ACIT, New Delhi V. M/s. Grant Thornton, New Delhi

ITA 4143/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7280 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAVETA NAKRA DUTTA
• Keywords: Double taxation relief; Services rendered outside India; Permanent establishment; Advance ruling
• Section: 37(1); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B , NEW DELHI BEFORE SHRI BHAVNESH SAINI , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO .4143/DEL / 2015 ASSESSMENT YEAR : 2010 - 11 ACIT, CIRCLE - 52(1), NEW DELHI VS. M/S. GRANT THORNTON, L - 41, CONNAUGHT PLACE, NEW DELHI PAN : AACFG9740K (APPELLANT) (RESPONDENT) APPELLANT BY MS. SHAVETA NAKRA DUTTA, SR.DR RESPONDENT BY SHRI V.K. BINDAL, CA & MS. SWEETY KOTHARI, CA ORDER PER O.P. KANT, A .M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORDER DATED 30/03/2015 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 18, NEW DELHI[IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2010 - 11 RAISING FOLLOWING GROUNDS: I. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,41,08.805/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS COMMITTED A DEFAULT U/S 40(A)(I) OF THE INCOME - TAX ACT, 1961 DATE OF HEARING 03.01.2019 DATE OF PRONOUNCEMENT 10.01.2019 2 ITA NO. 4143/DEL/2015 ON ACCOUNT OF NON - DEDUCTION OF TAX BY ASSESSEE PAID TO A FOREIGN COMPANY. III THE CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT ARTICLE 15 (INDEPENDENT PERSONAL SERVICES) IS APPLICABLE TO AN INDIVIDUAL, WHETHER IN HIS OWN CAPACITY OR AS A MEMBER OF A PARTNERSHIP. IN THE INSTANT CASE, THE PAYMENT HAS ADMITTEDLY BEEN MADE TO GRANT THORNTON LLP WHICH IS A LIMITED LIABILITY PARTNERSHIP FIRM AND NOT AN INDIVIDUAL. III) THE CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FAC T THAT THE LATEST EXPLANATION TO SECTION 9 APPLICABLE TO CLAUSE (VII) INSERTED FROM FINANCE ACT. 2010 W.E.F. 01.06.1976 APPLY TO THE PRESENT CASE IN THE LIGHT OF PAYMENTS (INDEPENDENT PERSONAL SERVICES) MADE TO A NON - RESIDENT ENTITY. IV) THE CIT(A) HAS E RRED IN DELETING THE ADDITION OF RS. 57.148/ - . WITHOUT APPRECIATING THE FACT THE INTEREST PAID FOR LATE DEPOSIT OF SERVICE TAX WHICH IS NOT ALLOWABLE U/S 37( 1). V) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF APPEAL. 2. B RIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM WAS ENGAGED IN PROVIDING INTERNATIONAL ACCOUNTANCY AND ADVISORY SERVICES TO VARIOUS CLIENTS IN INDIA AND ABROAD. THE ASSESSEE FILED RET URN OF INCOME ON 12/10/201 0 DECLARING TOTAL INCOME OF RS. 6,46,22,387/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE INCOME - TAX A CT, 1961 (IN SHORT THE A CT ) WAS ISSUED AND COMPLIED WITH. IN THE SCRUTINY PROCEEDINGS, THE ASSES SING OFFICER NOTICED CERTAIN PAYMENTS FOR PROFESSIONAL FEES TO NON - RESIDENTS FIRMS, ON WHICH NO TAX WAS DEDUCTED AT SOURCE. THE SERVICES OF THE FOREIGN FIRMS WERE OBTAINED TO RENDER SERVICES TO FOREIGN CLIENTS OF THE ASSESSEE IN UK, USA, NETHERLAND AND FRA NCE ETC. IT WAS CONTENDED BY THE ASSESSEE THAT FEE PAID TO THESE FIRMS WAS PAID FOR SERVICES RENDERED OUTSIDE INDIA AND SAME IS COVERED BY A RTICLE 15 3 ITA NO. 4143/DEL/2015 INDEPENDENT P ERSONAL S E RVICES OF RESPECTIVE DTAA AND I N ABSENCE OF ANY FIXED BASE OF THE RECIPIENT IN INDIA, INCOME WAS NOT CHARGEABLE TO TAX IN INDIA AND THUS NO WITHHOLDING TAX WAS REQUIRED TO DEDUCT ON SUCH PAYMENTS UNDER SECTION 195 OF THE A CT AND CONSEQUENTLY NO DISALLOWANCE UNDER SECTION 40(A)(I) OF THE A CT WAS REQUIRED. THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS TO SUPPORT ITS CLAIM: 1 . MAHARASHTRA S TATE ELECTRICITY BOARD VS. DCIT (2004) 90 ITD 793 ( MUM). 2 . GRAPHITE INDIA LTD VS. CIT ( 2003) 86ITR 384 (KOL) 2.1 A CCORDING TO THE ASSESSING OFFICER, IN VIEW OF THE EXPLANATION W.E.F. 01/06/1976 TO SECTION 9(I)(VII) OF THE A CT, SERVICES RENDERED BY A NON - RESIDENT ( FEE FOR TECHNICAL NATURE ) THOUGH HAVING NO RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA OR RENDERED OUTSIDE INDIA SHALL BE DEEMED TO ACCRUE ARISE IN INDIA. THE ASSESSING OFFICER PLACED RELIANCE ON THE DECISIONS OF THE ITAT MUMBAI IN THE CASE OF LINKLATERS LLP VS ITO (ITA NO. 5085/MUM/2003 AND ASHAPURA MINICHEM LTD (ITA NOT MENTIONED BY THE LD. AO ). ON THE ISSUE OF A RTICLE 15 OF THE RESPECTIVE DTAAS INVOKED BY THE ASSESSEE, THE LD. ASSESSING OFFICER OBSERVED THAT THE SAID ARTICLE IS APPLICABLE TO AN INDIVIDUAL, WH ETHER IN HIS OWN CAPACITY OR AS A MEMBER OF A PARTNERSHIP AND IN THE INSTANT CASE THE PARTIES ARE ADMITTEDLY L IMITED L IABILITY PARTNERSHIP F IRM S (LLP) AND NOT AN INDIVIDUAL, THOSE ARE NOT COVERED BY THE BENEFIT OF A RTICLE 15 FOR INDEPENDENT PERSONAL SERVI CES RENDERED . ACCORDING TO THE ASSESSING OFFICER 4 ITA NO. 4143/DEL/2015 THE SERVICES RENDERED BEING TECHNICAL IN NATURE THE PAYMENT ARE FEE FOR TECHNICAL SERVICES, WHICH FALLS UNDER A RTICLE 13 OF THE RESPECTIVE DTAA. IN VIEW OF THE OBSERVATION, THE LD. ASSESSING O FFICER MADE DI SALLOWANCE OF RS.1,41,08, 805/ - UNDER SECTION 40(A)(I) OF THE A CT IN RESPECT OF FOLLOWING PAYMENTS: S.NO. PARTY S NAME COUNTRY AMT. (RS.) 1. GRANT THORNTON LLP USA 85,16,462 2. GRANT THORNTON UK LLP UK 33,15,747 3. GRANT THORNTON SOCIETE D ADVOCATES FRANCE 14,55,655 4. GRANT THORNTON AMSTERDAM NETHERLANDS 7,50,011 5. ARENTHALS GRANT THORNTON ACCOUNTANTS NETHERLANDS 70,930 TOTAL 1,41,08,805 2.2 THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF THE INTEREST FOR DELAYED DEPOSIT OF SERVICE TAX AMOUNTING TO RS. 57,148 / - IN TERMS OF SECTION 37(1) OF THE A CT. 2.3 ON FURTHER APPEAL, THE LD. CIT(A) ANALYZED THE CLAIM OF THE ASSESSEE OF NON - TAXABILITY OF THE PAYMENTS IN THE HANDS OF THE NON - RESID ENT IN VIEW OF THE A RTICLE 15 (INDEPENDENT PERSONAL S ERVICES) UNDER RESPECTIVE DTAA S AND CONCLUDED THAT INCOME DERIVED BY A N INDIVIDUAL OR A PARTNERSHIP FIRM BY RENDERING PROFESSIONAL SERVICES IS TAXABLE IN THE COUNT RY OF ITS RESIDENCE. THE LD. CIT(A) ALSO EXAMINED TAXABILITY OF T HE PROFESSIONAL FEE PAID UNDER A RTICLE 13 OF VARIOUS DTAA S AND CONCLUDED THAT NO TECHNICAL KNOWLEDGE WAS MADE AVAILABLE AND THUS IN VIEW OF THE MAKE AVAILABLE CLAUSE IN DTAA (S), THE PAYM EN TS WERE NOT IN THE NATURE OF F EE FOR TECHNICAL S ERVICES. IN SUPPORT OF THE FINDING, HE RELIED ON NUMBER OF DECISIONS CITED IN THE IMPUGNED ORDER. THE LD. CIT(A) EMPHASIZE D THAT PROVISIONS OF THE DTAA BEING MORE 5 ITA NO. 4143/DEL/2015 FAVOURABLE TO THE ASSESSEE, THE ASSESSEE HAS OPTION TO CHOOSE THOSE PROVISIONS RATHER THAN PROVISIONS OF THE A CT. ACCORDINGLY, THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE WAS NOT LIABLE FOR DEDUCTING TAX AT S OURCE UNDER SECTION 195 OF THE A CT IN RESPECT OF THE PAYMENTS MADE TO NONRESIDENTS UNDER REFER ENCE AND DELETED THE DISALLOWANCE UNDER SECTION 40(A)(I) OF THE A CT. THE LD. CIT(A) ALSO DELETED THE ADDITION OF RS.57,148 / - FOR INTEREST PAID IN RELATION TO SERVICE TAX MADE BY THE ASSESSING OFFICER UNDER SECTION 37(1) OF THE ACT . AGGRIEVED WITH THE ABOVE FINDING OF THE LD. CIT(A), THE R EVENUE IS IN APPEAL BEFORE THE T RIBUNAL 3 . T HE GROUND NUMBER (I) TO (III) OF THE APPEAL ARE RELATED TO T HE ISSUE OF DISALLOWANCE OF RS. 1,4 1,08, 805 / - UNDER SECTION 40(A)(I) OF THE A CT. 3.1 BEFORE US, THE LEARNE D DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT A RTICLE 15 OF RESPECTIVE DTAAS IS APPLICABLE IN CASE OF INDIVIDUAL WHEREAS THE PAYMENT HAS BEEN MADE TO VARIOUS LIMITED LIABILITY PARTNERSHIP FIRMS AND THUS LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE. 3.2 ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) HAS MADE DETAILED ANALYSIS OF THE PROVISIONS OF A RTICLE 15 OF VARIOUS DTAAS AND FOUND THE PAYMENTS MAD E BY T HE ASSESSEE ELIGIBLE UNDER A RTICLE 15 OF THE RELEVANT DTAAS. THE LD. COUNSEL ALSO SUBMIT TED THAT PAYMENTS ARE ALSO NOT F EE FOR T ECHNICAL S ERVICES IN VIEW OF THE MAKE AVAILABLE CLAUSE OF RELEVANT DTAAS AS THE CONSULTANCY PROVIDED IS OF ROUTINE NATURE AND NO TECHNICAL KNOWLEDGE HAS BEEN PROVIDED TO THE ASSESSEE. ACCORDINGLY , SHE SUBMITTED THAT ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE MIGHT BE UPHELD. 6 ITA NO. 4143/DEL/2015 3.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FI ND THAT THE LD. ASSESSING OFFICER HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT SERVICES RENDERED BY THE 6 NON - RESIDENT ENTITIES ARE NOT IN THE NATURE OF INDEPENDENT PERSONAL SERVICES. THE LD. CIT(A) HAS MENTIONED THAT THOSE PARTIES HAVE RENDERED PROFES SIONAL SERVICES PERTAIN ING TO THE FIELD OF LAWYERING (GIVING REVIEWS AND OPINIONS ) AND ACCOUNTING E.G. SAS70 ENGAGEMENT, REVIE W AND FILING OF FORM NUMBER1120 , DUE DILIGENCE, REVIEW OF US GAAP FINANCIALS ETC. WE NOTE THAT THERE IS NO DISPUTE AS FAR AS THE N ATURE OF SERVICES RENDERED. THE ONLY DISPUT E WHICH HAS BEEN RAISED BY THE REVENUE IS THAT THE BENEFIT OF A RTICLE 15 OF RELEVANT DTAAS CAN BE AVAILED BY THE INDIVIDUAL NONRESIDENTS, WHEREAS IN THE INSTANT CASE THE NON - RESIDENT PARTIES ARE LIMITED LIABILITY PARTNERSHIP FIRMS . WE N OTE THAT THIS OBJECTION OF THE R EVENUE HAS BEEN ANALYSED IN DETAIL BY THE LD. CIT(A) AFTER REFERRING DTAA WITH UK, OBSERVING AS UNDER: 4.2.2 THUS, IT CAN BE SEEN FROM THE ABOVE DTAAS THAT AN INCOME DERIVED BY AN INDIVIDUAL OR A PA RTNERSHIP FIRM BY RENDERING OF PROFESSIONAL SERVICES IS TAXABLE IN THE COUNTRY / STATE OF HIS / ITS RESIDENCE. IF DTAA OF UK IS CONSIDERED FOR ILLUSTRATION, INCOME OF A UK FIRM FOR RENDERING PROFESSIONAL SERVICES IN UK WILL BE TAXABLE IN UK. HOWEVER, SUCH INCOME MAY ALSO BE TAXABLE IN INDIA IF THE INDIVIDUAL OR ANY PARTNER OF THE PROFESSIONAL FIRM IS PRESENT IN INDIA UP TO 90 DAYS IN A PREVIOUS YEAR OR THE PERSON / FIRM HAS A FIXED BASE REGULARLY AVAILABLE TO HIM / IT IN INDIA FOR PERFORMING HIS / ITS ACTIV ITIES. HOWEVER, IN THIS CASE, NONE OF THE MEMBERS / EMPLOYEES OF M/S GRANT THORNTON UK LLP CAME TO INDIA. IT IS CATEGORICALLY SUBMITTED THAT THERE IS NO FIXED BASE OR OFFICE OR PERMANENT ESTABLISHMENT (PE) OF THE SAID UK LLP IN INDIA. THEREFORE, IN THE ABS ENCE OF A PE / FIXED BASE OF THE RECIPIENT (I.E., M/S GRANT THORNTON UK LLP) IN INDIA AND ON ACCOUNT OF THE FACT THAT NO ONE FROM THE SAID FIRM HAD EVEN A SINGLE DAY STAY IN INDIA, PROFESSIONAL FEES FOR RENDERING SERVICES IN UK WILL BE TAXABLE ONLY IN UK A ND NOT IN INDIA. 7 ITA NO. 4143/DEL/2015 3.4 THE LD. C IT(A) HAS FURTHER ANALYSED THE A RTICLE 15 OF DTAA IN RESPECT OF USA, NETHERLAND, AND FRANCE AS UNDER: 4.2.4 IT MUST BE APPRECIATED THAT THE EXPLANATION OF THE APPELLANT THAT THE IMPUGNED PROFESSIONAL SERVICES WERE COVERED UNDER THE ARTICLE ON INDEPENDENT PERSONAL SERVICES OF DTAAS WITH UK AND OTHER COUNTRIES WAS REJECTED BY THE ASSESSING OFFICER ON A FLIMSY GROUND THAT THE SAID ARTICLE IS APPLICABLE FOR PROFESSIONAL FEES PAID TO AN INDIVIDUAL ONLY, WHETHER IN HIS OWN CAP ACITY OR AS A MEMBER OF A PARTNERSHIP, AND SINCE THE RECIPIENTS OF PROFESSIONAL FEES IN THIS CASE ARE LIMITED LIABILITY PARTNERSHIP FIRMS (LLPS), THE SAID ARTICLE UNDER THE RELEVANT DTAAS DID NOT APPLY IN THIS CASE. 4.2.5 NEEDLESS TO POINT OUT THAT IN THE CASE OF DTAAS WITH USA, UK AND FRANCE, IT IS UNAMBIGUOUSLY WRITTEN IN THE SAID ARTICLE ON INDEPENDENT PERSONAL SERVICES ITSELF THAT IT IS APPLICABLE ON INCOME DERIVED BY A PERSON WHO IS AN INDIVIDUAL OR FIRM OF INDIVIDUALS; OR BY AN INDIVIDUAL, WHETHER IN HIS OWN CAPACITY OR AS A MEMBER OF A PARTNERSHIP; OR BY AN INDIVIDUAL OR PARTNERSHIP OF INDIVIDUALS. 4.2.6 IN THE CASE OF NETHERLANDS, THE WORD RESIDENT IS USED IN ARTICLE 14 ON INDEPENDENT PERSONAL SERVICES , AND IT HAS BEEN EXPLAINED BY CLAUSE 1 O F ARTICLE 4 OF THE SAID DTAA AS: FOR THE PURPOSES OF THIS CONVENTION, THE TERM RESIDENT OF ONE OF THE STATES MEANS ANY PERSON WHO, UNDER THE LAWS OF THAT STATE, IS LIABLE TO TAX THEREIN BY REASON OF HIS DOMICILE, RESIDENCE, PLACE OF MANAGEMENT OR ANY OT HER CRITERION OF A SIMILAR NATURE. FURTHER, PERSON HAS BEEN DEFINED BY CLAUSE 1(E) AS: THE TERM PERSON INCLUDES AN INDIVIDUAL, A COMPANY, ANY OTHER BODY OF PERSONS AND ANY OTHER ENTITY WHICH IS TREATED AS A TAXABLE UNIT, UNDER THE TAXATION LAWS IN FO RCE IN THE RESPECTIVE STATES. 4.2.7 THUS, EVEN IN THIS CASE, ARTICLE 14 ON INDEPENDENT PERSONAL SERVICES IS DEFINITELY APPLICABLE ON THE INCOME DERIVED BY A PARTNERSHIP FIRM OR AN LLP. 4.2.8 ACCORDINGLY, THE ONLY CONTENTION OF THE AO IN REFUSING TO AC CEPT THE APPLICABILITY OF ARTICLE ON INDEPENDENT PERSONAL SERVICES IN RESPECT OF PROFESSIONAL FEE PAID TO VARIOUS FOREIGN PARTIES BY THE APPELLANT ON THE GROUND THAT IT IS APPLICABLE ONLY IF THE RECIPIENT OF INCOME IS AN INDIVIDUAL AND NOT A LIMITED L IABILITY PARTNERSHIP FIRM HAS NO LEGS TO STAND. 4.2.9 MOREOVER, IN EACH OF THESE DTAAS THE TERM PROFESSIONAL SERVICES INCLUDES THE INDEPENDENT ACTIVITIES OF LAWYERS AND ACCOUNTANTS AMONGST OTHER SUCH PROFESSIONAL. THE APPELLANT IS UNDISPUTEDLY ENGA GED IN RENDERING ACCOUNTING AND ADVISORY SERVICES 8 ITA NO. 4143/DEL/2015 OF INTERNATIONAL STANDARDS TO VARIOUS CLIENTS IN INDIA AND ABROAD. PHOTOCOPIES OF THE BILLS RAISED BY THE SAID PARTIES TOWARDS RENDERING OF SERVICES ALONG WITH PHOTOCOPIES OF FORM NO. 15CA AND 15CB FILED AR E ENCLOSED. INTERESTINGLY, THE AO HAS ALSO ADMITTED VIDE PARA NO. 5 AT PAGE 17 OF THE ASSESSMENT ORDER THAT IT IS IMPORTANT TO POINT OUT THAT THE SAME PROFESSIONAL FEES PAID BY THE ASSESSEE WITHIN INDIA IS COVERED FOR DEDUCTION OF TAX U/S 194J OF THE IN COME - TAX ACT, 1961. ACCORDINGLY, THE PAYMENT OF PROFESSIONAL FEES MADE ABROAD TO THE PARTIES REFERRED TO IN THE FOREGOING PARAS IS ALSO COVERED U/S 195 OF THE INCOME - TAX ACT, 1961... . 4.2.10 THEREFORE, IT CANNOT BE DOUBTED THAT THE IMPUGNED PROFESSIONAL FEES PAID ARE SQUARELY COVERED BY THE PROVISIONS OF ARTICLE ON INDEPENDENT PERSONAL SERVICES OF THE SAID DTAAS. FURTHERMORE, IT HAS BEEN HELD IN MAHARASHTRA STATE ELECTRICITY BOARD VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) THAT THE PROVISIONS OF ARTI CLE 15 BEING SPECIFIC PROVISIONS FOR PROFESSIONAL SERVICES WILL OVERRIDE THE RELATIVELY GENERAL PROVISIONS OF ARTICLE 13 WHICH APPLY TO BROADER CATEGORY OF MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES . 4.2.11 IN VIEW OF THE ABOVE SUBMISSIONS, THE IMPU GNED PROFESSIONAL FEES RECEIVED BY THE FOREIGN GRANT THORNTON LLPS FROM THE APPELLANT IS NOT TAXABLE IN INDIA AS PER ARTICLES ON INDEPENDENT PERSONAL SERVICES OF THE RELEVANT DTAAS WITH THOSE COUNTRIES AND, THEREFORE, THE SAME IS NOT LIABLE TO TAX DEDUCT ION AT SOURCE IN TERMS OF SECTION 195 OF THE ACT, AND ACCORDINGLY NO DISALLOWANCE OF THE SAME CAN BE MADE U/S 40(A)(I) AT ALL. 3.5 THE LD. DR COULD NOT CONTROVERT THE FINDING OF THE LD. CIT(A) THAT THE ARTICLE ON INDEPENDENT PERSONAL SERVICES IS APPLIC ABLE ON INCOME DERIVED BY A PERSON WHO IS AN INDIVIDUAL OR FIRM OF INDIVIDUALS OR BY AN INDIVIDUAL , WHETHER IN HIS OWN CAPACITY OR ANY MEMBER OF A PARTNERSHIP FIRM . FURTHER IN THE DTAA WITH NETHERLAND, THE WORD RESIDENT HAS BEEN USED FOR THE BENEFIT OF IND EPENDENT PERSONAL SERVICES, WHICH IS WIDER THAN INDIVIDUAL AND THE FIRM, WHO HAS RENDERED SERVICES IS ENTITLED TO BENEFIT OF SAID PROVISION. IN VIEW OF ABOVE, W E DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 3.6 FURTHER THE LD. CIT( A) HAS ALSO ANALYSED IN VIEW OF THE VARIOUS DTAA S THAT THE SERVICES RENDERED BY THE THOSE NON - 9 ITA NO. 4143/DEL/2015 RESIDENT PARTIES ARE NOT FEE FOR TECHNICAL S ERVICES. THE RELEVANT FINDING OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 4.3.7 FURTHERMORE, PARAGRAPH 4(C) OF ARTICLE 13 OF DTAA STATES THAT THE RENDERING OF TECHNICAL AND CONSULTANCY SERVICES INCLUDES MAKING AVAILABLE OF THE TECHNICAL KNOWLEDGE, EXPERIENCE OR SKILL IN INDIA OR DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. 4.3.8 THE APPELLANT IS ENGA GED IN RENDERING OF ADVISORY AND CONSULTANCY SERVICES IN LAWYERING AND ACCOUNTING FIELDS. THESE SERVICES ARE PURELY INDIVIDUAL - BASED SERVICES OF PROFESSIONALS. IT IS NOT A PRODUCTION OR MANUFACTURING CONCERN WHERE TECHNICAL DESIGNS OR PROCESSES ARE INVOLVE D OR REQUIRED. THUS, THERE IS QUESTION OF TRANSFER OR DEVELOPMENT OF ANY TECHNICAL PLAN OR TECHNICAL DESIGN BEING INVOLVED IN THIS CASE. EVEN THE AO HAS NOT MENTIONED ABOUT ANY SUCH TECHNICAL PLAN OR DESIGN ANYWHERE IN THE ASSESSMENT ORDER. THUS, THE SEC OND LIMB OF CLAUSE (C) ABOVE IS NOT APPLICABLE IN THIS CASE. 4.3.9 NOW THERE REMAINS ONLY THE FIRST LIMB OF CLAUSE (C) ABOVE AS PER WHICH THE TECHNICAL KNOWLEDGE, EXPERIENCE OR SKILL SHOULD BE MADE AVAILABLE IN INDIA. FOR THIS PURPOSE IT IS NECESSARY TO E XAMINE THE MEANING AND CONCEPT OF MAKE AVAILABLE IN INDIA. 4.3.10 MAKE AVAILABLE IMPLIES THAT THE TECHNICAL KNOWLEDGE, SKILL, ETC. REMAINS WITH THE PERSON UTILIZING THE SERVICES EVEN AFTER THE PARTICULAR TRANSACTION IS OVER. IN OTHER WORDS, IT MEANS T HAT THE TECHNICAL KNOWLEDGE, SKILLS, ETC. MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. THE RECIPIENT OF SERVICE MUST BE ABLE TO ABSORB AND APPLY THE TECHNOLOGY ON ITS OWN IN ITS FUTURE ACTIVITIES. .. . 3.7 THE LD. CIT(A) IN SUPPORT OF HIS FINDING, HAS RELIED ON FOLLOWING DECISIONS: A ) CUSHMAN & WAKEFILED (S) PTE., REPORTED IN (2008) 305 ITR 208; B ) SANDVIK AUSTRALIA PTY. LTD. VS. DDIT (INTERNATIONAL TAXATION), REPORTED IN (2013) 141 ITD 598 ( PUNE); C ) CIT VS. DE BEERS INDIA MINERALS PVT. LTD., REPORTED IN (2012) 346 ITR 467 (KARN.) D ) ISRO SATELLITE CENTRE (ISAC), (2008) 307 ITR 59 (AAR) E ) INTERTEK TESTING SERVICES INDIA (P) LTD., REPORTED IN AUTHORITY FOR ADVANCE RULINGS (2008) 307 ITR 418; 10 ITA NO. 4143/DEL/2015 F ) BHARTIAXA GENERAL INSURANCE CO. LTD., REPORTED IN (2010) 326 ITR 477 (AAR) ; G ) CABLE & WIRELESS NETWORKS INDIA PVT. LTD., REPORTED IN (2009) 315 ITR 72; H ) INVENSYS SYSTEMS INC., REPORTED IN (2009) 317 ITR 438; I ) GUY CARPENTER & CO. LTD. VS. ADIT, REPORTED IN (201 2) 18 ITR (TRIB.) 414 (DEL.) J ) WNS NORTH AMERICA INC. VS. ADIT (INTERNATIONAL TAXATION), REPORTED IN (2013) 25 ITR (TRIB.) 582 (MUM.); AND K ) ERNST & YOUNG PVT. LTD., REPORTED IN (2010) 323 ITR 184 3.8 BEFORE US , T HE LEARNED DR COULD NOT ESTABLISH THAT ANY TEC HNICAL KNOWLEDGE WAS MADE AVAILABLE IN THE PROCESS OF PROVIDING SERVICES BY THE NON - RESIDENT PARTIES TO THE ASSESSEE. IN ABSENCE OF NOT MAKING AVAILABLE, THE TECHNICAL KNOWLEDGE T O THE ASSESSEE, IN VIEW OF THE A RTICLE 13 OF THE RESPECTIVE DTAAS, THE PAYMEN T FOR SERVICES CANNOT BE HELD AS FEE FOR TECHNICAL SERVICES UNDER THE PROVISIONS OF THE RESPECTIVE DTAAS. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALSO. 3.9 THE LD. CIT(A) HAS FURTHER OBSERVED THAT A RTICLE 13 OF DTAAS PROVISION S DEFINING FEE FOR TECHNICAL S ERVICES BEING MORE FAVOURABLE TO THE ASSESSEE AS COMPARED TO THE PROVISIONS OF SECTION 9(1)(VII) OF THE A CT WHICH HAS DEFINED FEE FOR TECHNICAL S ERVICES, AND THUS THE ASSESSEE WAS HAVING OPTION OF CHOOSING MORE FAVOURABLE PRO VISIONS OF THE DTAAS. IN OUR OPINION, THE FINDING OF THE LD. CIT(A) IS IN ACCORDANCE WITH THE ESTABLISHED LEGAL POSITION ON THE ISSUE . 3.10 FURTHER THE LD. CIT(A) IN VIEW OF THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF VAN OORD ACZ INDIA (P) LTD VERSUS CIT (2010) 323 ITR 130 (DEL) HAS HELD THAT THE SUM PAYABLE TO THE NONRESIDENTS WAS NOT CHARGEABLE TO INCOME TAX IN THEIR HANDS AND THUS THE ASSESSEE WAS NOT LIABLE FOR DEDUCTION OF TAX AT 11 ITA NO. 4143/DEL/2015 SOURCE ON SUCH PAYMENT UNDER THE PROVISIONS OF SECTI ON 195 AND NO DISALLOWANCE UNDER SECTION 40(A)(I) COULD BE MADE. 3.11 WE FIND THAT THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY, WE UPHOLD THE SAME. T HE GROUND S OF THE APPEAL OF THE R EVENUE ARE , ACCORDINGLY , DISMISSED. 4. THE GROUND NO. ( IV ) OF THE A PPEAL RELATE TO ADDITION OF RS.57, 148/ - IN RELATION TO INTEREST PAID FOR DELAYED DEPOSIT OF SERVICE TAX, WHICH ACCORDING TO THE ASSESSING OFFICER IS NOT ALLOWABLE UNDE R SECTION 37(1) OF THE A CT. THE LD. CIT(A) DELETED THE ADDITION OBSERVING AS UNDER: 4.2 I AGREE WITH THE CONTENTION THAT THE NATURE OF INTEREST PAID ON SERVICE TAX IS DIFFERENT FROM INTEREST ON TDS AND FBT. THE INCOME TAX AND INTEREST FOR LATE PAYMENT OF INCOME - TAX IS SPECIFICALLY DISALLOWED U/S 40(A) (II) BUT THE PAYMENT OF SERVICE TAX AND INTEREST THEREON HAS NOT BEEN SPECIFICALLY DISALLOWED UNDER ANY PROVISIONS OF THE INCOME. THE INTEREST PAID ON SERVICE TAX IS NOT PENAL BUT COMPENSATORY IN NATURE. THE CASES RELIED UPON BY THE ASSESSEE ARE APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE SAME, THE DISALLOWANCE OF INTEREST OF RS.57,148/ - IS ALLOWED AND ADDITION IS DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 4.1 BEFORE US, THE LD. DR RELIED ON THE O RDER OF THE ASSESSING OFFICER, WHEREAS THE LD. COUNSEL OF THE ASSESSEE RELIED ON THE FINDING OF THE LD. CIT(A). 4.2 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN OUR CONSIDERED OPINION THE INTEREST PAID ON SERVICE TAX I S NOT PENAL IN NATURE BUT COMPENSATORY IN NATURE AND THUS IT CANNOT BE DISALLOWED UNDER PROV ISIONS OF SECTION 37(1) OF THE A CT. FURTHER , DISALLOWANCE OF I NTEREST FOR DELAYED PAYMENT OF INCOME - TAX HAS BEEN SPECIFICALLY MENTIONED UNDER SECTION 40(A)(II) OF THE A CT, WHEREAS NO SUCH INTEREST ON 12 ITA NO. 4143/DEL/2015 SERVICE TAX HAS BEEN SPECIFIED FOR DISALLOWANCE. ACCORDINGLY, THE FINDING OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY WE UPHOLD THE SAME. THE GROU ND OF THE APPEAL OF THE R EVENUE IS ACCORDINGLY DISMISSED. 5. IN THE R ESULT, THE APPEAL OF THE R EVENUE DISMISSED. ORDER IS PRONOUN CED IN THE OPEN COURT ON 1 0 T H JANUARY , 201 9 . S D / - S D / - [ BHAVNESH SAINI ] [O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 T H JANUARY, 2019 . RK / - [D.T.D.S] COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI