Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 8537 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 7 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-09-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
I
Next Hearing Date
14-06-2017
Assessment Year
2007-2008
Appeal Filed On
05-02-2014
Judgement Text
ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 1 OF 37 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND S S GODARA JM] ITA NO. 363/AHD/2014 ASSESSMENT YEAR: 2007-08 GUJARAT GAS TRADING CO. LTD. ......... ....APPELLANT 2, SHANTISADAN, NEAR PARIMAL GARDEN, ELLISBRIDGE, AHMEDABAD-360006 [PAN : AAACK 7745 B] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 4(1), AHMEDABAD ITA NO. 467/AHD/2014 ASSESSMENT YEAR: 2007-08 DCIT .............APPELLANT CIRCLE-4, AHMEDABAD VS. GUJARAT GAS TRADING CO. LTD. .......................RESPONDENT AHMEDABAD-360006 [PAN : AAACK 7745 B] ITA NO. 364/AHD/2014 ASSESSMENT YEAR: 2008-09 GUJARAT GAS TRADING CO. LTD. ......... ....APPELLANT AHMEDABAD-360006 [PAN : AAACK 7745 B] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 4(1),AHMEDABAD ITA NO. 468/AHD/2014 ASSESSMENT YEAR: 2008-09 DCIT .............APPELLANT CIRCLE-4, AHMEDABAD ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 2 OF 37 VS. GUJARAT GAS TRADING CO. LTD. .......................RESPONDENT AHMEDABAD-360006 [PAN : AAACK 7745 B] ITA NO. 2371/AHD/2013 ASSESSMENT YEAR: 2009-10 GUJARAT GAS TRADING CO. LTD. ......... ....APPELLANT AHMEDABAD-360006 [PAN : AAACK 7745 B] VS. ACIT .......................RESPONDENT CIRCLE 4, AHMEDABAD ITA NO. 2394AHD/2013 ASSESSMENT YEAR: 2009-10 DCIT .............APPELLANT CIRCLE-4, AHMEDABAD VS. GUJARAT GAS TRADING CO. LTD. .......................RESPONDENT AHMEDABAD-360006 [PAN : AAACK 7745 B] APPEARANCES BY: SN SOPARKAR & PARIN SHAH FOR THE ASSESSEE RP MAURYA FOR THE REVENUE DATE OF CONCLUDING THE HEARING : 12.09.2017 DATE OF PRONOUNCING THE ORDER : 21.09.2017 O R D E R PER PRAMOD KUMAR AM: 1. THESE ARE THREE CROSS APPEALS FILED BY THE ASSES SEE AND REVENUE RESPECTIVELY FOR ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 A ND ARE DIRECTED AGAINST RESPECTIVE ORDERS OF THE CIT(A), AHMEDABAD IN THE M ATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. ITA NO. 363/AHD/2014 : AY: 2007-08 ASSESSEES APP EAL 2. IN THIS APPEAL FILED BY THE ASSESSEE, GRIEVANCES RAISED ARE AS FOLLOWS:- ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 3 OF 37 1. THE ORDER PASSED BY LEARNED CIT (APPEALS) IS BAD IN LAW AND ON FACT AND HENCE IT IS REQUESTED THAT THE SAME BE SUITABLY MOD IFIED. 2. THE LEARNED CIT (APPEALS) GROSSLY ERRED IN LA W AND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWA NCE OF RS.23,09,009/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE I. T. ACT READ WITH RULE 8D OF THE I.T. RULES OUT OF EXPENDITURE INCURRED WH OLLY AND EXCLUSIVELY FOR EARNING THE INCOME CHARGEABLE TO TAX. 2.1 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION BY INVOKING THE PROVISIONS OF SECTION 14A OF THE I.T. ACT AND RULE 8D OF THE I.T. RULES IGNORING THE FACT THAT THE EXPENDITURE W HICH CAN BE ATTRIBUTED TO THE EXEMPTED INCOME AMOUNTED TO RS.18,176/- WHIC H THE APPELLANT ASSESSEE HAD SUO MOTO ADDED BACK TO THE TOTAL INCOM E FOR THE YEAR UNDER APPEAL AND THAT THE REST OF THE EXPENDITUR E HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME INCL UDED IN THE TOTAL INCOME. 2.2 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION WITHOUT APPRECIATING THE FACT THAT THE AO HAD MISIN TERPRETED RULE 8D AND THAT THE IMPUGNED ADDITION WAS MADE WITHOUT CARRYIN G OUT ANY PRELIMINARY EXERCISE OF VERIFYING IF THE EXPENDITUR E SUO MOTO DISALLOWED BY THE APPELLANT IS CORRECT OR NOT AS PER SUB RULE 1 OF RULE 8D. FURTHER, THE APPELLANT HAS NOT CLAIMED THAT IT HAS NOT INCUR RED ANY EXPENDITURE TO EARN INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME . HENCE, THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CI T (A) IS NOT IN ACCORDANCE WITH SUB RULE 1 OF RULE 8D OF THE I.T. R ULES, 1962. 2.3 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION BY INVOKING THE PROVISIONS OF RULE 8D OF THE I.T. RULE S, 1962 IN UTTER DISREGARD TO THE FACT THAT THE SAID RULE, WHICH WAS INTRODUCED WITH EFFECT FROM 24TH MARCH, 2008 SHALL APPLY ONLY WITH EFFECT FROM A.Y. 2008-09 AND IS NOT APPLICABLE TO A.Y. 2007-08 AS HELD BY THE HO N'BLE HIGH COURT IN THE CASE OF GODREJ BOYCE MANUFACTURING CO. LTD. VS. DCI T. 2.4 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE MADE BY THE AO WITHO UT APPRECIATING THE RATIO OF THE VARIOUS CASE LAWS WHICH WERE SPECIFICA LLY BROUGHT HIS NOTICE IN THE WRITTEN SUBMISSION FILED BEFORE HIM. IT IS THEREFORE PRAYED THAT THE IMPUGNED DISALLOWAN CE MADE BY THE AO MAY PLEASE BE DELETED. 3 YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER A ND/OR AMEND ALL OR ANY OF GROUNDS BEFORE THE FINAL HEARING OF APPEAL. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 4 OF 37 3. THE SHORT GRIEVANCE OF THE ASSESSEE THUS IS THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.21,58,380/- UNDER SECTION 14A OF THE ACT. TO ADJUDICATE ON THIS GRIEVANCE, ONLY A FEW MATERIAL F ACTS NEED TO BE TAKEN NOTE OF. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE HUGE INVESTMENTS GENERAT ING INTEREST FREE INCOME BUT SUO MOTU DISALLOWED ONLY RS.18,176/- UNDER SECTION 14A. HE REJECTED THIS CONTENTION AS UNACCEPTABLE. HE NOTED THAT THOUGH T HERE ARE NO DIRECT EXPENSES, AS AVERAGE INVESTMENTS, YIELD TAX EXEMPT INCOME, ARE O F RS.46.54 CRORES, % OF SUCH EXPENSES MUST BE DISALLOWED UNDER RULE 8D. THE ADM ISSIBLE DISALLOWANCE WAS THUS QUANTIFIED AT RS.23,27,185/-. IT WAS IN THIS BACKD ROP THAT A FURTHER DISALLOWANCE OF RS.23,09,009/- WAS MADE. AGGRIEVED, ASSESSEE CARRI ED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOW IN FURTHE R APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 5. AS LEARNED COUNSEL FOR THE ASSESSEE RIGHTLY POIN TS OUT, RULE 8D HAS NO APPLICATION IN THE PRESENT YEAR AS IT IS HELD TO BE APPLICABLE WITH EFFECT FROM THE ASSESSMENT YEAR 2008-09 IN THE CASE OF GODREJ BOYCE MFG CO LTD VS. DCIT [(2010) 328 ITR 81 (BOM)]. THE ONLY BASIS OF IMPUGNED DISA LLOWANCE IS RULE 8D BUT THEN, AS NOTED ABOVE, IT WAS NOT REALLY APPLICABLE IN THE YEAR BEFORE US. IN THIS VIEW OF THE MATTER, WE UPHOLD THE PLEA OF THE ASSESSEE AND DELE TE THE IMPUGNED DISALLOWANCE OF RS.23,09,009/-. 6. THE APPEAL OF THE ASSESSEE IS THUS ALLOWED. ITA NO. 467/AHD/2014 : AY: 2007-08 DEPARTMENTS A PPEAL 7. IN THIS APPEAL FILED BY THE ASSESSING OFFICER, F OLLOWING GRIEVANCES ARE RAISED:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,40,95,000/- MADE ON ACCOUNT OF DISALLOWANCE U/ S 40(A)(I) R.W.S. 195 OF THE ACT, FOR FAILURE TO COMPLY WITH THE PROVISIO NS OF CHAPTER XVII-B FROM THE COMMISSION PAID TO BG ENERGY HOLDING LTD., A NO N-RESIDENT COMPANY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 8. SO FAR AS THIS ISSUE IS CONCERNED, IT WOULD BE A PPROPRIATE TO TAKE NOTE OF SOME OF THE UNDISPUTED FACTS. THE ASSESSEE BEFORE US IS A PUBLIC COMPANY ENGAGED IN THE BUSINESS OF DISTRIBUTION AND TRANSMISSION OF NATURA L GAS. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE MADE EXPENDITURE AGGREG ATING TO RS. 2,40,95,000/- ON ACCOUNT OF PAYMENT OF COMMISSION ON PURCHASE OF GA S, TO BG ENERGY HOLDINGS LTD, A UK BASED COMPANY. THE ASSESSING OFFICER WAS OF T HE VIEW THAT THE PAYMENTS SO MADE BY THE ASSESSEE TO BG ENERGY WERE TAXABLE IN T HE HANDS OF THE RECIPIENT AND ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 5 OF 37 THE ASSESSEE WAS, THEREFORE, REQUIRED TO DEDUCT TAX AT SOURCE FROM THESE PAYMENTS. IT WAS HIS CONTENTION THAT SINCE ASSESSEE HAS NOT S O DEDUCTED TAX AT SOURCE, THE PAYMENTS MADE TO BG ENERGY HOLDING LTD WERE TO BE D ISALLOWED UNDER SECTION 40(A)(I) . ACCORDINGLY, THE ASSESSING OFFICER DISA LLOWED RS.2,40,95,000/- IN THE COMPUTATION OF INCOME. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE BY OBSERVING AS FOLLOWS:- 7.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSIONS MADE BY THE APPELLANT. THE PURCHASE COMMISSION AND GUARANT EE COMMISSION IS BEING PAID ON THE BASIS OF TRIPARTITE AGREEMENT BET WEEN GUJARAT GAS COMPANY LTD. AND BRITISH GAS INDIA PRIVATE LIMITED AND BE ENERGY HOLDING LTD. MADE ON 30 TH MAY, 2001. THIS ISSUE HAS BEEN DECIDED IN THE APP ELLANTS CASE FOR ASST. YEAR 2009-10 BY THE LEARNED CIT(A)-V III, AHMEDABAD VIDE ORDER DATED 25.07.2013. THE LEARNED CIT(A)-VIII, A HMEDABAD HAS HELD AS UNDER:- 'I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, THE FACTS OF THE CASE AND VARIOUS WRITTEN SUBMISSION GIVEN BY THE APPELLANT. THE A.O. HAS TREATED THE COMMISSION PAID BY THE APPELLATE TO BG ENERGY HOLDI NGS LTD. (BGEH) AS PAYMENT FOR TECHNICAL SERVICES (CONSULTANCY) RENDER ED IN INDIA. HE APPLIED THE PROVISIONS OF SECTION 9(L)(VII) READ WITH SECTI ON 195 OF THE ACT AND HELD THAT SINCE THE TAX WAS NOT DEDUCTED THE EXPENDITURE CANNOT BE ALLOWED. THE APPELLANT HAS CONTESTED THE ADDITION ON THE GROUND THAT THE PAYMENT WAS NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES, IT WA S A COMMISSION WHICH HAS BEEN PAID OUTSIDE INDIA FOR SERVICES RENDERED OUTSI DE INDIA BY IN NON-RESIDENT AND THEREFORE, IT WAS NOT TAXABLE AND ACCORDINGLY, NO TAX IS DEDUCTED BY THE APPELLANT NOW THE ISSUE IS WHETHER, LIST OF ALL, THE SERVICES OF BGEH ARE IN THE NATURE OF FTS AND SECONDLY, IN CASE IT WAS A COMMISSION WHETH ER PROVISIONS OF SECTION 195 WERE APPLICABLE AND THE APPELLANT WAS BOUND TO DEDUCT TAX ON THE SAME. THE FACTS SHOW THAT THE APPELLANT HAS MADE FOLLOWIN G PAYMENT OF COMMISSION:- PURCHASE COMMISSION : RS. 38,45,000 PAYMENT GUARANTEE COMMISSION : RS. 79,79,000 TOTAL : RS. 1,18,24,000 THE PURCHASE COMMISSION HAS BEEN PAID AS BGEH NEGOT IATED A GAS PURCHASE AGREEMENT WITH CAIRN INDIA LTD FOR SUPPLY OF GAS TO THE APPELLANT. THE COMMISSION WAS PAID AT THE RATE OF 1%\ OF ITS A NNUAL GAS PURCHASES AT CEILING PRICE. THE PAYMENT GUARANTEE COMMISSION HAS BEEN PAID TO B GEH AS IT PROVIDED A CORPORATE GUARANTEE TO CAIRN ENERGY LTD ON BEHALF O F THE APPELLANT, BGEH WAS THE PRIMARY OBLIGOR TO THE SELLING PARRY FOR TH E GAS PURCHASE CONTRACT. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 6 OF 37 THE FACTS REGARDING THE QUANTUM OF PAYMENT ARE NOT DISPUTED AS IT IS EVIDENCE BY THE AGREEMENTS AND THE A.O. HAS ALSO NOT DISPUTE D THE SAME. AS PER EXPLANATION 2 BELOW CLAUSE (VII) OF SUB-SECT ION (1) OF SECTION 9 OF THE I.T. ACT 'FEES TECHNICAL SERVICES' MEANS ANY CONSID ERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGER IAL TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR A NY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION OR WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER T HE HEAD 'SALARIES'. NOW IT WOULD ALSO BE USEFUL TO EXAMINE THE MEANING OF WORD 'COMMISSION'. THE TERM COMMISSION HAS NOT BEEN DEFINED IN THE INC OME TAX ACT IN SECTION? OF THE INCOME TAX ACT. HOWEVER, EXPLANATION BELOW S ECTION 194H OF THE INCOME TAX ACT HAS DEFINED COMMISSION AS UNDER: 'COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEI VED OR RECEIVABLE , OR INDIRECTLY, BY A PERSON ACTING ON B EHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFESSIONA L SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ART ICLE OF THING, NOT BEING SECRIRITES.' SIMILARLY CLAUSE 2 OF THE EXPLANATION DEFINES THE E XPRESSION PROFESSIONALS SERVICES AS UNDER: 'PROFESSIONAL SERVICES MEANS SERVICES RENDERED BY A PERSON IN THE COURSE OF CARRYING ON A LEGAL, MEDICAL, ENGINEERING OR ARCHITECTURAL PROFESSION OR ACCOUNTANCY OR TECHNICAL CONSULTANCY OR INTERIOR DECORATION OR SUCH OTHER PROFESSION AS IS NOTIFIED BY THE BOARD FOR THE PURPOSE OF SUB SECTION 44AA'. THE ABOVE DEFINITION SHOW THAT THE COMMISSION MEANS THE PAYMENT RECEIVED OR RECEIVABLE BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SOME SERVICES WHICH SHOULD NOT BE PROFESSIONAL SERVICES OR TECHNICAL SERVICES OR FOR SOME SERVICES IN THE COUR SE OF BUYING OR SELLING OF GOODS, VALUABLE ARTICLE OR THING. AFTER EXAMINING THE PAYMENT MADE BY THE APPELLANT TO BGEH IT IS APPARENT THAT T HE COMMISSION HAS BEEN PAID FOR NEGOTIATING PURCHASE OF GAS ON BEHALF OF THE APPELLANT THIS PAYMENT IS NOT IN THE MEANING OF TECHNICAL SER VICES OR PROFESSIONAL SERVICES. A PERUSAL OF THE AGREEMENT W ITH BGEH ALSO SHOW THAT IT WAS A PURE COMMISSION. THE SERVICES RE NDERED DOES NOT FALL IN THE CATEGORY OF TECHNICAL SERVICES, MANAGER IAL SERVICES AS WELL AS CONSULTANCY SERVICES. IT WAS A SIMPLE ACT OF NEGOTI ATION CARRIED OUT BY A FOREIGN AGENT FOR AN INDIAN COMPANY. RELIANCE IS ALSO PLACED ON THE DECISIONS OF J.K.(BO MBAY) LTD. (118 1TR 312 (DEL), LINDE AG (62 ITD 330] AND UPS SCS (ASIA] LTD. (50 SOT ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 7 OF 37 268 (MUM.)) WHEREIN THE PROPOSITION LAID DOWN IS TH AT MERELY BECAUSE THE FOREIGN SELLING AGENT HAS PROVIDED PROCUREMENT SERVICES, IT WOULD NOT FALL UNDER THE CATEGORY OF 'MANAGERIAL SERVICES ' SO AS TO APPLY THE PROVISIONS OFS.9(L)(VII) OF THE ACT THE BOMBAY HIGH COURT IN THE CASE OF J.K.(BOMBAY) LTD,, (SUPRA) HAS REFERRED AN ARTICLE ON 'MANAGEMENT SCIENCE' IN ENCYCLOPEDIA 747, WHEREIN IT IS STATED THAT THE MANAGEMENT IN ORGANIZATIONS INCLUDE AT LEAST THE FOLLOWING: (A ) DISCOVERING, DEVELOPING, DEFINING AND EVALUATING THE GOALS OF TH E ORGANIZATION AND THE ALTERNATIVE POLICIES THAT WILL LEAD TOWARDS THE GOALS; (BJ GETTING THE ORGANIZATION TO ADOPT THE POLICIES; (C) SCRUTINIZIN G THE EFFECTIVENESS OF THE POLICIES THAT ARE ADOPTED AND (D) INITIATING ST EPS TO CHANGE POLICIES WHEN THEY ARE JUDGED TO BE LESS EFFECTIVE THAN THEY OUGHT TO BE. MANAGEMENT THUS PERVADES ALL ORGANIZATIONS. FURTHER RELIANCE IS ALSO PLACED ON THE ORDERS OF AN GELIQUE INTERNATIONAL (55 SOT 226 (DEL)), ADIDAS SOURCING LTD. (21 ITR (T RIB.) 697 (DEL.)) AND SUKANI ENTERPRISE ITA NO. 1330/M/2011, WHEREIN ALSO, THE PROPOSITION LAID DOWN IS THAT SERVICES PROVIDED BY THE FOREIGN SELLING COMMISSION AGENT CANNOT BE CATEGORIZED AS MANAGERIA L SERVICES SO AS TO INVOKE PROVISIONS OF S.9(1)(VII) OF THE ACT. THEREFORE, IN MY CONSIDERED OPINION AND IN VIEW OF THE PRECEDING DISCUSSION THE SERVICES RENDERED SHOULD BE CATEGORI ZED AS 'COMMISSION'. ACCORDINGLY THE PAYMENT IS BEYOND THE SCOPE AND MEANING OF SECTION UNDER SECTION 195 WAS NOT THERE. THE PAYMENT HAS DIRECTLY HAS BEEN REMITTED ABROAD AND THEREFORE, IT ALSO CANNOT BE SAID THAT IT HAS BEEN RECEIVED BY SOME AGENT IN INDIA. THE HONOURABLE SUPREME COURT OF INDIA IN THE CASE O F TOSHOKU (SUPRA) HAS HELD THAT COMMISSION EARNED BY THE NON-RESIDENT FOR ACTING AS THE SELLING AGENT FOR THE INDIAN EXPORTER, WHEREIN SUCH NON-RESIDENT WAS RENDERING SERVICES FROM OUTSIDE INDIA DOES NOT ACCR UE IN INDIA. IN THE PRESENT CASE BEFORE ME ALSO, THE FOREIGN AGENT IS A RESIDENT OF UK FROM YOU'RE THE NEGOTIATIONS HAVE BEEN CARRIED OUT FOR W HICH THE COMMISSION HAS BEEN PAID, AND THEREFORE, THE ISSUE BEFORE ME I S DIRECTLY AND SQUARELY COVERED BY THE APEX COURT DECISION. IN VIEW OF THE ABOVE MENTIONED FACTS AND CIRCUMSTAN CES, IT IS HELD THAT THE APPELLANT WAS NOT LIABLE TO DEDUCT TAX ON THE C OMMISSION OF RS. 1,18,24,000/-. THE DISALLOWANCE MADE BY THE AO IS A CCORDINGLY DIRECTED TO BE DELETED.' 7.3 RESPECTFULLY FOLLOWING THE DECISION OF THE LE ARNED CIT(A)-VIII, AHMEDABAD FOR ASST. YEAR 2009-10, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELETED. 9. THE ASSESSEE IS AGGRIEVED OF THE RELIEF SO GRANT ED BY THE CIT(A) AND IS IN APPEAL BEFORE US. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 8 OF 37 10. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF APPLIC ABLE LEGAL POSITION. 11. WE FIND THAT THE ISSUE OF TAXABILITY OF COMMISS ION IN THE HANDS OF A NON- RESIDENT CAME UP FOR A DETAILED EXAMINATION BEFORE THIS TRIBUNAL, IN THE CASE OF DCIT VS. WELSPUN CORP LTD [(2017) 55 ITR (TRIB) 405 (AHD )] AND THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY OBSERVING AS FOL LOWS:- 31. THE SCHEME OF TAXABILITY IN INDIA, SO FAR AS T HE NON-RESIDENTS, ARE CONCERNED, IS LIKE THIS. SECTION 5 (2), WHICH DEALS WITH THE TAXABILITY OF INCOME IN THE HANDS OF A NON-RESIDENT, PROVIDES THAT 'THE TOT AL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NON-RESIDENT INCLUDES ALL INCO ME FROM WHATEVER SOURCE DERIVED WHICH (A) IS RECEIVED OR IS DEEMED TO BE R ECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON; OR (B) ACCRUES OR A RISES OR IS DEEMED TO ACCRUE OR ARISE TO HIM IN INDIA DURING SUCH YEAR'. THERE I S NO DISPUTE THAT SINCE NO PART OF THE OPERATIONS OF THE RECIPIENT NON-RESIDENTS IS CARRIED OUT IN INDIA, NO INCOME ACCRUES TO THESE NON-RESIDENTS IN INDIA. THE CASE O F THE REVENUE HINGES ON INCOME WHICH 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 RELEVANT 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 O R FROM ANY PROPERTY IN INDIA, OR THROUGH OR FROM ANY ASSET OR SOURCE OF IN COME 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 INCOM E AS IS REASONABLY ATTRIBUTABLE 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 CA RRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARN ING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA; OR (C)** ** **' EXPLANATION 1-.* ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 9 OF 37 EXPLANATION 2.- FOR THE PURPOSES OF THIS CLAUSE, 'F EES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CON SIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTAN CY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PER SONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBL Y, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD' SALARIES'.' * NOT RELEVANT FOR OUR PURPOSES 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 OP ERATIONS OF THE RECIPIENT'S BUSINESS, AS COMMISSION AGENT, WAS CARRIED OUT IN I NDIA. EVEN THOUGH DEEMING FICTION UNDER SECTION 9(1)(I) IS TRIGGERED ON THE F ACTS OF THIS CASE, ON ACCOUNT OF COMMISSION AGENT'S BUSINESS CONNECTION IN INDIA, IT HAS NO IMPACT ON TAXABILITY IN THE HANDS OF COMMISSION AGENT BECAUSE ADMITTEDLY NO BUSINESS OPERATIONS WERE CARRIED OUT IN INDIA, AND, THEREFORE, EXPLANAT ION 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-RESIDE NTS UNDER SECTION 9(1)(I), BUT, NEITHER THESE RULINGS ARE BINDING PRECEDENTS FOR US NOR ARE WE PERSUADED 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 THE EARLIER RULING IN THE CASE OF RAJIV MALHOTRA, I N 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 WOR KED FOR PROCURING PARTICIPATION BY OTHER NON-RESIDENT ENTITIES IN A F OOD AND WINE SHOW IN INDIA, AND THE CLAIM OF THE ASSESSEE WAS THAT SINCE THE AGENT HAS NOT CARRIED OUT ANY BUSINESS OPERATIONS IN INDIA, THE COMMISSION AGENT WAS NOT CHARGEABLE TO TAX IN INDIA, AND, ACCORDINGLY, THE ASSESSEE HAD NO OBLIGA TION TO DEDUCT TAX AT SOURCE FROM SUCH COMMISSION PAYMENTS TO THE NON-RESIDENT A GENT. ON THESE FACTS, THE AUTHORITY FOR ADVANCE RULING, INTER ALIA, OPINED TH AT 'NO DOUBT THE AGENT RENDERS SERVICES ABROAD AND PURSUES AND SOLICITS EXHIBITORS THERE IN THE TERRITORY ALLOTTED TO HIM, BUT THE RIGHT TO RECEIVE THE COMMISSION ARI SES IN INDIA ONLY WHEN EXHIBITOR PARTICIPATES IN THE INDIA INTERNATIONAL FOOD & WINE SHOW (TO BE HELD IN INDIA), AND MAKES FULL AND FINAL PAYMENT TO THE APPLICANT I N INDIA' AND THAT 'THE COMMISSION INCOME WOULD, THEREFORE, BE TAXABLE UNDE R SECTION 5(2)(B) READ WITH SECTION 9(1)(I) OF THE ACT'. THE AUTHORITY FOR ADVA NCE RULING ALSO HELD THAT 'THE FACT THAT THE AGENT RENDERS SERVICES ABROAD IN THE FORM OF PURSUING AND SOLICITING PARTICIPANTS AND 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. WHEN NO OPERA TIONS 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 INCOME 'DEEMED TO ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 10 OF 37 ACCRUE OR ARISE IN INDIA' FOR THE PURPOSE OF SECTIO N 5(2)(B). THE POINT OF TIME WHEN COMMISSION AGENT'S RIGHT TO RECEIVE THE COMMIS SION 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 SEIS IN OF. THE REVENUE'S CASE BEFORE US HINGES ON THE APPLICABILITY OF SECTION 9(1)(I) A ND, IT IS, THEREFORE. IMPORTANT TO ASCERTAIN AS TO WHAT EXTENT WOULD THE RIGOUR OF SEC TION 9(1)(I) BE RELAXED BY EXPLANATION 1 TO SECTION 9(1)(I). WHEN WE EXAMINE T HINGS FROM THIS PERSPECTIVE, THE INEVITABLE CONCLUSION IS THAT SINCE NO PART OF THE OPERATIONS OF THE BUSINESS OF THE COMMISSION AGENT IS CARRIED OUT IN INDIA, NO PA RT OF THE INCOME OF THE COMMISSION AGENT CAN BE BROUGHT TO TAX IN INDIA. IN THIS VIEW OF THE MATTER, VIEWS EXPRESSED BY THE HON'BLE AAR, WHICH DO NOT FETTER O UR INDEPENDENT OPINION ANYWAY IN VIEW OF ITS LIMITED BINDING FORCE UNDER S . 245S OF THE ACT, DO NOT 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 EITH ER, AND THAT THESE RULINGS AT LEAST HAVE PERSUASIVE VALUE. WE HAVE NO QUARREL WIT H THIS PROPOSITION. WE HAVE, WITH UTMOST CARE AND DEEPEST RESPECT, PERUSED THE A BOVE RULINGS RENDERED BY THE HON'BLE AUTHORITY FOR ADVANCE RULING. WITH GREA TEST RESPECT, BUT WITHOUT SLIGHTEST HESITATION, WE HUMBLY COME TO THE CONCLUS ION THAT WE ARE NOT PERSUADED 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, INTE R ALIA, PROVIDES THAT THE INCOME BY WAY OF TECHNICAL SERVICES PAYABLE BY A PERSON RE SIDENT 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. E XPLANATION 2 TO SECTION 9(1)(VII) DEFINES 'FEES FOR TECHNICAL SERVICES' AS ANY CONSIDERATION (INCLUDING ANY LUMPSUM CONSIDERATION) FOR THE RENDERING OF ANY MAN AGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISIONS OF S ERVICES OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR A NY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEA D 'SALARIES' [RELEVANT PORTION HIGHLIGHTED BY 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 AN Y MANAGERIAL, TECHNICAL AND CONSULTANCY SERVICES'. AS WE DO SO, IT IS USEFUL TO BEAR IN MIND THE FACT THAT EVEN GOING BY THE STAND OF THE ASSESSING OFFICER, AT BES T SERVICES RENDERED BY THE NON-RESIDENT TO THE AGENT INCLUDED TECHNICAL SERVIC ES BUT IT IS FOR THIS REASON THAT THE AMOUNTS PAID TO THESE AGENTS, ON ACCOUNT OF COM MISSION ON EXPORTS, SHOULD BE TREATED AS FEES FOR TECHNICAL SERVICES. EVEN PRO CEEDING ON THE ASSUMPTION THAT THESE NON-RESIDENT AGENTS DID RENDER THE TECHN ICAL SERVICES, WHICH, AS WE WILL SEE A LITTLE LATER, AN INCORRECT ASSUMPTION AN YWAY, WHAT IS IMPORTANT TO APPRECIATE IS THAT THE AMOUNTS PAID BY THE ASSESSEE TO THESE AGENTS CONSTITUTED CONSIDERATION FOR THE ORDERS SECURED BY THE AGENTS AND NOT THE SERVICES ALLEGED RENDERED BY THE AGENTS. THE EVENT TRIGGERING CRYSTA LLIZATION OF LIABILITY OF THE ASSESSEE, UNDER THE COMMISSION AGENCY AGREEMENT, IS THE EVENT OF SECURING ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 11 OF 37 ORDERS AND NOT THE RENDITION OF ALLEGED TECHNICAL S ERVICES. IN A SITUATION IN WHICH THE AGENT DOES NOT RENDER ANY OF THE SERVICES BUT S ECURES 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 FOR THE PRINCIPAL I.E. THE ASSESSEE, THE AGENT IS NOT ENTIT LED TO ANY COMMISSION. CLEARLY, THEREFORE, 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 AMOUNTS PAID BY THE ASSESSEE TO ITS NON-R ESIDENT AGENTS, EVEN IN THE EVENT OF HOLDING THAT THE AGENTS DID INDEED RENDER TECHNICAL SERVICES, CANNOT BE SAID TO BE CONSIDERATION FOR RENDERING OF ANY MANAG ERIAL, TECHNICAL OR CONSULTANCY SERVICES (EMPHASIS BY UNDERLINING SUPPL IED BY US)'. THE SERVICES RENDERED BY THE AGENTS, EVEN IF THESE SERVICES 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 TECHNIC AL SERVICES NOR THE QUANTIFICATION OF THESE AMOUNTS HAVE ANY RELATION W ITH THE QUANTUM OF THESE TECHNICAL SERVICES. THE KEY TO TAXABILITY OF AN AMO UNT UNDER SECTION 9(1)(VII) IS THAT IT SHOULD CONSTITUTE 'CONSIDERATION' FOR RENDI TION 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 H AVE PERFORMED THE SO CALLED TECHNICAL 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 C ARRIED OUT BY NON-RESIDENTS FOR INDIAN PRINCIPALS IS CONCERNED. IT DOES NOT NEE D MUCH OF A CEREBRAL EXERCISE TO FIND OUT WHETHER THE INCOME FROM THE BUSINESS CA RRIED ON BY A NON-RESIDENT ASSESSEE, AS A COMMISSION AGENT AND TO THE EXTENT I T CAN BE SAID TO DIRECTLY OR INDIRECTLY ACCRUING THROUGH OR FROM ANY BUSINESS CO NNECTION IN INDIA, IS 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 U NDER SECTION 9(1)(I) READ WITH PROVISO THERETO, AS WE HAVE SEEN IN THE EARLIE R DISCUSSIONS, HOLDS THE KEY, AND LAYS DOWN THAT ONLY TO THE EXTENT THAT WHICH TH E OPERATIONS OF SUCH A BUSINESS IS CARRIED OUT IN INDIA, THE INCOME FROM S UCH A BUSINESS IS TAXABLE IN INDIA. WHEN NO OPERATIONS OF THE BUSINESS ARE CARRI ED ON INDIA, THERE IS NO TAXABILITY OF THE PROFITS OF SUCH A BUSINESS IN IND IA EITHER. THE QUESTION THEN ARISES WHETHER IN A SITUATION IN WHICH, IN THE COUR SE 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 SECTIO N 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 SERVICES' AND TAXED AS SUCH UNDER SECTION 9(1)(VII). THIS QUE STION DOES NOT POSE MUCH DIFFICULTY EITHER. IN THE LIGHT OF THE DISCUSSIONS IN THE FOREGOING PARAGRAPH, UNLESS THERE IS A SPECIFIC AND IDENTIFIABLE CONSIDERATION FOR THE RENDITION OF TECHNICAL SERVICES, TAXABILITY UNDER SECTION 9(1)(VII) DOES N OT GET TRIGGERED. THEREFORE, IRRESPECTIVE OF WHETHER ANY TECHNICAL SERVICES ARE RENDERED DURING THE COURSE OF CARRYING ON SUCH AGENCY COMMISSION BUSINESS ON BEHA LF OF INDIAN PRINCIPAL, THE CONSIDERATION FOR SECURING BUSINESS CANNOT BE TAXED UNDER SECTION 9(1)(VII) AT ALL. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 12 OF 37 THIS PROFITS OF SUCH A BUSINESS CAN HAVE TAXABILITY IN INDIA ONLY TO THE EXTENT SUCH PROFITS RELATE TO THE BUSINESS OPERATIONS IN I NDIA, 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 ASSESS EE, THEREFORE, DID NOT HAVE ANY TAX LIABILITY IN INDIA IN RESPECT OF THE C OMMISSION AGENCY BUSINESS SO CARRIED OUT. 37. ON A MORE FUNDAMENTAL NOTE, HOWEVER, IT IS ALSO A SETTLED LEGAL POSITION BY NOW THAT THE SERVICES OF THE NATURE RENDERED BY THE SE COMMISSION AGENTS CANNOT ANYWAY BE TREATED AS FEES FOR TECHNICAL SERV ICES ANYWAY. VIEWED THUS, EVEN THE DISCUSSION ON WHETHER THE AMOUNTS IN QUEST ION COULD BE TREATED AS 'CONSIDERATION' FOR TECHNICAL SERVICES, MAY BE REND ERED ACADEMIC IN EFFECT. LEARNED CIT(A) HAS VERY WELL SUMMARIZED THE JUDICIA L PRECEDENTS IN SUPPORT OF THIS LINE OF REASONING, AND, IN AN ERUDITE AND EXTE NDED DISCUSSION, DEALT WITH EACH LIMB OF THE DEFINITION OF TECHNICAL SERVICES. THESE FINDINGS ARE REPRODUCED BY US EARLIER IN THIS ORDER. WHILE, FOR THE SAKE OF BREVITY, WE NEED TO REPEAT EACH OF THESE REASONS ANALYSED BY THE LEARNED CIT(A), SU FFICE TO SAY THAT WE APPROVE HIS WELL-REASONED FINDINGS AND LINE OF REASONING, A ND WE WILL ALSO BRIEFLY TOUCH UPON THIS ASPECT OF THE MATTER. BEFORE WE DO SO, WE MAY TAKE NOTE OF SOME OF THE CLAUSES IN A TYPICAL COMMISSION AGREEMENT ENTER ED INTO BY THE ASSESSEE WITH ITS COMMISSION AGENTS. THE KEY PROVISIONS IN T HIS AGREEMENT, A COPY OF WHICH IS PLACED BEFORE US AT PAGES 103 TO 109 OF TH E PAPER-BOOK, ARE AS FOLLOWS: ARTICLE 5 - AGENT'S OBLIGATION THE AGENT SHALL CARRY OUT ALL THE DUTIES NORMALLY R ENDERED BY AN AGENT INCLUDING BUT NOT LIMITED TO THE FOLLOWING: 5.1 TO ACT EXCLUSIVELY ON BEHALF OF THE PRINCIPAL A ND NOT SOURCE, PROCURE OR MARKET PRODUCTS OF SIMILAR TYPE MANUFACTURED BY COMPETITIVE COMPANIES WITHOUT PRIOR WRITTEN CONSENT OF THE PRINCIPAL. 5.2 TO USE ITS BEST ENDEAVORS AND FACILITIES TO DEV ELOP, EXPAND AND PROMOTE DILIGENTLY, THE SALE AND THE MARKET FOR THE PRODUCT S. THE AGENT WILL BE RESPONSIBLE OF MAKING THE NECESSARY MARKET PLANS AN D ESTABLISH THE MARKETING NETWORK OF REPRESENTATIVES TO HELP PROMOT E WELSPUN PRODUCTS . 5.3 TO PROVIDE THE PRINCIPAL WITH INFORMATION SUCH AS MARKER DEVELOPMENTS, ACTIVITIES OF COMPETITORS, INTENTIONS AND PLANS OF CLIENTS TO THE MAXIMUM OF HIS KNOWLEDGE. 5.4 ENDEAVOR TO PROVIDE THE PRINCIPAL PROMPT ADVANC E INFORMATION REGARDING TENDERS. TO FORWARD TO THE PRINCIPAL TEND ER DOCUMENTS, INQUIRIES ETC, WITH FULL TECHNICAL SPECIFICATIONS W ELL AHEAD - AS MUCH AS HE CAN - OF TENDER CLOSING. 5.5 THE AGENT ON BEHALF OF THE PRINCIPAL, WILL PURC HASE TENDER DOCUMENTS AND FORWARD THE SAME TO THE PRINCIPAL WEL L AHEAD - AS MUCH AS HE CAN - OF TENDER CLOSING. THE COST OF PURCHASE OF SUCH TENDER DOCUMENTS SHALL BE REIMBURSED BY THE PRINCIPAL TO T HE AGENT. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 13 OF 37 5.6 TO ASSIST FOR CLAIMS AND COMPLAINTS (IF SAY) TH AT MAY ARISE FROM THIRD PARTIES AND HELP TO REACH APPROPRIATE SETTLEMENT IN CLOSE CO-ORDINATION WITH THE PRINCIPAL. 5.7 THE AGENT WILL NOT ENTER INTO AGREEMENTS OR CON TRACTUAL OBLIGATIONS &. CREATE ANY FINANCIAL LIABILITIES ON BEHALF OF THE P RINCIPAL, WITHOUT THE PRINCIPAL'S PRIOR WRITTEN CONSENT. 5.8 THE AGENT HEREBY NOMINATES MR. HOSSAM KAWASH AS THEIR CONTACT POINT WHO WILL BE TOTALLY RESPONSIBLE FOR THE PRINC IPAL'S BUSINESS FOR CLARITY OF COMMUNICATION & EXPEDITIOUS ACTION. 5.9 TO ASSIST THE PRINCIPAL IN ALL POSSIBLE WAY, AS AND WHEN REQUESTED BY THE PRINCIPAL FOR THE FULFILLMENT OF ITS OBLIGATION S, IN CASE OF A CONTRACT WITHIN THE TERRITORY. IT INCLUDES ASSISTING THE PRI NCIPAL IN IDENTIFYING SUBCONTRACTORS LIKE LOGISTICS, SHIPPERS, CARGO HAND LING AGENCIES FOR SMOOTH EXECUTION OF SUCH CONTRACTS. 5.9A TO SEND THE PRINCIPAL PERIODIC REPORTS ON BUSI NESS ACTIVITY. 5.9B TO KEEP THE PRINCIPAL CONTINUOUSLY APPRISES OF ALL RELEVANT POLITICAL/ ECONOMIC CHANGES WHICH WOULD AFFECT TIE BUSINESS, 5.9C TO UNDERTAKE NOT TO DIVULGE SALES DOCUMENTS, C ATALOGUES, PRICES ETC. TO COMPETITORS AND THEIR AGENTS AND ASSOCIATES. ARTICLE 7 PRINCIPAL'S OBLIGATIONS DURING THE CONTINUANCE OF THIS AGREEMENT THE PRINCI PAL AGREES : 7.1 TO GIVE THE AGENT FULL SUPPORT FOR PROMOTING AN D CREATING MARKET FOR THE PRODUCTS OF THE PRINCIPAL IN THE TERRITORY. 7.2 TO INFORM THE AGENT ON RECEIPT OF AN INQUIRY FR OM THE TERRITORY REQUIRING DIRECT SUPPLY . 7.3 THE AGENT SHALL BE ENTITLED TO COMMISSION AS AG REED UPON IN THE CONTRACT. 7.4 TO TAKE INTO CONSIDERATION THE RECOMMENDATIONS MADE BY THE AGENT WHILE MAKING THE OFFER. 7.5 TO PROVIDE ALL INFORMATIVE DATA, CATALOGUES AND TECHNICAL MATERIAL (ALL IN THE ENGLISH LANGUAGE) REGARDING THE PRINCIPAL'S PRO DUCTS AND ACTIVITIES AND KEEP THE AGENT INFORMED ABOUT ALL RELEVANT CHAR GES. 7.6 TO OFFER COMPETITIVE PRICES AS FAR AS POSSIBLE TO ENABLE THE SALE OF THE PRODUCTS AS THE AGENT IS ONLY ENTITLED FOR COMMISSI ONS AND NOT FIXED SALARY ON HIS WORK. 7.7 THE PRINCIPAL NOMINATES MR. RANJIT LALA AS THE CONTACT PERSON WITH THE AGENT FOR ALL CORRESPONDENCES AND COMMUNICATION S. ARTICLE 9 - TERMINATION. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 14 OF 37 9.1 THIS AGREEMENT SHALL REMAIN VALID FOR A PERIOD OF ONE YEAR FROM THE DATE OF SIGNING. THE SAID AGREEMENT CAN ALSO BE TERMINAT ED BY EITHER PARTY ANYTIME GIVING NOTICE TO THE OTHER PARTY OF AT LEAS T 90 DAYS IN ADVANCE BY FAX AND FOLLOWED BY REGISTERED LETTER STATING REASONS F OR THE TERMINATION. THE AGREEMENT CAN BE REINSTATED FOR A FURTHER PERIOD OF TWO YEARS BASED ON MUTUAL AGREEMENT AND THEN AFTER ITS TERMINATION ANO THER PERIOD OF FIVE YEARS. 9.2 IN THE EVENT OF THE TERMINATION, THE AGENT WILL FURNISH ALL THE RELEVANT INFORMATION TO THE PRINCIPAL AND WILL BE RESPONSIBL E FOR REALIZATION OF PAYMENTS OUTSTANDING TILL DATE WITHIN THE TERRITORY . ALSO THE AGENT SHALL RETURN ALL THE CUSTOMERS RECORDS AND OTHER DA TA RELATING TO THE COMPANY'S BUSINESS OR SERVICES WHICH MAY BE IN HIS POSSESSION. 9.3 IN THE EVENT OF TERMINATION, IF ANY CONTRACT IS CONCLUDED AFTER THE TERMINATION DATE, BUT THE EXERCISE HAS COMMENCED PR IOR TO THE TERMINATION DATE, THE AGENT IS ENTITLED FOR THE APPLICABLE COMM ISSIONS. SALES COMMISSION FOR THE SONATRACH GK3 PROJECT WELSPUN WILL PAY GLOBAL SYNERGY INTERNATIONAL LTD. IN ITS CAPACITY AS AGENT FOR WELSPUN A SALES COMMISSION, B ASED ON THE FOB MILL SALES PRICE FOR THE GK 3 PROJECT EQUAL TO: (I) 2% OF THE FOB MILL VALUE IN U.S. DOLLARS FOR THE OR DERED QUANTITY. ALL SALES COMMISSIONS SHALL BE PAID IN U.S. DOLLARS TO THE BANK ACCOUNT TO BE ADVISED BY GLOBAL SYNERGY, DETAILS OF WHICH WILL BE PROVIDED BY THE AGENT. THE SALES COMMISSION SHALL BE PAYABLE BY WEL SPUN TO GLOBAL SYNERGY INTERNATIONAL LTD. AS INTERIM PAYMENTS ON P RORATE BASIS AFTER REALIZATION OF THE PAYMENTS RECEIVED BY THE P RINCIPAL WITHIN A REASONABLE TIME BUT NOT EXCEEDING 30 DAYS FROM RECE IPT OF PAYMENT BY THE PRINCIPAL. SALES COMMISSION FOR THE SONATRACH GK3 PROJECT BY THE VIRTUE OF THIS ADDENDUM, WELSPUN AGREE TO PA Y GLOBAL SYNERGY INTERNATIONAL LTD., IN ITS CAPACITY AS AGEN T FOR WELSPUN, A SALES COMMISSION, BASED ON THE FOB MILL SALES PRI CE FOR THE GK 3 PROJECT EQUAL TO: (I) 4.10% OF THE FOB MILL V ALUE IN U.S. DOLLAR FOR THE QUANTITY SHIPPED IS LAS T (18') SHIPMENT. (A) GLOBAL SYNERGY INTERNATIONAL LTD AGREES TO UNCONDIT IONALLY TO FULFILL THE SCOPE SET THEREIN BY THE VIRTUE OF THIS ADDENDUM. (B) THIS COMMISSION IS OVER THE ABOVE THE COMMISSIO N PAYABLE BY WELSPUN TO GLOBAL SYNERGY AS SPECIFIED IN ANNEXURE- 1 OF AGENCY AGREEMENT DATED 29TH DAY OF JUNE, 2008. ALL SALES COMMISSION SHALL BE PAID IN U.S. DOLLARS TO THE BANK ACCOUNT TO BE ADVISED BY GLOBAL SYNERGY, DETAILS OF WHICH ARE AVA ILABLE WITH WELSPUN. UNLESS OTHERWISE AGREED, THE SALES COMMISS ION SHALL BE PAYABLE BY WELSPUN TO GLOBAL SYNERGY INTERNATIONAL LTD., AS ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 15 OF 37 INTERIM PAYMENTS ON PRORATE BASIS AFTER REALIZATION OF THE PAYMENTS RECEIVED BY THE PRINCIPAL WITHIN A REASONABLE TIME BUT NOT E XCEEDING 30 DAYS FROM RECEIPT OF PAYMENT BY WELSPUN. 38. AS IS CLEAR FROM THE ABOVE PROVISIONS OF THE AG REEMENT, THE WORK THAT THE AGENT HAS TO DONE UNDER THIS AGREEMENT, AS IS STATE D UNAMBIGUOUSLY IN THE AGREEMENT ITSELF, IS TO 'CARRY OUT ALL THE DUTIES N ORMALLY RENDERED BY AN AGENT' INCLUDING BUT NOT LIMITED TO THE ACTIVITIES SPECIFI ED THEREIN. THE CONSIDERATION FOR WHICH THE PAYMENT MADE TO THE COMMISSION AGENT IS O BTAINING OF THE ORDERS AND NOT ANY SERVICES PER SE. THE CONSIDERATION IS COMPU TED ON THE BASIS OF BUSINESS PROCURED. OBVIOUSLY, IF THERE ARE NO BUSINESS GENER ATED FOR THE PRINCIPAL, THE AGENT GETS NOTHING. QUITE CLEARLY, WHAT IS DONE BY THE AGENT IS NOT A RENDITION OF SERVICE BUT PURE ENTREPRENEURIAL ACTIVITY. THE WORK ACTUALLY UNDERTAKEN BY THE AGENT IS THE WORK OF ACTING AS AGENT AND SO PROCURI NG BUSINESS FOR THE ASSESSEE BUT AS THE CONTEMPORARY BUSINESS MODELS REQUIRE THE WORK OF AGENT CANNOT SIMPLY AND ONLY BE TO OBTAIN THE ORDERS FOR THE PRO DUCT, AS THIS OBTAINING OF ORDERS IS INVARIABLY PRECEDED BY AND FOLLOWED BY SE VERAL PREPARATORY AND FOLLOW UP ACTIVITIES. THE DESCRIPTION OF AGENT'S OBLIGATIO N SETS OUT SUCH COMMON ANCILLARY ACTIVITIES AS WELL BUT THAT DOES NOT OVER RIDE, OR RELEGATE, THE CORE AGENCY WORK. THE CONSIDERATION PAID TO THE AGENT IS ALSO BASED ON THE BUSINESS PROCURED AND THE AGENCY AGREEMENTS DONOT PROVIDE FO R ANY INDEPENDENT, STANDALONE OR SPECIFIC CONSIDERATION FOR THESE SERV ICES. THE SERVICES RENDERED UNDER THE AGREEMENT CANNOT, THEREFORE, BE CONSIDERE D TO BE TECHNICAL SERVICES IN NATURE OR CHARACTER. THE SERVICES RENDERED IN THE C OURSE OF RENDERING AGENCY SERVICES ARE ESSENTIALLY BUSINESS SERVICES AND TO O BTAIN THE BUSINESS. WE HAVE ALSO NOTED THAT, SO FAR AS RENDITION OF TECHNICAL S ERVICES IS CONCERNED, ONE OF THE MAIN POINTS IN THE CASE OF THE REVENUE, AS EVIDENT FROM A PLAIN READING OF THE IMPUGNED ORDER UNDER SECTION 201, IS THAT 'MANUFACT URING OF SPECIALIZED PIPE WAS A HIGHLY TECHNICAL ACTIVITY INVOLVING VERY COMP LEX TECHNICAL EXERCISE OF TECHNOLOGY AND SKILLED LABOUR AND FINEST GRADE OF R AW MATERIAL' AND THAT 'OBVIOUSLY, TO PROCURE THE ORDERS, THE ASSESSEE COM PANY WILL NEED SPECIALIST AGENTS WHO CAN UNDERSTAND THE NITTY GRITTY OF THE A SSESSEE'S BUSINESS AND CAN DEMONSTRATE THE ASSESSEE'S BUSINESS PROFILE AND QUA LITY OF PRODUCTS OF THE ASSESSEE TO THE POTENTIAL CLIENTS TO CONVINCE THEM TO ENTER INTO A CONTRACT WITH THE ASSESSEE COMPANY JUST BECAUSE A PRODUCT IS HIGH LY TECHNICAL DOES NOT CHANGE THE CHARACTER OF ACTIVITY OF THE SALE AGENT. WHETHER A SALESMAN SELLS A HANDCRAFTED SOUVENIR OR A TOP OF THE LINE LAPTOP, H E IS SELLING NEVERTHELESS. IT WILL BE ABSURD TO SUGGEST THAT IN THE FORMER CASE, HE IS SELLING AND THE LATTER, HE WILL BE RENDERING TECHNICAL SERVICES. THE OBJECT OF THE SALESMAN IS TO SELL AND FAMILIARITY WITH THE TECHNICAL DETAILS, WHATEVER BE THE WORTH OF THOSE TECHNICAL DETAILS, IS ONLY TOWARDS THE END OF SELLING. IN A T ECHNOLOGY DRIVEN WORLD THAT WE LIVE IN, EVEN SIMPLEST OF DAY TO DAY GADGETS THAT W E USE ARE FAIRLY TECHNICAL AND COMPLEX. UNDOUBTEDLY WHEN A TECHNICAL PRODUCT IS BE ING SOLD, THE PERSON SELLING THE PRODUCT SHOULD BE FAMILIAR WITH TECHNICAL SPECI FICATIONS OF THE PRODUCT BUT THEN THIS ASPECT OF THE MATTER DOES NOT ANYWAY CHAN GE THE ECONOMIC ACTIVITY. NOTHING, THEREFORE, TURNS ON THE DETAILS OF THE PRO DUCTS BEING TECHNICAL. IT WAS ALSO NOTED THAT BY THE ASSESSING OFFICER THAT 'IT I S A VERY TECHNICAL EXERCISE TO OBTAIN THE CONTRACTS SINCE IT INVOLVES COMPLEX PROC ESS REQUIRING ELABORATE ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 16 OF 37 DISCUSSION, TECHNICAL EXPERTISE AND PRESENT OF COMP LEX TECHNICAL PRESENTATION, ON BEHALF OF THE ASSESSEE, WHICH CAN ONLY BE DONE B Y A SPECIALIST IN THIS FIELD SO AS TO CONVINCE THE CLIENTS ABOUT WELSPUN'S SUITABIL ITY TO THE CONTRACT'. THIS AT BEST SIGNIFIES COMPLEXITY IN THE BUSINESSES AND THE NEED OF TECHNICAL INPUTS IN THE PROCESS OF BUSINESSES, PARTICULARLY WHEN THE PR ODUCTS BEING DEALT WITH ARE TECHNICAL PRODUCTS, BUT THEN MERELY BECAUSE TECHNIC AL INPUTS ARE NEEDED IN CARRYING OUT BUSINESS ACTIVITY, IT DOES NOT BECOME A TECHNICAL SERVICE RATHER THAN A BUSINESS ACTIVITY. AT THE COST OF REPETITION, WE MUST EMPHASIZE THE IMPORTANT DISTINCTION BETWEEN A BUSINESS ACTIVITY, REQUIRING UNDERSTANDING OF RELATED TECHNOLOGY, AND RENDITION OF TECHNICAL SERVICES SIM PLICTOR. IN ANY CASE, WHAT HAS BEEN DESCRIBED AS A TECHNICAL SERVICE IS THE SERVIC E BEING RENDERED TO THE BUYER BUT THE PAYMENT RECEIVED BY THE COMMISSION AGENTS I S NOT FOR THIS SERVICE PER SE BUT FOR GENERATING BUSINESS ORDERS FOR THE ASSESSEE . GENERATING BUSINESS OR SECURING ORDERS IS AN ENTREPRENEURIAL ACTIVITY AND CANNOT, BY ANY STRETCH OF LOGIC, BE TREATED AS A TECHNICAL SERVICE PER SE. THE SAME IS THE POSITION WITH REGARD TO ASSISTANCE WITH RESPECT OF LOGISTICS, SUCH AS SHIPP ING AND HANDLING SERVICES, WITH RESPECT TO SALE FORECASTING, WITH RESPECT TO GATHER ING INFORMATION ON MARKETS, BUSINESS ENVIRONMENT AND ON SPECIFIC BUYERS AND WIT H RESPECT TO DEVELOPMENT OF SALES NETWORK. ALL THESE SERVICES ARE ESSENTIALL Y INTEGRAL PART OF, AND ARE THUS AIMED AT, DEVELOPING BUSINESS FOR THE ASSESSEE AND SECURING ORDERS FOR THE ASSESSEE FROM THE RIGHT PERSONS. NEITHER THESE SERV ICES CAN BE VIEWED ON A STANDALONE BASIS DIVORCED FROM THE ECONOMIC ACTIVIT Y OF SECURING ORDERS, NOR ANY PAYMENT CAN BE SAID TO BE FOR RENDITION OF THESE SE RVICES INASMUCH AS IT IS NOT THE RENDITION OF THESE SERVICES BUT SECURING BUSINE SS OF THE ASSESSEE WHICH TRIGGERS THE INCOME ACCRUING TO THE NON-RESIDENT AG ENTS OF THE ASSESSEE AND IT IS SECURING OF BUSINESS FOR THE ASSESSEE WHICH IS THE PROXIMATE CAUSE OF THE INCOME ACCRUING TO THE ASSESSEE. THIS ISSUE IS ALSO COVERED, IN FAVOUR OF THE ASSESSEE, BY A COORDINATE BENCH DECISION IN THE CAS E OF DY. CIT V. TROIKAA PHARMACEUTICALS LTD. [IT APPEAL NO. 2028/AHD/13 AND CO NO 13/AHD/14] AND VICE VERSA, WHEREIN IT HAS BEEN, INTER ALIA, OBSERV ED AS FOLLOWS: '5. AS REGARDS THE REFERENCES TO SECTION 9(1)(VII), AS MADE BY THE ASSESSING OFFICER AND THE LEARNED DEPARTMENTAL REPRESENTATIVE , WE FIND THAT ASPECT OF THE MATTER IS ALSO COVERED, IN FAVOUR OF THE ASSESS EE, BY A LARGE NUMBER OF JUDICIAL PRECEDENTS- INCLUDING HON'BLE MADRAS HIGH COURT'S JUDGMENT IN THE CASE OF CIT V. FARIDA LEATHER CO. [(2016) 66 TAXMAN N.COM 321 (MADRAS) ], WHEREIN THEIR LORDSHIPS HAVE, INTER ALIA, OBSERVED AS FOLLOWS: 5. THE MAIN CONTENTION OF THE LEARNED COUNSEL FOR T HE ASSESSEE/RESPONDENT IS THAT THE AGENCY COMMISSION/SALES COMMISSION PAID BY THE ASSESSEE TO NON-RESIDENT AGENTS, FOR THE SERVICES RENDERED BY T HEM, OUTSIDE INDIA, IN PROCURING EXPORT ORDERS FOR THE ASSESSEE, WOULD NOT ATTRACT OR PARTAKE THE CHARACTER OF 'FEES FOR TECHNICAL SERVICES' AS EXPLA INED IN THE CONTEXT OF 9(1)(VII) OF THE ACT AND THEREFORE, THERE IS NO SCO PE FOR THE APPLICATION OF THE PROVISIONS OF SECTION 195 OF THE ACT (TAX DEDUCTED AT SOURCE). IT IS ALSO CONTENDED THAT AS THE NON-RESIDENT AGENTS HAVE NEIT HER BUSINESS CONNECTION IN INDIA NOR THEY HAVE PERMANENT ESTABLI SHMENT IN INDIA, THEY ARE LIABLE TO BE TAXED IN INDIA. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 17 OF 37 5.1 YET ANOTHER CONTENTION OF THE LEARNED COUNSEL F OR THE ASSESSEE IS THAT: (A) THE ASSESSEE PAID THE AMOUNT BY WAY OF COMMISSI ON TO FOREIGN AGENTS FOR THE SERVICES RENDERED OUTSIDE INDIA; (B) THE TA X DEDUCTION AT SOURCE (TDS) IS REQUIRED TO BE MADE ON ALL PAYMENTS TO NON -RESIDENTS, ONLY IF SUCH PAYMENTS ARE LIABLE TO BE TAXED IN INDIA. (C) FOLLO WING THE DECISION OF THIS COURT, CIT V. FAIZAN SHOES (P.) LTD. [2014] 367 ITR 155/226 TAXMAN 115/48 TAXMANN.COM 48 (MAD.) , THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE, WHEN THE NON-RESIDENT AGENT PROVIDES SERVIC ES OUTSIDE INDIA ON PAYMENT OF COMMISSION. 5.2 THE CONTENTION OF THE REVENUE IS THAT SUCH SERV ICES ARE ATTRACTED BY EXPLANATION (2) TO SECTION 9 (1) (VII) OF THE ACT A ND THEREFORE TDS CERTIFICATE IS ESSENTIAL. 6. WHETHER THIS CONTENTION IS CORRECT, IS THE ISSUE TO BE DECIDED. 7. IN ORDER TO APPRECIATE THIS CONTENTION, IT IS NE CESSARY TO CONSIDER THE RELEVANT PROVISIONS OF THE ACT: (I) SECTION 40(A)(I) OF THE ACT : 'SECTION 40 - AMOUNTS NOT DEDUCTIBLE: NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION S 30 TO 38, THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCO ME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSI ON', (A) IN THE CASE OF ANY ASSESSEE (I) ANY INTEREST (NOT BEING INTEREST ON A LOAN ISSUED F OR PUBLIC SUBSCRIPTION BEFORE THE 1ST DAY OF APRIL, 1938), ROYALTY, FEES F OR TECHNICAL SERVICES OR OTHER SUM CHARGEABLE UNDER THIS ACT, WHICH IS PAYAB LE, (A) OUTSIDE INDIA; OR (B) IN INDIA TO A NON- RESIDENT, NOT BEING A COMPANY OR TO A FOREIGN COMPA NY, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTIO N 139: PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING TH E PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1 ) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE IN COME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. EXPLANATION: FOR THE PURPOSES OF THIS SUB-CLAUSE, (A) 'ROYALTY' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VI) OF SUB-SECTION (1) OF SECTION 9: (B) 'FEES FOR TECHNICAL SERVICES' SHALL HAVE THE SAME M EANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB-SECTION (1) OF SECTION 9: ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 18 OF 37 (IA) THIRTY PER CENT OF ANY SUM PAYABLE TO A RESIDE NT, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVIIB AND SUCH T AX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139. PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING TH E PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1 ) OF SECTION 139 THIRTY PER CENT OF, SUCH SUM SHALL BE ALLOWED AS A DEDUCTION I N COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAI D. PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DE DUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS O F CHAPTER XVII-B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEF AULT UNDER THE FIRST PROVISO TO SUB-SECTION (1) OF SECTION 201, THEN, FO R THE PURPOSE OF THIS SUB- CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DE DUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO.' (II) EXPLANATION 2 TO SECTION 195(1) OF THE ACT : 'SECTION 195 - OTHER SUMS: (1) ANY PERSON RESPONSIB LE FOR PAYING TO A NON- RESIDENT NOT BEING A COMPANY, OR TO A FOREIGN COMPA NY, ANY INTEREST (NOT BEING INTEREST REFERRED TO IN SECTION 194LB OR SECT ION 194LC) OR SECTION 194LD OR ANY OTHER SUM CHARGEABLE UNDER THE PROVISI ONS OF THIS ACT (NOT BEING INCOME CHARGEABLE UNDER THE HEAD 'SALARIES') SHALL, AT THE TIME OF CREDIT OF SUCH INCOME TO THE ACCOUNT OF THE PAYEE O R AT THE TIME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAF T OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT INCOME-TAX THEREON AT THE RATES IN FORCE : PROVIDED THAT IN THE CASE OF INTEREST PAYABLE BY TH E GOVERNMENT OR A PUBLIC SECTOR BANK WITHIN THE MEANING OF CLAUSE (23D) OF S ECTION 10 OR A PUBLIC FINANCIAL INSTITUTION WITHIN THE MEANING OF THAT CL AUSE, DEDUCTION OF TAX SHALL BE MADE ONLY AT THE TIME OF PAYMENT THEREOF IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE : PROVIDED FURTHER THAT NO SUCH DEDUCTION SHALL BE MA DE IN RESPECT OF ANY DIVIDENDS REFERRED TO IN SECTION 115-O. [EXPLANATION 1] :...................... [EXPLANATION 2.- FOR THE REMOVAL OF DOUBTS, IT IS H EREBY CLARIFIED THAT THE OBLIGATION TO COMPLY WITH SUB-SECTION (1) AND TO MA KE DEDUCTION THEREUNDER APPLIES AND SHALL BE DEEMED TO HAVE ALWAYS APPLIED AND EXTENDS AND SHALL BE DEEMED TO HAVE ALWAYS EXTENDED TO ALL PERSONS, R ESIDENT OR NON- RESIDENT, WHETHER OR NOT THE NON-RESIDENT PERSON HA S (I) A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNEC TION IN INDIA; OR (II) ANY OTHER PRESENCE IN ANY MANNER WHATSOEVER IN INDI A.' EXPLANATION 4 TO SECTION 9 (1) (I) OF THE ACT: ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 19 OF 37 'SECTION 9 - INCOME DEEMED TO ACCRUE OR ARISE IN IN DIA (1) THE FOLLOWING INCOMES SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA : (I) ALL INCOME ACCRUING OR ARISING, WHETHER DIRECTLY OR IND IRECTLY, THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA, OR THROUGH OR FRO M ANY PROPERTY IN INDIA, OR THROUGH OR FROM ANY ASSET OR SOURCE OF INCOME IN IN DIA, OR THROUGH THE TRANSFER OF A CAPITAL ASSET SITUATE IN INDIA. ** ** ** EXPLANATION 4.- FOR THE REMOVAL OF DOUBTS, IT IS HE REBY CLARIFIED THAT THE EXPRESSION 'THROUGH' SHALL MEAN AND INCLUDE AND SHA LL BE DEEMED TO HAVE ALWAYS MEANT AND INCLUDED ''BY MEANS OF', 'IN CONSE QUENCE OF' OR 'BY REASON OF'.' 7.1 SECTION 40 OF THE ACT SPELLS OUT WHAT AMOUNTS A RE NOT DEDUCTIBLE FROM THE INCOME CHARGED TO TAX UNDER THE PROFITS AND GAI NS OF BUSINESS OR PROFESSION. 7.2 SECTION 40(A)(I) OF THE ACT DEALS WITH INTEREST AND OTHER SUMS PAYABLE OUTSIDE INDIA. THE PROVISIONS OF THIS SUB-CLAUSE MA DE APPLICABLE TO INTEREST HAVE BEEN EXTENDED TO PAYMENT OF ROYALTY, TECHNICAL FEES AND ANY OTHER SUM CHARGEABLE UNDER THIS ACT. THE SECTION PROVIDES THAT THE SUMS COVERED BY THE SUB-CLAUSE, WHICH ARE CHARGEABLE UNDER THE A CT AND ARE PAYABLE OUTSIDE INDIA, SHALL NOT BE ALLOWED AS AN EXPENDITU RE TO THE ASSESSEE, UNLESS TAX IS PAID THEREON OR IS DEDUCTED THEREFROM UNDER CHAPTER XVII-B OF THE ACT. 7.3 SECTION 195(1) OF THE ACT DEALS WITH DEDUCTION OF TAX FROM PAYMENT TO NON-RESIDENTS AND FOREIGN COMPANIES. SECTION 195(1) OF THE ACT COMES INTO PLAY AT A STAGE WHERE THE PAYER, WHO IS ENJOINED TO DEDUCT THE TAX, EITHER CREDIT SUCH INCOME TO THE ACCOUNT OF THE PAYEE OR M AKE PAYMENT THEREOF, WHETHER IN CASH / CHEQUE / DRAFT OR ANY OTHER MODE. THE TAXABILITY OF SUCH AMOUNT IN THE HANDS OF THE PAYEE OR OCCASIONING OF THE TAXABLE EVENT IS ALIEN FOR THE PURPOSE OF SECTION 195(1) OF THE ACT. 7.4 SECTION 195(2) IS AN ENABLING PROVISION, ENABLI NG AN ASSESSEE TO FILE AN APPLICATION BEFORE THE ASSESSING OFFICER TO DETERMI NE THE APPROPRIATE PROPORTION OF THE SUM CHARGEABLE AND UPON SUCH DETE RMINATION, THE TAX HAS TO BE DEDUCTED UNDER SECTION 195(1) OF THE ACT. THE PAYMENT IS MADE CREDITED TO THE ACCOUNT OF THE PAYEE. 8. THE QUESTION NOW IS, WHETHER THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE AS CONTEMPLATED UNDER SECTION 195 OF THE ACT , WHEN THE ASSESSEE PAID COMMISSION TO FOREIGN AGENT. 9. THIS QUESTION HAS BEEN ANSWERED BY THE HON 'BLE SUPREME COURT, IN THE CASE OF G.E.INDIA TECHNOLOGY CENTRE (P.) LTD. (SUPR A), IN WHICH, IT IS VERY CATEGORICALLY HELD THAT THE TAX DEDUCTED AT SOURCE OBLIGATIONS UNDER SECTION 195(1) OF THE ACT ARISES, ONLY IF THE PAYMENT IS CH ARGEABLE TO TAX IN THE HANDS OF THE NON-RESIDENT RECIPIENT. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 20 OF 37 9.1 THEREFORE, MERELY BECAUSE A PERSON HAS NOT DEDU CTED TAX AT SOURCE OR A REMITTANCE ABROAD, IT CANNOT BE INFERRED THAT THE P ERSON MAKING THE REMITTANCE, NAMELY, THE ASSESSEE, IN THE INSTANT CA SE, HAS COMMITTED A DEFAULT IN DISCHARGING HIS TAX WITHHOLDING OBLIGATI ONS BECAUSE SUCH OBLIGATIONS COME INTO EXISTENCE ONLY WHEN THE RECIP IENT HAS A TAX LIABILITY IN INDIA. 9.2 THE UNDERLYING PRINCIPLE IS THAT, THE TAX WITHH OLDING LIABILITY OF THE PAYER IS INHERENTLY A VICARIOUS LIABILITY ON BEHALF OF TH E RECIPIENT AND THEREFORE, WHEN THE RECIPIENT / FOREIGN AGENT DOES NOT HAVE TH E PRIMARY LIABILITY TO BE TAXED IN RESPECT OF INCOME EMBEDDED IN THE RECEIPT, THE VICARIOUS LIABILITY OF THE PAYER TO DEDUCT TAX DOES NOT ARISE. THIS VICARI OUS TAX WITHHOLDING LIABILITY CANNOT BE INVOKED, UNLESS PRIMARY TAX LIABILITY OF THE RECIPIENT / FOREIGN AGENT IS ESTABLISHED. IN THIS CASE, THE PRIMARY TAX LIABI LITY OF THE FOREIGN AGENT IS NOT ESTABLISHED. THEREFORE, THE VICARIOUS LIABILITY ON THE PART OF THE ASSESSEE TO DEDUCT THE TAX AT SOURCE DOES NOT EXIST. 10. FURTHER, JUST BECAUSE, THE PAYER / ASSESSEE HAS NOT OBTAINED A SPECIFIED DECLARATION FROM THE REVENUE AUTHORITIES TO THE EFF ECT THAT THE RECIPENT IS NOT LIABLE TO BE TAXED IN INDIA, IN RESPECT OF THE INCO ME EMBEDDED IN THE PARTICULAR PAYMENT, THE ASSESSING OFFICER CANNOT PR OCEED ON THE BASIS THAT THE PAYER HAS AN OBLIGATION TO DEDUCT TAX AT SOURCE . HE STILL HAS TO DEMONSTRATE AND ESTABLISH THAT THE PAYEE HAS A TAX LIABILITY IN RESPECT OF THE INCOME EMBEDDED IN THE IMPUGNED PAYMENT. 11. IN THE INSTANT CASE, IT IS SEEN, ADMITTEDLY THA T THE NONRESIDENT AGENTS WERE ONLY PROCURING ORDERS ABROAD AND FOLLOWING UP PAYMENTS WITH BUYERS. NO OTHER SERVICES ARE RENDERED OTHER THAN THE ABOVE . SOURCING ORDERS ABROAD, FOR WHICH PAYMENTS HAVE BEEN MADE DIRECTLY TO THE NON-RESIDENTS ABROAD, DOES NOT INVOLVE ANY TECHNICAL KNOWLEDGE OR ASSISTANCE IN TECHNICAL OPERATIONS OR OTHER SUPPORT IN RESPECT OF ANY OTHER TECHNICAL MATTERS. IT ALSO DOES NOT REQUIRE ANY CONTRIBUTION OF TECHNICAL KNOW LEDGE, EXPERIENCE, EXPERTISE, SKILL OR TECHNICAL KNOW-HOW OF THE PROCE SSES INVOLVED OR CONSIST IN THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR DESIGN. THE PARTIES MERELY SOURCE THE PROSPECTIVE BUYERS FOR EFFECTING SALES BY THE ASSESSEE, AND IS ANALOGOUS TO A LAND OR A HOUSE / REAL ESTATE AGENT / BROKER, WHO WILL BE INVOLVED IN MERELY IDENTIFYING THE RIGHT PROPERT Y FOR THE PROSPECTIVE BUYER / SELLER AND ONCE HE COMPLETES THE DEAL, HE GETS TH E COMMISSION. THUS, BY NO STRETCH OF IMAGINATION, IT CANNOT BE SAID THAT T HE TRANSACTION PARTAKES THE CHARACTER OF 'FEES FOR TECHNICAL SERVICES' AS EXPLA INED IN THE CONTEXT OF SECTION 9(1)(VII) OF THE ACT. 12. AS THE NON-RESIDENTS WERE NOT PROVIDING ANY TEC HNICAL SERVICES TO THE ASSESSEE, AS HELD ABOVE AND AS HELD BY THE COMMISSI ONER OF INCOME TAX (APPEALS), THE COMMISSION PAYMENT MADE TO THEM DOES NOT FALL INTO THE CATEGORY OF 'FEES OF TECHNICAL SERVICES' AND THEREF ORE, EXPLANATION (2) TO SECTION 9(1)(VII) OF THE ACT, AS INVOKED BY THE ASS ESSING OFFICER, HAS NO APPLICATION TO THE FACTS OF THE ASSESSEE'S CASE. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 21 OF 37 13. IN THIS CASE, THE COMMISSION PAYMENTS TO THE NO N-RESIDENT AGENTS ARE NOT TAXABLE IN INDIA, AS THE AGENTS ARE REMAINING O UTSIDE, SERVICES ARE RENDERED ABROAD AND PAYMENTS ARE ALSO MADE ABROAD. 14. THE CONTENTION OF THE LEARNED COUNSEL FOR THE R EVENUE IS THAT THE TRIBUNAL OUGHT NOT TO HAVE RELIED UPON THE DECISION G.E.INDIA TECHNOLOGY'S CASE, CITED SUPRA, IN VIEW OF INSERTION OF EXPLANAT ION 4 TO SECTION 9(1)(I) OF THE ACT WITH CORRESPONDING INTRODUCTION OF EXPLANAT ION 2 TO SECTION 195(1) OF THE ACT, BOTH BY THE FINANCE ACT, 2012, WITH RETROS PECTIVE EFFECT FROM 01.04.1962. 15. THE ISSUE RAISED IN THIS CASE HAS BEEN THE SUBJ ECT MATTER OF THE DECISION, IN THE RECENT CASE, CIT V. KIKANI EXPORTS (P.) LTD. [2014] 369 ITR 96/[2015] 232 TAXMAN 255/49 TAXMANN.COM 601 (MAD.) WHEREIN THE CONTENTION OF THE REVENUE HAS BEEN REJECTED AND ASS ESSEE HAS BEEN UPHELD AND THE RELEVANT OBSERVATION READS AS UNDER: '... THE SERVICES RENDERED BY THE NON-RESIDENT AGEN T COULD AT BEST BE CALLED AS A SERVICE FOR COMPLETION OF THE EXPORT COMMITMEN T AND WOULD NOT FALL WITHIN THE DEFINITION OF 'FEES FOR TECHNICAL SERVIC ES' AND, THEREFORE, SECTION 9 WAS NOT APPLICABLE AND, CONSEQUENTLY, SECTION 195 D ID NOT COME INTO PLAY. THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING O FFICER TOWARDS EXPORT COMMISSION PAID BY THE ASSESSEE TO THE NON-RESIDENT WAS RIGHTLY DELETED.' 16. WHEN THE TRANSACTION DOES NOT ATRACT THE PROVIS IONS OF SECTION 9 OF THE ACT, THEN THERE IS NO QUESTION OF APPLYING EXPLANAT ION 4 TO SECTION 9 OF THE ACT. THEREFORE, THE REVENUE HAS NO CASE AND THE TAX CASE APPEAL IS LIABLE TO BE DISMISSED. 6. CLEARLY, THEREFORE, THE PAYMENT OF COMMISSION IN THE HANDS OF THE NON- RESIDENT AGENT, AS LONG AS SUCH AN AGENT CARRIES OU T ITS ACTIVITIES OUTSIDE INDIA, DOES NOT RESULT IN TAXABILITY IN THE HANDS O F THE AGENT IN INDIA.' 39. AS WE DEAL WITH THIS ASPECT OF THE MATTER, WE M AY ALSO TAKE NOTE OF THE FOLLOWING ANALYSIS, IN THE CASE OF UPS SCS ASIA LTD . V. ASSTT. DIT, (INTERNATIONAL TAXATION) [2012] 50 SOT 268/18 TAXMANN.COM 302 (MUM .) , ABOUT THE SCOPE OF MANAGERIAL, CONSULTANCY AND TECHNICAL SERVICES WHIC H THE SERVICES RENDERED MUST FULFIL SO AS TO LEAD TO TAXABILITY AS FEES FOR TECHNICAL SERVICES: '5. A BARE PERUSAL OF THE ABOVE QUOTED PROVISION IN DICATES THAT THE 'FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION FOR REN DERING OF ANY 'MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES' BUT DOES NOT INCLUDE THE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY ETC. T HE LEARNED CIT(A) HAS HELD THE SERVICES RENDERED BY THE ASSESSEE AS FEES FOR TECHNICAL SERVICES' COMING WITH IN THE SWEEP OF 'MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES'. ON THE CONTRARY, THE CONTENTION OF THE ASSESSEE HAS REMAINED BEFORE THE AUTHORITIES BELOW AS WELL AS US THAT THE SUCH SERVI CES DO NOT FALL WITHIN THE AMBIT OF ANY OF THE CATEGORIES TAKEN NOTE OF BY THE AUTHORITIES BELOW. WE WILL EXAMINE AS TO WHETHER THE SERVICES SO PROVIDED BY T HE ASSESSEE FALL WITHIN THE SCOPE OF 'MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES' AS PER EXPLANATION 2 TO SECTION 9(1)(VII). ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 22 OF 37 6. IN ORDER TO APPRECIATE THE NATURE OF SERVICES MO RE ELABORATELY, IT IS RELEVANT TO CONSIDER THE TERMS OF THE AGREEMENT ENT ERED INTO BETWEEN THE ASSESSEE AND MENLO INDIA EXECUTED ON NOVEMBER 7, 20 06 WITH EFFECT FROM 1ST JUNE, 2005, A COPY OF WHICH IS AVAILABLE ON PAG E 1 ONWARDS OF THE PAPER BOOK. THE SCOPE OF SERVICES HAS BEEN GIVEN IN CLAUS E 1.1. IN THE RECITAL CLAUSE IT HAS BEEN PROVIDED THAT THE ASSESSEE COMP ANY MAY REQUIRE MENLO INDIA TO PERFORM LOGISTICS SERVICES SUCH AS TRANSPO RT, PROCUREMENT, CUSTOM CLEARANCE, SORTING, DELIVERY, WAREHOUSING AND PICKI NG UP SERVICES (LOCAL SERVICES) WITHIN INDIA (LOCAL OPERATING AREA). IT H AS FURTHER BEEN PROVIDED THAT MENLO INDIA MAY ALSO SEEK SIMILAR SERVICES FRO M THE ASSESSEE COMPANY SUCH AS TRANSPORT, PROCUREMENT, CUSTOMS CLE ARANCE, SORTING, DELIVERY, WAREHOUSING AND PICK UP SERVICES (INTERNA TIONAL SERVICES) OUTSIDE INDIA. IN THE PRESENT APPEAL WE ARE CONCERNED WITH THE 'INTERNATIONAL SERVICES' PROVIDED BY THE ASSESSEE TO MENLO OUTSIDE INDIA. THESE SERVICES COMPRISE OF TRANSPORT, PROCUREMENT, CUSTOMS CLEARAN CE, SORTING, WAREHOUSING AND PICK UP SERVICES ON THE CARGO EXPOR TED BY MENLO ON BEHALF OF ITS CUSTOMERS. HAVING NOTED THE NATURE OF SERVIC ES PROVIDED BY THE ASSESSEE OUTSIDE INDIA, FOR WHICH MENLO INDIA MADE THE PAYMENT, LET US CONSIDER IF THESE CAN BE DESCRIBED AS MANAGERIAL OR TECHNICAL OR CONSULTANCY SERVICES. 7. FIRST WE WILL CONSIDER THE AMBIT OF 'MANAGERIAL SERVICES' TO TEST WHETHER THE INSTANT SERVICES CAN QUALIFY TO BE SO CALLED. O RDINARILY THE MANAGERIAL SERVICES MEAN MANAGING THE AFFAIRS BY LAYING DOWN C ERTAIN POLICIES, STANDARDS AND PROCEDURES AND THEN EVALUATING THE AC TUAL PERFORMANCE IN THE LIGHT OF THE PROCEDURES SO LAID DOWN. THE MANAG ERIAL SERVICES CONTEMPLATE NOT ONLY EXECUTION BUT ALSO THE PLANNIN G PART OF THE ACTIVITY TO BE DONE. IF THE OVERALL PLANNING ASPECT IS MISSING AND ONE HAS TO FOLLOW A DIRECTION FROM THE OTHER FOR EXECUTING PARTICULAR J OB IN A PARTICULAR MANNER, IT CANNOT BE SAID THAT THE FORMER IS MANAGING THAT AFF AIR. IT WOULD MEAN THAT THE DIRECTIONS OF THE LATTER ARE EXECUTED SIMPLICITY WI THOUT THERE BEING ANY PLANNING PART INVOLVED IN THE EXECUTION AND ALSO TH E EVALUATION OF THE PERFORMANCE. IN THE ABSENCE OF ANY SPECIFIC DEFINIT ION OF THE PHRASE 'MANAGERIAL SERVICES' AS USED IN SECTION 9(1)(VII) DEFINING THE 'FEES FOR TECHNICAL SERVICES', IT NEEDS TO BE CONSIDERED IN A COMMERCIAL SENSE. IT CANNOT BE INTERPRETED IN A NARROW SENSE TO MEAN SIM PLY EXECUTING THE DIRECTIONS OF THE OTHER FOR DOING A SPECIFIC TASK. FOR INSTANCE, IF GOODS ARE TO BE LOADED AND SOME WORKER IS INSTRUCTED TO PLACE TH E GOODS ON A CARRIER IN A PARTICULAR MANNER, THE ACT OF THE WORKER IN PLACING THE GOODS IN THE PRESCRIBED MANNER, CANNOT BE DESCRIBED AS MANAGING THE GOODS. IT IS A SIMPLE DIRECTION GIVEN TO THE WORKER WHO HAS TO EXE CUTE IT IN THE WAY PRESCRIBED. IT IS QUITE NATURAL THAT SOME SORT OF A PPLICATION OF MIND IS REQUIRED IN EACH AND EVERY ASPECT OF THE WORK DONE. AS IN THE ABOVE EXAMPLE WHEN THE WORKER WILL LIFT THE GOODS, HE IS EXPECTED TO BE VIGILANT IN PICKING UP THE GOODS MOVING TOWARDS THE CARRIER AND THEN PLACING THEM. THIS ACT OF THE WORKER CANNOT BE DESCRIBED AS MANAGING T HE GOODS BECAUSE HE SIMPLY FOLLOWED THE DIRECTION GIVEN TO HIM. ON THE OTHER HAND, 'MANAGING' ENCOMPASSES NOT ONLY THE SIMPLE EXECUTION OF A WORK , BUT ALSO CERTAIN OTHER ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 23 OF 37 ASPECTS, SUCH AS PLANNING FOR THE WAY IN WHICH THE EXECUTION IS TO BE DONE COUPLED WITH THE OVERALL RESPONSIBILITY IN A LARGER SENSE. THUS IT IS MANIFEST THAT THE WORD 'MANAGING' IS WIDER IN SCOPE THAN THE WORD 'EXECUTING'. RATHER THE LATER IS EMBEDDED IN THE FORMER AND NOT VICE VE RSA. 8. ADVERTING TO THE FACTS OF THE INSTANT CASE IT IS OBSERVED THAT THE ASSESSEE PERFORMED FREIGHT AND LOGISTICS SERVICES OUTSIDE IN DIA IN RESPECT OF CONSIGNMENTS ORIGINATING FROM INDIA UNDERTAKEN TO B E DELIVERED BY MENLO INDIA. THE ROLE OF THE ASSESSEE IN THE ENTIRE TRANS ACTION WAS TO PERFORM ONLY THE DESTINATION SERVICES OUTSIDE INDIA BY UNLOADING AND LOADING OF CONSIGNMENT, CUSTOM CLEARANCE AND TRANSPORTATION TO THE ULTIMATE CUSTOMER. IN OUR CONSIDERED OPINION, IT IS TOO MUCH TO CATEGO RIZE SUCH RESTRICTED SERVICES AS MANAGERIAL SERVICES. WE, THEREFORE, JET TISON THIS CONTENTION RAISED ON BEHALF OF THE REVENUE. 9. NOW WE TAKE UP THE NEXT COMPONENT OF THE DEFINIT ION OF 'FEES FOR TECHNICAL SERVICES', BEING 'CONSULTANCY SERVICES', WHICH HAS BEEN PRESSED INTO SERVICE BY THE LEARNED CIT(A) TO FORTIFY HIS VIEW THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS COVERED WITHIN SECTION 9(1)(VII). THE W ORD 'CONSULTANCY' MEANS GIVING SOME SORT OF CONSULTATION DE HORS THE PERFOR MANCE OR THE EXECUTION OF ANY WORK. IT IS ONLY WHEN SOME CONSIDERATION IS GIV EN FOR RENDERING SOME ADVICE OR OPINION ETC., THAT THE SAME FALLS WITHIN THE SCOPE OF 'CONSULTANCY SERVICES'. THE WORD 'CONSULTANCY' EXCLUDES ACTUAL ' EXECUTION'. THE NATURE OF SERVICES, BEING FREIGHT AND LOGISTICS SERVICES PROV IDED BY THE ASSESSEE TO MENLO INDIA HAS NOT BEEN DISPUTED BY THE AUTHORITIE S BELOW. THERE IS NOTHING LIKE GIVING ANY CONSULTATION WORTH THE NAME. RATHER SUCH PAYMENT IS WHOLLY AND EXCLUSIVELY FOR THE EXECUTION IN THE SHAPE OF T RANSPORT, PROCUREMENT, CUSTOMS CLEARANCE, DELIVERY, WAREHOUSING AND PICKIN G UP SERVICES. THAT BEING THE POSITION, WE OPINE THAT THE PAYMENT IN LI EU OF FREIGHT AND LOGISTICS SERVICES CANNOT BE RANKED AS CONSULTANCY SERVICES. 10. THE ONLY LEFT OVER COMPONENT OF THE DEFINITION OF 'FEES FOR TECHNICAL SERVICES' TAKEN NOTE OF BY THE LD. CIT(A) IS 'TECHN ICAL SERVICES'. HE OBSERVED THAT THE ASSESSEE'S BUSINESS STRUCTURE IS TIME BOUN D SERVICE COUPLED WITH CONTINUOUS REAL TIME TRANSMISSION OF INFORMATION BY USING AND ALSO MAKING AVAILABLE ITS TECHNOLOGY IN THE FORM OF SOPHISTICAT ED EQUIPMENTS AND SOFTWARE ETC. THE LEARNED CIT(A) HAS HELD THAT : 'I N ORDER TO ENSURE EFFICIENT AND TIMELY DELIVERY AND TO PROVIDE CONTINUOUS REAL TIME INFORMATION, THE APPELLANT IS REQUIRED TO USE SOPHISTICATED TECHNOLO GY FOR WHICH THE INDIAN ENTITY IS ALSO EQUALLY INVOLVED AND TO WHOM THE APP ELLANT IS COMMITTED TO PROVIDING THE REQUISITE SOFTWARE AND EQUIPMENT'. TH E LEARNED CIT(A) HAS ALSO ACCENTUATED ON THE CLAUSE 2 OF THE AGREEMENT W HICH READS AS UNDER: '2. CONTRACTOR SHALL SEPARATELY EXECUTE A TECHNOLOG Y AND SOFTWARE LICENSE AGREEMENT FOR THE PROVISION OF COMPUTER EQUIPMENT A ND SOFTWARE SUPPLIED BY SCS. CONTRACTOR SHALL SEPARATELY EXECUTE A TRADE MARK LICENSE AGREEMENT FOR THE USE OF ANY MARKS OR BRANDS OWNED BY UNITED PARCEL SERVICE OF AMERICA, INC. THE FEE PAYABLE BY CONTRAC TOR UNDER PARAGRAPH 3.1 WILL NOT INCLUDE ANY ROYALTY AMOUNT RELATING TO THE USE OF INTANGIBLE PROPERTY OR INFORMATION.' ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 24 OF 37 11. ON GOING THROUGH CLAUSE 2 OF THE AGREEMENT, IT IS OBVIOUS THAT MENLO INDIA SHALL 'SEPARATELY EXECUTE A TECHNOLOGY AND SO FTWARE LICENSE AGREEMENT' FOR THE PROVISION OF COMPUTER EQUIPMENT AND SOFTWARE SUPPLIED BY THE ASSESSEE. IT IS NOBODY'S CASE THAT THE CONSI DERATION IN QUESTION RELATES TO THE SUPPLY OF ANY COMPUTER EQUIPMENT AND SOFTWARE BY THE ASSESSEE TO MENLO INDIA. WE FAIL TO APPRECIATE AS T O HOW THIS CLAUSE 2 MAKES THE SERVICES PROVIDED BY THE ASSESSEE AS 'TEC HNICAL'. RATHER CLAUSE 2 MANDATES TO EXECUTE A SEPARATE TECHNOLOGY AND SOF TWARE LICENSE AGREEMENT FOR THE PROVISION OF COMPUTER EQUIPMENT A ND SOFTWARE. HOW IS IT THAT THE CONSIDERATION FOR THE SERVICES CAN BE ATTR IBUTED TO A PROPOSED AGREEMENT, WHICH HAS YET TO SEE THE LIGHT OF THE DA Y. 12. THE LEARNED CIT(A) HAS ALSO HARPED ON 'TRANSPOR TATION OF TIME SENSITIVE PACKAGES' WITH A VIEW TO BRING THE SERVICES PROVIDE D BY THE ASSESSEE WITHIN THE FOLD OF 'TECHNICAL SERVICES'. IN REACHING THIS CONCLUSION THE LEARNED CIT(A) ALSO RELIED ON THE ORDER PASSED BY THE MUMBA I BENCH OF THE TRIBUNAL IN BLUE DART EXPRESS LIMITED V. JCIT. LET US EXAMIN E THE FACTS OF THAT CASE. THE ASSESSEE THERE CLAIMED DEDUCTION U/S 80O IN RE SPECT OF ITS FOREIGN EXCHANGE EARNINGS FOR RENDERING TECHNICAL / PROFESS IONAL SERVICES TO A US MULTI INTERNATIONAL COMPANY. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE A.O. REQUIRED THE ASSESSEE TO FURNISH THE NATUR E OF SERVICES RENDERED AND ALSO THE CALCULATION OF DEDUCTION. THE ASSESSEE DID IT. ON BEING SATISFIED THE A.O. GRANTED DEDUCTION U/S 80O. BY E XERCISING THE POWER U/S 263, THE LEARNED CIT HELD THE ASSESSMENT ORDER TO B E ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE TO THE E XTENT OF GRANTING DEDUCTION U/S 800. WHEN THE MATTER CAME UP BEFORE THE TRIBUN AL, IT WAS OBSERVED THAT THE ISSUE IS DEBATABLE AND HENCE OUTSIDE THE A MBIT OF SECTION 263. APART FROM THAT, IT WAS ALSO OBSERVED THAT THE ASSE SSEE WAS ENGAGED IN INTEGRATED AIR AND GROUND TRANSPORTATION OF TIME SE NSITIVE PACKAGES TO VARIOUS DESTINATIONS RENDERING COMMERCIAL SERVICES. IT WAS IN THIS CONTEXT THAT THE ASSESSEE WAS HELD TO BE ELIGIBLE FOR DEDUC TION U/S 80O. AT THIS JUNCTURE IT WILL BE USEFUL TO NOTE THAT AT THE MATE RIAL TIME SECTION 80O PROVIDED FOR DEDUCTION ON ANY 'INCOME BY WAY OF ROY ALTY, COMMISSION, FEES OR ANY SIMILAR PAYMENT RECEIVED BY THE ASSESSEE FRO M THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE IN CONSIDERAT ION FOR THE USE OUTSIDE INDIA OF ANY PATENT, INVENTION, MODEL, DESIGN, SECR ET FORMULA OR PROCESS, OR SIMILAR PROPERTY RIGHT, OR INFORMATION CONCERNING I NDUSTRIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL MADE AVAI LABLE OR PROVIDED OR AGREED TO BE MADE AVAILABLE OR PROVIDED TO SUCH GOV ERNMENT OR ENTERPRISE BY THE ASSESSEE, OR IN CONSIDERATION OF TECHNICAL O R PROFESSIONAL SERVICES RENDERED OR AGREED TO BE RENDERED OUTSIDE INDIA TO SUCH GOVERNMENT OR ENTERPRISE BY THE ASSESSEE'. FROM THE ABOVE QUOTED PART OF SEC. 80O, IT CAN BE SEEN THAT THE DEDUCTION AT THAT TIME WAS AVA ILABLE NOT ONLY IN RESPECT OF INCOME AS A CONSIDERATION FOR THE USE OF 'TECHNI CAL OR PROFESSIONAL SERVICES' BUT ALSO ANY 'COMMERCIAL....KNOWLEDGE EXP ERIENCE OR SKILL'. THESES TWO SOURCES ARE DISTINCT FROM EACH OTHER AS CAN BE SEEN FROM THE EMPLOYMENT OF WORD 'OR' BETWEEN THEM. IN ORDER TO Q UALIFY FOR DEDUCTION UNDER THIS SECTION, THE INCOME COULD HAVE RESULTED FROM THE RENDERING OF ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 25 OF 37 'TECHNICAL OR PROFESSIONAL SERVICES' OR COMMERCIAL KNOWLEDGE, EXPERIENCE OR SKILL ETC. WHEN THE TRIBUNAL IN BLUE DART EXPRESS L IMITED (SUPRA) HELD THE ASSESSEE TO BE ENTITLED TO DEDUCTION, IT WAS CONSID ERING ALL THE SPECIES OF THE SERVICES SET OUT IN SECTION 80O AND NOT ONLY ' TECHNICAL OR PROFESSIONAL SERVICES'. IT WAS IN THE LIGHT OF SUCH LANGUAGE OF THE PROVISION THAT THE TRIBUNAL HELD THE ASSESSEE TO BE ELIGIBLE FOR RELIE F U/S 80O. WE ARE CURRENTLY DEALING WITH SECTION 9(1)(VII), BEING THE 'FEES FOR TECHNICAL SERVICES' AND THE DEFINITION OF SUCH EXPRESSION IS RESTRICTED ONLY TO 'MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES' AND DOES NOT HAV E ANY SUCH ELEMENTS AS ARE THERE IN SECTION 80O. THE DECISION IN THE CASE OF BLUE DART EXPRESS LIMITED (SUPRA) CAME UP FOR CONSIDERATION BEFORE TH E MUMBAI BENCH OF THE TRIBUNAL IN DAMPSKIBSSELSKABET AF 1912 V. ADDL. DIT (INTERNATIONAL TAXATION) [(2011) 51 DTR 148] (TO WHICH ONE OF US, NAMELY, THE LD. JM IS PARTY) IN WHICH IT HAS BEEN HELD THAT THE RATIO LAI D DOWN IN THAT CASE CANNOT BE UNIVERSALLY APPLIED. DUE TO MATERIAL DIFFERENCE IN THE LANGUAGE OF SECTIONS 9(1)(VII) AND 80O AS DISCUSSED ABOVE, WE HOLD THAT THE DECISION IN BLUE DART EXPRESS LIMITED (SUPRA), CAN NOT BE HELD TO BE SUPPORTING THE CASE OF THE REVENUE. 13. THE LD. CIT(A) IN REACHING THE CONCLUSION THAT THE ASSESSEE RENDERED 'TECHNICAL SERVICES' ALSO OBSERVED THAT ITS 'BUSINE SS STRUCTURE IS TIME BOUND SERVICE COUPLED WITH CONTINUOUS REAL TIME TRANSMISS ION OF INFORMATION BY USING AND ALSO MAKING AVAILABLE ADVANCED TECHNOLOGY IN THE FORM OF SOPHISTICATED EQUIPMENT AND SOFTWARE.' HE WAS SWAYE D BY THE CONTENTION OF THE ASSESSEE THAT THE MANLO INDIA OR THE ULTIMATE C USTOMER COULD TRACK THE MOVEMENT OF CARGO WITH THE HELP OF COMPUTERS. WE HA VE NOTED SUPRA THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE DID NOT INCLUDE ANY CONSIDERATION FOR THE SUPPLY OF ANY EQUIPMENT TO MA NLO INDIA. NOW WE WILL EXAMINE AS TO WHETHER THE USE OF COMPUTER IN ANY MA NNER FOR KNOWING THE LOCATION OF THE CARGO AT A PARTICULAR TIME, CAN BE HELD AS TECHNICAL SERVICE. 14. EXPLANATION TO SECTION 9(1)(VII) DEFINES THE EX PRESSION 'FEES FOR TECHNICAL SERVICES' AS CONSIDERATION FOR RENDERING 'MANAGERIA L, TECHNICAL OR CONSULTANCY SERVICES'. IT IS SEEN THAT THERE IS NO DEFINITION OF THE TERM 'TECHNICAL SERVICES' IN THE ACT. 15. THE PRINCIPLE OF NOSCITUR A SOCIIS MANDATES THA T THE MEANING OF A WORD IS TO BE JUDGED BY THE COMPANY OF OTHER WORDS WHICH IT KEEPS. THIS RULE IS WIDER IN SCOPE THAN THE RULE OF EJUSDEM GENERIS. IN ORDER TO DISCOVER THE MEANING OF A WORD WHICH HAS NOT BEEN DEFINED IN THE ACT, THE HON'BLE SUPREME COURT HAS APPLIED THE PRINCIPLE OF NOSCITUR A SOCIIS IN SEVERAL CASES INCLUDING ARAVINDA PARAMILA WORKS V. CIT [(1999) 23 7 ITR 284 (SC) ]. AS NOTED ABOVE THE WORD 'TECHNICAL' HAS BEEN SANDWICHE D BETWEEN THE WORDS 'MANAGERIAL' AND 'CONSULTANCY' IN EXPLANATION 2 TO SEC. 9(1)(VII) AND NO DEFINITION HAS BEEN ASSIGNED TO THE 'TECHNICAL' SER VICES IN THE RELEVANT PROVISION, WE NEED TO ASCERTAIN THE MEANING OF THE 'TECHNICAL SERVICES' FROM THE OVERALL MEANING OF THE WORDS 'MANAGERIAL' AND ' CONSULTANCY' SERVICES BY APPLYING THE PRINCIPLE OF NOSTICUR A SOCIIS. IT HAS BEEN HELD ABOVE THAT THE 'MANAGERIAL SERVICES' AND 'CONSULTANCY SERVICES' PR ESUPPOSE SOME SORT OF ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 26 OF 37 DIRECT HUMAN INVOLVEMENT. THESE SERVICES CANNOT BE CONCEIVED WITHOUT THE DIRECT INVOLVEMENT OF MAN. THESE SERVICES CAN BE RE NDERED WITH OR WITHOUT ANY EQUIPMENT, BUT THE HUMAN INVOLVEMENT IS INEVITA BLE. MOVING IN THE LIGHT OF THIS RULE, THERE REMAINS NO DOUBT WHATSOEVER THA T THE TECHNICAL SERVICES CANNOT BE CONTEMPLATED WITHOUT THE DIRECT INVOLVEME NT OF HUMAN ENDEAVOR. WHERE SIMPLY AN EQUIPMENT OR A STANDARD FACILITY AL BEIT DEVELOPED OR MANUFACTURED WITH THE USE OF TECHNOLOGY IS USED, SU CH A USER CANNOT BE CHARACTERIZED AS USING 'TECHNICAL SERVICES'. 16. COMING BACK TO THE FACTS OF THE PRESENT CASE, E VEN IF WE ACCEPT THE LEARNED FIRST APPELLATE AUTHORITY'S POINT OF VIEW T HAT THE COMPUTER COULD BE USED IN TRACING THE MOVEMENT OF THE GOODS, SUCH USE OF COMPUTER, THOUGH INDIRECT, REMOTE AND NOT NECESSARY, CAN NOT BRING T HE PAYMENT FOR FREIGHT AND LOGISTICS SERVICES WITHIN THE PURVIEW OF 'TECHN ICAL SERVICES'. THE ESSENCE OF THE CONSIDERATION FOR THE PAYMENT IS REN DERING OF SERVICES AND NOT THE USE OF COMPUTER. IF INCIDENTALLY COMPUTER I S USED AT ANY STAGE, WHICH IS OTHERWISE NOT NECESSARY FOR RENDERING SUCH SERVI CES, THE PAYMENT FOR FREIGHT AND LOGISTICS WILL NOT PARTAKE OF THE CHARA CTER OF FEES OF 'TECHNICAL SERVICES'. WE, THEREFORE, REPEL THIS CONTENTION RAI SED ON BEHALF OF THE REVENUE. 17. THUS IT CAN BE NOTICED THAT THE PAYMENT MADE TO THE ASSESSEE IN QUESTION IS NOT A CONSIDERATION FOR MANAGERIAL OR T ECHNICAL OR CONSULTANCY SERVICES. THAT BEING THE POSITION, IT CANNOT FALL W ITHIN THE AMBIT OF SECTION 9(1)(VII).' 40. WE MAY ALSO TAKE NOTE OF ANOTHER DECISION OF A COORDINATE BENCH DEALING WITH MATERIALLY SIMILAR QUESTION DEALING WITH TAXAB ILITY OF INCOME IN THE HANDS OF NON-RESIDENT COMMISSION AGENTS, REPRESENTING INDIAN PRINCIPAL, IN WHICH SIMILAR ACTIVITIES WERE SAID TO HAVE BEEN PERFORMED. IN THE CASE OF ARMYESH GLOBAL V. ASSTT. CIT [2012] 51 SOT 564/21 TAXMANN.C OM 130 (MUM.) , THE COORDINATE BENCH HAS, INTER ALIA, OBSERVED AS FOLLO WS: '16. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE FACTS ON RECORD. THE LEARNED ASSESSING OFFICER TRIED TO INVOKE THE DEFIN ITIONS OF TECHNICAL SERVICES ON THE COMMISSION PAID TO THE FOREIGN COMPANY. THE REASON BEING THAT COMMISSION PAYMENT TO NON-RESIDENT IS NOT COVERED B Y THE PROVISIONS OF SECTION 40(A)(IA), AS IT HAS ONLY APPLICABLE TO ANY INTEREST ROYALTY, FEES FOR TECHNICAL SERVICES OR OTHER SUM CHARGEABLE UNDER TH IS ACT WHICH PAYABLE OUTSIDE INDIA ON WHICH TAX IS DEDUCTIBLE AT SOURCE BUT HAS NOT BEEN DEDUCTED. THE ASSESSING OFFICER MADE OUT A CASE THA T THE COMMISSION PAID IS TEES FOR TECHNICAL SERVICES' WITHOUT SPECIFYING WHAT ARE THE TECHNICAL/MANAGERIAL SERVICES RENDERED BY THE SAID COMPANY TO THE ASSESSEE. ASSESSEE INDEED ENTERED INTO AN AGREEMENT FOR PROPAGATION OF ITS HANDICRAFT PRODUCTS WITH THE NON-RESIDENT COMPANY. THE COPIES OF THE AGREEMENT HAVE BEEN PLACED BEFORE THE AUTHORITIES. THE AGREEMENT CLEARLY SHOWS THAT THE NON-RESIDENT COMPANY WAS TO GET COMM ISSION FOR PROMOTING THE PRODUCTS OF THE ASSESSEE COMPANY AND RENDERING INCIDENTAL SERVICES ON SALES SUCH AS RECOVERY ETC. FOR DOING EXPORT SALES. IT IS ALSO RESPONSIBILITY OF ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 27 OF 37 THE NON-RESIDENT COMPANY TO DISSEMINATE THE INFORMA TION AND INQUIRE ABOUT VARIOUS IMPORTERS IN VARIOUS COUNTRIES SO THAT ASSE SSEE EXPORTS CAN BE INCREASED. THE AGREEMENT CLEARLY SHOWS THAT NON-RES IDENT COMPANY WAS TO GET THE COMMISSION FOR PROMOTING THE PRODUCT OF ASS ESSEE COMPANY AFTER SALES PROCEEDS ARE RECEIVED. THE DETAILED TERMS OF THE AGREEMENT ARE AS UNDER: 'AGENCY AGREEMENT IN THIS AGREEMENT BETWEEN M/S ARMAYESH GLOBAL, KAMA NWALA CHAMBERS, 2ND FLOOR, SIR P.M. ROAD, FORT, MUMBAI 400 001, IND IA HEREINAFTER REFERRED TO AS 'PRINCIPAL' AND INDIJACK LIMITED, 99 BRECK NO CK ROAD, LONDON N19 5 AB, U.K. HEREINAFTER REFERRED TO AS 'AGENT' THE FOLLOWING IS AGREED UPON: - ARTICLE 1- OBJECT OF AGREEMENT 1.1. THE PRINCIPAL ENTRUSTS THE AGENT WITH THE NON EXCLUSIVE AGENCY FOR THE FOLLOWING CONTRACTUAL TERRITORY (AREA): WORLDWIDE 1.2. THE PRINCIPAL ALSO HAS THE RIGHT TO OPERATE AC TIVELY' IN HE AFOREMENTIONED TERRITORY (AREA). 1.3. THE AGENCY COVERS THE FOLLOWING PRODUCTS: HAND EMBROIDERED PRODUCTS OF ANY AND ALL KINDS. 1.4. THE AGENT COVENANTS AND AGREES TO REPRESENT TH E PRINCIPAL ON A COMMISSION BASIS. ARTICLE 2 DUTIES OF THE AGENT 2.1 IT SHALL BE THE AGENT'S DUTY TO NEGOTIATE CONTR ACTS WITH THE OVERSEAS PARTY. FURTHERMORE, THE AGENT SHALL ACT ON THE PRIN CIPAL'S BEHALF IN CONFORMITY WITH PROVISIONS HEREINAFTER ENUMERATED. THE AGENT S HALL NOT BE AUTHORIZED TO ENTER INTO A CONTRACT OR OTHERWISE TO BIND THE P RINCIPAL. THE PRINCIPAL SHALL BE FREE TO CONCLUDE, OR TO REFUSE THE CONCLUSION OF A CONTRACT NEGOTIATED BY THE AGENT. 2.2 WHILE NEGOTIATING CONTRACTS OF SALE THE AGENT S HALL ACT IN CONFORMITY WITH ALL THE CONDITIONS AND PARTICULARLY OF DELIVERY AND PAYMENT AS FIXED BY THE PRINCIPAL. 2.3 THE AGENT SHALL BE RESPONSIBLE FOR NEGOTIATING WITH ALL PARTIES IN THEIR TERRITORY (AREA). THE AGENT SHALL TRAVEL IN THEIR T ERRITORY (AREA) REGULARLY TO VISIT CUSTOMERS, AND IS BOUND TO KEEP CONCLUDED CONTRACTS SECRET. THE AGENT SHALL ALWAYS KEEP THE PRINCIPAL INFORMED ABOUT THEI R ACTIVITIES AND SHALL SUPPLY THE PRINCIPAL, AT LEAST ONCE EVERY QUARTER, WITH REPORTS ON ECONOMIC DEVELOPMENTS AND MARKET CONDITIONS IN THE TERRITORY (AREA) AND AT THE SAME TIME, CONVEY TO THE PRINCIPAL, THE AGENT'S OBSERVAT IONS WITH RESPECT TO ACTIVITIES OF COMPETITORS. THE AGENT SHALL REPORT I MMEDIATELY ON PARTICULAR PROFITABLE BUSINESS POSSIBILITIES AND EXTRAORDINARY EVENTS. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 28 OF 37 2.4. THE AGENT SHALL ABSTAIN FROM ANY COMPETITION W HATSOEVER AGAINST THE PRINCIPAL AND SHALL NOT PROMOTE COMPETITION BY THIR D PERSONS. IN PARTICULAR, THE AGENT SHALL NOT ACT FOR COMPETITIVE FIRMS AS A COMMERCIAL AGENT, COMMISSION MERCHANT OR DISTRIBUTOR, NOR SHALL THE A GENT ASSOCIATE DIRECTLY OR INDIRECTLY WITH COMPETITIVE FIRMS. THE AGENT SHA LL NOT, FOR ALL TIME EXPLOIT OR DISCLOSE TO OTHER PERSONS ANY BUSINESS AND PRODUCTI ON SECRETS OF THE PRINCIPAL THAT HAVE BEEN COMMUNICATED TO THEM OR WH ICH THEY HAVE OTHERWISE COME TO KNOW, IRRESPECTIVE OF WHETHER OR NOT THE CONTRACT IS STILL IN FORCE. 2.5 THE AGENT SHALL OBSERVE THE RULES OF FAIR COMPE TITION AND BE RESPONSIBLE FOR ANY VIOLATION OF THE SAME. 2.6 THE AGENT IS NOT AUTHORIZED TO ACCEPT PAYMENTS DIRECTLY IN THEIR OWN NAME BUT SHALL ASSIST THE PRINCIPAL IN COLLECTING O UTSTANDING PAYMENTS. THE AGENT IS ALSO AUTHORIZED TO ACCEPT NOTIFICATION OF DEFECTS BY A CUSTOMER, AS WELL AS THE STATEMENT OF A CUSTOMER THAT HE WILL TH E GOODS AT THE DISPOSABLE OF THE PRINCIPAL OR ANY SIMILAR STATEMENT BY WHICH THE CUSTOMER EXERCISES HIS RIGHTS RESULTING FROM DEFECTIVE DELIVERY. THE AGENT SHALL IMMEDIATELY II PRINCIPAL AND SHALL SEE TO IT THAT THE NECESSARY EV IDENCE IN FAVOUR OF THE PRINCIPAL IS OBTAINED. 2.7 THE AGENT SHALL ESTABLISH BUSINESS RELATIONS ON LY WITH SUCH CUSTOMERS WHOSE SOLVENCY IS SATISFACTORY TO THE BEST OF THE K NOWLEDGE AND BELIEF OF THE AGENT. 17. THUS AS CAN BE SEEN FROM THE ABOVE, ALL THE TER MS DO INDICATE THAT THE SAID COMPANY WAS ONLY ACTING AS AN AGENT ON COMMISS ION BASIS AND HAS NOT BEEN PROVIDING ANY MANAGERIAL/TECHNICAL SERVICE S. FURTHER THERE IS NO EVIDENCE ON RECORD THAT THEY ARE PROVIDING ANY TECH NICAL/MANAGERIAL SERVICES. THE SAID COMPANY WAS RESPONSIBLE FOR ARRA NGING TIMELY PAYMENT FROM THE CUSTOMERS AND COMMISSION WAS PAID ONLY AFT ER THE SALES AMOUNT WAS RECEIVED. SINCE THE SERVICES WERE RENDERED OUTS IDE INDIA, THE PROVISIONS OF SECTION 5 CANNOT BE APPLIED TO THE CO MMISSION PAID SO AS TO MAKE IT TAXABLE IN INDIA. 18. THIS ASPECT CAN ALSO BE EXAMINED IN ANOTHER WAY AS ALREADY GIVEN A FINDING BY THE BENCH EARLIER AND WHICH IS ALSO NOT IN DISPUTE, THAT THE FOREIGN COMPANY DOES NOT HAVE ANY PE IN INDIA. THEREFORE, T HE COMMISSION PAID TO THE FOREIGN COMPANY WHICH HAS TO BE CONSIDERED AS B USINESS INCOME AND CANNOT BE TAXED IN INDIA AS PER THE DTAA BETWEEN IN DIA AND UK. THE DEFINITION OF 'FEE FOR TECHNICAL SERVICES' BETWEEN UK AND INDIA DOES NOT INCLUDE MANAGERIAL SERVICES. HOWEVER, NEITHER THE A SSESSING OFFICER NOR THE CIT (A) CONSIDERED THE ISSUE OF DTAA, EVEN THOUGH A SSESSEE MENTIONED THE SAME IN ITS SUBMISSIONS BEFORE THE AUTHORITIES. THE DEFINITION OF TECHNICAL SERVICES AS PER THE INCOME TAX ACT IS AS UNDER: '9.(1) THE FOLLOWING INCOMES SHALL BE DEEMED TO ACC RUE OR ARISE IN INDIA: (I) & (VI )** ** ** (VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 29 OF 37 (A) THE GOVERNMENT; OR (B) A PERSON WHO IS A RESIDENT, EXCEPT WHERE THE FEES A RE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRI ED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARN ING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA ; OR (C) A PERSON WHO IS A NON- RESIDENT, WHERE THE FEES ARE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRI ED ON BY SUCH PERSON IN INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY SOURC E IN INDIA : [PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHA LL APPLY IN RELATION TO ANY INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABL E IN PURSUANCE OF AN AGREEMENT MADE BEFORE THE 1ST DAY OF APRIL, 1976, A ND APPROVED BY THE CENTRAL GOVERNMENT.] [EXPLANATION 1.FOR THE PURPOSES OF THE FOREGOING P ROVISO, AN AGREEMENT MADE ON OR AFTER THE 1ST DAY OF APRIL, 1976, SHALL BE DEEMED TO HAVE BEEN MADE BEFORE THAT DATE IF THE AGREEMENT IS MADE IN A CCORDANCE WITH PROPOSALS APPROVED BY THE CENTRAL GOVERNMENT BEFORE THAT DATE.] EXPLANATION [2].FOR THE PURPOSES OF THIS CLAUSE, ' FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUDING ANY LU MP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR C ONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL O R OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION ASSE MBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATIO N WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIE S'. 19. AS CAN BE SEEN FROM THE ABOVE SECTION 9(1)(VII) (B), FEE PAYABLE FOR THE PURPOSES OF MAKING OR EARNING INCOME FROM ANY SOURC E OUTSIDE INDIA IS NOT INCLUDED IN THE DEFINITION. THE AMOUNT HAS TO BE CO NSIDERED AS BUSINESS INCOME. SINCE THE SERVICES ARE RENDERED OUTSIDE IND IA, THAT AMOUNT IS NOT TAXABLE AS IT DOES NOT ACCRUE OR ARISE IN INDIA. TH E SAME VIEW WAS CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CEAT INTERNATIONAL S.A. V. CIT237 ITR 859 , WHERE CERTAIN EXPORT COMMISSION WAS PAID TO A NON-RESIDENT COMPANY AND IT WAS HELD THAT THE ASSESSEE DID NOT IMPART ANY INFORMATION CONCERNING TECHNICAL, INDUST RIAL, COMMERCIAL OR SCIENTIFIC KNOWLEDGE EXPORTS OR SKILL, NOR RENDERED ANY MANAGERIAL TECHNICAL OR CONSULTANCY SERVICES. THE COMMISSION ATTRIBUTABL E TO THE SERVICES RENDERED CANNOT BE REGARDED AS ROYALTY OR FEES FOR TECHNICAL SERVICES AND IT WAS HELD THAT THE SAME WAS NOT TAXABLE UNDER SECTIO N 9(1)(VII). SIMILAR ISSUE WAS ALSO CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX V. SHERATON INTERNATIONAL INC.313 ITR 267 WHERE CERTAIN PAYMENTS FOR ADVERTISING, PUBLICITY AND SALES PROMO TION SERVICES WERE CONSIDERED AND HELD THAT THOSE PAYMENTS CANNOT BE C ONSIDERED AS EITHER ROYALTY OR FOR TECHNICAL SERVICES. SINCE THE NON-RE SIDENT DOES NOT HAVE ANY PE IN INDIA, SUCH INCOME WHICH IS TO BE CONSIDERED AS BUSINESS INCOME WAS NOT TAXABLE IN INDIA.' ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 30 OF 37 41. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS S O EXPRESSED BY THE COORDINATE BENCH. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE UPHOLD WELL REASONING FINDINGS OF T HE LEARNED CIT(A) THAT THE COMMISSION PAYMENTS MADE TO THE NON-RESIDENT AGENTS DID NOT HAVE ANY TAXABILITY IN INDIA, EVEN UNDER THE PROVISIONS OF T HE DOMESTIC LAW I.E. SECTION 9. ONCE WE COME TO THE CONCLUSION THAT THE INCOME EMBE DDED IN THESE PAYMENTS DID NOT HAVE ANY TAX IMPLICATIONS IN INDIA, NO FAUL T CAN BE FOUND IN NOT DEDUCTING TAX AT SOURCE FROM THESE PAYMENTS OR, FOR THAT PURP OSE, EVEN NOT APPROACHING THE ASSESSING OFFICER FOR ORDER UNDER SECTION 195. IN OUR CONSIDERED VIEW, THE ASSESSEE, FOR THE DETAILED REASONS SET OUR ABOVE, D ID NOT HAVE TAX WITHHOLDING LIABILITY FROM THESE PAYMENTS. AS HELD BY HON'BLE S UPREME COURT IN THE CASE OF GE INDIA TECHNOLOGY CENTRE (P.) LTD. V. CIT [201 0] 327 ITR 456/193 TAXMAN 234/7 TAXMANN.COM 18 , PAYER IS BOUND TO WITHHOLD TAX FROM THE FOREIGN REMITTANCE ONLY IF THE SUM PAID IS ASSESSABLE TO TA X IN INDIA. THE ASSESSEE CANNOT, THEREFORE, BE FAULTED FOR NOT APPROACHING T HE ASSESSING OFFICER UNDER SECTION 195 EITHER. AS REGARDS THE WITHDRAWAL OF TH E CBDT CIRCULAR HOLDING THAT THE COMMISSION PAYMENTS TO NON-RESIDENT AGENTS ARE NOT TAXABLE IN INDIA, NOTHING REALLY TURNS ON THE CIRCULAR, AS DE HORS TH E AFORESAID CIRCULAR, WE HAVE ADJUDICATED UPON THE TAXABILITY OF THE COMMISSION A GENT'S INCOME IN INDIA IN TERMS OF THE PROVISIONS OF THE INCOME TAX ACT AS AL SO THE RELEVANT TAX TREATY PROVISIONS. 42. IN VIEW OF THESE DISCUSSIONS, WE UPHOLD THE REL IEF GRANTED BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 12. IN THE PRESENT CASE, THE COMMISSION PAYMENTS HA VE BEEN MADE TO AN ENTITY TAX RESIDENT IN UNITED KINGDOM. THE BENEFIT OF IND O UK DOUBLE TAXATION AVOIDANCE AGREEMENT [(1994) 206 ITR (ST) 235] IS THUS CLEARLY ADMISSIBLE TO THE RECIPIENT. COMING TO THE TREATY PROVISIONS, IT IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT THE UK BASED ENTITY HAD A PERMANENT ESTABLISHMENT I N INDIA, AND THE COMMISSION PAID TO THIS ENTITY, THEREFORE, CANNOT BE TAXED AS BUSINESS PROFITS. IT IS ONLY ELEMENTARY THAT, IN THE ABSENCE OF A PE, ARTICLE 7 OF THE APPLICABLE DTAA DOES NOT ALLOW TAXATION OF BUSINESS PROFITS IN THE SOURCE CO UNTRY. AS FOR THE TAXABILITY UNDER THE FEES FOR TECHNICAL SERVICES CLAUSE, IT IS IMPORTANT TO BEAR IN MIND THE FACT THAT THE INDO UK DTAA HAS A MAKE AVAILABLE CLAUSE IN ITS ARTICL E DEALING WITH FEES FOR TECHNICAL SERVICES. AS FOR THE CONNOTATIONS OF MAKE AVAILABLE CLAUSE IN THE TREATY, THERE ARE AT LEAST TWO NON-JURISDICTIONAL HIGH COURT DECISIONS, NAMELY HONBLE DELHI HIGH COURT IN THE CASE OF DIT V. GUY CARPENTER & CO LTD. [2012] 3 46 ITR 504 AND HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. DE BEERS INDIA MINERALS (P.) LTD. [2012] 346 ITR 467 IN FAVOUR OF THE ASSESSEE, AND THERE IS NO CONTRARY DECISION BY HONBLE JURISDICTIONAL HIGH COURT OR BY HONBLE SUPREME COUR T. IN DE BEERS INDIA MINERALS (P.) LTD.'S CASE (SUPRA), THEIR LORDSHIPS POSED THE QUESTION, AS TO 'WHAT IS MEANING OF MAKE AVAILABLE', TO THEMSELVES, AND PROCEEDED TO DEAL WITH IT AS FOLLOWS: 'THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOU LD BE OF SUCH A NATURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNO WLEDGE, KNOW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSMITTING TECHNICAL ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 31 OF 37 KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE C OULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW-HOW ON HI S OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL ETC., MU ST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CO NTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUC T OF INTENSE TECHNOLOGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIE NCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN D EPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQU IRING THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERV ICE, WITHIN THE MEANING OF PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT W HICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLO GY AVAILABLE. IN OTHER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED A S 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TEST OF RENDERING SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TI ME IS SATISFIED.' 13. THE RENDITION OF SERVICES FOR EARNING COMMISSIO N CANNOT BE OF SUCH A NATURE THAT THERE IS A TRANSFER OF TECHNOLOGY, IN THE SENS E IT IS REQUIRED TO FULFIL THE MAKE AVAILABLE CLAUSE IN THE INDO UK DTAA. IT IS ALSO E LEMENTARY THAT IN A CASE IN WHICH THE PROVISIONS OF THE DTAA ARE APPLICABLE, THE PROV ISIONS OF THE INCOME TAX ACT APPLY ONLY TO THE EXTENT THE SAME ARE BENEFICIAL TO THE ASSESSEE. IN VIEW OF THESE DISCUSSIONS, QUITE CLEARLY, EVEN IF THE COMMISSION INCOME IN THE HANDS OF THE RECIPIENT IS TAXABLE UNDER THE PROVISIONS OF SECTIO N 9, THE PROVISIONS OF THE INDO UK DTAA WILL COME TO THE RESCUE OF THE ASSESSEE. WHIC HEVER WAY ONE LOOKS AT IT, WHETHER IN THE LIGHT OF THE PROVISIONS OF THE ACT O R THE INDO UK DTAA, THE CONCLUSIONS OF THE CIT(A) DO NOT CALL FOR ANY INTERFERENCE. 14. THE APPEAL OF THE ASSESSING OFFICER IS, THEREFO RE, DISMISSED. ITA NO. 364/AHD/2014 : AY: 2008-09 ASSESSEES APP EAL 15. GROUND NO. 1 IS GENERAL AND IT DOES NOT CALL FO R ANY SPECIFIC ADJUDICATION. 16. IN GROUND NO. 2, THE ASSESSEE-APPELLANT HAS RAI SED THE FOLLOWING GRIEVANCES:- 2. THE LEARNED CIT (APPEALS) GROSSLY ERRED IN LAW A ND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALL OWANCE OF RS.30,40,260/- BY INVOKING THE PROVISIONS OF SECTIO N 14A OF THE I.T. ACT READ WITH RULE 8D OF THE I.T. RULES OUT OF EXPENDIT URE INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME CHARGEABLE T O TAX. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 32 OF 37 2.1 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION BY INVOKING THE PROVISIONS OF SECTION 14A OF THE I.T. ACT AND RULE 8D OF THE I.T. RULES IGNORING THE FACT THAT THE EXPENDITURE W HICH CAN BE ATTRIBUTED TO THE EXEMPTED INCOME AMOUNTED TO RS.15,233/- WHIC H THE APPELLANT ASSESSEE HAD SUO MOTO ADDED BACK TO THE TOTAL INCOM E FOR THE YEAR UNDER APPEAL AND THAT THE REST OF THE EXPENDITUR E HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME INCL UDED IN THE TOTAL INCOME. 2.2 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION WITHOUT APPRECIATING THE FACT THAT THE AO HAD MISIN TERPRETED RULE 8D AND THAT THE IMPUGNED ADDITION WAS MADE WITHOUT CARRYIN G OUT ANY PRELIMINARY EXERCISE OF VERIFYING IF THE EXPENDITUR E SUO MOTO DISALLOWED BY THE APPELLANT IS CORRECT OR NOT AS PER SUB RULE 1 OF RULE 8D. FURTHER, THE APPELLANT HAS NOT CLAIMED THAT IT HAS NOT INCUR RED ANY EXPENDITURE TO EARN INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME . HENCE, THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CI T (A) IS NOT IN ACCORDANCE WITH SUB RULE 1 OF RULE 8D OF THE I.T. R ULES, 1962. 2.3 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE MADE BY THE AO WITHO UT APPRECIATING THE RATIO OF THE VARIOUS CASE LAWS WHICH WERE SPECIFICA LLY BROUGHT HIS NOTICE IN THE WRITTEN SUBMISSION FILED BEFORE HIM. 2.4 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE MADE BY THE AO WITHO UT CONSIDERING THE APPELLANTS PLEA THAT THE AO HAS WRONGLY TAKEN THE AMOUNT OF CLOSING BALANCE OF INVESTMENT AT RS.73,90,20,000/- AS AGAIN ST THE CORRECT FIGURE OF RS.7,39,02,000/-. DISALLOWANCE UNDER RULE 8D IF AT ALL ANY WERE TO BE MADE WOULD THEREFORE WORKOUT TO RS. 13,92,698/- AND NOT RS.30,40,260/- AS FOLLOWS:- AVERAGE VALUE OF INVESTMENT 48,31,77,000/- OPENING BALANCE OF INVESTMENT 7,39,02,000/- CLOSING BALANCE OF INVESTMENT TOTAL 55,70,79,000/- AGERAGE 27,85,39,500/- % 13,92,698/- IT IS THEREFORE PRAYED THAT THE IMPUGNED DISALLOWAN CE MADE BY THE AO MAY PLEASE BE DELETED OR ALTERNATIVELY RESTRICTED T O RS.13,92,698/- 17. IN RESPECT OF ASSESSMENT YEAR 2008-09, IT IS IM PORTANT TO BEAR IN MIND THE FACT THAT THIS IS THE YEAR IN WHICH THE RULE 8D HAD ADMI TTEDLY COME INTO FORCE AND AS PER ASSESSEES CLAIM THAT IT HAD SUFFICIENT INTEREST FR EE FUNDS. NO DISALLOWANCE IS MADE BY THE ASSESSING OFFICER IN RESPECT OF INTEREST PAY MENTS. THE DISALLOWANCE HAS ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 33 OF 37 BEEN MADE ON THE BASIS OF THE FORMULA SET OUT IN RU LE 8D IN RESPECT OF ADMINISTRATIVE EXPENSES AND WE SEE NO INFIRMITY IN THE ORDER OF CI T(A) IN CONFIRMING THIS DISALLOWANCE. GROUND NO.2 IS THUS DISMISSED. 18. BY WAY OF AN ADDITIONAL GROUND, THE ASSESSEE HA S RAISED FOLLOWING GRIEVANCE:- BOTH THE LOWER AUTHORITIES OUGHT TO HAVE ALLOWED P URCHASE COMMISSION AND GUARANTEE COMMISSION FOR AY 2003-04 WHICH WAS NOT C LAIMED IN AY 2003-04 AND DISCLOSED BY WAY OF A NOTE IN STATEMENT OF TOTA L INCOME FILED ALONG WITH RETURN OF INCOME THAT THE SAME WILL BE CLAIMED IN T HE YEAR OF PAYMENT. IN VIEW OF THIS, IT IS SUBMITTED THAT THE SAID PAYMENT HAS BEEN MADE DURING THE YEAR UNDER REVIEW AND HENCE, THE SAME BE GRANTED ACCORDI NGLY 19. SO FAR AS THIS GRIEVANCE OF THE ASSESSEE IS CON CERNED, IT IS SUFFICIENT TO TAKE NOT OF THE FACT THAT THE ASSESSEE HAD INCURRED CERT AIN EXPENDITURE ON ACCOUNT OF PURCHASE COMMISSION AND GUARANTEE COMMISSION IN RES PECT OF ASSESSMENT YEAR 2003-04 WHICH WAS NOT CLAIMED IN THAT PARTICULAR YE AR ON THE GROUND THAT TAX WAS NOT DEDUCTED AT SOURCE, WITH THE CAVEAT AS SET OUT IN T HE NOTE TO THE COMPUTATION OF INCOME, THAT DEDUCTION WILL BE CLAIMED IN THE YEAR IN WHICH THE PAYMENT IS MADE LEARNED COUNSEL SUBMITS THAT THOUGH THE STAND SO TA KEN BY THE ASSESSEE WAS ERRONEOUS INASMUCH AS NO TAX WAS DEDUCTIBLE BUT THE ASSESSEE CANNOT BE PUT TO THE DOUBLE DISADVANTAGE IN THE SENSE THAT NEITHER THE A MOUNT IS DEDUCTIBLE IN THE YEAR IN WHICH EXPENDITURE IS INCURRED NOR THE DEDUCTION IS PERMITTED IN THE YEAR IN WHICH THE TAX IS DEDUCTED, THOUGH WRONGLY, IN RESPECT OF SUCH PAYMENTS. WE ARE, THEREFORE, URGED TO DIRECT THE ASSESSING OFFICER TO ALLOW THE PAYMENT OF PURCHASE COMMISSION AND GUARANTEE COMMISSION FOR THE YEAR 2003-04 WHICH WAS NOT CLAIMED IN THAT YEAR ON THE GROUND THAT TAXES WERE NOT DEDUCTED FROM THE SAME AND HAS BEEN CLAIMED IN THE PRESENT YEAR ON THE BASIS THAT NOW TAXES HAS BE EN DEDUCTED AND PAID. LEARNED DEPARTMENTAL REPRESENTATIVE VERY FAIRLY DOES NOT OP POSE THE CONTENTION SO ADVANCED BY THE ASSESSEE. 20. IN VIEW OF THE THESE DISCUSSIONS, AS ALSO BEARI NG IN MIND ENTIRETY OF THE CASE, WE SEE MERITS IN THE STAND OF THE ASSESSEE AND DIRE CT THE ASSESSING OFFICER TO ALLOW THE CLAIM, UPON VERIFICATION ABOUT THE FACTUAL ELEM ENTS EMBEDDED IN THE SUBMISSIONS OF THE LEARNED COUNSEL, IN ACCORDANCE WITH LAW. TH IS ISSUE IS THUS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR NECESSARY FACTUAL VERI FICATION. THE ADDITIONAL GROUND IS THUS ALLOWED FOR STATISTICAL PURPOSES. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 34 OF 37 ITA NO. 468/AHD/2014 : AY: 2008-09 DEPARTMENTS A PPEAL 23. IN GROUND NO. 1, THE ASSESSING OFFICER HAS RAIS ED THE FOLLOWING GRIEVANCE:- THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING THE ADDITION OF RS.1,09,66,000/- MADE ON ACCOUNT OF DISALLOWANCE U/ S 40(A)(I) R.W.S. 195 OF THE ACT, FOR FAILURE TO COMPLY WITH THE PROVISIONS OF CHAPTER XVII-B FROM THE COMMISSION PAID TO BG ENERGY HOLDING LTD., A NON-RE SIDENT COMPANY. 24. WE FIND THAT THE GRIEVANCE RAISED ABOVE IS SIMI LAR TO THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IN HIS APPEAL FOR ASSESSMENT YEAR 2007-08 VIDE ITA NO.467/AHD/2014. FOR THE DETAILED DISCUSSION IN PA RAGRAPH NOS. 11 TO 14 ABOVE, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN THIS REG ARD, WHICH IS UPHELD. GROUND NO.1 IS THUS DISMISSED. 25. IN GROUND NO. 2, THE ASSESSING OFFICER HAS RAIS ED THE FOLLOWING GRIEVANCE:- LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETI NG THE ADDITION OF RS.1,47,85,477/- MADE ON ACCOUNT OF REFUND OF VALUE ADDED TAX RECEIVABLE BY THE APPLICANT FOR AY 2007-08. 26. SO FAR AS THIS GRIEVANCE IS CONCERNED, IT IS SU FFICIENT TO TAKE NOTE OF THE FACT THAT ADMITTEDLY THE ASSESSEE HAD NEVER CLAIMED DEDU CTION IN RESPECT OF THE AMOUNT OF EXCESS VAT PAID BY THE ASSESSEE ON GAS PURCHASE COST IN THE FY 2006-07. YET, WHEN THIS AMOUNT WAS REFUNDED TO THE ASSESSEE IN TH E PRESENT YEAR, THE ASSESSING OFFICER BROUGHT IT TO TAX. THE PLEA OF THE ASSESSE E THAT SINCE IT WAS NEVER CLAIMED AS DEDUCTION AT THE TIME OF MAKING PAYMENT, IT CANNOT BE BROUGHT TO TAX NOW, WAS SIMPLY BRUSHED ASIDE BY THE ASSESSING OFFICER. AGG RIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). LEARNED CI T(A) DELETED THE ADDITION ON THE GROUND THAT VAT HAS NOT BEEN ROUTED THROUGH PROFIT AND LOSS ACC OUNT AND THEREFORE , IT HAS NOT BEEN CLAIMED AS EXPENDITURE . THE ASSESSING OFFICER HAS NOT SATISFIED WITH THE RELIEF SO GRANTED BY THE CIT(A) AND IS IN APPEA L BEFORE US. 27. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING P ERUSED THE MATERIAL ON RECORD, WE SEE NO MERITS IN THE STAND OF THE ASSESSING OFFI CER. ONCE IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION AT THE T IME OF MAKING PAYMENT OF VAT, THE REFUND OF SUCH VAT CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. THE ACTION OF THE CIT(A) DOES NOT INDEED CALL FOR ANY I NTERFERENCE. WE, THEREFORE, APPROVE THE ORDER OF THE CIT(A) ON THIS POINT AND D ECLINE TO INTERFERE IN THE MATTER. GROUND NO.2 IS THUS DISMISSED. 28. THE APPEAL OF THE ASSESSING OFFICER IS, THEREFO RE, DISMISSED. ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 35 OF 37 ITA NO. 2371/AHD/2013 : AY: 2009-10 ASSESSEES AP PEAL 29. GROUND NO. 1 IS GENERAL AND IT DOES NOT CALL FO R ANY SPECIFIC ADJUDICATION. 30. IN GROUND NO. 2, THE ASSESSEE-APPELLANT HAS RAI SED THE FOLLOWING GRIEVANCES:- 2. THE LEARNED CIT (APPEALS) GROSSLY ERRED IN LAW A ND ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING AN ADD ITION OF RS.4,44,267/- BY INVOKING THE PROVISIONS OF SECTION 14A OF THE I. T. ACT READ WITH RULE 8D OF THE I.T. RULES OUT OF EXPENDITURE INCURRED WH OLLY AND EXCLUSIVELY FOR EARNING THE INCOME CHARGEABLE TO TAX. 2.1 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION BY INVOKING THE PROVISIONS OF SECTION 14A OF THE I.T. ACT AND RULE 8D OF THE I.T. RULES IGNORING THE FACT THAT THE EXPENDITURE W HICH CAN BE ATTRIBUTED TO THE EXEMPTED INCOME AMOUNTED TO RS.7,170/- WHICH THE APPELLANT ASSESSEE HAD SUO MOTO ADDED BACK TO THE TOTAL INCOM E FOR THE YEAR UNDER APPEAL AND THAT THE REST OF THE EXPENDITUR E HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING THE INCOME INCL UDED IN THE TOTAL INCOME. 2.2 THE LEARNED CIT (APPEALS) HAS GROSSLY ERRED IN LAW & ON FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING THE IM PUGNED ADDITION WITHOUT APPRECIATING THE FACT THAT THE AO HAD MISIN TERPRETED RULE 8D AND THAT THE IMPUGNED ADDITION WAS MADE WITHOUT CARRYIN G OUT ANY PRELIMINARY EXERCISE OF VERIFYING IF THE EXPENDITUR E SUO MOTO DISALLOWED BY THE APPELLANT IS CORRECT OR NOT AS PER SUB RULE 1 OF RULE 8D. FURTHER, THE APPELLANT HAS NOT CLAIMED THAT IT HAS NOT INCUR RED ANY EXPENDITURE TO EARN INCOME WHICH IS NOT INCLUDIBLE IN TOTAL INCOME . HENCE, THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE CI T (A) IS NOT IN ACCORDANCE WITH SUB RULE 1 OF RULE 8D OF THE I.T. R ULES, 1962. 31. IT IS PERTINENT TO OBSERVE THAT THE GRIEVANCE R AISED ABOVE IS SIMILAR TO THE GRIEVANCE RAISED BY THE ASSESSEE IN ITS APPEAL FOR ASSESSMENT YEAR 2008-09 VIDE ITA NO.364/AHD/2014. FOR THE DETAILED DISCUSSION I N PARAGRAPH NO. 17 ABOVE, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN CONFIRMI NG THIS DISALLOWANCE. GROUND NO.2 IS THUS DISMISSED. 32. BY WAY OF AN ADDITIONAL GROUND, THE ASSESSEE HA S RAISED FOLLOWING GRIEVANCE:- DISALLOWANCE OF SET OFF OF RS.8,80,500/- TOWARDS B ROUGHT FORWARD BUSINESS LOSS OF AY 2008-09 AGAINST BUSINESS INCOME OF AY 20 09-10 AND LEVY OF INTEREST. 33. LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITS THAT ALL THAT IS PRAYED FOR IN RESPECT OF THESE GROUNDS OF APPEAL IS CONSEQUENTIAL RELIEF. LEARNED DEPARTMENTAL ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 36 OF 37 REPRESENTATIVE DOES NOT OPPOSE THE PRAYER SO MADE B Y THE ASSESSEE. IN VIEW OF THE ABOVE POSITION, WE UPHOLD THE PLEA OF THE ASSESSEE, IN PRINCIPLE, AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR CONSEQUENT IAL RELIEF AND RESULTANT ATTACHMENT AS PRAYED FOR. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 34. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2394/AHD/2013 : AY: 2009-10 DEPARTMENTS APPEAL 35. IN THIS APPEAL, THE ASSESSING OFFICER HAS RAISE D THE FOLLOWING GRIEVANCES:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,18,24,000/- MADE ON ACCOUNT OF DISALLOWANCE U/ S 40(A)(I) R.W. SECTION 195 FOR FAILURE TO COMPLY WITH THE PROVISIONS OF CH APTER XVII-B FROM THE COMMISSION PAID TO BG ENERGY HOLDING LTD., A NON-RE SIDENT COMPANY. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN RELYING UPON THE JUDGMENT IN THE CASE OF CIT VS. TOSHOKU LTD (125 ITR 525 SC) WHEREIN THE ISSUE FOR AY 1962-63 WAS TAXABILITY OF THE COMMISSION PAYMENT AN D NOT APPLICABILITY OF TDS PROVISIONS TO THE SAID COMMISSION EXPENDITURE. 36. WE FIND THAT THE GRIEVANCE RAISED ABOVE IS SIMI LAR TO THE GRIEVANCE RAISED BY THE ASSESSING OFFICER IN HIS APPEAL FOR ASSESSMENT YEAR 2007-08 VIDE ITA NO.467/AHD/2014. FOR THE DETAILED DISCUSSION IN PA RAGRAPH NOS. 11 TO 14 ABOVE, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) IN THIS REG ARD, WHICH IS UPHELD. THESE GROUNDS ARE, THUS, DISMISSED. 37. THE APPEAL OF THE ASSESSING OFFICER IS, THEREFO RE, DISMISSED. 38. IN THE RESULT, THE APPEALS OF THE ASSESSING OFF ICER ARE DISMISSED AND THAT OF ASSESSEE FOR AY 2007-08 IS ALLOWED; WHEREAS THE APP EALS OF THE ASSESSEE FOR AYS 2008-09 AND 2009-10 ARE PARTLY ALLOWED FOR STATIST ICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON TODAY ON THE 21 ST DAY OF SEPTEMBER, 2017. SD/- SD/- S S GODARA PRAMOD KUM AR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *BT AHMEDABAD, THE 21 ST DAY OF SEPTEMBER, 2017 ITA NOS. 2371& 2394/AHD/2013, ITA NOS. 363, 364, 467 & 468/AHD/2014 ASSESSEE : GUJARAT GAS TRADING CO LTD ASSESSMENT YEAR : 2007-08 TO 2009-10 PAGE 37 OF 37 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: ........18.09.2017...AS PER SIX PAGES MANUSCRIPT OF HONBLE AM ATTACHED....... .............. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 18.09.2017.......... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S.: .....21.09.2017................ 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: ............ 21.09.2017............... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : .....25.09.2017.................... 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: .. 8. DATE OF DESPATCH OF THE ORDER: ......
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