETS INTO INTRA OCULAR LENS IS CLEARLY MANUFACTURE OF NEW PRODUCT AND THE GRIEVANCE OF THE ASSESSING O FFICER DOES NOT MERIT ACCEPTANCE. WE REJECT THE SAME. 38. GROUND NO. 4 IS THUS DISMISSED. 39. IN THE RESULT, THE APPEAL OF THE ASSESSING OFFI CER FOR THE ASSESSMENT YEAR 2010-11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 40. WE NOW TAKE UP THE APPEAL OF THE ASSESSING OFFI CER, AS ALSO CROSS OBJECTION OF THE ASSESSEE, FOR THE ASSESSMENT YEAR 2011-12. 41. IN THE FIRST GROUND OF APPEAL, THE ASSESSING OF FICER IS AGGRIEVED OF THE CIT(A) DELETING THE DISALLOWANCE OF RS 1,37,427 ON EQUIPME NT NOT INCLUDED IN PARA 3 OF THE NEW APPENDIX I. 42. IN THE IMPUGNED ORDER, LEARNED CIT(A) HAS MEREL Y FOLLOWED HIS ORDER FOR THE ASSESSMENT YEAR 2010-11, BUT, IN OUR DISCUSSIONS EA RLIER IN THIS CONSOLIDATED ORDER, WE HAVE CONFIRMED AND APPROVED THE SAME. RESPECTFULLY FOLLO WING THE VIEWS SO FORMED BY US FOR THE ASSESSMENT YEAR 2010-11, WE CONFIRM THIS ORDER OF T HE CIT(A) AS WELL AND DECLINE TO INTERFERE IN THE MATTER. 43. GROUND NO. 1 IS THUS DISMISSED. 44. IN THE SECOND GROUND OF APPEAL, THE ASSESSING O FFICER IS AGGRIEVED OF LEARNED CIT(A) DELETING THE DISALLOWANCE OF RS 28,23,909, UNDER SE CTION 40(A)(I), IN RESPECT OF COMMISSION PAID TO KUNTAL JOSHI, A US BASED INDIVIDUAL. 45. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS COVERED, IN FAVOUR OF THE ASSESSEE, BY A COORDINATE BENCH DECISION IN THE CAS E OF DCIT VS WELSPUN CORP LTD [(2017) 55 ITR (TRIB) 405 (AHD)]. LEARNED DR, HOWEVER, RELI ED UPON THE STAND OF THE ASSESSING OFFICER. IN THE SAID ORDER, THE COORDINATE BENCH HA S, INTER ALIA, OBSERVED AS FOLLOWS: ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 16 OF 21 31. THE SCHEME OF TAXABILITY IN INDIA, SO FAR AS TH E NON-RESIDENTS, ARE CONCERNED, IS LIKE THIS. SECTION 5 (2), WHICH DEALS WITH THE TAXA BILITY OF INCOME IN THE HANDS OF A NON-RESIDENT, PROVIDES THAT 'THE TOTAL INCOME OF AN Y PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOUR CE DERIVED WHICH (A) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN INDIA IN SU CH YEAR BY OR ON BEHALF OF SUCH PERSON; OR (B) ACCRUES OR ARISES OR IS DEEMED TO AC CRUE OR ARISE TO HIM IN INDIA DURING SUCH YEAR'. THERE IS NO DISPUTE THAT SINCE NO PART OF THE OPERATIONS OF THE RECIPIENT NON-RESIDENTS IS CARRIED OUT IN INDIA, NO INCOME AC CRUES TO THESE NON-RESIDENTS IN INDIA. THE CASE OF THE REVENUE HINGES ON INCOME WHI CH IS 'DEEMED TO ACCRUE OR ARISE IN INDIA'. COMING TO THE DEEMING PROVISIONS, WHICH ARE SET OUT IN SECTION 9, WE FIND THAT THE FOLLOWING STATUTORY PROVISIONS ARE RELEVAN T IN THIS CONTEXT: 'SECTION 9- INCOMES DEEMED TO ACCRUE OR ARISE IN IN DIA (1) THE FOLLOWING INCOMES WILL BE DEEMED TO ACCRUE OR ARISE IN INDIA: (I) ALL INCOME ACCRUING OR ARISING, WHETHER DIRECTL Y OR INDIRECTLY, THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA, OR THROUGH OR FROM AN Y PROPERTY IN INDIA, OR THROUGH OR FROM ANY ASSET OR SOURCE OF INCOME IN INDIA, EXPLANATION: FOR THE PURPOSE OF THIS CLAUSE [I.E. 9 (1)(I)], (A) IN THE CASE OF A BUSINESS OF WHICH ALL THE OPER ATIONS ARE NOT CARRIED OUT IN INDIA, THE INCOME OF THE BUSINESS DEEMED UNDER THIS CLAUSE TO ACCRUE OR ARISE IN INDIA SHALL BE ONLY SUCH PART OF THE INCOME AS IS REASONABLY ATTRI BUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA; (B) (C) (D)** ** **' (VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY- (A)** ** **' (B) A PERSON WHO IS A RESIDENT, EXCEPT WHERE THE FE ES ARE PAYABLE IN RESPECT OF SERVICES UTILISED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY S OURCE OUTSIDE INDIA; OR (C)** ** **' EXPLANATION 1-.* EXPLANATION 2.- FOR THE PURPOSES OF THIS CLAUSE, 'F EES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERA TION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCL UDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER T HE HEAD' SALARIES'.' * NOT RELEVANT FOR OUR PURPOSES ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 17 OF 21 32. SO FAR AS DEEMING FICTION UNDER SECTION 9(1)(I) IS CONCERNED, IT CANNOT BE INVOKED IN THE PRESENT CASE SINCE NO PART OF THE OPERATIONS OF THE RECIPIENT'S BUSINESS, AS COMMISSION AGENT, WAS CARRIED OUT IN INDIA. EVEN TH OUGH DEEMING FICTION UNDER SECTION 9(1)(I) IS TRIGGERED ON THE FACTS OF THIS C ASE, ON ACCOUNT OF COMMISSION AGENT'S BUSINESS CONNECTION IN INDIA, IT HAS NO IMPACT ON T AXABILITY IN THE HANDS OF COMMISSION AGENT BECAUSE ADMITTEDLY NO BUSINESS OPE RATIONS WERE CARRIED OUT IN INDIA, AND, THEREFORE, EXPLANATION 1 TO SECTION 9(1 )(I) COMES INTO PLAY. 33. THERE ARE A COUPLE OF RULINGS BY THE AUTHORITY FOR ADVANCE RULING, WHICH SUPPORT TAXABILITY OF COMMISSION PAID TO NON-RESIDENTS UNDE R SECTION 9(1)(I), BUT, NEITHER THESE RULINGS ARE BINDING PRECEDENTS FOR US NOR ARE WE PE RSUADED BY THE LINE OF REASONING ADOPTED IN THESE RULINGS. AS FOR THE AAR RULING IN THE CASE OF SKF BOILERS & DRIERS (P.) LTD. IN RE [2012] 343 ITR 385/206 TAXMAN 19/18 TAXMANN.COM 325 (AAR - NEW DELHI), WE FIND THAT THIS DECISION MERELY FOLLOWS T HE EARLIER RULING IN THE CASE OF RAJIV MALHOTRA, IN RE [2006] 284 ITR 564/155 TAXMAN 101 ( AAR - NEW DELHI) WHICH, IN OUR CONSIDERED VIEW, DOES NOT TAKE INTO ACCOUNT THE IMPACT OF EXPLANATION 1 TO SECTION 9(1)(I) PROPERLY. THAT WAS A CASE IN WHICH THE NON-RESIDENT COMMISSION AGENT WORKED FOR PROCURING PARTICIPATION BY OTHER NON-RES IDENT ENTITIES IN A FOOD AND WINE SHOW IN INDIA, AND THE CLAIM OF THE ASSESSEE WAS TH AT SINCE THE AGENT HAS NOT CARRIED OUT ANY BUSINESS OPERATIONS IN INDIA, THE COMMISSIO N AGENT WAS NOT CHARGEABLE TO TAX IN INDIA, AND, ACCORDINGLY, THE ASSESSEE HAD NO OBL IGATION TO DEDUCT TAX AT SOURCE FROM SUCH COMMISSION PAYMENTS TO THE NON-RESIDENT AGENT. ON THESE FACTS, THE AUTHORITY FOR ADVANCE RULING, INTER ALIA, OPINED THAT 'NO DOUBT T HE AGENT RENDERS SERVICES ABROAD AND PURSUES AND SOLICITS EXHIBITORS THERE IN THE TE RRITORY ALLOTTED TO HIM, BUT THE RIGHT TO RECEIVE THE COMMISSION ARISES IN INDIA ONLY WHEN EX HIBITOR PARTICIPATES IN THE INDIA INTERNATIONAL FOOD & WINE SHOW (TO BE HELD IN INDIA ), AND MAKES FULL AND FINAL PAYMENT TO THE APPLICANT IN INDIA' AND THAT 'THE CO MMISSION INCOME WOULD, THEREFORE, BE TAXABLE UNDER SECTION 5(2)(B) READ WITH SECTION 9(1)(I) OF THE ACT'. THE AUTHORITY FOR ADVANCE RULING ALSO HELD THAT 'THE FACT THAT TH E AGENT RENDERS SERVICES ABROAD IN THE FORM OF PURSUING AND SOLICITING PARTICIPANTS AN D THAT THE COMMISSION IS REMITTED TO HIM ABROAD ARE WHOLLY IRRELEVANT FOR THE PURPOSE OF DETERMINING SITUS OF HIS INCOME'. WE DO NOT CONSIDER THIS APPROACH TO BE CORRECT. WHE N NO OPERATIONS OF THE BUSINESS OF COMMISSION AGENT IS CARRIED ON IN INDIA, THE EXPLAN ATION 1 TO SECTION 9(1)(I) TAKES THE ENTIRE COMMISSION INCOME FROM OUTSIDE THE AMBIT OF DEEMING FICTION UNDER SECTION 9(1)(I), AND, IN EFFECT, OUTSIDE THE AMBIT OF INCOM E 'DEEMED TO ACCRUE OR ARISE IN INDIA' FOR THE PURPOSE OF SECTION 5(2)(B). THE POINT OF TI ME WHEN COMMISSION AGENT'S RIGHT TO RECEIVE THE COMMISSION FRUCTIFIES IS IRRELEVANT TO DECIDE THE SCOPE OF EXPLANATION 1 TO SECTION 9(1 )(I), WHICH IS WHAT IS MATERIAL IN THE CONTEXT OF THE SITUATION THAT WE ARE IN SEISIN OF. THE REVENUE'S CASE BEFORE US HINGES ON T HE APPLICABILITY OF SECTION 9(1)(I) AND, IT IS, THEREFORE. IMPORTANT TO ASCERTAIN AS TO WHAT EXTENT WOULD THE RIGOUR OF SECTION 9(1)(I) BE RELAXED BY EXPLANATION 1 TO SECT ION 9(1)(I). WHEN WE EXAMINE THINGS FROM THIS PERSPECTIVE, THE INEVITABLE CONCLU SION IS THAT SINCE NO PART OF THE OPERATIONS OF THE BUSINESS OF THE COMMISSION AGENT IS CARRIED OUT IN INDIA, NO PART OF THE INCOME OF THE COMMISSION AGENT CAN BE BROUGHT T O TAX IN INDIA. IN THIS VIEW OF THE MATTER, VIEWS EXPRESSED BY THE HON'BLE AAR, WHICH D O NOT FETTER OUR INDEPENDENT OPINION ANYWAY IN VIEW OF ITS LIMITED BINDING FORCE UNDER S. 245S OF THE ACT, DO NOT ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 18 OF 21 IMPRESS US, AND WE DECLINE TO BE GUIDED BY THE SAME . THE STAND OF THE REVENUE, HOWEVER, IS THAT THESE RULINGS, BEING FROM SUCH A H IGH QUASI-JUDICIAL FORUM, EVEN IF NOT BINDING, CANNOT SIMPLY BE BRUSHED ASIDE EITHER, AND THAT THESE RULINGS AT LEAST HAVE PERSUASIVE VALUE. WE HAVE NO QUARREL WITH THIS PROP OSITION. WE HAVE, WITH UTMOST CARE AND DEEPEST RESPECT, PERUSED THE ABOVE RULINGS RENDERED BY THE HON'BLE AUTHORITY FOR ADVANCE RULING. WITH GREATEST RESPECT, BUT WITH OUT SLIGHTEST HESITATION, WE HUMBLY COME TO THE CONCLUSION THAT WE ARE NOT PERSU ADED BY THESE RULINGS. 34. COMING TO SECTION 9(1)(VII)(B), THIS DEEMING FI CTION- WHICH IS FOUNDATIONAL BASIS FOR THE ACTION OF THE ASSESSING OFFICER, INTER ALIA , PROVIDES THAT THE INCOME BY WAY OF TECHNICAL SERVICES PAYABLE BY A PERSON RESIDENT IN INDIA, EXCEPT IN CERTAIN SITUATIONS- WHICH ARE NOT ATTRACTED IN THE PRESENT CASE ANYWAY, ARE DEEMED TO BE INCOME ACCRUING OR ARISING IN INDIA. EXPLANATION 2 TO SECTION 9(1)( VII) DEFINES 'FEES FOR TECHNICAL SERVICES' AS ANY CONSIDERATION (INCLUDING ANY LUMPS UM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTAN CY SERVICES (INCLUDING THE PROVISIONS OF SERVICES OF TECHNICAL OR OTHER PERSON NEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MININ G OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES' [RELEVANT PORTION HIGHLIGHTED B Y UNDERLINING]'. 35. IN THE LIGHT OF THE ABOVE LEGAL POSITION, WHAT WE NEED TO DECIDE AT THE OUTSET IS WHETHER THE AMOUNTS PAID BY THE ASSESSEE TO THE NON -RESIDENT AGENTS COULD BE TERMED AS 'CONSIDERATION FOR THE RENDERING OF ANY MANAGERI AL, TECHNICAL AND CONSULTANCY SERVICES'. AS WE DO SO, IT IS USEFUL TO BEAR IN MIN D THE FACT THAT EVEN GOING BY THE STAND OF THE ASSESSING OFFICER, AT BEST SERVICES RE NDERED BY THE NON-RESIDENT TO THE AGENT INCLUDED TECHNICAL SERVICES BUT IT IS FOR THI S REASON THAT THE AMOUNTS PAID TO THESE AGENTS, ON ACCOUNT OF COMMISSION ON EXPORTS, SHOULD BE TREATED AS FEES FOR TECHNICAL SERVICES. EVEN PROCEEDING ON THE ASSUMPTION THAT TH ESE NON-RESIDENT AGENTS DID RENDER THE TECHNICAL SERVICES, WHICH, AS WE WILL SEE A LIT TLE LATER, AN INCORRECT ASSUMPTION ANYWAY, WHAT IS IMPORTANT TO APPRECIATE IS THAT THE AMOUNTS PAID BY THE ASSESSEE TO THESE AGENTS CONSTITUTED CONSIDERATION FOR THE ORDE RS SECURED BY THE AGENTS AND NOT THE SERVICES ALLEGED RENDERED BY THE AGENTS. THE EVENT TRIGGERING CRYSTALLIZATION OF LIABILITY OF THE ASSESSEE, UNDER THE COMMISSION AGE NCY AGREEMENT, IS THE EVENT OF SECURING ORDERS AND NOT THE RENDITION OF ALLEGED TE CHNICAL SERVICES. IN A SITUATION IN WHICH THE AGENT DOES NOT RENDER ANY OF THE SERVICES BUT SECURES THE BUSINESS ANYWAY, THE AGENT IS ENTITLED TO HIS COMMISSION WHICH IS CO MPUTED IN TERMS OF A PERCENTAGE OF THE VALUE OF THE ORDER. IN A REVERSE SITUATION, IN WHICH AN AGENT RENDERS ALL THE ALLEGED TECHNICAL SERVICES BUT DOES NOT SECURE ANY ORDER FO R THE PRINCIPAL I.E. THE ASSESSEE, THE AGENT IS NOT ENTITLED TO ANY COMMISSION. CLEARLY, T HEREFORE, THE EVENT TRIGGERING THE EARNINGS BY THE AGENT IS SECURING THE BUSINESS AND NOT RENDITION OF ANY SERVICES. IN THIS VIEW OF THE MATTER, IN OUR CONSIDERED VIEW, THE AMO UNTS PAID BY THE ASSESSEE TO ITS NON-RESIDENT AGENTS, EVEN IN THE EVENT OF HOLDING T HAT THE AGENTS DID INDEED RENDER TECHNICAL SERVICES, CANNOT BE SAID TO BE CONSIDERAT ION FOR RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (EMPHASIS BY UNDE RLINING SUPPLIED BY US)'. THE SERVICES RENDERED BY THE AGENTS, EVEN IF THESE SERV ICES ARE HELD TO BE IN THE NATURE OF TECHNICAL SERVICES, MAY BE TECHNICAL SERVICES, BUT THE AMOUNTS PAID BY THE ASSESSEE ARE NOT FOR THE RENDITION OF THESE TECHNICAL SERVICES N OR THE QUANTIFICATION OF THESE ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 19 OF 21 AMOUNTS HAVE ANY RELATION WITH THE QUANTUM OF THESE TECHNICAL SERVICES. THE KEY TO TAXABILITY OF AN AMOUNT UNDER SECTION 9(1)(VII) IS THAT IT SHOULD CONSTITUTE 'CONSIDERATION' FOR RENDITION OF TECHNICAL SERVICES . THE CASE OF THE REVENUE FAILS ON THIS SHORT TEST, AS IN THE PRESENT CASE THE AMOUNTS PAID BY THE ASSESSEE ARE 'CONSIDERATION' FOR ORDERS SECURED BY THE ASSESSEE IRRESPECTIVE OF HOW AND WHETHER OR NOT THE AGENTS HAVE PERFORMED THE SO CALLED TECHNIC AL SERVICES. 36. LET US SUM UP OUR DISCUSSIONS ON THIS PART OF T HE SCHEME OF SECTION 9, SO FAR AS TAX IMPLICATIONS ON COMMISSION AGENCY BUSINESS CARRIED OUT BY NON-RESIDENTS FOR INDIAN PRINCIPALS IS CONCERNED. IT DOES NOT NEED MUCH OF A CEREBRAL EXERCISE TO FIND OUT WHETHER THE INCOME FROM THE BUSINESS CARRIED ON BY A NON-RESIDENT ASSESSEE, AS A COMMISSION AGENT AND TO THE EXTENT IT CAN BE SAID T O DIRECTLY OR INDIRECTLY ACCRUING THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA, I S REQUIRED TO BE TAXED UNDER SECTION 9(1)(I) OR UNDER SECTION 9(1)(VII), OF THE INCOME TAX ACT, 1961. THE ANSWER IS OBVIOUS. DEEMING FICTION UNDER SECTION 9(1)(I) READ WITH PROVISO THERETO, AS WE HAVE SEEN IN THE EARLIER DISCUSSIONS, HOLDS THE KEY, AND LAYS DOWN THAT ONLY TO THE EXTENT THAT WHICH THE OPERATIONS OF SUCH A BUSINESS IS CAR RIED OUT IN INDIA, THE INCOME FROM SUCH A BUSINESS IS TAXABLE IN INDIA. WHEN NO OPERAT IONS OF THE BUSINESS ARE CARRIED ON INDIA, THERE IS NO TAXABILITY OF THE PROFITS OF SUC H A BUSINESS IN INDIA EITHER. THE QUESTION THEN ARISES WHETHER IN A SITUATION IN WHIC H, IN THE COURSE OF CARRYING ON SUCH BUSINESS, THE ASSESSEE HAS TO NECESSARILY RENDER CE RTAIN SERVICES, WHICH ARE OF SUCH A NATURE AS COVERED BY EXPLANATION 2 TO SECTION 9(1)( VII), AND EVEN THOUGH THE ASSESSEE IS NOT PAID ANY FEES FOR SUCH SERVICES PER SE, ANY PART OF THE BUSINESS PROFITS OF THE ASSESSEE CAN BE TREATED AS 'FEES FOR TECHNICAL SERV ICES' AND TAXED AS SUCH UNDER SECTION 9(1)(VII). THIS QUESTION DOES NOT POSE MUCH DIFFICU LTY EITHER. IN THE LIGHT OF THE DISCUSSIONS IN THE FOREGOING PARAGRAPH, UNLESS THER E IS A SPECIFIC AND IDENTIFIABLE CONSIDERATION FOR THE RENDITION OF TECHNICAL SERVIC ES, TAXABILITY UNDER SECTION 9(1)(VII) DOES NOT GET TRIGGERED. THEREFORE, IRRESPECTIVE OF WHETHER ANY TECHNICAL SERVICES ARE RENDERED DURING THE COURSE OF CARRYING ON SUCH AGEN CY COMMISSION BUSINESS ON BEHALF OF INDIAN PRINCIPAL, THE CONSIDERATION FOR SECURING BUSINESS CANNOT BE TAXED UNDER SECTION 9(1)(VII) AT ALL. THIS PROFITS OF SUCH A BU SINESS CAN HAVE TAXABILITY IN INDIA ONLY TO THE EXTENT SUCH PROFITS RELATE TO THE BUSINESS O PERATIONS IN INDIA, BUT THEN, AS ARE THE ADMITTED FACTS OF THIS CASE, NO PART OF OPERATIONS OF BUSINESS WERE CARRIED OUT IN INDIA. THE COMMISSION AGENTS EMPLOYED BY THE ASSESSEE, THE REFORE, DID NOT HAVE ANY TAX LIABILITY IN INDIA IN RESPECT OF THE COMMISSION AGE NCY BUSINESS SO CARRIED OUT. 46. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US IN WELSPUNS CASE (SUPRA). RESPECTFULLY FOLLOWING TH E AFORESAID ORDER, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 47. GROUND NO. 2 IS THUS DISMISSED. 48. GROUND NO. 3 OF THE APPEAL AS ALSO GROUND NO 3 OF THE CROSS OBJECTION DEAL WITH THE INTEREST DISALLOWANCE IN RESPECT OF INTEREST FREE A DVANCES MADE BY THE ASSESSEE. WHILE THE ASSESSING OFFICER IS AGGRIEVED OF THE LEARNED CIT(A ) DELETING THE DISALLOWANCE OF RS ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 20 OF 21 35,96,180, THE ASSESSEE IS AGGRIEVED OF LEARNED CIT (A) SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS 73,917. 49. VIDE OUR ORDER FOR THE ASSESSMENT YEAR 2009-10 ON THIS ISSUE, WE HAVE REMITTED THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR LIM ITED VERIFICATION AS TO WHETHER THE INTEREST FREE FUNDS AVAILABLE TO THE ASSESSEE ARE MORE THAN INTEREST FREE LOANS GRANTED BY THE ASSESSEE, AND, IF SO, THE DELETION OF DISALLOWANCE WILL STAND CONFIRMED FOR THIS SHORT REASON ALONE, AND THE DISALLOWANCE SUSTAINED BY THE CIT(A) WILL ALSO STAND DELETED FOR THE SAME REASON. THESE OBSERVATIONS WILL APPLY MUTATIS MUTANDIS FOR THIS A SSESSMENT YEAR AS WELL. THE MATTER IS, ACCORDINGLY, REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR THIS ASSESSMENT YEAR AS WELL. 50. GROUND NO. 3 OF THE APPEAL AS ALSO GROUND NO. 3 OF THE CROSS OBJECTION THUS STANDS ALLOWED FOR STATISTICAL PURPOSES. 51. IN GROUND NO. 4, THE ASSESSING OFFICER IS AGGRI EVED OF THE LEARNED CIT(A) DELETING THE DISALLOWANCE OF RS 30,64,273 ON ACCOUNT OF ADDITION AL DEPRECIATION, EVEN THOUGH, ACCORDING TO THE ASSESSING OFFICER, END PRODUCT HAS NOT UNDER GONE ANY TRANSFORMATION AND NO NEW OR DISTINCTIVE ARTICLE HAS COME INTO EXISTENCE. 52. IN THE IMPUGNED ORDER, LEARNED CIT(A) HAS MEREL Y FOLLOWED HIS ORDER FOR THE ASSESSMENT YEAR 2010-11, BUT, IN OUR DETAILED DISCU SSIONS EARLIER IN THIS CONSOLIDATED ORDER, WE HAVE CONFIRMED AND APPROVED THE SAME. RESPECTFUL LY FOLLOWING THE VIEWS SO FORMED BY US FOR THE ASSESSMENT YEAR 2010-11, WE CONFIRM THIS OR DER OF THE CIT(A) AS WELL AND DECLINE TO INTERFERE IN THE MATTER. 53. GROUND NO. 4 IS THUS DISMISSED. 54. LET US NOW TURN TO REMAINING GRIEVANCES IN THE CROSS OBJECTION AS WELL. 55, GROUND NO. 1 IN THE CROSS OBJECTION FILED BY TH E ASSESSEE IS NOT PRESSED, AND IS, ACCORDINGLY, DISMISSED FOR WANT OF PROSECUTION. 56. IN GROUND NO. 2 IN THE CROSS OBJECTION FILED BY THE ASSESSEE, THE ASSESSEE IS AGGRIEVED OF THE LEARNED CIT(A) SUSTAINING THE DISALLOWANCE O F RS 6,50,559 UNDER SECTION 40(A)(IA) ON THE GROUND THAT THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE FROM THE RELATED PAYMENT OF CONFERENCE CHARGES. 57. LEARNED REPRESENTATIVES FAIRLY AGREE THAT, IN A CCORDANCE WITH THE LAW LAID DOWN BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS ANSA L LANDMARK TOWNSHIP PVT LTD (377 ITR 635) WITH THE DIRECTION THAT IN CASE THE RECIPIENT HAS DISCHARGED HIS TAX LIABILITY IN RESPECT OF INCOME EMBEDDED IN THESE PAYMENTS, THE DISALLOWANCE UNDER SECTION 40(A)(IA) WILL STAND ITA NO. 1388,2766 AND 3154/AHD/2014 CO NOS. 208 AND 328 /AHD/2014 ASSESSMENT YEAR: 2009-10, 2010-11 AND 2011-12 PAGE 21 OF 21 DELETED. WE, THEREFORE, REMIT THE MATTER TO THE FIL E OF THE ASSESSING OFFICER IN THE TERMS INDICATED ABOVE. 58. GROUND NO. 2 IS THUS ALLOWED FOR STATISTICAL PU RPOSES. 59. GROUND NO. 3 IS ALREADY DISCUSSED EARLIER, ALON GWITH APPEAL OF THE ASSESSING OFFICER ON THAT ISSUE, AND IS ALLOWED FOR STATISTICAL PURPO SES IN THE TERMS INDICATED ABOVE. 60. THE APPEAL FILED BY THE ASSESSING OFFICER, AS A LSO CROSS OBJECTION FILED BY THE ASSESSEE, FOR THE ASSESSMENT YEAR 2011-12 ARE ALSO PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 61. IN THE RESULT, ALL THE APPEALS AND CROSS OBJECT IONS ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 18 TH DAY OF APRIL, 2018. SD/- SD/- S S GODARA PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED THE 18 TH DAY OF APRIL, 2018 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD