THE NIELSEN COMPANY (US) LLC, MUMBAI V. DDIT (IT) 4(2), MUMBAI

ITA 4362/MUM/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4875 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 16-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HIMANSHU SHARMA; NISHANT SAMAIYA S R DRS
• Keywords: Double taxation relief; Advance ruling; Question of law; Set aside
• Section: 143(3); 234B; 205; 90

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL I BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 4362/MUM/2015 (ASSESSMENT YEAR 2010-11 ) THE NIELSEN COMPANY (US) LLC, C/O NIELSEN (INDIA) PVT. LTD., 6 TH FLOOR, BLOCK-C, GODREJ IT PARK, 02 GODREJ BUSINESS, DISTRICT, PHIROJSHAH NAGAR, LBS MARG, VIKHROLI (W), MUMBAI-400079. PAN: AACFJ7526Q VS. DCIT (IT) - 4(2) MUMBAI. APPELLANT RESPONDE NT APPELLANT BY : SHRI P.J. PARDIWALA WITH SH. MADHUR AGRAWAL (ARS) RESPONDENT BY : SHRI HIMANSHU SHARMA AND SH. NISHANT SAMAIYA (S R. DRS) DATE OF HEARING : 17.05.2019 DATE OF PRONOUNCEMEN T : 22.05.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME -TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-55, MUMBAI DATED 25 .03.2015, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER DATED 22.05.2014 P ASSED UNDER SECTION 143(3) R.W.S 144C(3) OF THE INCOME-TAX ACT (THE ACT ) FOR ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. THE LEARNED CIT(A) HAS ERRED IN NOT ADJUDICATING THE GROUND THAT NEITHER ANY SHOW CAUSE NOTICE NOR ANY OPPORTUNITY WAS PROVIDED TO THE APPELLANT TO FURNISH REASONS WHY GSA RECEIPTS FROM ACNOM AND ACNRS SHOUL D NOT BE TAXABLE. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER IN TREATING THE GSA RECEIPTS AMOUNTING TO RS. 189,243, 151 AS 'FEES FOR INCLUDED SERVICES' AS PER ARTICLE 12 OF THE TAX TREATY BETWE EN INDIA AND USA. ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 2 3. WITHOUT PREJUDICE TO THE ABOVE GROUND OF APPEAL, THE LEARNED CIT(A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO APPORTION AN D TREAT AS NOT TAXABLE, SOME PORTION OF THE TOTAL RECEIPTS TOWARDS SERVICES, WHI CH BY THEIR VERY NATURE DO NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, 'KNOW-HOW TO THE INDIAN ENTITIES (IN TERMS OF THE TAX TREATY BETWEEN INDIA AND USA). 4. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION MADE BY ASSESSING OFFICER BY TREATING THE REIMBURSEMENTS AMOUNTING TO RS. 498 ,576 AS 'FEES FOR INCLUDED SERVICES' AS PER ARTICLE 12 OF THE TAX TREATY BETWE EN INDIA AND USA. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTIO N OF THE ASSESSING OFFICER OF CHARGING INTEREST UNDER SECTION 234B AND 234C OF TH E ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ESTABLISHED UNDER THE LAWS OF DELAWARE, USA. THE ASSESSEE IS ONE OF T HE WORLD LEADING BUSINESS & INFORMATION IN MEDIA & INFORMATION, DIRE CTORIES & CONSUMER INFORMATION. THE ASSESSEE GROUP IS REPRESENTED IN INDIA THROUGH ITS TWO LEGAL ENTITY I.E. AC NEILSON ORG-MARG PRIVATE LTD (ACNOM) FOR CUSTOMISED RESEARCH SERVICES AND RETAILS MEASUREMEN T SERVICES AND ACT NEILSON RESEARCH PRIVATE LTD. (ACNRS). THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2009-10 ON 27.09.2010 DE CLARING INCOME OF RS. 17,75,26,437/-. THE ASSESSMENT WAS COMPLETED ON 22.05.2014 UNDER SECTION 143(3) READ WITH SECTION 144C(3) OF THE ACT . DURING THE PERIOD RELEVANT TO THE A.Y. UNDER CONSIDERATION, THE ASSES SEE RECEIVED A SUM OF RS. 18,92,43,151/- FROM A.C. NELSON INDIAN COMPANY UNDE R SERVICE AGREEMENT FOR ADMINISTRATIVE AND MANAGEMENT SUPPORT SERVICES AND CLAIMED AS NOT TAXABLE IN INDIA UNDER ARTICLE-12 OF THE INDIA-US T AX TREATY (DTAA). THE ASSESSEE CLAIMED THAT THE SERVICES RENDERED BY ASSE SSEE DO NOT PERTAIN TO MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE, SKILL ETC. THE ASSESSEE ALSO ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 3 RECEIVED AN AMOUNT OF RS. 4,98,576/- FROM INDIAN EN TITY ON ACCOUNT OF REIMBURSEMENT OF ACTUAL EXPENDITURE WHICH DOES NOT FALL UNDER ARTICLE-12 OF DTAA. THE ASSESSING OFFICER TREATED THE RECEIPT OF RS. 18,92,43,151/- AS INCOME IN THE NATURE OF FEES FOR INCLUDED SERVICES. THE OTHER RECEIPT OF RS. 4,98,576/- WAS NOT ALLOWED AS REIMBURSEMENT OF EXPE NSES AND CONSIDERED FOR USE OF A PROCESS OR FORMULA WHICH FALLS UNDER T HE DEFINITION OF ROYALTY UNDER THE DTAA. ON APPEAL BEFORE THE LD. CIT(A), BO TH THE ADDITIONS WAS CONFIRMED. THEREFORE, FURTHER AGGRIEVED BY THE ORDE R OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO .1 RELATES TO NOT PROVIDING PROPER OPPORTUNITY AND NON-ADJUDICATION O F GROUND. THE LD. AR OF THE ASSESSEE HAS NOT ARGUED ANYTHING. THEREFORE, TH IS GROUND IS TREATED AS NOT PRESSED, RESULTANTLY DISMISSED. 4. GROUND NO.2 & 3 RELATES TO TREATING THE RECEIPT OF RS. 18.92 CRORE AS FEES FOR INCLUDED SERVICES AS ARTICLE-12 OF INDIA-US DTA A. THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE IS A TAX RESIDENT OF USA. THE ASSESSEE PROVIDED SERVICES IN ITS GROUP IN INDIA ENTITY ACNO N FOR CUSTOMIZE RESEARCH SERVICES AND RETAIL MANAGEMENT SERVICES AN D TO ACNRS FOR CUSTOMIZE MARKET RESEARCH SERVICES. THE ASSESSEE EN TERED INTO LICENCE AGREEMENT ON 01.01.2009 FOR USE OF NELSON BUSINESS SYSTEM AND KNOWHOW ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 4 NELSON SOFTWARE AND PATENTS IN INDIA. THE ASSESSEE ALSO ENTERED INTO A SEPARATE SERVICE AGREEMENT DATED 01.01.2009 WITH AC NRS FOR RENDERING SERVICES IN THE FIELD OF COMMERCIAL, FINANCIAL, ACC OUNTING LEGAL MATTERS, LOGISTICS, DEVELOPING AND ENGINEERING, SALES AND MA RKETING AND OTHERS MATTERS. THE ASSESSEE RECEIVED RS. 18.92 CRORE AGAI NST THE SERVICE AGREEMENT RECEIPT, WHICH CANNOT BE TREATED AS ROYAL TY OR FEES FOR INCLUDED SERVICES AS PER ARTICLE-12 OF INDIA-US DTAA, NOT TA XABLE IN INDIA. THE ASSESSING OFFICER TREATED THE INTRA-GROUP SERVICES AS SERVICES IN THE NATURE OF FEES FOR INCLUDED SERVICES (FIS). THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE SERVICES PROVIDED BY ASSESSEE TO INDIA COM PANIES AS PER SERVICE AGREEMENT CONSISTS OF; A) DEVELOPMENT AND DETERMINATION OF SHORT AND LONG TER M BUSINESS STRATEGIES; B) OVERALL MANAGEMENT AND COORDINATION IN RELATION TO GENERAL POLICIES AND STRATEGIES PER COUNTRY AND HE IF AND P ER DIVISION; C) MAINTENANCE OF EXTERNAL RELATIONSHIPS, TO THE EXTEN T THAT THESE SERVICES DO NOT COMPRISE SHAREHOLDER SERVICES; D) HUMAN RESOURCES SERVICES REGARDING GROUP POLICIES; E) LEGAL SERVICES; F) INSURANCE SERVICES; G) DEVELOPMENT, CONTROL AND MAINTENANCE OF MANAGEMENT INFORMATION SYSTEMS; H) ADMINISTRATIVE SUPPORT TO GROUP COMPANIES, INCLUDIN G ANALYSIS OF MANAGEMENT INFORMATION; I) DEVELOPMENT OF SHORT AND LONG TERM IT POLICIES AND STRATEGIES; ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 5 J) MANAGEMENT AND CO-ORDINATION OF IT POLICIES BETWEEN GROUP COMPANIES; K) TAX SERVICES; L) FINANCIAL RISK MANAGEMENT SERVICES, TO THE EXTENT T HESE SERVICES DO NOT COMPRISE FINANCING SERVICES; M) SUPPORT IN THE AREA OF INTERNATIONAL STAFFING, CARE ER DEVELOPMENT AND INTERNATIONAL JOB ROTATION; AND N) MARKET RESEARCH, TARGET RESEARCH AND COMPETITOR RES EARCH AND O) STOCK BASED COMPENSATION . 5. THE SERVICES RENDERED ARE PURELY IN THE NATURE OF S UPPORT SERVICES WHICH CANNOT BE SAID THAT THEY ARE CONTINUOUS. THERE IS N O TRANSFER OF TECHNOLOGY, SKILL AND TECHNICAL KNOWHOW. IT WAS SUBMITS THAT IF THERE WAS ANY TRANSFER OF TECHNOLOGY, SKILL ETC THERE WOULD BE NECESSITY TO C ONTINUE WITH THE AGREEMENT AND THE PURPOSE FOR WHICH THE SERVICES OF THE ASSESSEE WERE SOUGHT WILL BE DEFEATED. THE LD. AR OF THE ASSESSEE ALSO REFERRED ARTICLE-12 OF INDIA-US DTAA, WHEREIN ROYALTY AND FEES FOR INCL UDED SERVICES IS DEFINED. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE LD. CIT(A) RELIED ON THE DECISION OF AUTHORITY OF ADVANCE RU LING (AAR) IN CASE OF PERFETTI VAN MELLE HOLDING BV WHICH HAS BEEN SET-AS IDE BY HONBLE DELHI HIGH COURT IN PERFETTI VAN MELLE HOLDING BV VS AAR REPORTED VIDE [2014] 52 TAXMAN.COM 161 (DEL.) DATED 30.09.2014 AND THIS FACT WAS BROUGHT TO HIS NOTICE. THE LD CIT(A) DESPITE BRINGING THIS FAC T TO HIS NOTICE RELIED ON THE SAME DECISION IN CONFIRMING THE ACTION OF ASSES SING OFFICER. ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 6 6. IN FURTHER SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF KARNATAKA HIGH COURT IN CIT VS. D. BEERS INDIA MINERALS (P.) LTD. 21 TAXMANN.COM 214 (KAR.), DECISION OF AA R IN ERNEST& YOUNG (P.) LTD.,[2010]189 TAXMAN 409(AAR), DECISION OF A HMEDABAD TRIBUNAL IN SANDVIK AUSTRALIA PTY. LTD. VS. DDIT [2013] 31 T AXMANN.COM 256 (PUNE- TRIB.), DCIT VS. BOMBARDIER TRANSPORTATION INDIA (P .) LTD. [2017] 77 TAXMANN.COM 166 (AHMEDABAD-TRIB.). THE LD AR FOR TH E ASSESSEE ALSO FILED THE COPY OF DECISION OF DELHI HIGH COURT IN PERFETT I VAN MELLE HOLDING B.V. VS AAR [2014] 52 TAXMAN.COM (DELHI) ON THE REL IANCE THAT THE DECISION OF AAR WAS SET ASIDE AND THE CASE WAS REST ORED BACK TO CONSIDER THE MATTER AFRESH. THE ASSESSEE HAS ALSO FILED ON R ECORD THE COPY OF RETURN OF INCOME WITH COMPUTATION OF INCOME AND TRANSFER PRIC ING REPORT UNDER FORM 3CEB, COPY OF LICENCE AGREEMENT DATED 01.01.2009 EN TERED BY ASSESSEE WITH ACNOM, COPY OF SERVICE OF SERVICE AGREEMENT DATED 0 1.01.2009 ENTERED BY ASSESSEE WITH ACNOM, COPY OF INDO-US DTAA AND THE C OPY OF WRITTEN SUBMISSIONS FILED BEFORE LD CIT(A). 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE FURTH ER SUBMITS THAT NO SEPARATE DETAILS ABOUT THE SERVICES RENDERED BY ASS ESSEE, TO ITS GROUP ENTITY, HAVE BEEN PROVIDED DURING THE ASSESSMENT PROCEEDING . THE SERVICE AGREEMENT IS A PART OF MAIN AGREEMENT. THE ASSESSEE HAS PROVIDED DEDICATED SERVICES WHICH ARE ACTUALLY IN THE NATURE OF FEES F OR INCLUDED SERVICES. THE ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 7 RECEIPTS ARE IN THE NATURE OF FIS AS ADVISORY SERVI CES AND ALSO SIGNIFY FEES FOR INCLUDED SERVICES. IN SUPPORT OF HIS SUBMISSION , THE LD. DR RELIED UPON THE DECISION OF COCHIN TRIBUNAL IN M/S US TECHNOLOG Y RESOURCES PVT. LTD. VS. ACIT IN ITA NOS. 99-104/COCH/2017 DATED 29.01.2 018. 8. IN THE REJOINDER SUBMISSIONS THE LD. AR FOR THE ASS ESSEE SUBMITS THAT, THE CASE LAW RELIED BY LD. DR FOR THE REVENUE IS BASED ON THE DIFFERENT FACTS. IN THE SAID CASE THE SERVICES WERE PROVIDED IN THE FIE LD OF MANAGEMENT DECISION MAKING (AS RECORDED IN PARA 22 OF THE SAID DECISION ), WHICH IS MISSING THE GENERAL SERVICES AGREEMENT OF THE ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT THE ASSESSEE CLAIMED THAT THE RECEIPT FROM SERVICE AGREEMENT DO NOT QUALIFY A S FEE FOR INCLUDED SERVICES AS PER ARTICLE 12 OF THE INDIA-US DTAA. T HE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVIDE THE SERVICE AGREEMENT AND EXPLAIN THE NATURE OF ADVISORY SERVICES. THE ASSESSEE FILED ITS REPLY DATED 19.12.2013 AND ALSO PROVIDED THE DETAILS OF THE SERVICES RENDERED UNDER THE GENERAL SERVICE AGREEMENT. THE ASSESSING OFFICER RECORDED THE SUBMI SSIONS OF THE ASSESSEE IN PARA 6 OF HIS ORDER. HOWEVER, THE EXPLANATION FURNI SHED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER TREATED THE RECEIPT IN THE NATURE OF FEE FOR INCLUDED SERVICES (FIS). THE ASSESSING OFFICER ALSO CONCLUDED THAT FIS HAS BEEN DEFINED IN ARTICLE 12(4) OF INDIA-US DTAA, ACCORDING TO WHICH THE PAYMENT IN CONSIDERATI ON FOR RENDERING OF ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 8 ANY CONSULTANCY SERVICES, WHICH CONSIST OF PROVISIO N OF SERVICES FOR TECHNICAL OR OTHER PERSONNEL, IF SUCH SERVICES INTE R ALIA MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. IT WAS FURTHER CONCLUDED THAT MEMO OF UNDERSTANDING ATTACH ED WITH INDIA-US DTAA, THE TERM MAKE AVAILABLE MEANS THAT THE PERS ON ACQUIRING THE SERVICES IS ENABLED TO INDEPENDENTLY APPLY THE TECH NOLOGY. THE FACTS THAT THE SERVICES ARE CONTINUOUS DOES NOT ITSELF IMPLY THA T THEY DO NOT ENABLE THE RECIPIENT TO INDEPENDENTLY APPLY THE KNOWLEDGE/ SKI LL THAT IS PROVIDED. THE WORD ENABLE IS USED IN THE SENSE THAT THE SERVICE S SHOULD BE SUCH THAT THEY MAKE THE RECIPIENT ABLE OR WISER IN THE SUBJECT MAT TER. THE SERVICES ARE CONTINUOUS TO ENSURE THAT THE KNOWLEDGE PROVIDED AN D APPLIED BY THE RECIPIENT CAN BE REVIVED FOR FURTHER ENABLING IT TO PERFORM ITS TASK BETTER. 10. THE ASSESSING OFFICER FURTHER CONCLUDED THAT ARTICL E 12(4)(B) OF DTAA BETWEEN INDIA AND USA ALL THE ADMINISTRATIVE AND MA NAGEMENT SUPPORT SERVICES RENDERED AS PER GENERAL SERVICE AGREEMENT IN INTRA GROUP SERVICES ARE WITH THE PRIMARY INTENTION TO MAINTAIN THE BRAN D NAME OF ASSESSEE AND KNOW-HOW, WITH THE INTENTION OF CARRYING ON THE BUS INESS IN LINE WITH THE BEST PRACTICE GLOBALLY. THE ENTITY MAY NOT BE PART OF THE GROUP BUT THE PAYMENT IS FOR THE USAGE OF BRAND NAME OF ASSESSEE AND HENCE MANAGEMENT SUPPORT SERVICES IS IN THE NATURE OF FIS. THE ASSES SING OFFICER ALSO CONCLUDED THAT THE ADVISORY SERVICES HAVE BEEN USED BY THE IN DIAN ENTITIES IN THE COURSE ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 9 OF THEIR BUSINESS ACTIVITIES WHICH ARE UTILISED FOR THE BETTERMENT AND IMPROVEMENT OF THEIR BUSINESS MODEL AND OTHER PRACT ICES, WHICH HAS ULTIMATELY REFLECTED IN THE INCREASE OF PROFITABILI TY OF INDIAN ENTITY. THE EMPLOYEES OF INDIAN ENTITY ARE HIGHLY QUALIFIED AND EDUCATED. THEREFORE, THE RECEIPT OF GENERAL SERVICE AGREEMENT WAS TREATED BY ASSESSING OFFICER AS FEE FOR INCLUDE SERVICES. THE ASSESSING OFFICER ALSO RE LIED ON THE DECISION OF AAR IN PERFETTI VAN HOLDING B.V (CASE NO. AAR NO.86 9 OF 2010 DATED 09.12.2011). 11. BEFORE LD CIT(A) THE ASSESSEE FILED DETAILED WRITT EN SUBMISSIONS AS MADE BEFORE US. IT WAS ALSO SPECIFICALLY BROUGHT TO THE NOTICE OF LD CIT(A) THAT THE DECISION RENDERED BY AAR IN PERFETTI VAN HOLDING B. V (SUPRA) RELIED BY THE ASSESSING OFFICER HAS ALREADY BEEN SET ASIDE BY DELHI HIGH COURT, DIRECTING AAR TO PASS THE ORDER AFRESH. THE LD CIT( A) CONFIRMED THE ORDER OF ASSESSING OFFICER WITHOUT GIVING ANY DIFFERENT FINDING. 12. WE HAVE ALSO EXAMINED THE SERVICE AGREEMENT DATED 0 9.01.2009 BETWEEN ASSESSEE AND ACNOM. THE ASSESSEE HAS AGREE TO PROVI DE THE SERVICES TO ACNOM WHICH WE HAVE NOTED IN PARA 4(SUPRA). WE HAV E ALSO PERUSED THE PROVISIONS OF INDIA USA DTAA AS NOTIFIED BY THE GOV ERNMENT OF INDIA IN NOTIFICATION NO.GSR 990(E), DATED 20-12-1990. ARTICLE 12 OF DTAA BETWEEN INDIA AND USA DEALS WITH ROYALTIES AND FEES FOR INCLUDED SERVICE. FEE FOR INCLUDED SERVICE IS DEFINED IN CLAUSE 4 OF ARTICLE 12 OF DTAA. FOR ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 10 THE PURPOSE OF APPRECIATION, CLAUSE 4 OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND USA IS EXTRACTED BELOW: '4. FOR THE PURPOSES OF THIS ARTICLE, 'FEES FOR INC LUDED SERVICES' MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE REN DERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISI ON OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) IF SUCH SERVICES: (A)ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIB ED IN PARAGRAPH 3 IS RECEIVED; OR (B)MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF DEVELOPMENT AND TRANSFER OF A TECHNIC AL PLAN OR TECHNICAL DESIGN.' 13. AS PER THE ABOVE DEFINITION IN DTAA, FEES FOR INCLU DED SERVICES MEANS PAYMENT OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES. WE HAVE NOTED TH AT THE TERM 'MANAGERIAL SERVICE' AS PRESCRIBED IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE INDIAN INCOME-TAX ACT, 1961 IS NOT FOUND IN CLAUSE 4 OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND USA . 14. FOR FURTHER APPRECIATION OF THE RELEVANT PORTION OF THE MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN INDIA AND USA ON 15T H MAY, 1989 IS ALSO EXTRACTED BELOW : 'UNDER PARAGRAPH 4, TECHNICAL AND CONSULTANCY SERVI CES ARE CONSIDERED INCLUDED SERVICES ONLY TO THE FOLLOWING EXTENT: (1) AS DESCR IBED IN PARAGRAPH 4(A), IF THEY ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJO YMENT OF A RIGHT, PROPERTY OR INFORMATION FOR WHICH ARE ROYALTY PAYMENT IS MADE; OR (2) AS DESCRIBED IN PARAGRAPH 4(B), IF THEY MAKE AVAILABLE TECHNICAL KNOWLEDGE, E XPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSF ER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. THUS, UNDER PARAGRAPH 4(B), CONSU LTANCY SERVICES WHICH ARE NOT OF A TECHNICAL NATURE CANNOT BE I PARAGRAPH 4( A ) PARAGRAPH 4( A ) OF ARTICLE 12 REFERS TO TECHNICAL OR CONSULTANCY SERVICES THAT ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJO YMENT OF ANY RIGHT, PROPERTY, OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGR APH 3( A ) OR ( B ) IS RECEIVED. THUS, PARAGRAPH 4( A ) INCLUDES A TECHNICAL AND CONSULTANCY SERVICES THA T ARE ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 11 ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJO YMENT OF AN INTANGIBLE FOR WHICH A ROYALTY IS RECEIVED UNDER A LICENCE OR SALE AS DESC RIBED IN PARAGRAPH 3( A ), AS WELL AS THOSE ANCILLARY AND SUBSIDIARY TO THE APPLICATION O R ENJOYMENT OF INDUSTRIAL, COMMERCIAL, OR SCIENTIFIC EQUIPMENT FOR WHICH A ROY ALTY IS RECEIVED UNDER A LEASE AS DESCRIBED IN PARAGRAPH 3( B ). IT IS UNDERSTOOD THAT, IN ORDER FOR A SERVICE FEE T O BE CONSIDERED 'ANCILLARY AND SUBSIDIARY' TO THE APPLICATION OR ENJOYMENT OF SOME RIGHT, PROPERTY, OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3( A ) OR ( B ) IS RECEIVED, THE SERVICE MUST BE RELATED TO THE APPLICATION OR ENJOYMENT OF THE R IGHT, PROPERTY, OR INFORMATION. IN ADDITION, THE CLEARLY PREDOMINANT PURPOSE OF THE AR RANGEMENT UNDER WHICH THE PAYMENT OF THE SERVICE FEE AND SUCH OTHER PAYMENTS ARE MADE MUST BE THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY, OR INFORMATION DESCRIBED IN PARAGRAPH 3. THE QUESTION OF WHETHER THE SERVICE IS RELATED TO THE APPLICATION OR ENJOYMENT OF RIGHT, PROPERTY, OR INFORMATION DESCRI BED IN PARAGRAPH 3 AND WHETHER THE CLEARLY PREDOMINANT PURPOSE OF THE ARRANGEMENT IS SUCH APPLICATION OR ENJOYMENT MUST BE DETERMINED BY REFERENCE TO THE FA CTS AND CIRCUMSTANCES OF EACH CASE. 15. FROM THIS MEMORANDUM OF UNDERSTANDING, IT IS OBVIOU S THAT AS PROVIDED IN CLAUSE 4(B) OF ARTICLE 12 OF THE INDIA USA DTAA, THAT IF THE TECHNICAL OR CONSULTANCY SERVICES MADE AVAILABLE ARE TECHNICA L KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DE VELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN ARE CONSIDERED TO BE TECHNICAL OR CONSULTANCY SERVICES. IT IS ALSO CLARIFIED THAT CON SULTANCY SERVICES NOT OF TECHNICAL NATURE CANNOT FALL UNDER 'INCLUDED SERVIC ES'. IN VIEW OF THIS MEMORANDUM OF UNDERSTANDING BETWEEN TWO SOVEREIGN C OUNTRIES, THE CONSULTANCY SERVICES WHICH ARE TECHNICAL IN NATURE ALONE ARE TO BE INCLUDED AS TECHNICAL AND CONSULTANCY SERVICES FOR THE PURPO SE OF FEES FOR INCLUDED SERVICES AS PER SUB CLAUSE 4(B) OF ARTICLE 12 OF DTAA BETWEEN INDIA AND USA. 16. IN VIEW OF THE ABOVE PROVISIONS OF THE INDIA USA DT AA, WE HAVE SEEN THE SERVICE AGREEMENT EXECUTED BETWEEN THE ASSESSEE AND THE SERVICE ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 12 PROVIDER. THE SERVICES PROVIDED BY THE ASSESSEE CON SIST OF DEVELOPMENT AND DETERMINATION OF SHORT AND LONG TERM BUSINESS S TRATEGIES; OVERALL MANAGEMENT AND COORDINATION IN RELATION TO GENERAL POLICIES AND STRATEGIES PER COUNTRY AND PER DIVISION, MAINTENANC E OF EXTERNAL RELATIONSHIPS TO THE EXTENT THAT THESE SERVICES DO NOT COMPRISE SHAREHOLDER SERVICES; HUMAN RESOURCES SERVICES REGARDING GROUP POLICIES; LEGAL SERVICES; INSURANCE SERVICES; DEVELOPMENT, CONTROL AND MAINTENANCE OF MANAGEMENT INFORMATION SYSTEMS; ADMINISTRATIVE SUPP ORT TO GROUP COMPANIES, INCLUDING ANALYSIS OF MANAGEMENT INFORMA TION; DEVELOPMENT OF SHORT AND LONG TERM IT POLICIES AND STRATEGIES; MANAGEMENT AND CO- ORDINATION OF IT POLICIES BETWEEN GROUP COMPANIES; TAX SERVICES; FINANCIAL RISK MANAGEMENT SERVICES, TO THE EXTENT T HESE SERVICES DO NOT COMPRISE FINANCING SERVICES; SUPPORT IN THE AREA OF INTERNATIONAL STAFFING, CAREER DEVELOPMENT AND INTERNATIONAL JOB ROTATION; MARKET RESEARCH, TARGET RESEARCH AND COMPETITOR RESEARCH AND STOCK B ASED COMPENSATION. WE HAVE NOTED THAT WHILE UNDERTAKING THE ABOVE SERV ICES THE ASSESSEE HAS NOT EXECUTED ANY CONTRACTED TO MAKE AVAILABLE ANY T ECHNICAL EXPERTISE SO AS TO USE THOSE SERVICES INDEPENDENTLY BY THE LICEN SEE. ALL THE SERVICES UNDER TAKEN BY THE ASSESSEE ARE EITHER SUPPORT SERV ICES, IT ENABLE SERVICES, COORDINATION OR TAX SERVICES AS REFERRED ABOVE ARE NOT SUCH WHICH REQUIRE TRANSFER OF TECHNOLOGY, SKILL TO THE RECEIPT COMPANY. ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 13 17. THE HONBLE KARNATAKA HIGH COURT IN CIT VS DE BEER S INDIA MINERALS (P) LTD. WHILE CONSIDERING THE SIMILAR QUESTION OF LAW WHILE CONSIDERING THE PROVISIONS OF INDIA- NETHERLAND DOUBLE TAX AVOIDANC E AGREEMENT (INDIA- NETHERLAND DTAA), WHILE CONSIDERING THE FACTS THAT WHERE A NETHERLAND COMPANY RENDERED TECHNICAL SERVICES TO THE ASSESSEE , WITHOUT MAKING AVAILABLE ANY TECHNICAL EXPERTISE SO AS TO ENABLE A SSESSEE USE THOSE SERVICES INDEPENDENTLY IN FUTURE, PAYMENT MADE FOR SUCH SERV ICES CANNOT BE TERMED AS FEE FOR TECHNICAL SERVICES, THE RELEVANT PART OF THE DECISION IS EXTRACTED BELOW; 13. UNDER THE ACT IF THE CONSIDERATION PAID FOR RENDER ING TECHNICAL SERVICES CONSTITUTES INCOME BY WAY OF FEES FOR TECHNICAL SER VICES, IT IS TAXABLE. HOWEVER, ARTICLE 12 OF THE AFORESAID INDIA-NETHERLANDS TREAT Y DEFINES FEES FOR TECHNICAL SERVICES FOR THE PURPOSE OF ARTICLE 12 WHICH DEALS WITH ROYALTIES AND FEES FOR TECHNICAL SERVICES. THE FEES FOR TECHNICAL SERVICES MEANS THE PAYMENT OF ANY AMOUNT TO ANY PERSON IN CONSIDERATION FOR RENDERING OF ANY TECHNICAL SERVICES ONLY, IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNO WLEDGE, EXPERTISE, SKILL, KNOW- HOW OR PROCESSES. IF THE TECHNICAL KNOWLEDGE EXPERT ISE, SKILL, KNOW HOW OR PROCESS IS NOT MADE AVAILABLE BY THE SERVICE PROVID ER, WHO HAS RENDERED TECHNICAL SERVICE FOR THE PURPOSE OF ARTICLE 12 OF DTAA IT WO ULD NOT CONSTITUTE FEES FOR TECHNICAL SERVICES. TO THAT EXTENT THE DEFINITION O F FEE FOR TECHNICAL SERVICES FOUND IN THE AGREEMENT IS INCONSISTENT WITH THE DEFINITIO N OF FEES FOR TECHNICAL SERVICES PROVIDED IN EXPLANATION 2 TO CLAUSE (VII) OF SUB SECTION (1) OF SECTION 9. I N VIEW OF SECTION 90 THE DEFINITION OF FEES FOR TECHNICAL SERVICES CONTAINED IN THE AGREEMENT OVERRIDES THE STATUTORY PROVISIONS CONTAI NED IN THE ACT. IN FACT, THE LATEST AGREEMENT BETWEEN INDIA END SINGAPORE FURTHE R CLARIFIES THIS POSITION, WHERE THEY HAVE EXPLAINED THE MEANING OF THE WORD 'MAKE A VAILABLE'. ACCORDING TO THE AFORESAID DEFINITION FEES FOR TECHNICAL SERVICE MEA NS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR SERVICES OF TECHNICAL N ATURE IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, K NOW HOW OR PROCESSES, WHICH ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 14 ENABLES THE PERSON ACQUIRING THE SERVICE TO APPLY T ECHNOLOGY CONTAINED THEREIN. THOUGH THIS PROVISION IS NOT CONTAINED IN INDIA NET HERLANDS TREATY, BY VIRTUE OF PROTOCOL IN THE AGREEMENT, CLAUSE (IV) (2) READS AS UNDER:- 'IF AFTER THE SIGNATURE OF THIS CONVENTION UNDER AN Y CONVENTION OR AGREEMENT BETWEEN INDIA AND THIRD STATE WHICH IS A MEMBER OF THE OECD INDIA SHOULD LIMIT ITS TAXATION AT SOURCE ON DIVIDE NDS, INTERESTS, ROYALTIES, FEES FOR TECHNICAL SERVICES OR PAYMENTS FOR THE USE OF EQUIPMENT TO A RATE LOWER OR A SCOPE MORE RESTRICTED THAN THE RATE OR S COPE PROVIDED FOR IN THIS CONVENTION ON THE SAID ITEMS OF INCOME, THEN AS FRO M THE DATE ON WHICH THE RELEVANT INDIAN CONVENTION OR AGREEMENT ENTERS INTO FORCE THE SAME RATE OR SCOPE AS PROVIDED FOR IN THAT CONVENTION OR AGREEMENT ON THE SAID ITEMS OF INCOME SHALL ALSO APPLY UNDER THIS CONVENT ION.' 14. THEREFORE THE CLAUSE IN SINGAPORE AGREEMENT WHICH EXPLICITLY MAKES IT CLEAR THE MEANING OF THE WORD 'MAKE AVAILABLE', THE SAID CLAUSE HAS TO BE APPLIED, AND TO BE READ INTO THIS AGREEMENT ALSO. THEREFORE, IT FOL LOWS THAT FOR ATTRACTING THE LIABILITY TO PAY TAX NOT ONLY THE SERVICES SHOULD B E OF TECHNICAL IN NATURE, BUT IT SHOULD BE MADE AVAILABLE TO THE PERSON RECEIVING TH E TECHNICAL SERVICES. THE TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON WHO RECEIVED SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE SER VICE PROVIDER IN ORDER TO RENDER TECHNICAL SERVICES USES TECHNICAL KNOWLEDGE, EXPERI ENCE, SKILL, KNOW HOW OR PROCESSES. TO ATTRACT THE TAX LIABILITY, THAT TECHN ICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESS WHICH IS USED BY SERVICE PROVID ER TO RENDER TECHNICAL SERVICE SHOULD ALSO BE MADE AVAILABLE TO THE RECIPIENT OF T HE SERVICES, SO THAT THE RECIPIENT ALSO ACQUIRES TECHNICAL KNOWLEDGE, EXPERIENCE, SKIL L, KNOW HOW OR PROCESSES SO AS TO RENDER SUCH TECHNICAL SERVICES. ONCE ALL SUCH TE CHNOLOGY IS MADE AVAILABLE IT IS OPEN TO THE RECIPIENT OF THE SERVICE TO MAKE USE OF THE SAID TECHNOLOGY. THE TAX IS NOT DEPENDENT ON THE USE OF THE TECHNOLOGY BY THE R ECIPIENT. THE RECIPIENT AFTER RECEIVING OF TECHNOLOGY MAY USE OR MAY NOT USE THE TECHNOLOGY. IT HAS NO BEARING ON THE TAXABILITY ASPECT IS CONCERNED. WHEN TECHNIC AL SERVICE IS PROVIDED, THAT TECHNICAL SERVICE IS TO BE MADE USE OF BY THE RECIP IENT OF THE SERVICE IN FURTHER CONDUCT OF HIS BUSINESS. MERELY BECAUSE HIS BUSINES S IS DEPENDENT ON THE TECHNICAL SERVICE WHICH HE RECEIVES FROM THE SERVIC E PROVIDER, IT DOES NOT FOLLOW THAT HE IS MAKING USE OF THE TECHNOLOGY WHICH THE S ERVICE PROVIDER UTILISES FOR RENDERING TECHNICAL SERVICES. THE CRUX OF THE MATTE R IS AFTER RENDERING OF SUCH TECHNICAL SERVICES BY THE SERVICE PROVIDER, WHETHER THE RECIPIENT IS ENABLED TO USE THE TECHNOLOGY WHICH THE SERVICE PROVIDER HAD USED. THEREFORE, UNLESS THE SERVICE PROVIDER MAKES AVAILABLE HIS TECHNICAL KNOWLEDGE, E XPERIENCE, SKILL, KNOW HOW OR ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 15 PROCESS TO THE RECIPIENT OF THE TECHNICAL SERVICE, IN VIEW OF THE CLAUSES IN THE DTAA THE LIABILITY, TO TAX IS NOT ATTRACTED. 15. THE LEARNED ADDITIONAL SOLICITOR GENERAL RELIED ON 3 JUDGMENTS TO POINT OUT THAT WAS THE EARLIER VIEW. NOW THERE IS A DEPARTURE SUPPORTING THE DEPARTMENT. THE FIRST JUDGMENT ON WHICH RELIANCE IS PLACED IS, THE JUDGMENT OF THE ADVANCE RULING AUTHORITY IN THE CASE OF PERFETTI VAN MELLE HOLDING B.V. , IN RE [2012] 204 TAXMAN 166/[2011] 16 TAXMANN.COM 207 (AAR-NEW DELHI ) WHERE IT WAS HELD AS UNDER:- ' THE EXPRESSION 'MAKE AVAILABLE' ONLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE IN A POSITION TO DERIVE AN ENDURI NG BENEFIT AND BE IN A POSITION TO UTILISE THE KNOWLEDGE OR KNOW-HOW IN FU TURE ON HIS OWN. 'BY MAKING AVAILABLE THE TECHNICAL SKILLS OR KNOW HOW, THE RECIPIENT OF THE SAME WILL GET EQUIPPED WITH THAT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDE R. SO WHEN THE EXPERTISE IN RUNNING THE INDUSTRY RUN BY THE GROUP IS PROVIDED T O THE INDIAN ENTITY IN THE GROUP TO BE APPLIED IN RUNNING THE BUSINESS, THE EM PLOYEES OF THE INDIAN ENTITY GET EQUIPPED, TO CARRY ON THAT BUSINESS MODE L OR SERVICE MODEL ON THEIR OWN WITHOUT REFERENCE TO THE SERVICE PROVIDER , WHEN THE SERVICE AGREEMENT COMES TO AN END. IT IS NOT AS IF FOR MAKI NG AVAILABLE, THE RECIPIENT MUST ALSO BE CONVEYED SPECIFICALLY THE RI GHT TO CONTINUE THE PRACTICE PUT INTO EFFECT AND ADOPTED UNDER THE SERV ICE AGREEMENT ON ITS EXPIRY.' 16. IN THE AFORESAID CASE, THE APPLICANT HOLDING COMPA NY WAS TO PROVIDE TO ITS SUBSIDIARY COMPANY IN INDIA THE LICENCE TO MANUFACT URE AND SELL PRODUCTS, THE LICENCE TO USE TECHNOLOGY, TECHNICAL MARKETING AND COMMERCIAL KNOW-HOW IN THE MANUFACTURE, SALES AND ADVERTISEMENT AND PROMOTION OF THE PRODUCTS, OFFER TECHNICIANS, MARKETERS, SALESMAN, IN-HOUSE LEGAL CO UNSEL AND THE EXPERIENCED EMPLOYEES TO ASSIST IN THE ACTIVITIES MENTIONED ABO VE. UNDER THE SERVICE AGREEMENT, SPECIFICALLY THE SERVICE RECIPIENT REQUI RE THE USE OF PROPRIETARY KNOWLEDGE AND PROCESSES BELONGING TO PERFETTI GROUP . SPECIFIED SERVICES SUCH AS ACCOUNTING BUDGETING, SALES, MARKETING, FOREX MANAG EMENT, LOANS, HR, LEGAL SUPPORT ETC. AND SPECIFIED SERVICES ARE TO BE PROVI DED ON CONTINUOUS BASIS. THEREFORE, IT WAS HELD IN THE AFORESAID CASE, THAT THE CASE FALLS WITHIN THE PURVIEW OF ARTICLE 12.5(A) OF THE DTAC ON SUCH SERVICE WHIC H ARE ANCILLARY AND SUBSIDIARY TO THE APPLICANT OR ENJOYMENT OF RIGHT PROPERTY OR INFORMATION FOR WHICH THE PAYMENT PRESCRIBED IN PARAGRAPH 4 OF THE ARTICLE IS TO BE MADE. THEREFORE, IT IS A CASE OF ROYALTY AND NOT FEE FOR TECHNICAL SERVICE. EVEN OTHERWISE IT IS CLEAR UNDER THE TERMS OF THE AGREEMENT THE TECHNICAL KNOW-HOW I N THE MANUFACTURING, SALES, ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 16 ADVERTISEMENT AND PROMOTION OF THE PRODUCTS IS MADE AVAILABLE. THEREFORE, THE AFORESAID FINDING RECORDED IS LEGAL AND CANNOT BE F OUND FAULT WITH. 17. YET ANOTHER JUDGMENT RELIED ON IS IN THE CASE OF SHELL INDIA MARKETS (P.) LTD ., IN RE [2012] 205 TAXMAN 288 / 18 TAXMANN.COM 46 (AA R-NEW DELHI) WHERE ALSO THE AUTHORITY FOR ADVANCE RULING HELD RELYING ON FI NDINGS RECORDED IN PERFETTI MARKETING CASE WHERE IT WAS HELD THAT 'THE EXPRESSI ON 'MAKE AVAILABLE' ONLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE I N A POSITION TO DERIVE AN ENDURING BENEFIT AND BE IN A POSITION TO UTILISE TH E KNOWLEDGE OR KNOW-HOW IN FUTURE ON HIS OWN.' HERE, THE INDUSTRIAL SPECIFIC E XPERTISE IS PROVIDED TO THE INDIAN ENTITY WHICH IS APPLIED IN RUNNING ITS BUSINESS. TH E EMPLOYEES OF THE INDIAN COMPANY GET EQUIPPED TO CARRY ON THEIR BUSINESS, MA RKET OR SERVICE MARKET ON THEIR OWN WITHOUT REFERENCE TO THE SERVICE PROVIDER WHEN THE SERVICE . AGREEMENT COMES TO AN END. IT IS A CASE OF MAKING AVAILABLE T HE TECHNICAL KNOWLEDGE. THE RECIPIENT OF THE SERVICE WAS CONVEYED SPECIFICALLY THE RIGHT TO CONTINUE THE PRACTICE PUT INTO EFFECT AND ADOPT IT UNDER THE AGR EEMENT ON ITS EXPIRY. 18. FROM THE AFORESAID STATEMENT OF LAW IT IS CLEAR TH E TEST IS WHETHER THE RECIPIENT OF THE SERVICE IS EQUIPPED TO CARRY ON HIS BUSINESS WITHOUT REFERENCE TO THE SERVICE PROVIDER, IF HE IS ABLE TO CARRY ON HIS BUSINESS IN FUTURE WITHOUT THE TECHNICAL SERVICE OF THE SERVICE PROVIDER IN RESPECT OF SERVI CES RENDERED THEN, IT WOULD BE SAID THAT TECHNICAL KNOWLEDGE IS MADE AVAILABLE. 19. THE 3RD JUDGMENT ON WHICH RELIANCE WAS PLACED IS AREVA T & D INDIA LTD. AGAIN THE OPINION EXPRESSED BY THE ADVANCE RULING A UTHORITY WHEREUNDER UNDER THE TERMS OF THE AGREEMENT THE FRENCH COMPANY HAS T O PROVIDE SUPPORT SERVICE TO THE CENTRAL TEAM IN THE AREA OF INFORMATION TECHNOL OGY TO THE APPLICANT AND TO ITS SUBSIDIARIES IN THE WORLD. THE PROVISION OF SUPPORT SERVICES BY THE FRENCH COMPANY WOULD ITSELF MAKE AVAILABLE, THE TECHNICAL KNOWLEDGE/EXPERIENCE TO THE APPLICANT. IN THAT CONTEXT IT WAS HELD THAT THE SER VICE PROVIDER UNDER THE IT AGREEMENT ARE IN THE NATURE OF FEES FOR TECHNICAL S ERVICES AND TAXABLE UNDER THE DTAA AS WELL AS UNDER THE ACT. 20. IN THE AFORESAID CASE THE BUSINESS OF THE APPLICAN T BEING THAT OF EXECUTING THE PROJECTS FOR TRANSMISSION AND DISTRIBUTION OF POWER ON TURNKEY BASIS, IT IS THE FRENCH COMPANY AND OTHER GROUP COMPANIES WHICH CONT INUOUSLY UPGRADE DESIGNS, MODEL AND OTHER ENGINEERING PLANS AND FORM ULAE WHICH ARE USED BY THE ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 17 APPLICANT FOR THE PURPOSE OF ITS BUSINESS. THE MAIN OBJECTIVE OF SETTING UP OF AN EXCLUSIVE PLATFORM IS NOT FOR PROVIDING INFORMATION TECHNOLOGY BUT FOR ENABLING THE APPLICANT TO USE DATA IN THE FORM OF DESIGNS, P LAN, MODEL AND ENGINEERING FORMULAE ETC., IN 2D & 3D FORM. THE CHARACTER OF TH E PAYMENT IS CLEARLY ROYALTY AS DEFINED IN ARTICLE 13(3) OF DTAA AS WELL AS TO EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT. THE AGREEMENT CLEARLY ESTABLISHES THAT THE APPLICANT AS TO PREPARE FOR THE INSTALLATION AT THE FIXED GATEWAY SITES FOR PRO PER INSTALLATION OF EQUIPMENT BY FRANCE TELECOM. IT IS TO ACT AS BAILEE OF THE EQUIP MENT WHICH IS UNDER ITS CONTROL AND USE FOR ITS BUSINESS. THE USE OF EQUIPMENT IS W ITH THE USUAL CONDITION OF WARRANTY AND THE NETWORK COULD BE MANAGED BY THE AP PLICANT. THE EQUIPMENT INSTALLED IS TO BE INTEGRATED INTO AREVA NET GLOBAL NETWORK WHICH IS MANAGED AND CONTROLLED BY THE FRENCH COMPANY FOR EQUIPMENT INST ALLATION AT GATEWAY SITES IN NOIDA AND CHENNAI CONSTITUTE PE IN INDIA AS THE EQU IPMENT HAS BEEN USED BY THE FRENCH COMPANY IN THE COURSE OF ITS BUSINESS IN PRO VIDING TECHNICAL DATA TO THE GROUP COMPANIES. 21. THEREFORE FROM THE AFORESAID JUDGMENTS IT IS NOT P OSSIBLE TO HOLD THAT THERE IS A DEPARTURE BY THE ADVANCE RULING AUTHORITY IN RESPEC T OF ITS EARLIER VIEWS. IT IS IN THIS BACKGROUND WE HAVE TO LOOK AT THE FACTS OF THI S CASE, IN ORDER TO FIND OUT WHETHER THE SERVICE PROVIDER HAS MADE AVAILABLE THE TECHNICAL KNOWLEDGE TO THE ASSESSEE SO AS TO FOIST THE LIABILITY OF PAYMENT OF TAX. 22. WHAT IS THE MEANING OF 'MAKE AVAILABLE'. THE TECHN ICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NATURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNOWLEDGE, KNOW-HOW AND THE LIK E. THE SERVICE SHOULD BE AIMED AT AND RESULT IN TRANSMITTING TECHNICAL KNOWL EDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UT ILIZE THE KNOWLEDGE OR KNOW- HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SER VICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL?, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SER VICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT OF TECHNI CAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNIC AL KNOWLEDGE OR SKILLS OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE A VAILABLE' WHEN THE PERSON ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 18 ACQUIRING THE SERVICE IS ENABLED TO APPLY THE TECHN OLOGY. 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 P ERSON PURCHASING THE SERVICE, WITHIN THE MEANING OF PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTHER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TESTS OF RENDERING SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TI ME IS SATISFIED. 18. THE COORDINATE BENCH OF AHMEDABAD TRIBUNAL WHILE CO NSIDERING THE PROVISIONS OF INDIA- CANADA DTAA AND FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN DEE BEERS INDIA (P) LTD (SU PRA) HELD THAT RENDITION OF IT SUPPORT SERVICES TO ASSESSEE BY A CANADIAN CO MPANY, EVEN IF CERTAIN EQUIPMENT WERE TO BE USED, THAT BY ITSELF DID NOT V EST ANY RIGHT IN ASSESSEE TO USE EQUIPMENT AND THUS, PAYMENTS MADE BY ASSESSEE C OULD NOT BE VIEWED AS PAYMENTS FOR 'USE OR RIGHT TO USE' ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT. THE RELEVANT PART OF THE ORDER IS EXTRAC TED BELOW; 15. WE FIND THAT SO FAR AS TAXABILITY UNDER ARTICLE 12 , I.E. WITH RESPECT TO 'ROYALTIES AND FEES FOR INCLUDED SERVICES' IS CONCERNED, WE FI ND THAT ARTICLE 12(4) PROVIDES THAT, 'THE TERM 'FEES FOR TECHNICAL INCLUDED SERVIC ES' AS USED IN THIS ARTICLE MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR SERVICES OF A MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE (INCLUDING THE PROV ISION OF SUCH SERVICES THROUGH TECHNICAL OR OTHER PERSONNEL) IF SUCH SERVICES : (A ) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3 IS RECEIVED ; OR ( B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES , WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONT AINED THEREIN'. IN ORDER TO INVOKE ARTICLE 12(4)(A) IT IS NECESSARY THAT SUCH S ERVICES SHOULD 'MAKE AVAILABLE' TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, O R PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TEC HNICAL DESIGN THE SERVICES ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 19 PROVIDED BY BT CANADA WERE SIMPLY MANAGEMENT SUPPOR T OR CONSULTANCY SERVICES WHICH DID NOT INVOLVE ANY TRANSFER OF TECHNOLOGY. I T IS NOT EVEN THE CASE OF THE ASSESSING OFFICER THAT THE SERVICES WERE SUCH THAT THE RECIPIENT OF SERVICE WAS ENABLED TO PERFORM THESE SERVICES ON ITS OWN WITHOU T ANY FURTHER RECOURSE TO THE SERVICE PROVIDER. IT IS IN THIS CONTEXT THAT WE HAV E TO EXAMINE THE SCOPE OF EXPRESSION 'MAKE AVAILABLE'. 16. AS FOR THE CONNOTATIONS OF MAKE AVAILABLE CLAUSE I N THE TREATY, THIS ISSUE IS NO LONGER RES INTEGRA. THERE ARE AT LEAST TWO NON-JURISDICTIONAL HIGH COUR T DECISIONS, NAMELY HON'BLE DELHI HIGH COURT IN THE CASE OF DIT V. GUY CARPENTER & CO LTD [2012] 346 ITR 504/207 TAXMAN 121/20 TAXMANN.COM 80 7 AND HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. DE BEERS INDIA MINERALS (P.) LTD [2012] 346 ITR 467/208 TAXMAN 406/21 TAXMANN.COM 21 4 IN FAVOUR OF THE ASSESSEE, AND THERE IS NO CONTRARY DECISION BY HON' BLE JURISDICTIONAL HIGH COURT OR BY HON'BLE SUPREME COURT. IN DE BEERS 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 TECHNICA L KNOWLEDGE, KNOW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RE SULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW- HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWL EDGE, SKILL?, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT O F TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE IN TO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER C AN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPE NDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED 'MADE AVAIL ABLE' WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY TH E TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILL, ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANING OF PARAG RAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHAL L NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTH ER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNIC AL/INCLUDED SERVICES' ONLY IF THE TWIN TESTS OF RENDERING SERVICES AND MA KING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 20 19. FURTHER, THE COORDINATE BENCH OF PUNE TRIBUNAL IN S ANDVIK PTY. LTD VS DCIT (SUPRA) WHILE CONSIDERING THE PROVISIONS OF IN DIAAUSTRALIA DTAA HELD THAT THE ASSESSEE HAD ONLY PROVIDED BACK-UP SE RVICES AND IT SUPPORT SERVICES FOR SOLVING IT RELATED PROBLEMS TO ITS IND IAN SUBSIDIARY AND SERVICES WERE NOT MADE AVAILABLE, PAYMENT RECEIVED FOR SUCH SERVICES COULD NOT BE TAXED IN INDIA IN VIEW OF ARTICLE 12(3)(G) OF INDO- AUSTRALIA TREATY. THE RELEVANT PART OF THE DECISION IS REPRODUCED BELOW: 13. WE ARE CONCERNED WITH PARA NO. 3 OF ARTICLE 12, WH ICH DEFINES THE TERM ROYALTY. UNDER THE IT ACT, THE TERM ROYALTY AND EXP RESSION FTS ARE CLASSIFIED AS TWO DIFFERENT CONNOTATIONS, I.E. 9(1) (VI) AND 9(1)(VII). SO FAR AS ARTICLE 12 IS CONCERNED, FTS IS INCLUDED IN THE TER M 'ROYALTY' FOR THE PURPOSE OF DECIDING IN WHICH CONTRACTING STATE THE INCOME FROM THE SAME IS TO BE TAXED. CLAUSE (G) IN ARTICLE 12(3) GOES TO TH E ROOTS OF THE ISSUE. MAIN THRUST OF THE ARGUMENT OF THE LD. COUNSEL IS THAT I T IS NOT ONLY SUFFICIENT TO RENDER THE SERVICES BUT THE SAME SHOULD BE MADE AVA ILABLE TO THE RECIPIENT AND THIS PARTICULAR IMPORTANT ASPECT IS MISSED BY T HE DRP/TPO. WE FIND THAT THE EXPRESSION 'MAKING AVAILABLE' IS VERY MUCH IMPORTANT TO DECIDE IN WHICH CONTRACTING STATE THE AMOUNT RECEIVED FOR REN DERING THE SERVICES RELATING TO THE TECHNICAL KNOW-HOW IS TO BE TAXED. THE EXPRESSION 'MAKE AVAILABLE' IS USED IN THE CONTEXT OF SUPPLYING OR T RANSFERRING TECHNICAL KNOWLEDGE OR TECHNOLOGY TO ANOTHER. IT IS DIFFERENT THAN THE MERE OBLIGATION OF THE PERSON RENDERING THE SERVICES OF THAT PERSON S OWN TECHNICAL KNOWLEDGE OR TECHNOLOGY IN PERFORMANCE OF THE SERVI CES. THE TECHNOLOGY WILL BE CONSIDERED AS MADE AVAILABLE WHEN THE PERSO N RECEIVING THE SERVICES IS ABLE TO APPLY THE TECHNOLOGY BY HIMSELF . 14. THE EXPRESSION 'MAKE AVAILABLE' HAS COME FOR CONSI DERATION BEFORE THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF DE BEERS INDIA MINERALS (P.) LTD. ( SUPRA ). IN THE SAID CASE, THE TREATY BETWEEN INDIA AND NETHERLANDS WAS FOR THE CONSIDERATION OF THEIR LORD SHIPS. THE ASSESSEE IN THAT APPEAL WAS A PROVIDING COMPANY ENGAGED IN THE BUSINESS OF ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 21 PROSPECTING AND MINING FOR DIAMONDS AND OTHER MINER ALS. THEY HAVE BEEN GRANTED LICENCES (RECONNAISSANCE PERMITS) BY THE ST ATE GOVERNMENT OF KARNATAKA, ANDHRA PRADESH AND CHHATTISGARH. DURING THE EARLY STAGE, VARIOUS TECHNIQUES WERE EMPLOYED FOR THE PURPOSE OF CARRYING OUT GEOPHYSICAL SURVEY, THE ASSESSEE ENTERED INTO AGREE MENT WITH M/S.FUGRO ELBOCON B.V. NETHERLANDS, WHO HAD A TEAM OF EXPERTS SPECIALISED IN AIR BORNE GEOPHYSICAL SERVICES FOR CLIENTS. FOR THE TEC HNICAL SERVICES RENDERED BY THEM THE SAID ASSESSEE HAD PAID CONSIDERATION. T HE ASSESSING OFFICER APPLIED ARTICLE 12 OF THE INDO-NETHERLANDS TREATY A ND HELD THAT THE SAME WAS TAXABLE IN THE HANDS OF THE NETHERLANDS COMPANY . AS THE WORDINGS OF ARTICLE 12 IN THE INDO-NETHERLANDS TREATY ARE ANALO GOUS TO ARTICLE 12 OF THE INDIA AUSTRALIA TREATY, AS EXPRESSION 'MAKE AVAILAB LE' IS ALSO USED WHILE DETERMINING FISCAL JURISDICTION OF THE CONTRACTING STATE, THE HON'BLE HIGH COURT EXPLAINED THE MEANING OF THE EXPRESSION 'MAKE AVAILABLE' WHICH WAS APPEARING IN THE INDO-NETHERLANDS TREATY. 20. IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSIONS, WE HOLD THAT THE ASSESSING OFFICER ERRED IN TAXING THE SERVICE AGREE MENT RECEIPT AS FEE FOR INCLUDED SERVICES AS PER ARTICLE 12(4) OF INDIA US A DTAA FOR SUCH SERVICES AS MENTIONED IN PARA 4 (SUPRA), IN ABSENCE OF CLAUSE IN THE SERVICE AGREEMENT DATED 09.01.2009, THAT THE RECIPIENT WOUL D BE ABLE TO PERFORM THESE SERVICES OF ITS OWN WITHOUT ANY FURTHER ASSIS TANCE OF THE ASSESSEE. 21. THE RATIO OF DECISION OF COCHIN TRIBUNAL IN M/S US TECHNOLOGY RESOURCES PVT. LTD. VS. ACIT (SUPRA) RELIED BY LD. DR FOR THE REVENUE IS NOT HELPFUL TO THE REVENUE. IN THE SAID CASE THE ASSESSEE RENDERIN G THE SERVICES IN THE FIELD OF MANAGEMENT DECISION MAKING. FURTHER, IN THE SAID CASE IT WAS CLEARLY HELD THE EXPERTISE AND TECHNOLOGY WAS MADE AVAILABLE BY USA COMPANY WAS A TECHNICAL SERVICES WITHIN MEANING OF ARTICLE 12(4)( B) OF INDIA-USA DTAA. ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 22 22. IN THE RESULT THE GROUND NO. 2 OF THE APPEAL IS AL LOWED. 23. GROUND NO.3 RELATES TO APPORTION OF THE TOTAL RECE IPT OF SERVICE AGREEMENT. CONSIDERING THE FACTS THAT WE HAVE ALLOWED THE GROU ND NO.2 OF THE APPEAL, THEREFORE, THE DISCUSSION ON THIS GROUND OF APPEAL HAS BECOME ACADEMIC. 24. GROUND NO.4 RELATES TO TREATING THE REIMBURSEMENT OF EXPENSES AS FEE FOR INCLUDED SERVICES. 25. THE LD AR FOR THE ASSESSEE SUBMITS THAT DURING THE RELEVANT PERIOD THE ASSESSEE RECEIVED RS. 4,98,576/- ON ACCOUNT OF REIM BURSEMENT FROM THE INDIAN ENTITY, THUS, THE SAME IS NOT TAXABLE IN THE HAND OF ASSESSEE. IT WAS SUBMITTED THAT PWC WAS HANDLING THE TAXATION OF THE ENTIRE ASIA- PACIFIC REGION AND RAISED INVOICE ON THE ASSESSEE FOR SUCH SERVICES. THE SERVICES WERE ALLOCATED TO THE GROUP COMPANY ON THE BASIS OF NUMBER OF EXPAT EMPLOYEE IN THE ENTITY ON PRORATE BASIS. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR RELIED ON THE DECISION OF BOMBAY HIGH COURT IN S IEMENS AKTIONGESELLSCHAFT 310 ITR 320 (BOM). 26. ON THE OTHER HAND THE LD. DR FOR THE REVENUE RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PAR TIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. DURING THE ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE RECEIVED RS. 4,98,576/- FROM ACNOM, WHICH WAS NOT INCLUDED IN THE INCOME AND THE ASSESSEE CLAIMED IT AS REIMBURSEMENT OF ACTUAL EXPENSES AND CLAIMED NOT LIABLE TO TAX UNDER ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 23 INDIA USA DTAA. THE ASSESSEE WAS ASKED AS TO WHY TH IS RECEIPT SHOULD NOT BE TREATED AS INCOME AND TAXED ACCORDINGLY. THE ASS ESSEE FILED ITS REPLY AND CONTENDED THAT THAT THE REIMBURSEMENT OF CHARGES PA ID TO PWC CONSULTING FOR HANDLING THE TAXATION OF THE ENTIRE ASIA- PACIF IC REGION AND RAISED INVOICE ON THE ASSESSEE FOR SUCH SERVICES. THESE SE RVICES WERE ALLOCATED TO THE GROUP COMPANY ON THE BASIS OF NUMBER OF EXPAT E MPLOYEE IN THE ENTITY ON PRORATE BASIS. THUS, THIS IS A MERE REIMBURSEMEN T OF EXPENSES BY ASSESSEE ON BEHALF OF INDIAN ENTITY. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE NOT CHARGED ANY MARK-UP OVER THE COST INCURRED BY IT AN D MERELY CHARGED PROPORTIONATE AMOUNT OF INVOICE RAISED BY PWC AND I T DOES NOT INVOLVE ANY ELEMENT OF INCOME. 28. THE REPLY OF THE ASSESSEE WAS NOT ACCEPTED BY THE A SSESSING OFFICER HOLDING THAT NON-RESIDENT RESIDENT COMPANY, THE SERVICE PRO VIDER HAS PROVIDED SERVICES THROUGH PWC CONSULTING TO THE INDIAN ENTIT Y WHO ARE SERVICE RECIPIENT. IT WAS FURTHER HELD BY ASSESSING OFFICER THAT IF THE EXPENSES WERE NOT MEET BY THE SERVICE RECIPIENT, THE EXPENSES WOU LD HAVE BEEN MET BY THE SERVICE PROVIDER AND THE SERVICE PROVIDER MIGHT HAV E CHARGED THE ADDITIONAL AMOUNT FROM THE SERVICE RECIPIENT. THEREFORE, THE A SSESSING OFFICER HELD THAT THE PAYMENT CANNOT BE REGARDED AS REIMBURSEMENT AS THE PAYMENT IS FOR THE USE OF THE PRODUCT AND NOT FOR SHARING THE EXPENSES . THE AGREEMENT IS BASICALLY TO SHARE THE PRODUCT WITHOUT PAYING THE R OYALTY BUT BY PAYING THE CONSIDERATION WHICH OCCURS ONLY ON THE USE OF THE P RODUCT AND NOT ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 24 OTHERWISE. THE ASSESSING OFFICER TAXED THE SAID REC EIPT AS CONSIDERATION FOR THE USE OF PROCESS OR FORMULA AND FALL UNDER THE DE FINITION OF ROYALTY. THE LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICE R HOLDING THE ASSESSING OFFICER HAS ASSIGNED VALID REASON WHILE TAXING THE RECEIPT. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS NOT EXAMINED THE FAC TS AS PER THE REPLY AND THE EXPLANATION FURNISHED BY THE ASSESSEE. CONSIDERING THE FACTS THAT WE HAVE ALREADY ALLOWED THE GROUND NO. 2 HOLDING THAT ASSES SING OFFICER ERRED IN TAXING THE SERVICE AGREEMENT RECEIPT AS FEE FOR IN CLUDED SERVICES AS PER ARTICLE 12(4) OF INDIA USA DTAA. THUS, ON THE SAME PRINCIPLES THE RECEIPT CANNOT BE TREATED AS ROYALTY AS THERE IS NO TRANSFE R OF PROCESS OR FORMULA. 29. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS SIE MENS AKTIONGESELLSCHAFT (SUPRA) WHILE RELYING ON THE JUD GMENT OF A DIVISION BENCH OF THE DELHI HIGH COURT IN INDUSTRIAL ENGINEERING PROJECTS (P.) LTD.'S CASE [1993] 202 ITR 1014 (DELHI) , HELD THAT REIMBURSEMENT OF EXPENSES CAN, UNDER NO CIRCUMSTANCES, BE REGARDED AS A REVENUE RE CEIPT. SIMILAR ISSUE HAD ALSO COME UP FOR CONSIDERATION BEFORE THE DIVISION BENCH OF THE CALCUTTA HIGH COURT IN DUNLOP RUBBER CO. LTD.'S CASE (142 ITR 493 CAL). CONSIDERING THE ABOVE FACTUAL AND LEGAL DISCUSSIONS THE GROUND NO. 4 OF THE APPEAL IS ALLOWED . 30. GROUND NO. 5 RELATES TO CHARGING OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. THE LD. AR FOR THE ASSESSEE SUBMITS THA T NO INTEREST TO BE CHARGED ITA NO. 4362 MUM 2015 - THE NIELSEN COMPANY (US) LL C 25 PRIOR TO THE AMENDMENT BROUGHT IN STATUE BY FINANCE ACT 2012. IN SUPPORT OF HIS SUBMISSION THE LD. AR FOR THE ASSESSEE RELIED O N THE DECISION OF BOMBAY HIGH COURT IN NGC NETWORK ASIA LLC (222 CTR 85) (BO MBAY HIGH COURT). 31. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER O F THE LOWER AUTHOR TIES. 32. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INTEREST BY TAKING IN CONSIDERATION OF DECISION OF BOMBAY HIGH COURT IN NGC NETWORK ASIA LLC (SUPRA). IN THE RESUL T THE GROUND NO. 5 OF THE APPEAL IS ALLOWED. 33. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/05/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 22.05.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR I BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI