ITO (TDS), New Delhi V. M/s. DLF Ltd., New Delhi

ITA 3487/DEL/2012

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8478 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-06-2017
• Assessment Year: misc
• Appeal Filed On: 02-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST S DATED PASSED; AND A Y
• Keywords: Business income; Double taxation relief; Deemed to accrue or arise in india; Benefit of exemption; TDS; Set aside
• Section: 5(2); 195; 201; 274

Judgement Text

1 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE MS SUCHITRA KAMBLE, JU DICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEM BER I.T.A. NO. 3253/DEL/2 012 (A.Y. 2007-08) I.T.A. NO. 3254/DEL/2 012 (A.Y. 2008-09) DLF LIMITED 9 TH FLOOR, DLF CENTRE, SANSAD MARG, NEW DELHI - 110001 (APPELLANT) VS . ITO, WARD-3(2), INTERNATIONAL TAXATION, DRUM SHAPE BUILDING, NEW DELHI-110002 (RESPONDENT) I.T.A. NO. 3487/DEL/2 012 (A.Y. 2007-08) I.T.A. NO. 3488/DEL/2 012 (A.Y. 2008-09) ITO (TDS) , WARD-3(2), INTERNATIONAL TAXATION, DRUM SHAPE BUILDING, NEW DELHI-110002 (APPELLANT) VS. DLF LIMITED 9 TH FLOOR, DLF CENTRE, SANSAD MARG, NEW DELHI - 110001 (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE ASSESSEE AND THE RE VENUE FOR A.Y. 2007- 08 AND 2008-09 AGAINST THE ORDERS DATED 26.04.2012 PASSED BY THE CIT(A)- XXIX, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER : APPELLANT BY SH. R.S.SINGHVI, SH. SATYAJEET GOEL, CAS RESPONDENT BY G.K.DHALL, CIT-DR DATE OF HEARING 07.08.2019 DATE OF PRONOUNCEMENT 10.10.2019 2 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 ITA NO. 3253/DEL/2012 (A.Y. 2007-08) ASSESSEES APP EAL 1.1 THAT LEARNED CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE IN CONFIRMING THE ASSESSING OFFICER VIEW FOR TREATING THE ASSESSEE IN DEFAULT FOR NON D EDUCTION OF TAX AT SOURCE IN RESPECT OF REIMBURSEMENT OF EXPENSES RS. 2,16,96 2/- I.E. (RS. 147,766/- PAYMENT MADE TO SUPER POTATO COMPANY LTD, JAPAN AND RS. 69,196/- TO CREATIVE KITCHEN PLANET INTT, MALAYSIA) MADE BY THE ASSESSEE COMPANY TO VARIOUS NON RESIDENT RECIPIENTS BY HOLDING THAT PAYMENT MADE BY THE APPELLANT TO SUPER POTATO CO. LTD (SPC, JAPAN) & CR EATIVE KITCHEN PLANNERS INTL. MALAYSIA WERE IN THE NATURE OF FEES FOR TECHNICAL SERVICES AND THEREFORE CHARGEABLE TO TAX IN INDIA. THE APPELLANT WAS REQUIRED TO WITHHOLD TAX ON THESE PAYMENTS U/S 195 1.2 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIAT E THAT THE PAYMENT IS IN THE NATURE OF REIMBURSEMENTS MADE TO SUPER POTATO (SPC) & CREATIVE KITCHEN PLANNERS INTL. (CKP) (THE NON RESIDENT SERVICE PROV IDER) ON ACCOUNT OF ACTUAL EXPENSES INCURRED BY THE NON RESIDENT LIKE AIR FARE CHARGES, TRAVELLING, BOARDING & LODGING ETC IN INDIA IN PURSUANCE OF THE RESPECTIVE AGREEMENTS WITH THE CONCERNED PARTIES, ON THE BASIS OF BACK UP INVOICE/ SUPPORTS OF THIRD PARTIES AND THERE IS NO ELEMENT OF INCOME PRESENT I N SUCH REMITTANCE WHICH MAY BE CHARGEABLE TO TAX UNDER THE PROVISIONS OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 1.3 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LA W IN APPLYING SECTION 9(L)(VII) OF THE I.T. ACT, 1961 BY TREATING THE PAY MENT MADE BY THE. APPELLANT COMPANY TO THESE NON RESIDENTS RECIPIENTS IN NATURE OF FEES FOR TECHNICAL SERVICE AND CHARGEABLE TO TAX IN INDIA WITHOUT APPR ECIATING THAT THIS SECTION IS NOT APPLICABLE TO THE PRESENT CASE AS THE PAYMENTS MADE BY THE APPELLANT COMPANY ARE OF NATURE OF REIMBURSEMENT OF EXPENSES ETC AND ARE NOT CHARGEABLE TO TAX IN INDIA SINCE THEY EITHER DO NOT FALL WITHIN THE AMBIT OF SECTION 4 READ WITH SECTION 5(2) READ WITH SECTION 9(1) OF THE I.T. ACT ARE NOT COVERED AS PER THE RELEVANT DTAA OF INDIAN WITH THE OTHER COUNTRY AND THAT THE MACHINERY PROVISIONS OF SECTION 195 DO NOT APPL Y TO THE SAID PAYMENT. 1.4 THAT THE ORDER PASSED BY THE LEARNED CIT(APPEAL S) IS BAD IN LAW AS WELL AS WRONG ON FACTS AND ERRONEOUS IN POINT OF LAW AND RIGHT IS RESERVED TO ASSAIL THE SAME ON SUCH OTHER GROUND OR GROUNDS AS MAY BE ADVANCED AT THE TIME OF HEARING FOR WHICH THE APPELLANT CRAVES LEAV E TO AMEND, VARY OR ADD TO THE GROUND HEREIN BEFORE APPEARING. ITA NO. 3487/DEL/2012 (A.Y. 2007-08) REVENUES APPE AL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO, BY HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS HIRING OF AIR CRAFT DOES NOT 3 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 CONSTITUTE THE NATURE OF ROYALTY. FURTHER, HOLDING THAT AS PER THE DEFINITION OF ROYALTY IN SECTION 9(I)(VI), THE PAYMENT DOES NOT F ALL INTO THE CATEGORY OF ROYALTY BUT FAILING TO APPRECIATE THAT SUCH PAYMENT S WOULD FALL UNDER THE CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(L)(VI) O F THE ACT READ WITH ARTICLE 12 OF THE DTAA 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE TO WHITE & CASE, THE CONSULTANCY FIRM, IS NO T IN THE NATURE OF FTS BUT FAILING TO APPRECIATE ARTICLE 15(1) OF THE INDO-UK TREATY, DEALS WITH PAYMENTS TO INDIVIDUALS AND DOES NOT APPLY TO PARTN ERSHIP FIRMS. FURTHER FAILING TO APPRECIATE THAT SUCH PAYMENTS WOULD BE C OVERED UNDER ARTICLE 13 OF THE TREATY AS FEE FOR TECHNICAL SERVICES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE FOR SURVEY OF AIRCRAFT AND ROUTINE SERVICE ARE NOT IN THE NATURE OF FTS SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED, BUT FAILING TO APPRECIATE THE FACT THE RECEIPT WAS NOT REQUIRED TO MAKE SUCH A KN OWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PERMANENT BASIS AND THE SE RVICES WERE PROVIDE IN CONNECTION WITH REVIEW OF AIRCRAFT- RECORDS AND CON DITION SURVEY TO DLF LTD AND ENABLE IT TO PURCHASE A SECOND HAND AIRCRAFT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE FOR AIRCRAFT MAINTENANCE ARE NOT IN THE NATURE OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SA ME TIME FAILING TO APPRECIATE THE FACT THAT THE RECIPIENT WAS NOT REQUIRED TO MAK E SUCH A KNOWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PERMANENT BASIS AND THE SERVICES WERE PROVIDED IN CONNECTION WITH MAINTENANCE OR AIRCRAFT . 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE FOR CREW SUPPORT SERVICES ARE NOT IN THE NATURE OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SAME TIME FAI LING TO APPRECIATE THAT IT WAS NOT INTENDED BY THE ASSESSEE TO HAVE SUCH SERVICE I N THE FORM OF TRAINING OR TRANSFERRING PERMANENT EXPERTISE. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE FOR ADVERTISEMENT RIGHTS OF THE CIRCLET GROUND CANNOT BE CHARACTERIZED AS ROYALTY BUT AT THE SAME TIME FAILING TO APPRECIA TE THAT THE ASSESSEE USED SUCH GROUND RIGHTS FOR FINDING SPONSORS FOR THE IND IA- PAKISTAN FRIENDLY MATCH AND SUCH PAYMENT WOULD FALL WITHIN THE PRECINCTS OF SECTION 9(I)(VI) OF THE ACT AND THE ARTICLE 12 OF THE INDO-UAE DTAA. 4 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE AS A SECURITY DEPOSIT AND THAT THE SUCH AMOUNT WAS RECEI VED BACK BY THE ASSESSEE IN THE SUBSEQUENT YEAR, ACCORDINGLY IT IS NOT AN EX PENDITURE ON THE PART OF THE ASSESSEE WHEREAS IT IS FOUND FROM RECORDS THAT THIS CLAIM IS NOT FACTUALLY CORRECT WITH REGARD TO THE RECEIVING BACK THE SECUR ITY DEPOSIT AND HENCE IT IS AN EXPENDITURE ENTRY. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE TOWARDS BUSINESS AND PERSONNEL SECURITY CONSULTANCY SERVICES DID NOT FULFILLED THE CRITERIA OF MAKE AVAILABLE CLAUSE A S PER THE TREATY WITH SINGAPORE BUT AT THE SAME TIME FAILING TO APPRECIAT E AS THE SERVICES WERE PROVIDED TO THE ASSESSEE TO IMPROVE ITS SECURITY PR OFILE ALONG WITH THE SECURITY PROFILE OF OTHER IMPORTANT PERSONS OF THE COMPANY. 9. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTE R ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APP EAL. ITA NO. 3254/DEL/2012 (A.Y. 2008-09) ASSESSEES APP EAL 1.1 THAT LEARNED CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE IN CONFIRMING THE ASSESSING OFFICER VIEW FOR TREATING THE ASSESSEE IN DEFAULT FOR NON DEDUCT ION OF TAX AT SOURCE IN RESPECT OF REIMBURSEMENT OF EXPENSES RS.18,15,961/- I.E.(RS. 12,51,250/- PAYMENT MADE TO SUPER POTATO COMPANY LTD, JAPAN, RS . 1,00,622/- TO CREATIVE KITCHEN PLANET INTT, MALAYSIA & RS. 4,64,0 89/- TO SMALL, WOOD, REYNOLDS STEWART .SINGAPORE) MADE BY THE APPELLANT COMPANY TO VARIOUS NON RESIDENT RECIPIENTS BY HOLDING THAT PAYMENT MADE BY THE APPELLANT TO SUPER POTATO CO. LTD (SPC, JAPAN), CREATIVE KITCHEN PLANNERS INTL. MALAYSIA & SMALL, WOOD, REYNOLDS STEWART SINGAPORE WERE IN THE NATURE OF FEES FOR TECHNICAL SERVICES AND THEREFORE CHARGEABLE TO TAX IN INDIA. THE APPELLANT WAS REQUIRED TO WITHHOLD TA X ON THESE PAYMENTS U/S 195 1.2 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE T HAT THE PAYMENT IS IN THE NATURE OF REIMBURSEMENTS MADE TO SUPER POTATO (SPC) , CREATIVE KITCHEN PLANNERS INTL. (CKP) & SMALL, WOOD, REYNOLDS STEWAR T .SINGAPORE (THE NON RESIDENT SERVICE PROVIDER) ON ACCOUNT OF ACTUAL EXP ENSES INCURRED BY THE NON RESIDENT LIKE AIR FARE CHARGES, TRAVELLING, BOARDIN G & LODGING ETC IN INDIA IN PURSUANCE OF THE RESPECTIVE AGREEMENTS WITH THE CON CERNED PARTIES, ON THE BASIS OF BACK UP INVOICE/ SUPPORTS OF THIRD PARTIES AND THERE IS NO ELEMENT OF INCOME PRESENT IN SUCH REMITTANCE WHICH MAY BE CHAR GEABLE TO TAX UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 1.3 THAT THE LEARNED CIT(A) HAS GROSSLY ERRED IN LAW I N APPLYING SECTION9(1 5 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 )(VII) OF THE I.T. ACT, 1961 BY TREATING THE PAYMEN T MADE BY THE APPELLANT COMPANY TO THESE NON RESIDENTS RECIPIENTS IN NATURE OF FEES FOR TECHNICAL SERVICE AND CHARGEABLE TO TAX IN INDIA WITHOUT APPR ECIATING THAT THIS SECTION IS NOT APPLICABLE TO THE PRESENT CASE AS THE PAYMENTS MADE BY THE APPELLANT COMPANY ARE NATURE OF REIMBURSEMENT OF EXPENSES ETC AND ARE NOT CHARGEABLE TO TAX IN INDIA SINCE THEY EITHER DO NOT FALL WITHI N THE AMBIT OF SECTION 4 READ WITH SECTION 5(2) READ WITH SECTION 9(1) OF THE I.T . ACT ARE NOT COVERED AS PER THE RELEVANT DTAA OF INDIA WITH THE OTHER COUNTRY A ND THAT THE MACHINERY PROVISIONS OF SECTION 195 DO NOT APPLY TO THE SAID PAYMENT. 1.4 THAT THE ORDER PASSED BY THE LEARNED CIT(APPEALS) I S BAD IN LAW AS WELL AS WRONG ON FACTS AND ERRONEOUS IN POINT OF LAW AND RIGHT IS RESERVED TO ASSAIL THE SAME ON SUCH OTHER GROUND OR GROUNDS AS MAY BE ADVANCED AT THE TIME OF HEARING FOR WHICH THE APPELLANT CRAVES LEAV E TO AMEND, VARY OR ADD TO THE GROUND HEREIN BEFORE APPEARING. ITA NO. 3488/DEL/2012 (A.Y. 2008-09) REVENUES APPE AL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO, BY HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS HIRING OF AIR CRAFT DOES NOT CONSTITUTE THE NATURE OF ROYALTY. FURTHER, HOLDING THAT AS PER THE DEFINITION OF ROYALTY IN SECTION 9(I)(VI), THE PAYMENT DOES NOT F ALL INTO THE CATEGORY OF ROYALTY BUT FAILING TO APPRECIATE THAT SUCH PAYMENT S WOULD FALL UNDER THE CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(L)(VI) O F THE ACT READ WITH ARTICLE 12 OF THE DTAA 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE TO WHITE & CASE, THE CONSULTANCY FIRM, IS NO T IN THE NATURE OF FTS BUT FAILING TO APPRECIATE ARTICLE 15(1) OF THE INDO-UK TREATY, DEALS WITH PAYMENTS TO INDIVIDUALS AND DOES NOT APPLY TO PARTNERSHIP FI RMS. FURTHER FAILING TO APPRECIATE THAT SUCH PAYMENTS WOULD BE COVERED UNDE R ARTICLE 13 OF THE TREATY AS FEE FOR TECHNICAL SERVICES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT MADE FOR SURVEY OF AIRCRAFT AND ROUTINE SERVICE ARE NOT IN THE NATURE OF FTS SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED, BUT FAILING TO APPRECIATE THE FACT THE RECEIPT WAS NOT REQUIRED TO MAKE SUCH A KN OWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PERMANENT BASIS AND THE SE RVICES WERE PROVIDE IN CONNECTION WITH REVIEW OF AIRCRAFT- RECORDS AND CON DITION SURVEY TO DLF LTD AND ENABLE IT TO PURCHASE A SECOND HAND AIRCRAFT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY H OLDING THAT PAYMENT 6 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 MADE FOR AIRCRAFT MAINTENANCE ARE NOT IN THE NATURE OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SA ME TIME FAILING TO APPRECIATE THE FACT THAT THE RECIPIENT WAS NOT REQUIRED TO MAK E SUCH A KNOWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PERMANENT BASIS AND THE SERVICES WERE PROVIDED IN CONNECTION WITH MAINTENANCE OR AIRCRAFT . 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE FOR CREW SUPPORT SERVICES ARE NOT IN THE NATURE OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SAME TIME FAI LING TO APPRECIATE THAT IT WAS NOT INTENDED BY THE ASSESSEE TO HAVE SUCH SERVICE I N THE FORM OF TRAINING OR TRANSFERRING PERMANENT EXPERTISE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE FOR ADVERTISEMENT RIGHTS OF THE CIRCLET GROUND CANNOT B E CHARACTERIZED AS ROYALTY BUT AT THE SAME TIME FAILING TO APPRECIATE THAT THE ASSESSEE USED SUCH GROUND RIGHTS FOR FINDING SPONSORS FOR THE INDIA- PAKISTAN FRIENDLY MATCH AND SUCH PAYMENT WOULD FALL WITHIN THE PRECINCTS OF SECTION 9(I)(VI) OF THE ACT AND THE ARTICLE 12 OF THE INDO-UAE DTAA. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE AS A SECURITY DEPOSIT AND THAT THE SUCH AMOUNT WAS RECEI VED BACK BY THE ASSESSEE IN THE SUBSEQUENT YEAR, ACCORDINGLY IT IS NOT AN EX PENDITURE ON THE PART OF THE ASSESSEE WHEREAS IT IS FOUND FROM RECORDS THAT THIS CLAIM IS NOT FACTUALLY CORRECT WITH REGARD TO THE RECEIVING BACK THE SECUR ITY DEPOSIT AND HENCE IT IS AN EXPENDITURE ENTRY. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO, BY HOLDING THAT PAYMENT MADE TOWARDS BUSINESS AND PERSONNEL SECURITY CONSULTANCY SERVICES DID NOT FULFILLED THE CRITERIA OF MAKE AVAILABLE CLAUSE A S PER THE TREATY WITH SINGAPORE BUT AT THE SAME TIME FAILING TO APPRECIAT E AS THE SERVICES WERE PROVIDED TO THE ASSESSEE TO IMPROVE ITS SECURITY PR OFILE ALONG WITH THE SECURITY PROFILE OF OTHER IMPORTANT PERSONS OF THE COMPANY. 8. THE APPELLANT CRAVES TO ADD, AMEND, MODIFY OR ALTE R ANY GROUNDS OF APPEAL AT THE TIME OR BEFORE THE HEARING OF THE APP EAL. 3. THE ASSESSEE ENGAGED IN THE BUSINESS OF REAL EST ATE. DURING THE ASSESSMENT YEAR 2007-08, THE ASSESSEE COMPANY HAS M ADE PAYMENT TO NON- RESIDENT AND DEDUCTED TDS WHERE EVER REQUIRED IN AC CORDANCE WITH THE 7 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 PROVISION OF INCOME TAX AND HAS ALSO MADE SOME PAYM ENT WITHOUT DEDUCTING TDS AS THESE PAYMENTS ARE GENERALLY IN THE NATURE O F REIMBURSEMENT, HIRING OF AIRCRAFT ETC. AS PER THE ASSESSEE. THUS THE ASSESSE E SUBMITTED BEFORE THE ITO THAT THESE PAYMENTS ARE COVERED UNDER THE EXEMPTION S AVAILABLE UNDER DTAA NOT CHARGEABLE TO TAX U/S 5(2) READ WITH SECTION 9 OF THE INCOME TAX ACT, 1961. FURTHER THEY ARE TAXED WITH THE RELEVANT COUNTRY. T HEREFORE, PROVISIONS OF SECTION 195 ARE NOT ATTRACTED. THE ASSESSING OFFICE R AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, MADE DEMAND OF RS. 5,4 5,45,170/- U/S 201 OF THE ACT VIDE ORDER DATED 29.03.2010 BY TREATING THE ASSESSEE COMPANY AS AN ASSESSEE IN DEFAULT FOR NON DEDUCTION OF TAX AT SOU RCE IN RESPECT OF PAYMENT OF RS. 36,85,48,449/- FOR THE A.Y. 2007-08 & 2008-09 M ADE BY THE ASSESSEE COMPANY TO VARIOUS NON RESIDENTS RECIPIENTS WHICH A RE IN THE NATURE OF ROYALTY/FTS AND IS CHARGEABLE TO TAX IN INDIA AS PE R THE ASSESSING OFFICER. THE ITEMS IDENTIFIED BY THE ASSESSING OFFICER FOR TREAT ING THE ASSESSEE IN DEFAULT U/S 201 IN RESPECT TO REMITTANCES MADE TO THE NON-RESID ENT PAYEES FOR DIFFERENT ASSESSMENT YEARS HAVE BEEN TABULATED AS UNDER: ISSUE PARTY NAME / PAYEE COUNTRY AY 2006-07 AY 2007-08 AY 2008-09 1. HIRING / CHARTERING OF AIRCRAFT AIR PARTNER INC. USA 37,22,865 - - AIR PARTNER PLC UAE - 53,84,363 - NET JETS UK LTD. UK - - 1,10,86,070 LONDON AIR CHARTER CENTER LTD. UK - 6,92,145 - 2. LEGAL CONSULTANCY SERVICES WHITE & CASE UK - 2,35,00,341 88,10,931 3. REIMBURSEMENT OF EXPENSES CREATIVE KITCHEN PLANNERS INTL. MALAYSIA 69,169 1,00,622 SUPER POTATO CO. LTD. JAPAN - 1,47,766 12,51,250 SMALLWOOD, REYNOLDS, STEWARD SINGAPORE - - 4,64, 089 4. ANNUAL MEMBERSHIP FEE OF THE CLUB LOCH LOMOND GOLF CLUB UK - 50,25,025 2,52,200 8 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 5. PAYMENT FOR AIRCRAFT/RECORDS AND CONDITION SURVEY GENERAL DYNAMIC AVIATION USA - 40,52,559 3,03,617 6. PAYMENT FOR AIRCRAFT MAINTENANCE GULF STREAM AEROSPACE LTD. UK - - 1,81,95,077 7. PAYMENT FOR CREW SUPPORT SERVICES ACASS CANADA LTD. CANADA - - 7,99.728 8. PAYMENT FOR SPONSORSHIP/ADVERTISEMENT PERCEPT DMARK GULF LLC UAE - 32,58,44,025 - 9. PAYMENT - SECURITY DEPOSIT DALLAS AIRMOTIVE INC. USA - - 97,56,000 10. PAYMENT FOR RISK ASSESSMENT CONTROL RISK GROUP (S) PTE LTD. SINGAPORE - 38,33,029 - TOTAL 37,22,865 36,85,48,422 5,10,19,584 4. BEING AGGRIEVED BY THE ORDER UNDER SECTION 201 O F THE INCOME TAX ACT, 1961, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT AS REGARDS TO ASSESSEE S APPEALS ARE CONCERNED, THE CIT(A) WAS NOT RIGHT IN CONFIRMING T HE ASSESSING OFFICERS VIEW FOR TREATING THE ASSESSEE IN DEFAULT FOR NON DEDUCT ION OF TAX AT SOURCE IN RESPECT OF REIMBURSEMENT OF EXPENSES OF RS. 2,16,96 2/- (I.E. RS. 1,47,766/- PAYMENT MADE TO SUPER POTATO COMPANY LTD., JAPAN AN D RS. 69,196/- TO CREATIVE KITCHEN PLANET INTT., MALAYSIA) FOR A.Y. 2 007-08 MADE BY THE ASSESSEE COMPANY TO VARIOUS NON-RESIDENT RECIPIENTS BY HOLDI NG THAT PAYMENT MADE BY THE APPELLANT TO THESE COMPANY WERE IN THE NATURE O F FEES FOR TECHNICAL SERVICES AND THEREFORE, CHARGEABLE TO TAX IN INDIA. THE APPELLANT WAS REQUIRED TO WITHHOLD TAX ON THESE PAYMENTS U/S 195. THE LD. AR SUBMITTED THAT THESE EXPENSES WERE ACTUALLY INCURRED AND FROM THE PERUSA L OF THE INVOICE IT CAN BE SEEN THAT THERE IS NO ELEMENT OF INCOME PRESENT IN SUCH REMITTANCE. THE LD. AR 9 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 FURTHER SUBMITTED THAT SECTION 9(1)(VII) OF THE ACT DOES NOT APPLY TO THE PRESENT CASE AS THE PAYMENTS MADE BY THE ASSESSEE COMPANY A RE OF NATURE OF REIMBURSEMENT OF EXPENSES AND NOT CHARGEABLE TO TAX IN INDIA SINCE THEY EITHER DO NOT FALL WITHIN THE AMBIT OF SECTION 4 READ WITH SECTION 5(2) READ WITH SECTION 9(1) OF THE ACT AND ALSO NOT COMING UNDER T HE PURVIEW OF RELEVANT DTAA OF INDIA WITH THE OTHER COUNTRY AND THAT THE MACHIN ERY PROVISIONS OF SECTION 195 DO NOT APPLY TO THE SAID PAYMENT. THE LD. AR RE LIED UPON THE DECISION OF THE TRIBUNAL IN CASE OF PERNOD RICARD INDIA PVT. LT D. VS. ITO (TDS) ITA NO. 6640/DEL/2013 ORDER DATED 08.01.2019 WHEREIN THE RE LIANCE WAS MADE ON THE DECISIONS OF THE HONBLE DELHI HIGH COURT IN CASE O F INDUSTRIAL ENGINEERING PROJECTS PVT. LTD. 202 ITR 1014 AND THE HONBLE BOM BAY HIGH COURT IN CASE OF KRUPP UDHE GMBH 354 ITR 173. 6. THE LD. DR RELIED UPON THE ORDER UNDER SECTION 2 71 OF THE ACT AS WELL AS THE ORDER OF THE CIT(A) ON THIS ISSUE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT RECORDS. IT IS PERTINENT TO NOTE THAT PAYMENTS MADE TO NON RESIDEN TS IN THE PRESENT CASE THE PAYMENTS MADE TO THEM ARE PURELY OF REIMBURSEMENT I N NATURE AND DOES NOT FALL WITHIN THE REMUNERATION AT ALL. THE FINDINGS G IVEN BY THE CIT(A) THAT WHETHER THE PAYMENTS ARE MADE DIRECTLY TO NON-RESID ENTS OR PART OF THEIR EXPENSE IS REIMBURSED BY THE ASSESSEE HAS SAME EFFE CT, IS NOT CORRECT. IN FACT ACTUAL EXPENSES IN THE NATURE OF AIRFARE CHARGES, C OURIER CHARGES, TELEPHONE CHARGES AND LOCAL TRAVELLING EXPENSES ETC ARE PAID BY THE NON-RESIDENTS AND IT IS ONLY REIMBURSEMENT WHICH WAS NOT AN INCOME OF THE N ON RESIDENTS. THE RELIANCE UPON THE DECISION OF PERNOD RICARD INDIA L TD. (SUPRA) BY THE LD. AR IS APT. THEREFORE, THE FINDINGS OF THE CIT(A) TO THIS EXTENT IS SET ASIDE. SINCE THE APPEALS OF THE ASSESSEE FILED FOR A.Y. 2007-08 AND 2008-09 ARE ON IDENTICAL ISSUES BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED . 8. NOW WE ARE TAKING UP THE APPEALS FILED BY THE RE VENUE. THE LD. DR 10 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 SUBMITTED THAT AS REGARDS TO GROUND NO. 1, THE CIT (A) ERRED IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER BY HOLDING THAT THE PAYMENTS MADE BY THE ASSESSEE TOWARDS HIRING OF AIRCRAFT DOES NOT CO NSTITUTE THE NATURE OF ROYALTY. FURTHER, HOLDING THAT AS PER THE DEFINITION OF ROYA LTY IN SECTION 9(I)(VI), THE PAYMENT DOES NOT FALL INTO THE CATEGORY OF ROYALTY BUT FAILING TO APPRECIATE THAT SUCH PAYMENTS WOULD FALL UNDER THE CLAUSE (IVA) OF EXPLANATION 2 TO SECTION 9(L)(VI) OF THE ACT READ WITH ARTICLE 12 OF THE DTA A. 9. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 3.4 FINDING THE APPELLANT HAS MADE PAYMENTS TO FOLLOWING NON- RESIDENT AIRLINES FOR HIRING AIRCRAFT ON CHARTERED BASIS: (I) AIR PARTNERS INC (USA) (II) AIR PARTNER PLC (UAE) (III) NET JETS UK LTD. (UK) (IV) LONDON AIR CHARTER CENTRE LTD. (UK) THE CHARTERED PLANE HAS BEEN UTILIZED BY THE APPELL ANT FOR TRAVELLING OVERSEAS FOR A FEW DAYS AS MENTIONED SUPRA. ISSUE I NVOLVED IS WHETHER THE APPELLANT (PAYER) IS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE (TDS) ON THESE PAYMENTS U/S 195 OF THE ACT. .. IT IS NOT THE CASE OF THE AO THAT PAYMENTS MADE BY THE APPELLANT ARE RECEIVED OR DEEMED TO BE RECEIVED BY THE NON-RESIDE NT AIRLINES IN INDIA. THEREFORE, SECTION 5(2)(A) IS NOT APPLICABLE. THE A OS CASE IS THAT SUCH PAYMENTS ARE DEEMED TO ACCRUE OR ARISE IN INDIA AND ARE IN NATURE OF ROYALTY UNDER EXPLANATION 2 (IVA) TO SECTION 9(1)(VI) R W S ECTION 5(2)(B) OF THE ACT. IT IS UNDISPUTED FACT THAT THESE PAYMENT ARE NOT TAXABLE AS BUSINESS RECEIPTS UNDER ARTICLE 7 OF THE RELEVANT DTAA BECAUSE THE RE CIPIENTS AIRLINES DO NOT HAVE PE IN INDIA, AS THIS IS NOT THE CASE OF THE AO EVEN. NOW, THE ISSUE INVOLVED IS WHETHER SUCH PAYMENTS CA N BE CHARACTERIZED AS ROYALTY AS PROVISIONS OF EXPLANATION 2 (IVA) TO SEC TION 9(1)(VI) OF THE ACT. SECTION 9(1)(VI) PROVIDES THE SOURCE RULE AND ITS C LAUSE (B) SAYS THAT INCOME BY 11 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 WAY OF ROYALTY PAID BY INDIAN RESIDENT SHALL BE DEE MED TO ACCRUE OR ARISE IN INDIA. THIS CLAUSE ALSO PROVIDES AN EXCEPTION TO TH IS RULE, WHICH IS HOWEVER NOT APPLICABLE IN CASE OF APPELLANT. FOR APPLICABIL ITY OF THIS SOURCE RULE, THE NATURE OF INCOME SHOULD BE ROYALTY. THE TERM ROYA LTY HAS DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VI) AND ITS CLAUSE (I VA): .. THE APPELLANT HAS HIRED AIRCRAFT ON CHARTERED BASIS FROM NON-RESIDENT AIRLINES. THE APPELLANT IS ENGAGED IN BUSINES S OF REAL ESTATE AND IS NOT IN AVIATION BUSINESS. THEREFORE, IT CAN NOT BE INFERRED THAT THE AIRCRAFT TAKEN ON HIRE BY THE APPELLANT HAS BEEN USED IN ITS BUSINESS FOR PRODUCING GOODS OR PROVIDING SERVICES IN ANY MANNER. IF AT AL L IT IS TO BE INFERRED THAT AIR CRAFT IS IN NATURE OF EQUIPMENT, THEN IF THE APPELL ANT HIRES A TAXI, MAY BE ON CHARTERED BASIS, THAT WILL ALSO BE AN EQUIPMENT FOR THE APPELLANT WHO IS ENGAGED IN REAL ESTATE BUSINESS. THIS WILL GIVE AN ABSURD RESULT. FROM THE NATURE OF ROYALTY ITSELF, IT CAN BE INFERRED THAT EQUIPMENT SHOULD BE OF INDUSTRIAL, COMMERCIAL OR SCIENTIFIC NATURE AND THE APPELLANT SHOULD USE IT IN ITS BUSINESS FOR EARNING INCOME. THIS IS NOT THE CA SE HERE. IT SAYS THAT WHERE A SHIP OR AIRCRAFT IS LEASED ON CHARTER FULLY EQUIPPED AND MANNED/CREWED BASIS, IT IS COVERED BY ARTICLE 8 OF DTAA. HOWEVER, IF IT IS A BARE BOAT LEASE, THEN IT IS COVERED BY ARTICLE 7 OR IF DTAA CONTAINS CLAUSE OF EQUIPMENT ROYALTY, THEN BY ARTICLE 12. THE LOGIC IS VERY SIMPLE. IN PRESENT CASE, THE APPELLANT IS NOT IN BUSINESS O F FLYING AIRCRAFT AND IT HAS TAKEN FULLY EQUIPPED AND MANNED /CREWED AIRCRAFT ON CHARTER BASIS, THEREFORE PAYMENT OF HIRE CHARGES CAN NOT BE IN NATURE OF ROY ALTY. . THE AO HAS RELIED UPON WEST ASIA MARITIME LTD. VS. ITO, CHENNAI (2008) 111 ITD 155 AND POOMPUHAR SHIPPING CORP. LTD. VS. I TO (2008) 297 ITR (A.T.) FOR ARRIVING AT CONCLUSION THAT AIRCRAFT HIRED BY T HE APPELLANT IS IN NATURE OF EQUIPMENT. THE BASIC FACT IN CASE OF BOTH THESE CAS ES WAS THAT THE ASSESSEE WAS IN BUSINESS OF OPERATING SHIPS. THIS IS A VITAL AND DECIDING FACTOR. AS PER DEFINITION OF EQUIPMENT AS DISCUSSED SUPRA AN ASSET IS EQUIPMENT IF IT IS USED IN BUSINESS OF AN ENTERPRISE. IN PRESENT CASE, THE APPELLANT IS NOT AT ALL ENGAGED IF IT IS USED IN BUSINESS OF AN ENTERPRISE. IN PRESENT CASE, THE APPELLANT IS NOT AT ALL ENGAGED IN OPERATING AIRCRA FT, THEREFORE, BY NO STRETCH OF IMAGINATION, AIRCRAFT CAN BE EQUIPMENT FOR THE APPE LLANT. WITHOUT PREJUDICE TO THIS FINDING, EVEN IF AIRCRAFT IS EQUIPMENT FOR APP ELLANT, IT HAS TAKEN ON FULLY MANNED / CREWED CHARTERED BASIS, THEN ACCORDING KLA US VOGEL COMMENTARY, THE HIRE CHARGES CAN NOT BE IN NATURE OF ROYALTY. 12 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 FURTHER, THE AO HAS HELD THAT PAYMENT MADE TO AIR P ARTNERS INC (USA) IS IN NATURE OF ROYALTY AS PER ARTICLE 12(3)(B) OF INDO-U SA TREATY. THE SAID ARTICLE IS REPRODUCED AS BELOW: . THIS ARTICLE ITSELF PROVIDES AN EXCEPTION THAT IF P AYMENT IS COVERED BY ARTICLE 8, THEN IT SHALL NOT BE TREATED AS ROYALTY. THE PAYMENT FOR AIRCRAFT TAKEN ON FULLY EQUIPPED, CREWED CHARTERED BASIS IS COVERED BY ARTICLE 8 AS PER KLAUS VOGEL COMMENTARY AS DISCUSSED SUPRA, THEREFO RE THIS PAYMENT FALLS OUTSIDE PURVIEW OF ARTICLE 12(3)(B) AND HENCE IT IS NOT IN NATURE OF ROYALTY. . AS PER DISCUSSION SUPRA, IT IS SEEN THAT THE HIRE C HARGES FOR CHARTERED FULLY EQUIPPED AIRCRAFT IS, NOT IN NATURE OF ROYALTY AS P ER DEFINITION OF ROYALTY AS CONTAINED IN 9(1)(VI) OF THE ACT, BECAUSE SUCH AIRC RAFT SHALL NOT BE AN INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT FOR THE APPELLANT. THE PAYMENT IS NOT IN NATURE OF ROYALTY EVEN AS PER RELEVANT DT AA AS DISCUSSED SUPRA. IN VIEW THIS FINDING, I HOLD THAT SINCE THE PAYMENT IS NOT CHARGEABLE TO TAX IN INDIA, THERE IS NO OBLIGATION CAST ON THE APPELLANT TO WITHHOLD TAX ON IT. THIS ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. THIS D ISPOSES OFF RELEVANT PORTION OF GROUND NO. 2.1 FOR AY 2006-07, 2007-08 & 2007-08 WHICH ARE ALLOWED. FROM THE PERUSAL OF THE ABOVE FINDINGS GIVEN BY THE CIT(A) AND FROM THE RECORDS PRODUCED BEFORE THE ASSESSING OFFICER AT THE TIME O F THE PROCEEDINGS UNDER SECTION 201 OF THE ACT, IT CAN BE SEEN THAT THE ASS ESSEE COMPANY ENTERED INTO AN AGREEMENT WITH LONDON AIR CHARTER CENTRE LTD. (U K) AND AIR PARTNER PLC (UAE) BOTH NON-RESIDENT AND MADE PAYMENTS DURING TH E RELEVANT ASSESSMENT YEARS TOWARDS THE HIRING OF AIRCRAFT. THE PAYMENT M ADE BY ASSESSEE COMPANY TO THE NON-RESIDENT BY AVAILING A STANDARD FACILITY OF FERED BY THE PAYEE I.E. NON- RESIDENT COMPANY. ALL TRANSACTIONS ENTERED INTO BY THE ASSESSEE COMPANY WITH THE NON-RESIDENT PAYEES ARE OF SIMILAR CHARACTER AN D CANNOT CLASSIFIED AS ROYALTY AS HELD BY THE ASSESSING OFFICER. THE PAYME NT IS FOR CHARTERED PLANE HIRE OUTSIDE INDIA PAID TO NON-RESIDENT OUTSIDE IND IA. THUS, THE SAID INCOME DOES NOT DEEMED TO HAVE ACCRUED OR ARISE IN INDIA A ND HENCE NOT LIABLE FOR TAX IN INDIA. THEREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). GROUND NO. 1 OF THE REVENUES APPEAL IS DISMISSED. 11. THE LD. DR SUBMITTED THAT AS REGARDS GROUND NO. 2, THE CIT(A) ERRED IN 13 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 DELETING THE ADDITION MADE BY THE ASSESSING OFFICER , BY HOLDING THAT PAYMENT MADE TO WHITE & CASE, THE CONSULTANCY FIRM, IS NO T IN THE NATURE OF FTS BUT FAILING TO APPRECIATE ARTICLE 15(1) OF THE INDO-UK TREATY, DEALS WITH PAYMENTS TO INDIVIDUALS AND DOES NOT APPLY TO PARTNERSHIP FIRMS . FURTHER FAILING TO APPRECIATE THAT SUCH PAYMENTS WOULD BE COVERED UNDE R ARTICLE 13 OF THE TREATY AS FEE FOR TECHNICAL SERVICES. 12. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 4.4 FINDING: THE APPELLANT HAS MADE PAYMENT TO WHITE & CASE, A PARTNERSHIP FIRM OF UK FOR SEEKING CONSULTANCY SERVICES IN RESP ECT OF ISSUE OF IPO. THE SAID FIRM PROVIDED TECHNICAL INPUTS REGARDING CONTE NTS TO BE INCLUDED IN PROSPECTUS IN ACCORDANCE WITH REGULATORY PROVISIONS OF LAW APPLICABLE. THE SERVICES PROVIDED BY WHITE & CASE ARE UNDISPUTEDLY IN NATURE OF FEE FOR TECHNICAL SERVICES AS PER SECTION 9(1)(VII) OF THE ACT. EVEN THE APPELLANT HAS NOT DISPUTED IT. THE ISSUE INVOLVED IS WHETHER THE SERV ICES PROVIDED BY WHITE & CASE CONSTITUTE FTS UNDER RELEVANT INDO-UK DTAA ALS O. . NOW, IN PRESENT CASE, WHITE & CASE, A PARTNERSHIP FIRM RESIDENT OF UK HAS RENDERED LEGAL SERVICES IN UK TO THE APPELLANT. THE SERVICES ARE COVERED IN THE DEFINITION OF PROFESSIONAL SERVICES AS GIVEN IN ART ICLE 15(3). BUT, SINCE THE SERVICES ARE RENDERED IN UK ONLY AND CONDITIONS OF (A) AND (B) ARE NOT SATISFIED, THEREFORE AS PER ARTICLE 15(1), SUCH PAY MENT SHALL BE TAXABLE ONLY IN UK. THE AO CASE IS THAT SINCE THE PAYMENT HAS BEEN MADE TO A PARTNERSHIP FIRM AND NOT TO THE INDIVIDUAL, ARTICLE 15 DOES NOT APPLY. THIS ARGUMENT OF AO IS NOT CORRECT IN VIEW OF FIRST SENTENCE OF ARTICLE 15(1) WHICH TALKS ABOUT THE 14 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 INCOME DERIVED BY AN INDIVIDUAL, WHETHER IN HIS OWN CAPACITY OR AS A MEMBER OF A PARTNERSHIP. THE PARTNERSHIP FIRM CAN PROVIDE SERVICES THROUGH ITS MEMBERS AND COLLECT PAYMENT THROUGH ITS MEMBERS. TH E WORDS PARTNERSHIP APPEARING IN THE ARTICLE IS NOT WITHOUT ANY MEANING . FURTHER, IN CASE OF PARTNERSHIP FIRM, STAY OF A SPECIFIC INDIVIDUAL MEM BER OF PARTNERSHIP IS NOT RELEVANT FOR COUNTING THE PERIOD OF 90 DAYS AS IS C LEAR FROM PROVISIONS OF ARTICLE 15(2), WHICH SAY THAT STAY OF ANY MEMBER OF PARTNERSHIP SHALL BE RELEVANT. A SIMILAR INTERPRETATION HAS BEEN GIVEN I N CASE OF CLIFFORD CHANCE, UK VS. DCIT (2003-TII-53-ITAT-MUM-INTL), WHEREIN IN DO-UK TREATY WAS INVOLVED AS IN THE PRESENT CASE. IN VIEW OF THE DIS CUSSION, IT IS CLEAR THAT IN PRESENT CASE, THE PAYMENT MADE TO WHITE & CASE IS T AXABLE IN UK AND NOT IN INDIA BECAUSE THE SERVICES WERE RENDERED IN UK AND THE FIRM OR ITS MEMBER DID NOT HAVE A FIXED BASE IN INDIA OR THEIR STAY IN INDIA DID NOT EXCEED 90 DAYS. NOW, IT IS SEEN THAT EXCEPTION TO ARTICLE 13(4) AS PROVIDED BY ARTICLE 13(5)(E) BRINGS THE PAYMENT MADE BY THE APPELLANT WITHIN THE PURVIEW OF ARTICLE 15 WHEREIN SUCH PAYMENT BECOMES TAXABLE IN UK AND NOT IN INDIA. WITHOUT PREJUDICE TO THIS FINDING, EVEN IF IT IS ASSUMED TH AT PAYMENT IS COVERED BY ARTICLE 13(4), THEN CRITERION OF MAKE AVAILABLE H AS TO BE SATISFIED BEFORE THE PAYMENT CAN BE CHARACTERIZED AS FTS. THE MEANING AT TACHED TO THE TERM MAKE AVAILABLE HAS BEEN EXPLAINED IN VARIOUS JUDI CIAL DECISIONS. .. .. THE AO HAS RELIED UPON INTERTEK TESTING SERVICES I NDIA PVT. LTD. [2008] 307 ITR 418 (AAR), BUT HAS DRAWN A CONCLUSION DIFFERENT FROM WHAT HAS BEEN DRAWN BY HONBLE SPECIAL BENCH, ITAT MUMBAI IN CASE OF MAHINDRA & MAHINDRA CASE. THUS, RELIANCE OF AO ON THE SAID DEC ISION OF AAR IS MISPLACED. FROM THE DISCUSSION SUPRA, IT IS SEEN THAT UNLESS MAKE AVAILABLE CLAUSE IS SATISFIED, SERVICES CANNOT BE CHARACTERIZED AS F TS UNDER INDO-UK TREATY. THUS, EVEN IF IT IS ASSUMED THAT THE SERVICES PROVI DED BY WHITE & CASE TO THE APPELLANT ARE COVERED UNDER ARTICLE 13(4) AND NOT U NDER ARTICLE 15 BY VIRTUE OF 15 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 EXCEPTION CLAUSE CONTAINED IN ARTICLE 13(5)(3), SUC H SERVICES SHALL NOT BE IN THE NATURE OF FTS AS THE AO HAS NOT ESTABLISHED HOW MA KE AVAILABLE CLAUSE HAS BEEN SATISFIED. THE APPELLANT HAS NOT BEEN TRAINED BY THE FIRM WHITE & CASE FOR DEALING WITH LEGAL MATTERS IN FUTURE. IN VIEW O F THESE FINDINGS, I HOLD THAT THE PAYMENT MADE BY THE APPELLANT TO WHITE & CASE I S NOT IN NATURE OF FTS AND IS THEREFORE NOT CHARGEABLE TO TAX IN INDIA. HE NCE THE APPELLANT IS NOT LIABLE TO DEDUCT TAX ON SUCH PAYMENT. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. THIS DISPOSES OFF RELEVANT PORTION OF GR OUND NO. 2.2 FOR AY 2007-08 AND 2008-09, WHICH ARE ALLOWED. FROM THE PERUSAL OF THE EVIDENCES PRODUCED BY THE A SSESSEE COMPANY DURING THE PROCEEDINGS UNDER SECTION 201 OF THE ACT AND FR OM THE FINDINGS OF THE CIT(A), IT CAN BE SEEN THAT THE ASSESSEE COMPANY EN TERED INTO AN AGREEMENT WITH M/S WHITE & CASE FOR PROFESSIONAL SERVICE REND ERED AS INTERNATIONAL COUNSEL TO DLF LTD. IN CONNECTION WITH IPO ISSUE AN D MADE A PAYMENT. THE PAYMENT MADE TO WHITE & CASE FALL UNDER THE AMBIT O F ARTICLE 15 OF THE DTAA BETWEEN INDIA AND UK AND IS NOT SUBJECTED TO TAX IN INDIA AS THE SAID WHITE & CASE IS PARTNERSHIP FIRM. THE FIRM IS A RESIDENT OF UK WHICH DOES NOT HAVE ANY FIXED BASE REGULARLY IN INDIA AND AGGREGATE STAY IN INDIA DURING THE PERIOD APRIL, 2006 TO MARCH 2007 DOES NOT EXCEED 90 DAYS. HENCE TDS WILL BE NOT APPLICABLE AS PER ARTICLE 15 OF THE DTAA AGREEMENT IN BETWEEN INDIA AND UK. THE ASSESSING OFFICER OVERLOOKED THE VITAL FACT THA T THE PAYMENT IS COVERED UNDER ARTICLE 15 AND NOT UNDER ARTICLE 13 SINCE THE REMITTANCE HAS BEEN MADE TO A NON-RESIDENT PARTNERSHIP FIRM, AS IS ALSO EVID ENT FROM THE INVOICE OF THE PAYEE PRODUCED BY THE ASSESSEE COMPANY. THE BENEFIT OF EXEMPTION UNDER ARTICLE 15 ARE AVAILABLE TO AN INDIVIDUAL AS WELL A S TO A PARTNERSHIP FIRM AND THUS, TAX IS NOT REQUIRED TO BE WITHHELD ON THE CON CERNED PAYMENT. THUS, THE FINDINGS GIVEN BY THE CIT(A) IS CORRECT AND THERE I S NO NEED TO INTERFERE WITH THE SAME. HENCE, GROUND NO. 2 IS DISMISSED. 14. THE LD. DR SUBMITTED THAT AS REGARDS TO GROUND NO. 3, THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER, BY HOLDING THAT 16 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 PAYMENT MADE FOR SURVEY OF AIRCRAFT AND ROUTINE SER VICE ARE NOT IN THE NATURE OF FTS SINCE MAKE AVAILABLE CONDITION IS NOT FULF ILLED, BUT FAILING TO APPRECIATE THE FACT THE RECEIPT WAS NOT REQUIRED TO MAKE SUCH A KNOWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PERMANENT BASIS AND THE SE RVICES WERE PROVIDE IN CONNECTION WITH REVIEW OF AIRCRAFT- RECORDS AND CON DITION SURVEY TO DLF LTD. AND ENABLE IT TO PURCHASE A SECOND HAND AIRCRAFT. 15. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 7.4 FINDING: THE APPELLANT WANTED TO BUY AN OLD AIRCRAFT AND E NTERED INTO AN AGREEMENT WITH GENERAL DYNAMICS AVIATION SERVICES, USA FOR MAKING A SURVEY REPORT OF SAID AIRCRAFT. IT HAS MADE PAYMENT TO GENERAL DYNAMICS AVIATION SERVICES, USA FOR THE SERVICES PROVIDED WH ICH ARE IN NATURE OF REVIEW OF MAINTENANCE HISTORY AND RECORDS, REVIEW OF REQUI RED AIRCRAFT DOCUMENTATION, REVIEW OF REQUIRED FLIGHT MANUALS AN D SUPPLEMENTS ETC. THE SERVICES ARE HIGHLY TECHNICAL IN NATURE AND COULD B E RENDERED BY ONLY AN EXPERT OR PROFESSIONAL PERSON. THE APPELLANT HAS NO T DISPUTED THE HIGHLY TECHNICAL NATURE OF THE SERVICE. THE AO HAS TREATED THESE SERVICES AS FTS UNDER ARTICLE 13(4) OF INDO-USA DTAA. HOWEVER, THE APPELLANT HAS CONTENDED THAT ITS CASE IS NOT COVERED BY SOURCE RULE AS CONT AINED IN SECTION 9(1)(VII)(B) OF THE ACT, WHICH READS AS BELOW: . ACCORDING TO APPELLANT, IT HAS RECEIVED SERVICES I N THE NATURE OF REVIEW OF MAINTENANCE HISTORY AND RECORDS, REVIEW OF REQUIRED AIRCRAFT DOCUMENTATION, REVIEW OF REQUIRED FLIGHT MANUALS AND SUPPLEMENTS E TC. FROM GDAS WHICH WAS LATER PRESENTED TO DLF IN THE FORM OF A REPORT. SINCE THE APPELLANT HAS 17 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 UTILIZED THE SERVICES OUTSIDE INDIA, THEY WOULD FAL L OUTSIDE THE PURVIEW OF SECTION 9(1)(VII) AND SHALL NOT BE HELD TO BE INCOM E DEEMED TO ACCRUE ARISE OUTSIDE INDIA BY THE VIRTUE OF EXCLUSION IN THE CL AUSE B TO SECTION 9(1)(VII). THIS ARGUMENT OF THE APPELLANT IS FALLACIOUS BECAUS E EXCLUSION SHALL BE AVAILABLE ONLY IF SERVICES ARE UTILIZED FOR BUSINES S OR PROFESSION CARRIED ON BY THE PAYER OUTSIDE INDIA OR FOR THE PURPOSES OF MAKI NG OR EARNING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA. ADMITTEDLY, THE APPE LLANT IS ENGAGED IN BUSINESS OF REAL ESTATE AND IT IS NOT IN BUSINESS O F OPERATING AIRCRAFT OUTSIDE INDIA. THE AIRCRAFT HAS BEEN BROUGHT BY THE APPELLA NT JUST FOR ITS TRAVELLING PURPOSE, IN THE SAME WAY AS A BUSINESSMAN BUYS A VE HICLE FOR HIS TRAVELLING PURPOSE. THE AIRCRAFT WAS NOT MEANT TO BE A SOURCE OF INCOME SITUATED OUTSIDE INDIA FOR THE APPELLANT. THEREFORE, CASE OF THE APP ELLANT DOES NOT FALL OUT OF PURVIEW OF PROVISIONS OF SECTION 9(1)(VII)(B) OF TH E ACT. THE SERVICES PROVIDED BY NON-RESIDENT SQUARELY FALL WITHIN DEFINITION OF TEC HNICAL SERVICES UNDER THE DOMESTIC ACT. NOW, WE HAVE TO EXAMINE THE POSITION UNDER INDO-US A DTAA. ARTICLE 13(4) OF SAID DTAA DEFINES TECHNICAL SERVICES AND IT CONT AINS MAKE AVAILABLE CLAUSE. THE MEANING ATTACHED TO MAKE AVAILABLE; BY DIFFERENT JUDICIAL AUTHORITIES HAVE BEEN DISCUSSED SUPRA IN ISSUE NO.2 . THEREFORE, UNLESS THE APPELLANT HAS BEEN ENABLED BY THE NON-RESIDENT SERV ICE PROVIDER TO APPLY THE SAID SERVICE IN FUTURE ON ITS OWN WITHOUT RESORTING TO THE NON-RESIDENT SERVICE PROVIDER, IT CANNOT BE SAID THAT THE SERVICE HAS BE EN MADE AVAILABLE. HONBLE BOMBAY HIGH COURT IN CASE OF DIAMOND SERVICES INTER NATIONAL (P) LTD. VS. UNION OF INDIA [2008-TOIL-268-HC-MUM-IT], HAS REITE RATED THE SAME PRINCIPLE. THE AO HAS NOT ESTABLISHED THAT THE APPELLANT HAS B EEN TRAINED BY GENERAL DYNAMICS AVIATION SERVICES, USA IN THE FIELD OF SUR VEY OF OLD AIRCRAFT SO THAT THAT THE APPELLANT COULD IN FUTURE GENERATE SUCH RE PORT ON ITS OWN. IN VIEW OF THIS, I HOLD THAT THE PAYMENT MADE BY THE APPELLANT TO GENERAL DYNAMICS AVIATION SERVICES, USA IS NOT IN NATURE OF FTS AND IS THEREFORE NOT CHARGEABLE TO TAX IN INDIA. HENCE THE APPELLANT IS NOT LIABLE TO DEDUCT TAX ON SUCH PAYMENT. THE ISSUE IS DECIDED IN FAVOUR OF THE APPE LLANT. 18 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 FROM THE PERUSAL OF RECORDS IT CAN BE SEEN THAT THE ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH M/S GENERAL DYNAMIC AVIATION SERVICE (USA) AND MADE A PAYMENT. AS PER THE AGREEMENT BETWEEN THE ASSESSE E COMPANY AND GENERAL DYNAMIC AVIATION SERVICES (GDAS), THE LATTER HAS RE NDERED AIRCRAFT/RECORDS AND CONDITION SURVEY SERVICES TO THE ASSESSEE COMPA NY. GDAS ONLY EXERCISES ITS SKILL AND KNOWLEDGE IN CONDUCTING THE SURVEY OF THE AIRCRAFT AND ISSUES A REPORT TO THE ASSESSEE COMPANY EXPRESSING ITS OPINI ON ON THE BASIS OF THE SURVEY. THE SAID COMPANY DOES NOT TRANSFER OR MAKE AVAILABLE THE SKILL OR KNOWLEDGE REQUIRED FOR CONDUCTING THE SURVEY AND GE NERATING THE REPORT TO ASSESSEE COMPANY. THUS, THE CONCERNED REMITTANCE CA NNOT BE TERMED AS FEES FOR TECHNICAL SERVICES AS PER THE RELEVANT DTAA AN D IS EXEMPT FROM WITHHOLDING OF TAXES. THE PAYMENTS MADE TO GDAS ARE TOWARDS THE REPORTS TO BE ISSUED BY THEM TO THE ASSESSEE COMPANY. THE REPO RTS SO ISSUED DO NOT INVOLVE ANY TRANSFER OF COMMERCIAL INTEREST OR THE RIGHT TO USE ITS EXPERIENCE TO THE ASSESSEE COMPANY. THERE IS ALSO NO TRANSFER OF MY SKILL OR KNOWLEDGE OF GDAS TO ASSESSEE COMPANY IN THE ISSUANCE OF REPORTS . THE PAYMENTS RECEIVED IS NOT THE ONE FOR THE USE OR THE RIGHT TO USE EXPE RIENCE, BUT IS INSTEAD ONE FOR THE APPLICATION OF EXPERIENCE BY THE NON-RESIDENT P AYEE THE PAYMENTS CANNOT BE CLASSIFIED TO BE IN THE NATURE OF FEES FOR TECHN ICAL SERVICES AS PER THE ACT OR UNDER ARTICLE 12 OF THE RELEVANT DTAA. THEREFORE RE MITTANCE TO GDAS, USA IS EXEMPT FROM WITHHOLDING OF TAX AS PER ARTICLE 7 OF THE DTAA WITH USA AND INDIA. THERE IS NO NEED TO INTERFERE WITH THE FINDI NGS OF THE CIT(A) AS THE CIT(A) HAS TAKEN CORRECT COGNIZANCE OF THESE FACTS. HENCE GROUND NO. 3 IS DISMISSED. 17. THE LD. DR SUBMITTED THAT AS REGARDS TO GROUND NO. 4, THE CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFI CER, BY HOLDING THAT PAYMENT MADE FOR AIRCRAFT MAINTENANCE ARE NOT IN TH E NATURE OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SAME TIME FAILING TO APPRECIATE THE FACT THAT THE RECIPIENT WAS NOT REQU IRED TO MAKE SUCH A KNOWLEDGE OR TECHNICAL EXPERTISE AVAILABLE ON A PER MANENT BASIS AND THE SERVICES WERE PROVIDED IN CONNECTION WITH MAINTENAN CE OR AIRCRAFT. 19 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 18. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 19. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 8.4 FINDING: THE APPELLANT HAS MADE PAYMENT TO GULF STREAM AERO SPACE LTD., UK FOR AIRCRAFT MAINTENANCE WHICH IS IN THE NATURE OF ROUT INE REPAIR AND MAINTENANCE AND INCLUDES LABOUR AND MATERIAL CHARGES. THE AO HA S TAKEN A VIEW THAT THE NON-RESIDENT HAS PROVIDED FTS TO THE APPELLANT. THE NATURE OF JOB DONE BY GULF STREAM AEROSPACE LTD., UK IS LIKE ANOTHER REPA IR JOB, WHICH INCLUDED BOTH MEN AND MATERIAL. THE AO HAS NOT POINTED OUT A NY SPECIAL FEATURE OF THIS REPAIR JOB SO AS TO LABEL IT AS TECHNICAL SERVICE W ITHIN THE MEANING OF SEC 9(1)(VII) OF THE ACT AND ARTICLE 13(4) OF INDO-UK D TAA. IF IT IS TO BE A TECHNICAL SERVICE, THEN ANY KIND OF REPAIR OF A MOTOR VEHICLE SHALL BE IN NATURE OF TECHNICAL SERVICE, WHICH APPEARS TO BE ABSURD. THE APPELLANT CONTENTION IS SUPPORTED BY RATIO OF DECISION IN CASE OF LUFTHANSA CARGO INDIA PVT. LTD. VS. DCIT [2005] 274 ITR 20 (DELHI). THE SERVICES PROVID ED BY NON-RESIDENT DOES NOT QUALIFY TO BE CALLED TECHNICAL SERVICES U/S 9(1 )(VII) OF THE ACT. WITHOUT PREJUDICE TO IT, EVEN IF IT IS ASSUMED THA T THE SERVICES CAN BE CALLED TECHNICAL SERVICES U/S DOMESTIC ACT, IT NEEDS TO BE EXAMINED WHETHER THESE CONSTITUTE TECHNICAL SERVICES UNDER INDO-UK DTAA. A RTICLE 13(4) OF THE TREATY WHICH DEALS WITH FTS CONTAINS MAKE AVAILABLE CLAU SE, WHICH HAS TO BE SATISFIED BEFORE A SERVICE CAN BE CALLED TECHNICAL SERVICE. THE AO HAS NOT MADE OUT A CASE THAT THE APPELLANT HAS BEEN GOT TRA INED BY THE NON-RESIDENT SERVICE PROVIDER TO DO SUCH REPAIR JOB ON ITS OWN I N FUTURE. THUS, MAKE AVAILABLE REQUIREMENT IS NOT SATISFIED WITHOUT WHI CH THE SERVICES CAN NOT BE LABELED AS TECHNICAL SERVICE UNDER INDO-UK DTAA. TH E MEANING ATTACHED TO MAKE AVAILABLE CLAUSE HAS BEEN DISCUSSED IN DETAI L SUPRA IN ISSUE NO. 2. IN 20 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 VIEW OF THESE FINDINGS, I HOLD THAT THE PAYMENT MAD E BY THE APPELLANT IS NOT IN THE NATURE OF FTS AND IS THEREFORE NOT CHARGEABL E TO TAX IN INDIA. HENCE THE APPELLANT IS NOT LIABLE TO DEDUCT TAX ON SUCH PAYME NT. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. FROM THE PERUSAL OF THE RECORDS IT CAN BE SEEN THAT THE ASSESSEE COMPANY MADE PAYMENTS TO GULF STREAM AEROSPACE LTD., UK (GA L) FOR AIRCRAFT MAINTENANCE WHICH IS IN THE NATURE OF ROUTINE REPAI R AND MAINTENANCE AND INCLUDES LABOUR AND MATERIAL CHARGES. THE SAME IS I N THE FORM OF A WORK CONTRACT AS IT IS A COMPOSITE CONTRACT FOR SUPPLY O F LABOUR, MATERIAL AND SERVICES. ALL THESE CONTRACTS ARE IN THE NATURE OF WORK CONTRACTS ONLY AND DOES NOT INVOLVE ANY MANAGERIAL OR CONSULTANCY SERVICE. BESIDES THE ASSESSEE COMPANY DID NOT PAY ANY REMITTANCE IN THE NATURE OF FEES FOR MANAGERIAL, CONSULTANCY OR TECHNICAL SERVICES AS DEFINED IN EX PLANATION 2 TO SEC. 9(1) AND NOT LIABLE TO TDS. THUS, THE CIT(A) RIGHTLY HELD TH AT THE PAYMENT MADE BY THE APPELLANT IS NOT IN THE NATURE OF FTS AND IS THEREF ORE NOT CHARGEABLE TO TAX IN INDIA. HENCE THE APPELLANT IS NOT LIABLE TO DEDUCT TAX ON SUCH PAYMENT. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CI T(A). HENCE GROUND NO. 4 IS DISMISSED. 20. THE LD. DR SUBMITTED THAT AS REGARDS TO 5, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER , BY HOLDING THAT PAYMENT MADE FOR CREW SUPPORT SERVICES ARE NOT IN THE NATUR E OF FTS, SINCE MAKE AVAILABLE CONDITION IS NOT FULFILLED BUT AT THE SA ME TIME FAILING TO APPRECIATE THAT IT WAS NOT INTENDED BY THE ASSESSEE TO HAVE SU CH SERVICE IN THE FORM OF TRAINING OR TRANSFERRING PERMANENT EXPERTISE. 21. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 22. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL 21 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 9.3 FINDING: THE APPELLANT HAS MADE PAYMENT TO ACASS CANADA LT D., CANADA, IN RESPECT OF CREW SUPPORT SERVICES FOR ITS AIRCRAF T FOR A SHORT DURATION OF TIME. THE AO HAS TAKEN A VIEW THAT IT IS IN THE NATURE OF FTS. THE APPELLANT HAS HIRED SERVICE OF A PILOT FOR A SHORT DURATION AND I T IS ANALOGOUS TO ENGAGING A DRIVER FOR ONES CAR. IT IS NOT UNDERSTANDABLE HOW THE SERVICES PROVIDED BY A DRIVER ARE IN NATURE OF TECHNICAL SERVICE. SUCH KIN D OF SERVICES ARE NOT MEANT TO BE COVERED UNDER PROVISIONS OF SECTION 9(1)(VII) OF THE ACT. WITHOUT PREJUDICE TO IT, EVEN IF IT IS ASSUMED TH AT THE SERVICES CAN BE CALLED TECHNICAL SERVICES U/S DOMESTIC ACT, IT NEED S TO BE EXAMINED WHETHER THESE CONSTITUTE TECHNICAL SERVICES UNDER INDO-CANA DA DTAA. ARTICLE 12(4) WHICH DEALS WITH FTS CONTAINS MAKE AVAILABLE CLAU SE, WHICH HAS TO BE SATISFIED BEFORE A SERVICE CAN BE CALLED TECHNICAL SERVICE. THE APPELLANT HAS ARGUED THAT THOUGH SOME DEGREE OF TRAINING HAS BEEN PROVIDED, STILL IT CAN NOT BE SAID THAT THE APPELLANT HAS BEEN TRAINED TO FLY THE AIRCRAFT ON ITS OWN. THE ARGUMENT OF THE APPELLANT CARRIES WEIGHT. FLYING OF AIRCRAFT IS NOT LIKE LEARNING HOW TO DRIVE A VEHICLE. FOR THIS, DGCA GUIDELINES H AVE TO BE OBSERVED AND ONLY AFTER HAVING EXPERIENCE OF FLYING AN AIRCRAFT FOR CERTAIN HOURS, LICENCE TO FLY AN AIRCRAFT IS GIVEN. THE AO HAS NOT ESTABLISHE D THAT THE APPELLANT HAS BEEN TRAINED TO SUCH AN EXTENT THAT IT HAS BECOME E NTITLED TO OBTAIN FLYING LICENCE. THUS, MAKE AVAILABLE REQUIREMENT IS NOT SATISFIED WITHOUT WHICH THE SERVICES CAN NOT BE LABELED AS TECHNICAL SERVICE UN DER INDO-CANADA DTAA. IN VIEW OF THESE FINDINGS, I HOLD THAT THE PAYMENT MAD E BY THE APPELLANT IS NOT IN NATURE OF FTS AND IS THEREFORE, NOT CHARGEABLE T O TAX IN INDIA. HENCE THE APPELLANT IS NOT LIABLE TO DEDUCT TAX ON SUCH PAYME NT. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. AS PER THE FACTS OF THE PRESENT CASE, THE CREW SERV ICES OBTAINED BY THE ASSESSEE TO FLY AIRCRAFT AS THE SAID CREW MEMBER HAS NOT REN DERED ANY KNOWLEDGE, SKILL OR KNOW HOW THAT MAY ENABLE DLF TO FLY THE AIRCRA FT ON ITS OWN IN FUTURE. THEREFORE, THE CIT(A) HAS RIGHTLY HELD THAT SUCH SE RVICES DO NOT FALL UNDER THE 22 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 DEFINITION OF MAKE AVAILABLE AS PER CLAUSE (B) TO A RTICLE 12(4) OF THE DTAA BETWEEN INDIA AND CANADA. THUS, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE GROUND NO. 5 IS DISMI SSED. 23. THE LD. DR SUBMITTED THAT AS REGARDS TO GROUND NO. 6, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER, BY HOLDING THAT PAYMENT MADE FOR ADVERTISEMENT RIGHTS OF THE CIRCLE T GROUND CANNOT BE CHARACTERIZED AS ROYALTY BUT AT THE SAME TIME FAILI NG TO APPRECIATE THAT THE ASSESSEE USED SUCH GROUND RIGHTS FOR FINDING SPONSO RS FOR THE INDIA- PAKISTAN FRIENDLY MATCH AND SUCH PAYMENT WOULD FALL WITHIN T HE PRECINCTS OF SECTION 9(I)(VI) OF THE ACT AND THE ARTICLE 12 OF THE INDO- UAE DTAA. 24. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 25. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 10.3 FINDING: .. .. I HAVE CAREFULLY CONSIDERED VARIOUS SUBMISSIONS M ADE BY THE APPELLANT AND THE ORDER OF THE AO. THE AGREEMENT BE TWEEN THE APPELLANT AND PERCEPT D MARK GULF LLC SHOWS THAT THE APPELLANT HA S TAKEN SPONSORSHIP OF INDIA-PAKISTAN FRIENDSHIP SERIES CRICKET MATCHES PL AYED IN UAE AND THE MALAYSIA TRI SERIES PLAYED IN MALAYSIA. THE APPELLA NT HAS GOT NOTHING TO DO WITH CRICKET GROUND. THE TERM EQUIPMENT HAS NEITHER BEEN DEFINED IN THE ACT NOR IN THE DTAA. THE OXFORD CONCISE DICTIONARY DEFI NES EQUIPMENT AS THINGS NEEDED FOR A PARTICULAR PURPOSE. MACMILLAN DICTIONARY DEFINES IT AS MACHINE OR TOOLS NEEDED FOR A JOB. THE MERRIAM WEBS TERS DICTIONARY DEFINES AN EQUIPMENT AS ALL FIXED ASSETS OTHER THAN LAND A ND BUILDING USED IN A 23 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 BUSINESS ENTERPRISES. A FIXED ASSET IS AN ASSET HEL D WITH THE INTENTION OF BEING USED FOR THE PURPOSE OF PRODUCING OR PROVIDIN G GOODS OR SERVICES AND IS NOT HELD FOR SALE IN THE NORMAL COURSE OF BUSINESS. [ICAI ACCOUNTING STANDARD (AS), 10, ACCOUNTING FOR FIXED ASSETS, PARA 6.1]. F ROM THESE DEFINITIONS, A REASONABLE GUIDANCE CAN BE TAKEN THAT AN EQUIPMENT IS AN ASSET OTHER THAN LAND AND BUILDING AND WHICH IS USED IN A BUSINESS E NTERPRISES. NOW, A CRICKET GROUND IS A FIXED ASSET BUT IT IS LAND AND BUILDIN G. FURTHER, IT IS NOT USED IN BUSINESS OF THE APPELLANT, WHO IS ENGAGED IN REAL E STATE BUSINESS. IN ANY CASE, THE APPELLANT IS NOT SUPPOSED TO DO ANYTHING WITH CRICKET GROUND UNDER AGREEMENT WITH PERCEPT D MARK GULF LLC. THEREFORE, BY NO STRETCH OF IMAGINATION, CRICKET GROUND FITS INTO DEFINITION OF EQUIPMENT AND EVEN IF BY DEFINITION, IT IS EQUIPMENT, IT IS NOT EQUIPMENT FO R THE APPELLANT AS APPELLANT IS NOT USING IT IN ITS BUSINESS. FURTHER, EVEN ASSUMIN G THAT CRICKET GROUND IS EQUIPMENT, THE APPELLANT HAD NO RIGHT TO USE IT. TH E PRINCIPLE USE OF CRICKET GROUND IS TO PLAY THE CRICKET. THE APPELLANT WAS NO T ALLOWED TO USE THE GROUND FOR PLAYING CRICKET. ONLY BRAND NAME OF THE APPELLA NT WAS TO BE FOCUSED ON CERTAIN THINGS IN THE GROUND, WHICH AMOUNTS TO ADVE RTISEMENT AND NOTHING ELSE. SO, THERE IS NO USE OR RIGHT TO USE AVAILABLE TO THE APPELLANT, EVEN IF IT IS ASSUMED THAT CRICKET GROUND IS A EQUIPMENT. .. SINCE CRICKET GROUND CAN NOT BE DESCRIBED AS EQUIP MENT NOR THERE IS USE OR RIGHT TO USE OF IT, THE PAYMENTS MADE BY THE APPELL ANT FOR TAKING SPONSORSHIP OF CRICKET SERIES CAN NOT BE CHARACTERIZED AS ROYAL TY UNDER BOTH DOMESTIC ACT AND THE TAX TREATY. THE CRICKET GROUND IS AN IMMOVABLE PROPERTY AND TH EREFORE THE APPELLANT HAS TAKEN AN ARGUMENT THAT ARTICLE 6 OF RELEVANT DT AA COMES INTO PLAY INSTEAD OF ARTICLE 12. THE ARTICLE 6 TALKS ABOUT TH E INCOME DERIVED FROM IMMOVABLE PROPERTY. HERE, IN PRESENT CASE, PERCEPT D MARK GULF LLC HAS EARNED INCOME WHICH IS DERIVED FROM HIS MARKETING R IGHTS WHICH IT HAS GOT FOR CRICKET SERIES. BY VIRTUE OF ITS MARKETING RIGHT, P ERCEPT D MARK GULF LLC HAS GIVEN SPONSORSHIP TO THE APPELLANT. OBVIOUSLY, THE INCOME IS NOT DERIVED FROM 24 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 IMMOVABLE PROPERTY AND HENCE IN MY CONSIDERED VIEW, ARTICLE 6 OF DTAA DOES APPLY. THE INCOME EARNED BY PERCEPT D MARK GULF LLC IS IN NATURE OF BUSINESS RECEIPT IN ITS HANDS AND IT WOULD BE TAXAB LE IN STATE OF RESIDENCE OF PERCEPT D MARK GULF LLC UNDER ARTICLE 7 OF THE TREA TY BECAUSE ADMITTEDLY, IT HAS NO PE IN INDIA. SINCE THE PAYMENT MADE BY THE APPELLANT TO NON-RES IDENT PERCEPT D MARK GULF LLC IS NOT CHARGEABLE TO TAX IN INDIA, I HOLD THAT THE APPELLANT IS UNDER NO OBLIGATION TO WITHHOLD TAX ON SUCH PAYMENTS. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. IT IS PERTINENT TO NOTE THAT THE ASSESSEE COMPANY E NTERED INTO AN AGREEMENT WITH PERCEPT D MARK GULF LLC (PERCEPT) FOR OBTAININ G THE GROUND RIGHTS IN RESPECT OF THE INDIA-PAKISTAN FRIENDSHIP SERIES CRI CKET MATCHES PLAYED IN UAE. THE ASSESSEE COMPANY WAS TO MAKE PAYMENT TO THE SAI D COMPANY FOR SECURING THE GROUND RIGHTS OF THE MATCHES FROM BOARD OF CRIC KET CONTROL OF INDIA. THE ASSESSEE COMPANY MADE PAYMENT TO PERCEPT D MARK GUL F LLC TOWARDS PUBLICITY EXPENSES DURING THE YEAR WHICH WAS FOR SE CURING THE GROUND RIGHTS WHICH ENABLED IT TO FIND ANY OTHER SPONSORS FOR THE EVENT. THUS, THE PAYMENT IN THIS RESPECT DOES NOT COME UNDER THE PURVIEW OF THE DEFINITION OF ROYALTY AS PROVIDED UNDER SECTION 9(1)(VI) OF THE ACT. THE PAY MENT MADE BY THE ASSESSEE COMPANY MERELY ENABLED IT TO FIND A SPONSOR FOR THE EVENT IN ORDER TO SHARE THE GROUND. THUS, NO INCOME WAS RECEIVED OR DEEMED TO B E RECEIVED IN INDIA OR ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE I N INDIA TO THE NON-RESIDENT PAYEE IN TERMS OF SECTION 5(2) READ WITH SECTION 9 OF THE ACT. THERE IS NO INCOME CHARGEABLE TO TAX WITHIN THE SCOPE OF TOTAL INCOME AS PER SECTION 4 AND SECTION 5 OF THE ACT. THUS, TAX CANNOT BE DEDUCTIBL E, SINCE PAYEE IS RESIDENT OF UAE AND DOES NOT HAVE PE IN INDIA. THEREFORE, THE C IT(A) WAS RIGHT IN DELETING THE SAID ADDITION. THERE IS NO NEED TO INTERFERE WI TH THE FINDINGS OF THE CIT(A). HENCE, GROUND NO. 6 IS DISMISSED. 26. THE LD. DR SUBMITTED THAT AS REGARDS TO GROUND NO. 7, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER, BY HOLDING THAT 25 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 PAYMENT MADE AS A SECURITY DEPOSIT AND THAT THE SUC H AMOUNT WAS RECEIVED BACK BY THE ASSESSEE IN THE SUBSEQUENT YEAR, ACCORD INGLY IT IS NOT AN EXPENDITURE ON THE PART OF THE ASSESSEE WHEREAS IT IS FOUND FROM RECORDS THAT THIS CLAIM IS NOT FACTUALLY CORRECT WITH REGARD TO THE RECEIVING BACK THE SECURITY DEPOSIT AND HENCE IT IS AN EXPENDITURE ENTRY. 27. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 28. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 11.4 FINDING: THE APPELLANT HAS ARGUED THAT THE PAYMENT WAS MAD E TO DALLAS AS SECURITY DEPOSIT. THIS BEING AN ITEM OF BALANCE SHE ET IS NOT AN EXPENDITURE ON PART OF THE APPELLANT. THERE CAN NOT BE ANY INCOME IN HANDS OF NON-RESIDENT, WHICH IS FURTHER EVIDENCED BY THE FACT THAT ENTIRE AMOUNT HAS BEEN RECEIVED BACK IN SUBSEQUENT YEAR. ACCORDINGLY, I HOLD THAT T HERE IS NO OBLIGATION ON PART OF APPELLANT TO WITHHOLD TAX ON SUCH REMITTANC E. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. IT IS PERTINENT TO NOTE THAT THE PAYMENT MADE TO DA LLAS AIRMOTIVE INC., USA WAS IN THE NATURE OF SECURITY DEPOSIT AND FOR HIRING TH E AIRCRAFT ENGINE DURING THE PERIOD THE ORIGINAL ENGINE OF DLF HAD GONE FOR OVER HAULING TO DALLAS. HOWEVER, IN THE NEXT YEAR THE ASSESSEE RECEIVED BACK THE ENT IRE AMOUNT WHICH WAS EARLIER EXTENDED TO DALLAS IN THE FORM OF A SECURIT Y DEPOSIT AND RENTAL FOR ENGINE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETED T HIS ADDITION AND THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, GROUND NO. 7 IS DISMISSED. 29. THE LD. DR SUBMITTED THAT AS REGARDS TO GROUND NO. 8, THE CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE ASSESSIN G OFFICER, BY HOLDING THAT PAYMENT MADE TOWARDS BUSINESS AND PERSONNEL SECURIT Y CONSULTANCY SERVICES 26 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 DID NOT FULFILLED THE CRITERIA OF MAKE AVAILABLE CLAUSE AS PER THE TREATY WITH SINGAPORE BUT AT THE SAME TIME FAILING TO APPRECIAT E AS THE SERVICES WERE PROVIDED TO THE ASSESSEE TO IMPROVE ITS SECURITY PR OFILE ALONG WITH THE SECURITY PROFILE OF OTHER IMPORTANT PERSONS OF THE COMPANY. 30. THE LD. AR RELIED UPON THE ORDER U/S 201 OF THE ACT AND ORDER OF THE CIT(A). 31. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE CIT(A) HELD AS UNDER: 12.4 FINDING: THE SERVICES PROVIDED TO THE APPELLANT ARE IN NAT URE OF TECHNICAL SERVICES WITHIN THE MEANING OF SECTION 9(1)(VII) OF THE ACT. THIS IS NOT DISPUTED BY THE APPELLANT EVEN. HOWEVER, ARTICLE 12(4) OF INDO-SINGAPORE TREATY C ONTAINS MAKE AVAILABLE CLAUSE. THE MEANING ATTACHED TO THIS CLA USE HAS BEEN DISCUSSED SUPRA IN ISSUE NO. 2 AND IT HAS BEEN HELD THAT UNLE SS THE SERVICES PROVIDED BY NON-RESIDENT EQUIP THE RECIPIENT OF SERVICES WITH A DEQUATE EXPERTISE TO THE EXTENT THAT THE RECIPIENT IS IN A POSITION TO UTILI ZE THOSE SERVICES OWN THEIR OWN, THE SERVICES CAN NOT BE CHARACTERIZED AS FTS. IN PRESENT CASE, THE AO HAS NOT ESTABLISHED HOW THE RISK CONTROL REPORT GIV EN BY M/S CONTROL RISK GROUP(S) PTE LTD., SINGAPORE TO THE APPELLANT HAS E NABLED THE APPELLANT TO DO SUCH JOB ON ITS OWN IN FUTURE WITHOUT TAKING HELP O F M/S CONTROL RISK GROUP(S) PTE LTD, SINGAPORE. THERE IS NOTHING IN THE AGREEME NT WHICH SHOWS THAT APPELLANT HAS BEEN GIVEN ANY TRAINING IN THIS REGAR D BY M/S CONTROL RISK GROUP(S) PTE LTD, SINGAPORE. IN VIEW OF THIS, IT CA N NOT BE SAID THAT REQUIREMENT OF MAKE AVAILABLE HAS BEEN SATISFIED. HENCE, I HOLD THAT THE SERVICES PROVIDED BY M/S CONTROL RISK GROUP(S) PTE LTD, SINGAPORE CAN NOT BE CHARACTERIZED AS FTS AND HENCE NOT CHARGEABLE TO TAX IN INDIA. THE APPELLANT IS NOT UNDER OBLIGATION TO WITHHOLD TAX O N SUCH PAYMENT. THE ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT. 27 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 FROM THE PERUSAL OF RECORDS IT CAN BE SEEN THAT THE ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH M/S CONTROL RISK GROUP PTE, SINGAPORE. THE ASSESSEE COMPANY WAS TO MAKE PAYMENT OUTSIDE INDIA TO CONTRO L RISK FOR SECURING THE BUSINESS & PERSONNEL SECURITY SERVICES IN IPO. THU S, THE ASSESSEE COMPANY MADE PAYMENT DURING THE RELEVANT ASSESSMENT YEARS T OWARDS PROVIDING BUSINESS & PERSONNEL SECURITY CONSULTANCY SERVICES FOR IPO. THUS, INCOME CANNOT BE DEEMED TO HAVE ACCRUED OR ARISE IN INDIA AND HENCE THE SAME IS NOT LIABLE FOR TAX IN INDIA AS M/S CONTROL RISK GROUP P TE, SINGAPORE DOES NOT HAVE ANY PE IN INDIA. THUS, THE CIT(A) RIGHTLY DELETED T HIS ADDITION. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE , GROUND NO. 8 IS DISMISSED. 32. FACTS OF THE CASE FOR A.Y. 2008-09 ARE SIMILAR THEREFORE, NO SEPARATE FINDINGS ARE GIVEN HERE AND THE FINDINGS GIVEN FOR A.Y. 2007-09 ARE APPLICABLE IN TOTALITY FOR EACH ISSUES CONTESTED BY THE REVENU E. 33. IN RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED AND BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2019 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 10/10/2019 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 28 ITA NO. 3253, 3254, 3487, 3488/DEL/2012 ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 07.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 07.08.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK