ACIT, CIRCLE- 14(1), NEW DELHI V. KAPOOR INDUSTRIES LTD., NEW DELHI

ITA 4215/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6900 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 27-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILESH KUMAR SENIOR
• Assessee Lawyers: R K MEHRA
• Keywords: Capital asset; Residential status; Deemed to accrue or arise in india; Retrospective amendment; Advance ruling; Non-deduction of tax; TDS; Set aside
• Section: 5(2); 40(a)(ia); 195; 251; 208; 9(1); 9(1); 9(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.4215/DEL./2017 (ASSESSMENT YEAR : 2014-15) ACIT, CIRCLE 14 (1), VS. M/S. KAPOOR INDUSTRIES L TD., NEW DELHI. 29A-2/1, DESU ROAD, MEHRAULI, NEW DELHI 110 030. (PAN : AAECK6613N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. MEHRA, CA REVENUE BY : SHRI SHAILESH KUMAR, SENIOR DR DATE OF HEARING : 19.01.2021 DATE OF ORDER : 29.01.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CIRCLE 14 (1), NEW DELHI (HEREINA FTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 10.04.2017 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-5, DELHI QUA T HE ASSESSMENT YEAR 2014-15 ON THE GROUNDS THAT :- THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN DELETING THE ADDITION OF RS.1,10,46,652/- MADE BY THE AO U/S 40(A)(IA) OF THE INCOME TAX ACT,1961 TOWARDS FOREIGN COMMISSION EXPENSES ITA NO.4215/DEL./2017 2 FOR FAILURE TO DEDUCT TAX AT SOURCE ON REMITTANCE O F COMMISSION WHILE HOLDING THAT SERVICE RENDERED BY FOREIGN COMP ANY TOWARDS SALES PROMOTIONS, PROCUREMENT OF EXPORT ORD ERS ETC. WERE NOT COVERED WITHIN THE AMBIT OF ' FEES FOR TEC HNICAL SERVICES' U/S 9 OR 195 OF THE INCOME TAX ACT,1961. IN DOING SO LD. CIT(A) PAS IGNORED THE LEGAL POSITION THAT CHAR GEABILITY OF INCOME U/S 9 AND TAX DEDUCTIBILITY U/S 195 ARE TO B E EXAMINED IN THE ASSESSMENT OF NON-RESIDENT/FOREIGN COMPANY. THE ASSESSEE HAS TO DEDUCT TAX U/S 195 OF INCOME TAX AC T 1961, MANDATORILY IRRESPECTIVE OF CHARGEABILITY OF INCOME U/S 9 OF INCOME TAX ACT, 1961 IN THE HANDS OF THE NON- RESID ENT/FOREIGN COMPANY.' 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE BUSI NESS OF MANUFACTURE AND EXPORTER OF FABRICS, MADE-UPS TERRY TOWELS AND OTHER TEXTILE GOODS. DURING THE YEAR UNDER ASSESSM ENT, ASSESSEE CLAIMED COMMISSION EXPENSES OF RS.1,10,46,652/- (RS.2,02,47,767/- MINUS CERTIFICATE U/S 195 (2) RS. 92,01,115/-) PAID TO THE FOREIGN COMMISSION AGENTS, WHICH HAS BE EN DISALLOWED BY THE AO IN THE ABSENCE OF TDS (TAX DEDUCTED AT SO URCE) ON REMITTANCE OF COMMISSION ON THE GROUND THERE THERE EXIST BUSINESS CONNECTION BETWEEN THE ASSESSEE AND NON-RESIDENT AG ENT AS THE PROVIDING OF AGENCY SERVICES BY THE NON-RESIDENT TO THE ASSESSEE AND SUPPLY OF GOODS BY THE ASSESSEE, HAS A DIRECT B USINESS CONNECTION. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS DELETED THE ADDITION BY P ARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT ITA NO.4215/DEL./2017 3 (A), THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) RELIED UPON THE ORDER PAS SED BY THE AO AND CONTENDED THAT LD. CIT (A) HAS ERRED IN DELETIN G THE ADDITION MADE BY THE AO U/S 40(A)(IA) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AS THE SERVICES RENDERED BY THE F OREIGN COMPANY TOWARDS SALES PROMOTIONS & PROCUREMENT OF EXPORT SE RVICES FALLS UNDER SECTIONS 9/195 OF THE ACT. 6. HOWEVER, ON THE OTHER HAND, TO REPEL THE ARGUMEN TS ADDRESSED BY THE LD. DR FOR THE REVENUE, LD. AR FOR THE ASSESSEE CONTENDED THAT SINCE NONE OF THE SERVICES HAVE BEEN RENDERED BY THE FOREIGN AGENT IN INDIA NOR THE PAYMENT OF COMMI SSION HAS BEEN MADE IN INDIA, LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION AND RELIED UPON THE ORDER PASSED BY THE LD. CIT (A). 7. AT THE SAME TIME, LD. AR FOR THE ASSESSEE CONTEN DED THAT THE ISSUE IN CONTROVERSY IS COVERED IN FAVOUR OF THE AS SESSEE BY THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN AYS 2011- ITA NO.4215/DEL./2017 4 12 & 2012-13 IN ITA NOS.4049 & 4050/DEL/2015 ORDER DATED 28.05.2019 . 8. WE HAVE PERUSED THE ORDER PASSED BY THE LD. CIT (A) WHO HAS THRASHED THE FACTS IN DETAIL AND PARTICULARLY I N PARAS 3.1 & 3.2 OF THE IMPUGNED ORDER DISCUSSED THE FACTUM OF RENDE RING SERVICES BY OVERSEAS AGENT TO THE ASSESSEE AND ALSO DISCUSSE D THE DETAIL OF FOREIGN COMMISSION AGENT WHOM PAYMENT OF COMMISSION HAS BEEN MADE. 9. UNDISPUTEDLY, SERVICES IN THIS CASE HAVE BEEN RE NDERED BY OVERSEAS AGENT IN FOREIGN COUNTRIES AND THEY HAVE A LSO RECEIVED COMMISSION IN THEIR RESPECTIVE COUNTRIES. IT IS AL SO NOT IN DISPUTE THAT EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE FOR RENDERING SERVICES BY THE OVERSEAS AGENT AND ALSO BROUGHT ON RECORD EVIDENCES OF TDS ON THE FOREIGN REMITTANCES U/S 195 OF THE ACT, PARTY-WISE DETAILS OF COMMISSION EXPENSES ALONG WIT H COPIES OF COMMISSION INVOICES, A2 FORM, BANK CORRESPONDENCE E XCHANGED BY THE ASSESSEE WITH THE FOREIGN COMMISSION AGENTS ON THE ISSUE OF COMMISSION EXPENSES AND ALL THESE EVIDENCES HAVE BE EN EXAMINED AND HAS NOT BEEN DISPUTED ON ANY GROUND. THE ASSES SEE HAS ALSO FILED AFFIDAVIT WITH THE AO, AVAILABLE AT PAGES 60 TO 62 OF THE PAPER BOOK, STATING THEREIN THAT HE HAS PAID THE COMMISSI ON TO ITS FOREIGN ITA NO.4215/DEL./2017 5 AGENTS TO WHICH PROVISIONS CONTAINED U/S 195 OF THE ACT ARE NOT APPLICABLE AS PER LAW LAID DOWN BY HONBLE DELHI HI GH COURT. 10. HONBLE DELHI HIGH COURT IN CASE CITED AS DIT VS. PANALFA AUTOELEKTRIK LTD. (2014) 272 CTR 117 (DELHI) HAS DECIDED THE TAXABILITY OF COMMISSION PAID TO FOREIGN AGENT BY R ETURNING FOLLOWING FINDINGS :- 4. THE ASSESSING OFFICER RELYING UPON THE DECISION OF THE AUTHORITY FOR ADVANCE RULINGS IN IN RE: M/S. WALLAC E PHARMACEUTICALS P. LTD. [2005] 278 ITR 97 (AAR) HEL D THAT THE COMMISSION PAYMENT TO THE NON-RESIDENT COMPANY ON P ROCURING ORDERS WAS TAXABLE AS FEE FOR TECHNICAL SERVICE UNDER SUB- CLAUSE (B) TO SECTION 9(1) (VII) OF THE ACT. THE INITIAL DIRECTION THAT THE TAX SHOULD BE DEDUCTED AT SOURCE @ 20% REC ORDED IN THE ORDER DATED 4TH MAY, 2010, WAS MODIFIED/REDUCED TO 10% VIDE ORDER DATED 8TH NOVEMBER, 2010 AFTER RECORDING THAT DEDUCTION AT A HIGHER RATE WOULD NOT BE APPLICABLE IN THE PRESEN T CASE. 5. THE COMMISSIONER OF INCOME TAX (APPEALS), HOWEVE R, REVERSED THE AFORESAID FINDING HOLDING THAT THE COM MISSION PAYMENT IN THE PRESENT CASE WAS NOT IN THE NATURE O F FEE FOR TECHNICAL SERVICE AND HE DISTINGUISHED THE DECISION IN THE CASE OF WALLACE PHARMACEUTICALS P. LTD. (SUPRA). THE SAI D FINDING HAS BEEN AFFIRMED BY THE TRIBUNAL IN THE IMPUGNED ORDER . 6. IN ORDER TO APPRECIATE THE CONTROVERSY, WE WOUL D FIRST LIKE TO REFER AND INTERPRET SECTIONS 5(2) , 9(1)(I) AND 9(1)(VII) OF THE ACT, THOUGH, THE ASSESSING OFFICER IN THE PRESENT C ASE HAD NOT INVOKED SECTION 9(1)(I) OF THE ACT. THE RELEVANT PROVISIONS READ AS UNDER:- '5. SCOPE OF TOTAL INCOME.-- XXX (2) SUBJECT TO THE PROVISIONS OF THIS ACT, THE TOT AL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS A NO N- RESIDENT INCLUDES ALL INCOME FROM WHATEVER SOURCE D ERIVED WHICH-- (A) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN IND IA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON; OR ITA NO.4215/DEL./2017 6 (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR AR ISE TO HIM IN INDIA DURING SUCH YEAR. EXPLANATION 1.--INCOME ACCRUING OR ARISING OUTSIDE INDIA SHALL NOT BE DEEMED TO BE RECEIVED IN INDIA WITHIN THE MEANING OF THIS SECTION BY REASON ONLY OF THE FACT THAT IT IS TAKEN INTO ACCOUNT IN A BALANCE-SHEET PREPARED IN I NDIA. XXX 9. INCOME DEEMED TO ACCRUE OR ARISE IN INDIA.--(1) THE FOLLOWING INCOMES SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA-- (I) ALL INCOME ACCRUING OR ARISING, WHETHER DIRECT LY OR INDIRECTLY, THROUGH OR FROM ANY BUSINESS CONNECTION IN INDIA, OR THROUGH OR FROM ANY PROPERTY IN INDIA, OR THROUGH OR FROM ANY ASSET OR SOURCE OF INCOME IN INDIA, OR THROUGH THE TRANSFER OF A CAPITAL ASSET SITUATE IN INDIA. EXPLANATION-1--FOR THE PURPOSES OF THIS CLAUSE-- (A) IN THE CASE OF A BUSINESS OF WHICH ALL THE OPERATIONS ARE NOT CARRIED OUT IN INDIA, THE INCOME OF THE BUSINESS DEEMED UNDER THIS CLAUSE TO ACCRUE OR ARISE IN INDIA SHALL BE ONLY SUCH PART OF THE INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA; XXX EXPLANATION 4--FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT THE EXPRESSION 'THROUGH' SHALL MEAN AND INCLUDE AND SHALL BE DEEMED TO HAVE ALWAYS MEANT AN D INCLUDED 'BY MEANS OF', 'IN CONSEQUENCE OF' OR 'BY REASON OF'. XXX (VII) INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE BY XXX (B) A PERSON WHO IS A RESIDENT, EXCEPT WHERE THE F EES ARE PAYABLE IN RESPECT OF SERVICES UTILISED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA; OR XXX EXPLANATION 2.--FOR THE PURPOSES OF THIS CLAUSE, 'F EES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (INCLUD ING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF AN Y MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCL UDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PER SONNEL) ITA NO.4215/DEL./2017 7 BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUC TION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT, OR CONSIDERATION WHICH WOULD BE INCOME O F THE RECIPIENT CHARGEABLE UNDER THE HEAD 'SALARIES'.' 7. SECTION 5(2) STATES THAT TOTAL INCOME OF A PERSON, WHO IS A NON- RESIDENT, INCLUDES INCOME FROM ALL SOURCES WHI CH (A) IS RECEIVED OR DEEMED TO BE RECEIVED IN INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON; (B) ACCRUES OR ARISES IN IND IA; OR (C) IS DEEMED TO ACCRUE OR ARISE IN SUCH YEAR IN INDIA. EX PLANATION 1 OF THE AFORESAID SECTION CLARIFIES THAT INCOME ACCRUIN G OR ARISING OUT OF INDIA SHALL NOT BE DEEMED TO BE RECEIVED IN INDI A BY REASON OF THE FACT THAT IT IS TAKEN INTO ACCOUNT IN A BALANCE SHEET PREPARED IN INDIA. WE ARE REQUIRED TO DECIDE, WHETHER THE CO MMISSION PAID TO NON-RESIDENT WOULD BE INCOME DEEMED TO BE EARNED IN INDIA. 8. SECTION 9 , AS IS CLEAR FROM THE HEADING ITSELF, DOES NOT DEA L WITH INCOME WHICH IS RECEIVED OR ACCRUED OR HAS ARI SEN IN INDIA BUT DEALS WITH INCOME WHICH DOES NOT FALL UNDER ANY OF THE AFORESAID CATEGORIES. SECTION 9 CREATES A DEEMING FICTION OF INCOME WHICH IS NOT RECEIVED IN INDIA OR ACCRUES OR ARISES IN INDIA BUT IS DEEMED TO ACCRUE OR ARISE IN INDIA. WH ILE INTERPRETING A DEEMING CLAUSE, THE COURTS HAVE TO B E CAUTIOUS THAT THEY SHOULD NOT EXPAND THE SCOPE BEYOND WHAT IS MAN DATED AND REQUIRED BY THE DEEMING CLAUSE. THE DEEMING CLAUSE BY ITS VERY NATURE ENACTS A FICTION TO TREAT WHAT IS UNREAL AS REAL AND, THEREFORE, UNLESS THE SITUATION IS COVERED UNDER TH E LANGUAGE OF THE PROVISION, ITS SCOPE SHOULD NOT BE EXPANDED AND WIDENED BEYOND WHAT IS CLEARLY APPARENT AND PERCEIVABLE. IN SUCH CASES, PURPOSE SHOULD BE ASCERTAINED WHY THE LEGAL FICTION IS CREATED AND THEN FULL EFFECT SHOULD BE GIVEN TO IT WITHOUT BEING BOGGLED DOWN OR BIDDEN WHEN IT COMES TO THE INEVITABLE CORO LLARIES, BECAUSE WE IMAGINE THE UNREAL AS REAL. 9. SECTION 9(1)(I) BRINGS TO TAX INCOME OF A NON-RESIDENT ACCRUING OR ARISING, WHETHER DIRECTLY OR INDIRECTLY , THROUGH AND FROM ANY BUSINESS CONNECTION IN INDIA, OR THROUGH O R FROM ANY PROPERTY IN INDIA ETC. 10. WHAT IS MEANT BY BUSINESS CONNECTION HAS BEEN INTERPRETED BY THE SUPREME COURT IN THE CASE OF CIT , PUNJAB VERSUS R.D. AGGARWAL AND CO. [1965] 56 ITR 20 AND SUBSEQUENTLY IN BARENDRA PRASAD RAY VERSUS ITO [198 1] 129 ITR 295. WE NEED NOT DWELL ON THE SAID ASPECT IN DE TAIL FOR SEVERAL REASONS, THOUGH CIRCULAR NO. 23 DATED 23RD JULY, 1969 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES WOULD N OT BE APPLICABLE AS IT STANDS WITHDRAWN WITH EFFECT FROM 22ND OCTOBER, 2009 VIDE CIRCULAR NO.7 OF 2009. FIRSTLY, THE ASSES SING OFFICER HAD NOT INVOKED THE SAID PROVISION; SECONDLY, AS PE R EXPLANATION 1 CLAUSE (A) TO SECTION 9 , IN CASE OF A BUSINESS OF WHICH ALL ITA NO.4215/DEL./2017 8 OPERATIONS ARE NOT CARRIED OUT IN INDIA, ONLY SUCH PART OF INCOME AS IS REASONABLY ATTRIBUTABLE TO THE OPERATIONS CAR RIED OUT IN INDIA IS DEEMED TO BE ACCRUED OR ARISEN IN INDIA UN DER CLAUSE 9(1)(I). BY FINANCE ACT , 2012, EXPLANATION 4 HAS BEEN ADDED WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL, 1962, CL ARIFYING THE EXPRESSION 'THROUGH' TO HAVE ALWAYS MEANT AND INCLU DED, 'BY MEANS OF', 'IN CONSEQUENCE OF' OR 'BY REASON OF'. T HERE IS NO FINDING BY THE ASSESSING OFFICER AND THERE IS NO AL LEGATION THAT A NON-RESIDENT WAS CARRYING ON ANY OPERATION WHATSOEV ER IN INDIA. THUS, THERE IS NO QUESTION OF ATTRIBUTING ANY INCOM E TO OPERATIONS CARRIED ON BY THE NON-RESIDENT IN INDIA. NO SUCH ARGUMENT HAS BEEN ADDRESSED. 11. THE ASSESSING OFFICER IN HIS ORDER UNDER SECTION 195 / 197 OF THE ACT HAS RELIED UPON THE JUDGMENT IN THE CASE OF WALLACE PHARMACEUTICALS P. LTD. (SUPRA), WHICH HAS BEEN DIS TINGUISHED ON FACTS BY THE FIRST APPELLATE AUTHORITY AND THE T RIBUNAL. THE FACTUAL MATRIX, INCLUDING THE AGREEMENT BETWEEN THE ASSESSEE AND THE NON- RESIDENT AND THE TERMS, HAVE NOT BEEN SPOK EN OF BY THE ASSESSING OFFICER. THESE HAVE BEEN REFERRED TO AND EXAMINED BY THE COMMISSIONER OF INCOME TAX (APPEALS). BUT FIRST , WE EXAMINE SECTION 9(1)(VII) OF THE ACT. 12. IN THE PRESENT CASE, CLAUSE (B) TO SECTION 9(1)(VII) WOULD BE APPLICABLE AS THE RESPONDENT-ASSESSEE, THE PAYER WAS A RESIDENT OF INDIA. THE EXCEPTIONS CARVED OUT UNDER CLAUSE (B ) ARE NOT APPLICABLE AS IT IS NOT THE CASE OF THE RESPONDENT- ASSESSEE THAT THE FEE PAID WAS IN RESPECT OF SERVICES TO BE UTILISED IN BUSINESS OR PROFESSION CARRIED OUT BY THE PAYER OUTSIDE INDIA, OR FOR THE PURPOSE OF MAKING OR EARNING OF ANY INCOME FROM ANY SOURCE OUTSIDE INDIA. THE RESPONDENT-ASSESSEES MANUFACTUR ING UNIT WAS IN INDIA AND IT WOULD BE PROPER TO HOLD THAT THE SO URCE OF INCOME WOULD BE THE MANUFACTURING UNIT OF THE RESPONDENT-A SSESSEE IN INDIA, EVEN IF THE SALE PROCEEDS WERE ON ACCOUNT OF EXPORTS. 13. THE MAIN QUESTION AND ISSUE, WHICH WOULD ARISE IS WHETHER THE PAYMENT MADE TO THE NON-RESIDENT WOULD BE COVERED UNDER THE EXPRESSION, 'FEE FOR TECHNICAL SERVICES' AS DEFINED IN EXPLANATION 2 QUOTED ABOVE. THERE ARE THREE CATEGOR IES OF TECHNICAL SERVICES AS PER EXPLANATION 2; MANAGERIAL SERVICES, TECHNICAL SERVICES AND CONSULTANCY SERVICES, AND IT INCLUDES PROVISIONS FOR SERVICES OF TECHNICAL AND OTHER PERS ONNEL ALBEIT THERE ARE SPECIFIC EXCLUSIONS, BUT WE ARE NOT CONCE RNED WITH THE SAME IN THE PRESENT APPEAL. 14. THE EXPRESSIONS 'MANAGERIAL, TECHNICAL AND CON SULTANCY SERVICES' HAVE NOT BEEN DEFINED EITHER UNDER THE AC T OR UNDER THE GENERAL CLAUSES ACT , 1897. THE SAID TERMS HAVE TO BE READ TOGETHER WITH THE WORD SERVICES TO UNDERSTAND AND APPRECIATE THEIR PURPORT AND MEANING. WE HAVE TO EXAMINE THE G ENERAL OR ITA NO.4215/DEL./2017 9 COMMON USAGE OF THESE WORDS OR EXPRESSIONS, HOW THE Y ARE INTERPRETED AND UNDERSTOOD BY THE PERSONS ENGAGED I N BUSINESS AND BY THE COMMON MAN WHO IS AWARE AND UNDERSTANDS THE SAID TERMS. THE EXPRESSION 'MANAGEMENT SERVICES' WAS ELU CIDATED UPON BY THIS COURT IN J.K. (BOMBAY) LIMITED VERSUS CBDT AND ANOTHER, [1979] 118 ITR 312 IN THE FOLLOWING TERMS: - '6. IT MAY BE ASKED WHETHER MANAGEMENT IS NOT A TECHNICAL SERVICE. ACCORDING TO AN ARTICLE ON 'MANAGEMENT SCIENCES', IN 14 ENCYCLOPAEDIA BRITANNI CA 747, THE MANAGEMENT IN ORGANISATIONS INCLUDE AT LEA ST THE FOLLOWING: '(A) DISCOVERING, DEVELOPING, DEFINING A ND EVALUATING THE GOALS OF THE ORGANIZATION AND THE ALTERNATIVE POLICIES THAT WILL LEAD TOWARD THE GOAL S, (B) GETTING THE ORGANIZATION TO ADOPT THE POLICIES , (C) SCRUTINIZING THE EFFECTIVENESS OF THE POLICIES THAT ARE ADOPTED, (D) INITIATING STEPS TO CHANGE POLICIES WHEN THEY ARE JUDGED TO BE LESS EFFECTIVE THAN THEY OUGHT TO BE.' MANAGEMENT THUS PERVADES ALL ORGANISATIONS. TRADITIONALLY ADMINISTRATION WAS DISTINGUISHED FROM MANAGEMENT, BUT IT IS NOW RECOGNISED THAT MANAGEMEN T HAS A ROLE EVEN IN CIVIL SERVICES. ACCORDING TO THE FONTANA DICTIONARY OF MODERN THOUGHT, PAGE 366, MANAGEMENT WAS TRADITIONALLY IDENTIFIED WITH THE RUNNING OF BU SINESS. THEREFORE, MANAGEMENT AS A PROCESS IS PRACTISED THROUGHOUT EVERY ORGANIZATION FROM TOP MANAGEMENT THROUGH MIDDLE MANAGEMENT TO OPERATIONAL MANAGEMENT.' RECENTLY THIS COURT IN CIT VERSUS BHARTI CELLULAR L IMITED AND OTHERS, [2009] 319 ITR 139 HAD OBSERVED:- 'THE WORD 'MANAGER' HAS BEEN DEFINED, INTER ALIA, A S: 'A PERSON WHOSE OFFICE IT IS TO MANAGE AN ORGANIZATION , BUSINESS ESTABLISHMENT, OR PUBLIC INSTITUTION, OR P ART OF ONE; A PERSON WITH THE PRIMARILY EXECUTIVE OR SUPER VISORY FUNCTION WITHIN AN ORGANIZATION, ETC., A PERSON CON TROLLING THE ACTIVITIES OF A PERSON OR TEAM IN SPORTS, ENTER TAINMENT, ETC.' IT IS, THEREFORE, CLEAR THAT A MANAGERIAL SERVICE W OULD BE ONE WHICH PERTAINS TO OR HAS THE CHARACTERISTIC OF A MANAGER. IT IS OBVIOUS THAT THE EXPRESSION 'MANAGER ' AND CONSEQUENTLY 'MANAGERIAL SERVICE' HAS A DEFINIT E ITA NO.4215/DEL./2017 10 HUMAN ELEMENT ATTACHED TO IT. TO PUT IT BLUNTLY, A MACHINE CANNOT BE A MANAGER.' REFERENCE CAN BE ALSO MADE TO THE DECISION OF THE AUTHORITY FOR ADVANCE RULINGS IN IN RE: INTERTEK TE STING SERVICES INDIA PRIVATE LIMITED, [2008] 307 ITR 418, WHEREIN IT WAS ELUCIDATED:- 'FIRST, ABOUT THE CONNOTATION OF THE TERM 'MANAGERI AL'. THE ADJECTIVE 'MANAGERIAL' RELATES TO MANAGER OR MANAGEMENT. MANAGER IS A PERSON WHO MANAGES AN INDUSTRY OR BUSINESS OR WHO DEALS WITH ADMINISTRATI ON OR A PERSON WHO ORGANIZES OTHER PEOPLE S ACTIVITY [NEW SHORTER OXFORD DICTIONARY]. AS POINTED OUT BY THE SUPREME COURT IN R. DALMIA V. CIT [1977] 106 ITR 895, 'MANAGEMENT' INCLUDES THE ACT OF MANAGING BY DIRECT ION, OR REGULATION OR SUPERINTENDENCE. THUS, MANAGERIAL SERVICE ESSENTIALLY INVOLVES CONTROLLING, DIRECTING OR ADMINISTERING THE BUSINESS.' 15. THE SERVICES RENDERED, THE PROCUREMENT OF EXPO RT ORDERS, ETC. CANNOT BE TREATED AS MANAGEMENT SERVICES PROVI DED BY THE NON- RESIDENT TO THE RESPONDENT-ASSESSEE. THE NON-R ESIDENT WAS NOT ACTING AS A MANAGER OR DEALING WITH ADMINISTRAT ION. IT WAS NOT CONTROLLING THE POLICIES OR SCRUTINISING THE EF FECTIVENESS OF THE POLICIES. IT DID NOT PERFORM AS A PRIMARY EXECUTOR, ANY SUPERVISORY FUNCTION WHATSOEVER. THIS IS CLEAR FROM THE FACTS AS RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS ), WHICH HAVE BEEN AFFIRMED BY THE TRIBUNAL. THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS QUOTED EXCERPTS OF THE AGR EEMENT BETWEEN THE RESPONDENT-ASSESSEE, WHO HAS BEEN DESCR IBED AS PAL , AND THE NON-RESIDENT, WHO HAS BEEN DESCRIBED AS AGENTA . THE RELEVANT PORTIONS THEREOF READ AS UNDER:- '2. APPOINTMENT (1) PAL HEREBY APPOINT AGENTA AS ITS COMMISSION AGENT FOR SALE OF ITS PRODUCTS WITHIN THE TERRITORY TO THE PURCHASER(S) DURING THE TERMS OF THIS AGREEMENT, SU BJECT TO AND IN ACCORDANCE WITH TERMS AND CONDITIONS SET OUT HEREIN AND AGENTA AGREES TO AND ACCEPTS THE SAME. (2) IT IS AGREED BY AND BETWEEN THE PARTIES THAT AGENTA S REPRESENTATIONS AND ACTS ON BEHALF AND FOR PAL VIZ-A-VIZ ANY THIRD PARTY SHALL BE LEGALLY BIND ING ON PAL ONLY WHEN THE SAME ARE AUTHORIZED BY VIRTUE OF A WRITTEN AND SIGNED AUTHORISATION EXECUTED BY PAL IN FAVOUR OF AGENTA. XXXXX ITA NO.4215/DEL./2017 11 4. COMMISSION (A) PAL AGREES AND AGENTA ACCEPTS THAT THE AMOUNT OF COMMISSION PAYABLE TO IT SHALL BE THE DIFFERENCE BETWEEN CONSIDERATION WHICH PAL RECEIVES IN TERMS OF THE PURCHASE CONTRACT/ORDER FORM THE PURCHASER(S) AND THE PRE DETERMINED GUARANTEED CONSIDERATION SETTLED AND AGREED BETWEEN THE PARTIES, AS DESCRIBED IN ANNEXURE 1 ANNEXED HERETO; (B) THE PARTIES AGREE THAT ALL THE TAXES APPLICABL E AND REQUIRED TO BE DEDUCTED IN INDIA TO THE TRANSACTION CONTEMPLATED HEREIN AT THE DATE OF EXECUTION OF THIS AGREEMENT AND AT ANY TIME IN FUTURE DURING THE TERMS OF THIS AGREEMENT SHALL BE DEDUCTED FROM THE COMMISSION (AS DESCRIBED HEREIN ABOVE) BEFORE THE SAME IS PAID AND TRANSFERRED TO THE BANK ACCOUNT OF AGENTA (HEREIN REFERRED TO AS THE COMMISSION PAYABLE)' 16. THE NON-RESIDENT, IT IS CLEAR WAS APPOINTED AS A COMMISSION AGENT FOR SALE OF PRODUCTS WITHIN THE TE RRITORIES SPECIFIED AND SUBJECT TO AND IN ACCORDANCE WITH THE TERMS SET OUT, WHICH THE NON-RESIDENT ACCEPTED. THE NON-RESIDENT, THEREFORE, WAS ACTING AS AN AGENT FOR PROCURING ORDERS AND NOT RENDERING MANAGERIAL ADVICE OR MANAGEMENT SERVICES. FURTHER, THE RESPONDENT-ASSESSEE WAS LEGALLY BOUND WITH THE NON- RESIDENTS REPRESENTATIONS AND ACTS, ONLY WHEN THERE WAS A WRI TTEN AND SIGNED AUTHORIZATION ISSUED BY THE RESPONDENT-ASSES SEE IN FAVOUR OF THE NON-RESIDENT. THUS, THE RESPONDENT-ASSESSEE DICTATED AND DIRECTED THE NON-RESIDENT. THE COMMISSIONER OF INCO ME TAX (APPEALS) HAS ALSO DEALT WITH QUANTIFICATION OF THE COMMISSION AND AS PER CLAUSE 4, THE COMMISSION PAYABLE WAS THE DIFFERENCE BETWEEN THE PRICE STIPULATED IN THE AGREEMENT AND T HE CONSIDERATION THAT THE RESPONDENT-ASSESSEE RECEIVED IN TERMS OF THE PURCHASE CONTRACT OR ORDER, IN ADDITION TO A PR E-DETERMINED GUARANTEE CONSIDERATION. AGAIN, AN INDICATION CONTR A TO THE CONTENTION THAT THE NON-RESIDENT WAS PROVIDING MANA GEMENT SERVICE TO THE RESPONDENT-ASSESSEE. 17. THE REVENUE, WHICH IS THE APPELLANT BEFORE US, HAS NOT PLACED COPY OF THE AGREEMENT TO CONTEND THAT THE AF ORESAID CLAUSES DO NOT REPRESENT THE TRUE NATURE OF THE TRA NSACTION. THE ASSESSING OFFICER IN HIS ORDER HAD NOT BOTHERED TO REFER AND TO EXAMINE THE RELEVANT CLAUSES, WHICH CERTAINLY WAS N OT THE RIGHT WAY TO DEAL WITH THE ISSUE AND QUESTION. ITA NO.4215/DEL./2017 12 18. IT WOULD BE INCONGRUOUS TO HOLD THAT THE NON-R ESIDENT WAS PROVIDING TECHNICAL SERVICES. TO QUOTE FROM SKYCELL COMMUNICATIONS LTD. AND ANR. VS. DEPUTY COMMISSIONE R OF INCOME TAX AND ORS. (2001) 251 ITR 53 (MAD), THE WO RD TECHNICAL HAS BEEN INTERPRETED IN THE FOLLOWING MANNER:- 'THUS WHILE STATING THAT 'TECHNICAL SERVICE' WOULD INCLUDE MANAGERIAL AND CONSULTANCY SERVICE, THE LEGISLATURE HAS NOT SET OUT WITH PRECISION AS TO WH AT WOULD CONSTITUTE 'TECHNICAL' SERVICE TO RENDER IT 'TECHNICAL SERVICE'. THE MEANING OF THE WORD 'TECHN ICAL' AS GIVEN IN THE NEW OXFORD DICTIONARY IS ADJECTIVE 1. OF OR RELATING TO A PARTICULAR SUBJECT, ART OR CRAFT OR I TS TECHNIQUES: TECHNICAL TERMS (ESPECIALLY OF A BOOK O R ARTICLE) REQUIRING SPECIAL KNOWLEDGE TO BE UNDERSTO OD: A TECHNICAL REPORT. 2. OF INVOLVING, OR CONCERNED WIT H APPLIED AND INDUSTRIAL SCIENCES: AN IMPORTANT TECHN ICAL ACHIEVEMENT. 3. RESULTING FROM MECHANICAL FAILURE: A TECHNICAL FAULT. 4. ACCORDING TO A STRICT APPLICATI ON OR INTERPRETATION OF THE LAW OR THE RULES: THE ARREST WAS A TECHNICAL VIOLATION OF THE TREATY. HAVING REGARD TO THE FACT THAT THE TERM IS REQUIRED TO BE UNDERSTOOD IN THE CONTEXT IN WHICH IT IS USED, 'FEE FOR TECHNICAL SERVICES' COULD ONLY BE MEANT TO COVER SU CH THINGS TECHNICAL AS ARE CAPABLE OF BEING PROVIDED B Y WAY OF SERVICE FOR A FEE. THE POPULAR MEANING ASSOCIATE D WITH 'TECHNICAL' IS 'INVOLVING OR CONCERNING APPLIED AND INDUSTRIAL SCIENCE'.' 19. THE SAID TERM WAS ALSO INTERPRETED BY THIS COU RT IN CASE OF BHARTI CELLULAR LIMITED AND OTHERS (SUPRA) WHERE EM PHASIS WAS LAID ON THE ELEMENT OF HUMAN INTERVENTION, BUT WE A RE NOT CONCERNED WITH THE SAID ASPECT IN THE PRESENT CASE. THE NON- RESIDENT HAD NOT UNDERTAKEN OR PERFORMED 'TECHNICAL SERVICES', WHERE SPECIAL SKILLS OR KNOWLEDGE RELATING TO A TEC HNICAL FIELD WERE REQUIRED. TECHNICAL FIELD WOULD MEAN APPLIED S CIENCES OR CRAFTSMANSHIP INVOLVING SPECIAL SKILLS OR KNOWLEDGE BUT NOT FIELDS SUCH AS ARTS OR HUMAN SCIENCES (SEE PARAGRAPH 24 BE LOW). 20. THE MOOT QUESTION AND ISSUE IS WHETHER THE NON -RESIDENT WAS PROVIDING CONSULTANCY SERVICES. IN OTHER WORDS, WHAT DO YOU MEAN BY THE TERM 'CONSULTANCY SERVICES'? THIS COURT IN BHARTI CELLULAR LIMITED AND OTHERS (SUPRA) HAD REFERRED TO THE TERM 'CONSULTANCY SERVICES' IN THE FOLLOWING WORDS:- '14. SIMILARLY, THE WORD 'CONSULTANCY' HAS BEEN DEF INED IN THE SAID DICTIONARY AS 'THE WORK OR POSITION OF A CONSULTANT; A DEPARTMENT OF CONSULTANTS.' 'CONSULTA NT' ITSELF HAS BEEN DEFINED, INTER ALIA, AS 'A PERSON W HO GIVES ITA NO.4215/DEL./2017 13 PROFESSIONAL ADVICE OR SERVICES IN A SPECIALIZED FI ELD.' IT IS OBVIOUS THAT THE WORD 'CONSULTANT' IS A DERIVATIVE OF THE WORD 'CONSULT' WHICH ENTAILS DELIBERATIONS, CONSIDERATION, CONFERRING WITH SOMEONE, CONFERRING ABOUT OR UPON A MATTER. CONSULT HAS ALSO BEEN DEFINED IN THE SAID DICTIONARY AS 'ASK ADVICE FOR, SEEK COUNSEL OR A PROFESSIONAL OPINION FROM; REFER TO (A SOURCE OF INFORMATION); SEEK PERMISSION OR APPROVAL FROM FOR A PROPOSED ACTION'. IT IS OBVIOUS THAT THE SERVICE OF CONSULTANCY ALSO NECESSARILY ENTAILS HUMAN INTERVEN TION. THE CONSULTANT, WHO PROVIDES THE CONSULTANCY SERVIC E, HAS TO BE A HUMAN BEING. A MACHINE CANNOT BE REGARDED A S A CONSULTANT.' THE AAR IN THE CASE OF IN RE: P.NO. 28 OF 1999, REP ORTED AS [1999] 242 ITR 208 HAD OBSERVED:- 'BY TECHNICAL SERVICES, WE MEAN IN THIS CONTEXT SER VICES REQUIRING EXPERTISE IN TECHNOLOGY. BY CONSULTANCY SERVICES, WE MEAN IN THIS CONTEXT ADVISORY SERVICES . THE CATEGORY OF TECHNICAL AND CONSULTANCY SERVICES ARE TO SOME EXTENT OVERLAPPING BECAUSE A CONSULTANCY SERVI CE COULD ALSO BE TECHNICAL SERVICE. HOWEVER, THE CATEG ORY OF CONSULTANCY SERVICES ALSO INCLUDES AN ADVISORY SERV ICE, WHETHER OR NOT EXPERTISE IN TECHNOLOGY IS REQUIRED TO PERFORM IT.' 21. THE WORD CONSULTANT REFERS TO A PERSON, WHO IS CONSULTED AND WHO ADVISES OR FROM WHOM INFORMATION IS SOUGHT. IN BLACK S LAW DICTIONARY, EIGHTH EDITION, THE WORD CONSULTATION HAS BEEN DEFINED AS AN ACT OF ASKING THE ADVICE OR OPINION OF SOMEONE (SUCH AS A LAWYER). IT MAY MEAN A MEETING IN WHICH PARTIES CONSULT OR CONFER. FOR CONSULTATION S ERVICE UNDER EXPLANATION 2, THERE SHOULD BE A PROVISION OF SERVI CE BY THE NON- RESIDENT, WHO UNDERTAKES TO PERFORM IT, WHICH THE A CQUIRER MAY USE. THE SERVICE MUST BE RENDERED IN THE FORM OF AN ADVICE OR CONSULTATION GIVEN BY THE NON-RESIDENT TO THE RESID ENT INDIAN PAYER. 22. IN THE PRESENT, CASE COMMISSION PAID FOR ARRAN GING OF EXPORT SALES AND RECOVERY OF PAYMENTS CANNOT BE REG ARDED AS CONSULTANCY SERVICE RENDERED BY THE NON-RESIDENT. T HE NON- RESIDENT HAD NOT RENDERED ANY CONSULTATION OR ADVIC E TO THE RESPONDENT-ASSESSEE. THE NON-RESIDENT NO DOUBT HAD ACQUIRED SKILL AND EXPERTISE IN THE FIELD OF MARKETING AND S ALE OF AUTOMOBILE PRODUCTS, BUT IN THE FACTS, AS NOTICE BY THE TRIBUNAL AND THE COMMISSIONER OF INCOME TAX (APPEALS), THE N ON- RESIDENT DID NOT ACT AS A CONSULTANT, WHO ADVISED O R RENDERED ANY COUNSELING SERVICES. THE SKILL, BUSINESS ACUMEN AND KNOWLEDGE ACQUIRED BY THE NON-RESIDENT WERE FOR HIS OWN BENEF IT AND USE. ITA NO.4215/DEL./2017 14 THE NON-RESIDENT PROCURED ORDERS ON THE BASIS OF TH E SAID KNOWLEDGE, INFORMATION AND EXPERTISE TO SECURE 'THE IR' COMMISSION. IT IS A CASE OF SELF-USE AND BENEFIT, A ND NOT GIVING ADVICE OR CONSULTATION TO THE RESPONDENT-ASSESSEE O N ANY FIELD, INCLUDING HOW TO PROCURE EXPORT ORDERS, HOW TO MARK ET THEIR PRODUCTS, PROCURE PAYMENTS ETC. THE RESPONDENT-ASSE SSEE UPON RECEIPT OF EXPORT ORDERS, MANUFACTURED THE REQUIRED ARTICLES/GOODS AND THEN THE GOODS PRODUCED WERE EXP ORTED. THERE WAS NO ELEMENT OF CONSULTATION OR ADVISE RENDERED B Y THE NON- RESIDENT TO THE RESPONDENT-ASSESSEE. 23. DECISION IN THE CASE OF M/S WALLACE PHARMACEUT ICALS PRIVATE LIMITED (SUPRA) IS CLEARLY DISTINGUISHABLE AS IN THE SAID CASE THE NON- RESIDENT CONSULTANT HAD TO PERFORM SE VERAL SERVICES IN THE NATURE OF ATTENDING MEETINGS ON MUTUALLY AGR EEABLE DATES AND PROVIDING ADVICE AND COUNSELING, WHICH WERE IN THE NATURE OF CONSULTANCY SERVICES AS THEY ENTAILED SUPPORT FR OM A PRODUCT TEAM, COMPLIANCE WITH ALL LEGAL AND ADMINISTRATIVE FORMALITIES, INCLUDING REGISTRATION AND MARKETING STRATEGY, CREA TION OF ENTRY INTO NEW MARKETS, DEVELOPMENT AND DISTRIBUTION CHAN NELS, ETC. THE WORK BEING RENDERED WAS IN THE NATURE OF SERVIC ES AS A CONSULTANT TO THE INDIAN ASSESSEE. IT INCLUDED AN E LEMENT OF ADVICE AND WAS CERTAINLY RECOMMENDATORY IN NATURE. 24. THE OECD REPORT ON E-COMMERCE TITLED, TAX TREA TY CHARACTERISATION ISSUES ARISING FROM E-COMMERCE: RE PORT TO WORKING PARTY NO.1 OF THE OECD COMMITTEE ON FISCAL AFFAIRS DATED 01ST FEBRUARY 2001, HAS ELUCIDATED:- 'TECHNICAL SERVICES 39. FOR THE GROUP, SERVICES ARE OF TECHNICAL NATURE WHEN SPECIAL SKILLS OR KNOWLEDGE RELATED TO A TECHNICAL FIELD ARE REQUIRED FOR THE PROVISION OF SUCH SERVICES. WHILST TECHNIQUES RELATED TO APPLIED SCIENCE OR CRAFTSMANS HIP WOULD GENERALLY CORRESPOND TO SUCH SPECIAL SKILLS O R KNOWLEDGE, THE PROVISION OF KNOWLEDGE ACQUIRED IN F IELDS SUCH AS ARTS OR HUMAN SCIENCES WOULD NOT. AS AN ILLUSTRATION, WHILST THE PROVISIONS OF ENGINEERING SERVICES WOULD BE OF A TECHNICAL NATURE, THE SERVICES OF A PSYCHOLOGIST WOULD NOT. 40. THE FACT THAT TECHNOLOGY IS USED IN PROVIDING A SERVICE IS NOT INDICATIVE OF WHETHER THE SERVICE IS OF A TE CHNICAL NATURE. SIMILARLY, THE DELIVERY OF A SERVICE VIA TECHNOLOGICAL MEANS DOES NOT MAKE THE SERVICE TECHN ICAL. THIS IS ESPECIALLY IMPORTANT IN THE E-COMMERCE ENVIRONMENT AS THE TECHNOLOGY UNDERLYING THE INTERN ET IS OFTEN USED TO PROVIDE SERVICES THAT ARE NOT, THEMSE LVES, TECHNICAL (E.G. OFFERING ON-LINE GAMBLING SERVICES THROUGH THE INTERNET). ITA NO.4215/DEL./2017 15 41. IN THAT RESPECT, IT IS CRUCIAL TO DETERMINE AT WHAT POINT THE SPECIAL SKILL OR KNOWLEDGE IS USED. SPECIAL SKI LL OR KNOWLEDGE MAY BE USED IN DEVELOPING OR CREATING INP UTS TO A SERVICE BUSINESS. THE FEE FOR THE PROVISION OF A SERVICE WILL NOT BE A TECHNICAL FEE, HOWEVER, UNLESS THAT S PECIAL SKILL OR KNOWLEDGE IS REQUIRED WHEN THE SERVICE IS PROVIDED TO THE CUSTOMER. FOR EXAMPLE, SPECIAL SKILL OR KNOW LEDGE WILL BE REQUIRED TO DEVELOP SOFTWARE AND DATA USED IN A COMPUTER GAME THAT WOULD SUBSEQUENTLY BE USED IN CARRYING ON THE BUSINESS OF ALLOWING CONSUMERS TO P LAY THIS GAME ON THE INTERNET FOR A FEE. SIMILARLY, SPE CIAL SKILL OR KNOWLEDGE IS USED TO CREATE A TROUBLESHOOTING DA TABASE THAT CUSTOMERS WILL PAY TO ACCESS OVER THE INTERNET . IN THESE EXAMPLES, HOWEVER, THE RELEVANT SPECIAL SKILL OR KNOWLEDGE IS NOT USED WHEN PROVIDING THE SERVICE FO R WHICH THE FEE IS PAID, I.E. ALLOWING THE CONSUMER T O PLAY THE COMPUTER GAME OR CONSULT THE TROUBLESHOOTING DATABASE. 42. MANY CATEGORIES OF E-COMMERCE TRANSACTIONS SIMI LARLY INVOLVE THE PROVISION OF THE USE OF, OR ACCESS TO, DATA AND SOFTWARE (SEE, FOR EXAMPLE, CATEGORIES 7, 8, 9, 11, 13, 15, 16, 20 AND 21 IN ANNEX 2). THE SERVICE OF MAKING SU CH DATA AND SOFTWARE, OR FUNCTIONALITY OF THAT DATA OR SOFTWARE, AVAILABLE FOR A FEE IS NOT, HOWEVER, A SE RVICE OF A TECHNICAL NATURE. THE FACT THAT THE DEVELOPMENT OF THE NECESSARY DATA AND SOFTWARE MIGHT ITSELF REQUIRE SUBSTANTIAL TECHNICAL SKILLS IS IRRELEVANT AS THE S ERVICE PROVIDED TO THE CLIENT IS NOT THE DEVELOPMENT OF TH AT DATA AND SOFTWARE (WHICH MAY WELL BE DONE BY SOMEONE OTH ER THAN THE SUPPLIER) BUT RATHER THE SERVICE OF MAKING THE DATA AND SOFTWARE AVAILABLE TO THAT CLIENT. FOR EXA MPLE, THE MERE PROVISION OF ACCESS TO A TROUBLESHOOTING D ATABASE WOULD NOT REQUIRE MORE THAN HAVING AVAILABLE SUCH A DATABASE AND THE NECESSARY SOFTWARE TO ACCESS IT. A PAYMENT RELATING TO THE PROVISION OF SUCH ACCESS WO ULD NOT, THEREFORE, RELATE TO A SERVICE OF A TECHNICAL NATURE. MANAGERIAL SERVICES 43. THE GROUP CONSIDERS THAT SERVICES OF A MANAGERI AL NATURE ARE SERVICES RENDERED IN PERFORMING MANAGEME NT FUNCTIONS. THE GROUP DID NOT ATTEMPT TO GIVE A DEFI NITION OF MANAGEMENT FOR THAT PURPOSE BUT NOTED THAT THIS TERM SHOULD RECEIVE ITS NORMAL BUSINESS MEANING. THUS, I T WOULD INVOLVE FUNCTIONS RELATED TO HOW A BUSINESS I S RUN AS OPPOSED TO FUNCTIONS INVOLVED IN CARRYING ON THA T BUSINESS. AS AN ILLUSTRATION, WHILST THE FUNCTIONS OF HIRING AND TRAINING COMMERCIAL AGENTS WOULD RELATE TO ITA NO.4215/DEL./2017 16 MANAGEMENT, THE FUNCTIONS PERFORMED BY THESE AGENTS (I.E. SELLING) WOULD NOT. 44. THE COMMENTS IN PARAGRAPHS 40 TO 42 ABOVE ARE A LSO RELEVANT FOR THE PURPOSES OF DISTINGUISHING MANAGER IAL SERVICES FROM THE SERVICE OF MAKING DATA AND SOFTWA RE (EVEN IF RELATED TO MANAGEMENT), OR FUNCTIONALITY O F THAT DATA OR SOFTWARE, AVAILABLE FOR A FEE. THE FACT THA T THIS DATA AND SOFTWARE COULD BE USED BY THE CUSTOMER IN PERFORMING MANAGEMENT FUNCTIONS OR THAT THE DEVELOPMENT OF THE NECESSARY DATA AND SOFTWARE, AND THE MANAGEMENT OF THE BUSINESS OF PROVIDING IT TO CUSTO MERS, MIGHT ITSELF REQUIRE SUBSTANTIAL MANAGEMENT EXPERTI SE IS IRRELEVANT AS THE SERVICE PROVIDED TO THE CLIENT IS NEITHER MANAGING THE CLIENTS BUSINESS, MANAGING THE SUPPLI ERS BUSINESS NOR DEVELOPING THAT DATA AND SOFTWARE (WHI CH MAY WELL BE DONE BY SOMEONE OTHER THAN THE SUPPLIER ) BUT RATHER MAKING THE SOFTWARE AND DATA AVAILABLE TO TH AT CLIENT. THE MERE PROVISION OF ACCESS TO SUCH DATA A ND SOFTWARE DOES NOT REQUIRE MORE THAN HAVING AVAILABL E SUCH A DATABASE AND THE NECESSARY SOFTWARE. A PAYME NT RELATING TO THE PROVISION OF SUCH ACCESS WOULD NOT, THEREFORE, RELATE TO A SERVICE OF A MANAGERIAL NATU RE. CONSULTANCY SERVICES 45. FOR THE GROUP, 'CONSULTANCY SERVICES' REFER TO SERVICES CONSTITUTING IN THE PROVISION OF ADVICE BY SOMEONE, SUCH AS A PROFESSIONAL, WHO HAS SPECIAL QUALIFICATIONS ALLOWING HIM TO DO SO. IT WAS RECOGN ISED THAT THIS TYPE OF SERVICES OVERLAPPED THE CATEGORIE S OF TECHNICAL AND MANAGERIAL SERVICES TO THE EXTENT THA T THE LATTER TYPES OF SERVICES COULD WELL BE PROVIDED BY A CONSULTANT.' WE BROADLY AGREE WITH THE AFORESAID OBSERVATIONS. HOWEVER, IN THE CASE OF SELLING AGENTS, WE ADD A NO TE OF CAUTION THAT TAXABILITY WOULD DEPEND UPON THE NATUR E OF THE CHARACTER OF SERVICES RENDERED AND IN A GIVEN F ACTUAL MATRIX, THE SERVICES RENDERED MAY POSSIBLY FALL IN THE CATEGORY OF CONSULTANCY SERVICES. PARAGRAPHS 41 AND 42 DO NOT EMANATE FOR CONSIDERATION IN THE PRESENT CAS E, AND EFFECT THEREOF CAN BE EXAMINED IN AN APPROPRIATE CA SE [HOWEVER, SEE COMMISSIONER OF INCOME TAX VS. ESTEL COMMUNICATION P. LTD . (2009) 318 ITR 185 (DEL) AND SKYCELL COMMUNICATIONS LTD. (SUPRA)]. 25. THUS, THE TECHNICAL SERVICES CONSISTS OF SERVI CES OF TECHNICAL NATURE, WHEN SPECIAL SKILLS OR KNOWLEDGE RELATING TO TECHNICAL FIELD ARE REQUIRED FOR THEIR PROVISION, M ANAGERIAL ITA NO.4215/DEL./2017 17 SERVICES ARE RENDERED FOR PERFORMING MANAGEMENT FUN CTIONS AND CONSULTANCY SERVICES RELATE TO PROVISION OF ADVICE BY SOMEONE HAVING SPECIAL QUALIFICATION THAT ALLOW HIM TO DO S O. IN THE PRESENT CASE, THE AFORESAID REQUISITES AND REQUIRED NECESSITIES ARE NOT SATISFIED. INDEED, TECHNICAL, MANAGERIAL AND CO NSULTANCY SERVICES MAY OVERLAP AND IT WOULD NOT BE PROPER TO VIEW THEM IN WATER TIGHT COMPARTMENTS, BUT IN THE PRESENT CASE T HIS ISSUE OR DIFFERENTIATION IS AGAIN NOT RELEVANT. 11. FOLLOWING THE DECISION RENDERED BY HONBLE DELH I HIGH COURT IN THE CASE OF DIT VS. PANALFA AUTOELEKTRIK LTD. (SUPRA) TO WHICH FACTS OF THIS CASE ARE IDENTICAL AND NO DISTI NGUISHED FACTS OR LAW HAS BEEN BROUGHT ON RECORD BY THE LD. DR FOR TH E REVENUE, WE ARE OF THE CONSIDERED VIEW THAT WHEN NONE OF THE SE RVICES HAVE BEEN RENDERED BY THE FOREIGN COMMISSION AGENT TO TH E ASSESSEE IN INDIA AND THEY HAVE RECEIVED THEIR COMMISSION FOR R ENDERING SERVICES AS TO PROCURING ORDER FROM THE FOREIGN BUY ERS/EXPORTERS, GETTING APPROVAL OF SAMPLES OF THE ASSESSEE FROM TH E OVERSEAS BUYERS, NEGOTIATING ORDERS ON BEHALF OF THE ASSESSE E WITH THE FOREIGN BUYERS INCLUDING NEGOTIATING RATES OF THE A SSESSEE, HELPING THE BUYERS TO RECEIVE THE GOODS FROM THE ASSESSEE A ND RECONCILING THE QUANTITIES AND RATES WITH INVOICES AND PACKING LIST ETC. AND THAT FOREIGN AGENTS WHO HAVE RECEIVED THE COMMISSION HAV E BEEN WORKING FOR THE ASSESSEE FOR THE PAST MANY YEARS AN D IF AT ALL FOREIGN AGENTS ARE LIABLE FOR MAKING PAYMENT OF INC OME-TAX, THEY ARE LIABLE TO PAY THE SAME IN THEIR OWN COUNTRIES W HERE THEY ARE ITA NO.4215/DEL./2017 18 WORKING FOR GAINS AND EARNED THEIR INCOME BY WAY OF COMMISSION FROM THE ASSESSEE. 12. COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2011-012 & 2012-13 ORDER DATED 28.05.2019 (SUPRA) HAS ALSO DECIDED IDENTICAL ISSUE IN FAVOUR OF THE ASSES SEE BY UPHOLDING THE DECISION RENDERED BY LD. CIT (A). SO, WE ARE O F THE CONSIDERED VIEW THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDIT ION MADE BY THE AO U/S 40(A)(IA) OF THE ACT TREATING THE SAME BEING NOT COVERED UNDER THE AMBIT OF FEE FOR TECHNICAL SERVICES U/S 9 OR 195 OF THE ACT. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE ORDE R OF THE LD. CIT (A), THE APPEAL FILED BY THE REVENUE IS HEREBY DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF JANUARY , 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF JANUARY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-5, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.