INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE LTD., SINGAPORE V. ACIT, CIRCLE- 2(1)(1), INTERNATIONAL TAXATION, NEW DELHI

ITA 4524/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4948 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K AGARWAL
• Keywords: Capital asset converted into stock in trade; Transfer pricing; Double taxation relief; Revised return; Capital expenditure
• Section: 143(3); 139(1); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. KUL BHARAT, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4524/DEL/2017 : ASSTT. YEAR : 2012-13 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD., 230, VICTORIA STREET, #13-00, BUGIS JUNCTION TOWERS, SINGAPORE VS ACIT, CIRCLE-2(1)(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A A BCI6407M ASSESSEE BY : SH. S. K. AGARWAL, CA REVENUE BY : SH. UMESH TAKYAR, SR. DR DATE OF HEAR ING: 20 . 0 9 .20 2 1 DATE OF PRONOUNCEMENT: 24 .0 9 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-42, NEW DELHI DATED 28.04. 2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1.1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE CIT(A) CONFIRMING THE ADDITION MADE BY THE LD. AO UNDER SECTION 144C(3) R.W.S. 143(3) IN RELATION TO MANAGEMENT SUPPORT CHARGE IS WRONG AND BAD IN LAW. 1.2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) HAS ERRED IN TREATING T HE AMOUNT RECEIVED BY THE APPELLANT FROM INTERCONTINENTAL HOTELS GROUP (INDIA) PVT. LTD (IH G INDIA) TOWARDS PROVISION OF MANAGEMENT SUPPORT CHARGE TO BE IN THE NATURE OF FEE FOR TECHNICAL ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 2 SERVICES (FTS) UNDER ARTICLE 12 OF INDIA- SINGAPO RE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA/ TREATY). 1.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) FAILED TO APPRECIATE TH AT MERELY BECAUSE THE SERVICES ARE MANAGERIAL, TECHNIC AL AND CONSULTANCY IN NATURE, THE SAME WILL NOT ISPO- FACTO RESULT INTO FTS UNDER ARTICLE 12 OF INDIA- SINGAPORE DTAA, UNLESS THE SERVICES RESULTS INTO MAKING AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, WHICH ENABLES THE SERVICE RECIPIENT TO APPLY THE TECHNOLOGY CONTAINED THEREIN. 1.4 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN CONCLUDING THAT THE MANAGEMENT SUPPORT SERVICES 'MAKE AVAILABLE' TECHNOLOGY, KNOWLEDGE, SKILL, EXPERIENCE TO THE RECIPIENT IGNORING THE EXPLICIT LANGUAGE OF ARTICLE 12(4)(B) OF THE DTAA WHICH PROVIDES THAT THE RECIPIENT SHOULD BE IN A POSITION TO APPLY THE TECHNOLOGY CONTAINED IN THE SERVICES. 1.5 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) HAS FAILED TO APPRECIAT E THAT THE SUPPORT SERVICES PROVIDED BY THE APPELLANT ARE REQUIRED BY IHG INDIA ON AN ON-GOING BASIS AND HENCE THE TECHNOLOGY, EXPERIENCE ETC., CANNOT BE SA ID TO BE MADE AVAILABLE BY THE APPELLANT TO IHG INDIA. 1.6 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) HAS ERRED IN OBSERVING THAT INTERPRETING THE TERM 'MAKE AVAILABLE' IN REFERENCE TO OTHER TAX TREATIES, IS NOT PERMISSIBLE . 2. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 3. BRIEF FACTS OF THE CASE AS TAKEN FROM THE ORDER OF THE LD. CIT(A) ARE THAT THE ASSESSEE IS A PRIVATE COMPANY INCORPORATED IN SINGAPORE AND IS A PART OF THE INTERCONTINENTAL HOTELS GROUP ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 3 ('IHG'). THE PRIMARY BUSINESS OF THE ASSESSEE IS TO FRANCHISE/ LICENSE, OPERATE AND MANAGE HOTELS OPERATING UNDER DIFFERENT HOTEL BRANDS OF IHG IN THE ASIA PACIFIC REGION THE ASSESSEE BEING THE REGIONAL HEADQUARTERS FOR THE ASIA PACIFI C REGION OF THE IHG GROUP, IS THE ECONOMIC AND BENEFICIAL OWNER OF VARIOUS HOTEL BRANDS INCLUDING 'INTERCONTINENTAL', 'HOLIDAY INN' AND 'CROWNE PLAZA'. THE ASSESSEE IS IN RECEIPT OF ROYAL TY FEES FROM VARIOUS HOTELS WITHIN ASIA PACIFIC REGION, INCLUDIN G INDIA, FROM LICENSING OF THE VARIOUS HOTEL BRANDS. FURTHER, DUR ING THE SUBJECT YEAR THE ASSESSEE HAS ALSO RECEIVED INTERES T INCOME FROM A GROUP ENTITY IN INDIA, M/S IHG IT SERVICES ( INDIA) PRIVATE LIMITED. BOTH THE STREAMS OF INCOME I.E. ROYALTY FE ES AND INTEREST HAVE BEEN DULY OFFERED TO TAX ON A GROSS B ASIS IN INDIA IN THE PREVIOUS YEAR RELEVANT TO AY 2012-13. 4. THE RETURN OF INCOME FOR AY 2012-13 WAS FILED BY THE ASSESSEE UNDER SECTION 139(1) OF THE ACT ON 30 NOVE MBER 2012 VIDE ACKNOWLEDGEMENT NO. 535691281301112 DECLARING TOTAL INCOME OF RS.7,37,95,029/- AND CLAIMING WITHHOLDING TAX CREDIT OF RS.1,38,47,577/-, UNDER THE NORMAL PROVISIONS OF THE ACT. THE ASSESSEE THEREAFTER FILED A REVISED RETURN ON 3 1 ST MARCH 2014, VIDE ACKNOWLEDGEMENT NO. 169839431310314, DEC LARING A TOTAL INCOME OF RS.7,37,95,029/- AND CLAIMING ENHAN CED WITHHOLDING TAX CREDIT OF RS.1,69,15,416/-. 5. DURING THE YEAR, AN AMOUNT OF RS. 5,43,76,923/- HAS ACCRUED TO THE ASSESSEE FROM ANOTHER GROUP COMPANY IN INDIA, INTERCONTINENTAL HOTELS GROUP (INDIA) PRIVATE LIMIT ED ('IHG INDIA'), ON ACCOUNT OF MANAGEMENT SUPPORT COSTS. BA SED ON THE NATURE OF SERVICES ENUMERATED UNDER THE SUPPORT SER VICE ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 4 AGREEMENT ENTERED WITH IHG INDIA, THE ASSESSEE IS P ROVIDING SERVICES IN THE NATURE OF OPERATIONAL SUPPORT, ACCOUNTING AND LEGAL SUPPORT INFORMATION TECHNOLOGY RELATED SERVIC ES ETC. DURING THE YEAR, THE ASSESSEE, WAS ALSO IN RECEIPT OF RS.75,53,276/- FROM VARIOUS INDIAN HOTELS ON ACCOUN T OF TRAVEL AGENT COMMISSION (TACP), NOT TAXABLE IN THE HANDS O F THE ASSESSEE BEING IN THE NATURE OF REIMBURSEMENT OF EX PENSES. 6. THE ASSESSMENT WAS COMPLETED UNDER SECTION 144C( 3) R.W.S 143(3) OF THE ACT VIDE AO'S ORDER DATED 20 TH MAY 2015, ASSESSING THE INCOME OF THE ASSESSEE UNDER THE NORM AL PROVISIONS OF THE ACT AT RS.13,57,25,228/- AFTER MA KING THE FOLLOWING ADDITIONS ON ACCOUNT OF TACP AND MANAGEME NT SUPPORT CHARGES. 7. BEFORE THE LD.CIT(A), THE ASSESSEE HAS CHALLENGE D THE TREATMENT OF MANAGEMENT SUPPORT SERVICES CHARGE OF RS.5,43,76,923/- FROM INTER CONTINENTAL HOTELS GROU P (INDIA) PRIVATE LIMITED ('IHG INDIA') ON ACCOUNT OF SUPPORT SERVICES PROVIDED BY THE ASSESSEE AS FEE FOR TECHNICAL SERVI CES (FTS) UNDER THE INDIA- SINGAPORE DOUBLE TAXATION AVOIDANC E AGREEMENT('DTAA'). 8. THE ASSESSEE, BEING THE REGIONAL HEADQUARTERS, H AS CENTRALIZED DEPARTMENTS WHICH PROVIDE SERVICES IN T HE NATURE OF OPERATIONAL SUPPORT, ACCOUNTING AND LEGAL SUPPORT, INFORMATION TECHNOLOGY RELATED SERVICES ETC. TO ITS SUBSIDIARIES/AFFILIATES IN THE ASIA-PACIFIC REGION FOR OPERATIONAL EFFICIENCY AND CONSISTENCY. THE AMOUNT CHARGED BY IHG AP TO IHG IN DIA FOR SUCH SUPPORT SERVICES IS DETERMINED BASED ON CERTAI N ALLOCATION KEYS (FEE CHARGED) TO BE APPLIED TO 'TOTAL MANAGEME NT POOL ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 5 COSTS'. DURING AY 2012-13, MANAGEMENT SUPPORT CHARG ES OF AN AMOUNT OF RS.5,43,76,923/- HAS ACCRUED TO THE ASSES SEE FOR PROVIDING SUCH SUPPORT SERVICES TO IHG INDIA. IN TH IS REGARD, SUPPORT SERVICES AGREEMENT WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 9. THE ASSESSEE DID NOT OFFER THE AFORESAID RECEIPT S TO TAX ON THE PLEA THAT THE SUPPORT SERVICES DO NOT CONSTITUT E FTS AS ENVISAGED UNDER ARTICLE 12(4) OF INDIA-SINGAPORE DT AA. 10. THE ASSESSEE SUBMITTED THE SUMMARIZED VIEW OF T HE NATURE OF SERVICES RENDERED BY THE ASSESSEE ALONG WITH ILL USTRATIVE LIST OF BENEFITS, WHICH IS AS UNDER: OPERATIONAL SUPPORT RESPONSIBILITY TOWARDS HOTELS MANAGED ACROSS ASIA PACIFIC REGION IN PROVIDING SUPPORT TO GENERAL MANAGERS. PROVIDE BROAD GUIDELINES ON OPERATIONS OF HOTELS IN ACCORDANCE WITH THE BRAND STANDARDS; AND PROVIDING ADVISE ON SAFETY, INSURANCE AND RISK ASPECTS OF THE PROPERTIES. ANALYTICAL AND ACCOUNTING SUPPORT RESPONSIBLE FOR A NUMBER OF FINANCE RELATED AREAS, INCLUDING GLOBAL FINANCIAL REPORTING, GLOBAL TREASURY, FL AND GLOBAL TAX. REPORT AND ANALYSIS OF REGIONAL FINANCIAL PERFORMANCE AND PREPARING OF BUDGET FOR THE REGION; AND PROVIDING ASSISTANCE IN MAINTENANCE OF ACCOUNTING BOOKS AND BACKEND ACCOUNTING SERVICES E.G. ACCOUNTS RECEIVABLE COLLECTION, INVOKING ETC. LEGAL ADVICE RESPONSIBILITY FOR PROVIDING SUPPORT IN THE FORM OF ADVISE, COUNSEL AND OPINIONS TO LEGAL PROBLEMS CONNECTED WITH THE BUSINESS ACTIVITIES. PROVIDE ASSISTANCE IN REVIEWING TAX COMPUTATION, SUBMISSION, LETTER TO BE FILED BEFORE TAX AUTHORITIES, ETC.; PROVIDE ADVICE, COUNSEL AND OPINIONS ON NATIONAL AND INTERNATIONAL LEGAL ISSUES; AND ASSISTANCE ON RISK MANAGEMENT AND CONDUCT INTERNAL AUDIT FOR HOTELS AND CORPORATE OFFICES. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 6 INFORMATION TECHNOLOGY RESPONSIBILITY FOR PROVIDING IT SUPPORT INCLUDING INSTALLATION OF HARDWARE AND SOFTWARE. ASSISTANCE ON AND SUPPORT THE IMPLEMENTATION OR CORRECTION OF HARDWARE AND SOFTWARE SYSTEMS, AS WELL AS LOCAL AREA NETWORKS; AND PROVIDE AD-HOC IT SUPPORT AS NECESSARY. PERSONNEL RESPONSIBILITY FOR EMPLOYEE RECRUITMENT, TRAINING, MANAGING THE EMPLOYER BRAND, AS WELL AS RESOURCING AND TALENT. LAYING BROAD GUIDELINES FOR INITIATION AND IMPLEMENTATION OF RECOGNITION PROGRAMS; ASSIST IN RECRUITMENT, SELECTION AND DEVELOPMENT OF WORKFORCE; AND CO- ORDINATE INTERNATIONAL MANPOWER PLANNING AND MANAGE SECONDMENT OPPORTUNITIES. 11. THE ASSESSEE SUBMITTED TAX RESIDENCY CERTIFICAT E OF SINGAPORE. THEREFORE, BY VIRTUE OF PROVISIONS OF SE CTION 90(2) OF THE ACT, IHG AP CLAIMED THE SHELTER OF THE PROVISIO NS OF THE INDIA- SINGAPORE DTAA TO THE EXTENT THESE ARE MORE BENEFICIAL VIS-A-VIS THE ACT. 12. AS PER ARTICLE 12(4) OF THE TAX TREATY BETWEEN INDIA AND SINGAPORE, THE TERM 'FEES FOR TECHNICAL SERVICES' M EANS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FO R SERVICES OF A MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE IF SU CH SERVICES: (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATIO N 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 ACQ UIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN; OR (C) CONSIST OF THE DEVELOPMENT AND TRANSFER OF A T ECHNICAL PLAN OR TECHNICAL DESIGN, BUT EXCLUDES ANY SERVICE THAT DOES NOT ENABLE THE PERSON ACQUIRING THE SERVICE TO APPLY TH E TECHNOLOGY CONTAINED THEREIN. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 7 13. THE ASSESSEE SUBMITTED THAT SINCE THE SERVICES WERE NOT ANCILLARY OR SUBSIDIARY TO ENJOYMENT OF A RIGHT FOR WHICH ROYALTY IS BEING RECEIVED BY THE ASSESSEE, THEREFORE, SUCH RECEIPTS CANNOT BE TAXED AS FTS UNDER ARTICLE 12(4)(A) OF TH E INDIA- SINGAPORE TAX TREATY. FURTHER, THE ASSESSEE AVERRED THAT THE SUPPORT SERVICES RENDERED BY IHG AP DO NOT ENTAIL A NY TRANSFER OR DEVELOPMENT OF TECHNICAL PLAN OR DESIGN AND CLAI MED THAT THE SUPPORT SERVICES IN QUESTION SHOULD NOT CONSTITUTE FTS AS PER CLAUSE (C) OF ARTICLE 12(4) OF THE INDIA-SINGAPORE DTAA. 14. AS REGARDS ARTICLE 12(4)(B) OF THE INDIA-SINGAP ORE DTAA, ASSESSEE SUBMITTED THAT THE AFORESAID CLAUSE OF TRE ATY DEFINES FTS IN A RESTRICTIVE MANNER TO MEAN PAYMENTS RECEIV ED IN CONSIDERATION FOR RENDERING OF ANY MANAGERIAL, TECH NICAL OR CONSULTANCY SERVICES, IF SUCH SERVICES MAKE AVAILAB LE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSE S, WHICH ENABLES THE PERSON ACQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN. IN THIS REGARD, THE A SSESSEE RELIED UPON VARIOUS JUDICIAL PRECEDENTS WHICH HAVE INTERPRETED THE TERM 'MAKE AVAILABLE' . THE ASSESSEE ALSO TRIED TO DRAW INFERENCE OF SIMILAR TERM UNDER THE INDIA-US DTAA W HICH PROVIDES THAT A TECHNICAL SERVICE WOULD 'MAKE AVAILABLE' TECHNICAL KNOWLEDGE, SKILL ETC. ONLY WHERE THE PERSON AVAILING THE SERVICES IS ENABLED TO APPLY THE SERVICES AVAIL ED IN HIS OWN RIGHT WITHOUT RECOURSE TO THE PERSON PROVIDING THE SERVICES. 15. THE ASSESSEE EMPHASIZED ON THE FACT THAT MERE R ENDERING OF SERVICES SHALL NOT QUALIFY AS FTS UNLESS THE PER SON UTILIZING THE SERVICES IS IN FUTURE ABLE TO MAKE USE OF THE T ECHNICAL KNOWLEDGE, SKILL, ETC. EMBEDDED IN SUCH SERVICES BY HIMSELF ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 8 WITHOUT RECOURSE TO THE PROVIDER OF SERVICES. THE A SSESSEE INVITED ATTENTION TO THE INDIA-SINGAPORE DTAA WHICH SPECIFICALLY PROVIDES THAT THE SERVICES WOULD BE COVERED UNDER T HIS PROVISION ONLY IF THE SERVICES PROVIDED 'ENABLES THE PERSON A CQUIRING THE SERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN' . 16. THE MAIN OBSERVATIONS OF THE AO IN THIS REGARD ARE AS UNDER: MAKE AVAILABLE IS NOT DEFINED IN THE INDIA SINGAPOR E DTAA, AND THE APPELLANT CANNOT TAKE BENEFIT OF INDIA-USA DTAA WHERE THE TERM 'FEE FOR INCLUDING SERVICES' HAS BEE N DEFINED IN THE ACT. THE APPELLANT IS TAKING BENEFIT OF INDIA-USA DTAA T O IMPORT THE MEANING OF MAKE AVAILABLE, AS THE SAME I S NOT DEFINED UNDER INDIA- SINGAPORE DTAA. HOWEVER, THE S AME IS NOT PERMITTED IN LIGHT OF FOLLOWING JUDGEMENT:- ONGC VS. ACIT, DEHRADUN [2006] 9 SOT 8 (DELHI) (SMC ) FROM THE OBSERVATION OF THE SERVICES BEING PROVIDED , IT IS CLEAR THAT THE ASSESSEE IS PROVIDING ORGANIZATIONAL CHANGE MANAGEMENT ASSISTANCE, DEVELOPMENT OF COACHING SKIL LS, OR OPERATIONAL IMPROVEMENT SERVICES. IT IS BRINGING IT S OWN, PROPRIETARY METHODOLOGIES OR FRAMEWORKS TO GUIDE TH E IDENTIFICATION OF PROBLEMS AND TO SERVE AS THE BASI S FOR RECOMMENDATIONS FOR MORE EFFECTIVE OR EFFICIENT WAY S OF PERFORMING WORK TASKS. THUS THE SERVICES OF THE ASS ESSEE ARE NOT MERELY SUPPORT SERVICES BUT MANAGERIAL CONSULTANCY SERVICES WHICH FALL IN PURVIEW OF CONSU LTANCY SERVICES. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 9 ANY MANAGERIAL, TECHNICAL, CONSULTANCY SERVICE CAN BE PROVIDED ONLY WHEN THE PROVIDER POSSESSES THE EXPER TISE, SKILL, KNOWLEDGE OR KNOW HOW ETC., IN THE RELEVANT FIELD AND ONCE IT IS SO, THE FURTHER ACT OF PROVIDING SUCH SE RVICES TO THE RECIPIENT ENABLES THE RECIPIENT IN MANY WAYS IN CLUDING ENABLING IT TO APPLY SUCH TECHNOLOGY ON ITS OWN. AO MADE REFERENCE-TO SECTION 80-0 OF THE INCOME TAX ACT WHICH IS THE ONLY SECTION THAT REFERS TO THE EXPRES SION 'MADE AVAILABLE' AND RELIED ON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CBDT VS. OBEROI (INDIA) (P.) L TD. 97 TAXMANN 453 (SC). AO RELIED ON THE DECISION IN THE CASE OF AREVA T&D LTD. (ORDER DATED 7.2.2012 IN AAR NO. 876 OF 2010), MERS EN INDIA PVT. LTD. [2012] 20 TAXMANN.COM 475 (AAR - NE W DELHI) AND SHELL INDIA MARKETS PVT. LTD. (ORDER DAT ED 12.1.2012 IN AAR NO. 833 OF 2009). 17. THE LD. CIT (A) CONCURRED WITH THE ASSESSING OF FICER AND HELD THAT IT IS EVIDENT FROM THE PLAIN READING OF THE NA TURE OF SERVICES PROVIDED BY IHG INDIA TO THIRD PARTY OWNER S THAT IHG FIRST AVAILED THE KNOWLEDGE SET IN RESPECT OF OPERA TIONAL SUPPORT, ANALYTICAL & ACCOUNTING SUPPORT, LEGAL ADV ICE, INFORMATION TECHNOLOGY, PURCHASING, PERSONNEL & TRA INING AND MISCELLANEOUS AND DELIVERED THE SAME TO THIRD PARTY OWNERS OF CMH HOTELS. IT IS NOTED THAT WHILE DESCRIBING THE S ERVICES, THE TERM 'ADVISE/ADVICE' HAS BEEN REPEATEDLY USED AND T HE SERVICES ARE THEMSELVES CALLED 'SUPPORT SERVICES'. THIS ITSE LF INDICATES THAT WHILE PROVIDING SERVICES, THE EMPLOYEES OF THE ASSESSEE WORKED CLOSELY WITH THE EMPLOYEES OF THE IHG INDIA AND SUPPORTED/ADVISED THEM. THUS, THE TRANSFER OF KNOWL EDGE AND ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 10 EXPERIENCE IS INHERENT IN THIS PROCESS WHICH LEADS TO 'MAKE AVAILABLE' OF SERVICES. THE ASSESSEE COMPANY HAS A STAKE INVOLVED IN DELIVERY OF SERVICES BECAUSE ANY LAPSE AT THE LAST END WOULD BE DETRIMENTAL TO THE BRAND VALUE OF THE ASSESSEE COMPANY. THEREFORE, THE LARGER INTEREST OF THE ASSE SSEE COMPANY IS TO ENSURE THE COMPLETE TRANSFER OF KNOWL EDGE BASE, EXPERIENCE AND SKILL SET SO AS TO DELIVER THE BEST SERVICES IN LINE WITH GLOBAL BEST PRACTICES TO BE A LEAD BRAND IN HO TEL INDUSTRY . 18. THE LD. CIT (A) HELD THAT IT IS NOT MERELY A SE RVICE BUT EQUIPPING OF THE RESOURCE OF THE RECIPIENT ENTITY F OR THEIR CAPACITY BUILDING IN ORDER TO MANAGE THE OPERATIONS HOTELS OWNED BY THIRD PARTIES. THE LD. CIT (A) HELD THAT T HE PAYMENT FOR MANAGEMENT, SUPPORT SERVICE IS HELD TO BE FTS E XCEPT FOR PAYMENT OF INFORMATION TECHNOLOGY SERVICES. 19. BEFORE US, DURING THE HEARING, THE LD. AR REAFF IRMED THE SUBMISSIONS TAKEN UP BEFORE THE AUTHORITIES BELOW. THE SAME HAVE BEEN PERUSED. THE SAME ARE REPRODUCED FROM THE ORDER OF THE LD. CIT(A). 20. THE ASSESSEE SUBMITTED THAT ON RECEIPT OF SUCH SERVICES, IHG INDIA IS NOT GETTING EQUIPPED TO RENDER THESE S ERVICES WITHOUT RECOURSE TO THE ASSESSEE. THE ASSESSEE STRE SSED ON THE FACT THAT THE SERVICES ARE REQUIRED BY IHG INDIA FR OM THE ASSESSEE ON AN ONGOING BASIS, YEAR AFTER YEAR AND A RGUED THAT IN CASE SERVICES CONFERRED ANY TECHNOLOGY, SKILL SE T, KNOWLEDGE ETC., BY THE ASSESSEE TO IHG INDIA, THERE WAS NO NE ED OF AVAILING SUCH SERVICES BY IHG INDIA ON AN ONGOING B ASIS. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 11 21. THE ASSESSEE RELIED UPON THE FOLLOWING JUDICIAL PRECEDENTS TO SUPPORT ITS CONTENTION THAT TECHNOLOGY, SKILL AN D TECHNICAL KNOW-HOW ETC. CANNOT BE HELD TO BE MADE AVAILABLE T O SERVICE RECIPIENT WHERE SIMILAR SERVICES ARE REQUIRED BY IT ON AN ONGOING BASIS, YEAR AFTER YEAR. R. R. DONNELLEY INDIA OUTSOURCE PRIVATE LTD (241 CT R 305) PAN AMSAT INTERNATIONAL SYSTEMS INC. (9 SOT 100) 22. THE ASSESSEE ALSO RELIED ON FOLLOWING CASE LAWS WHEREIN IT IS HELD THAT THE SIMILAR SERVICES AS PROVIDED BY TH E ASSESSEE TO IHG INDIA ARE NOT IN THE NATURE OF FTS. BHARTI AXA GENERAL INSURANCE CO. LTD (234 ITR 62)AA R SHELL TECHNOLOGY INDIA PRIVATE LIMITED (AAR NO 850 OF 2009) AAR INVENSYS SYSTEMS INC. (317 ITR 438) AAR ERNST & YOUNG (P) LTD (323 ITR 184) AAR MEASUREMENT TECHNOLOGIES LIMITED [305 ITR 37[305 IT R 37 (AAR)] AAR INTERTEK TESTING SERVICES INDIA (P.) LTD., IN RE (1 75 TAXMAN 375 ) AAR 23. IT WAS ARGUED THAT THE AFORESAID PRINCIPAL AND MEANING OF 'MAKE AVAILABLE' HAS BEEN UPHELD IN PLETHORA OF JUD ICIAL PRECEDENTS, IN THE CONTEXT OF TAX TREATY, APART FRO M INDIA- SINGAPORE DTAA. SOME OF THESE ARE AS UNDER: DE BEERS INDIA MINERALS PVT. LTD. (21 TAXMANN.COM 2 14) KARNATAKA HIGH COURT PRO-QUIP CORPORATION IN RE(255 ITR 354) AAR ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 12 FEDERATION OF INDIAN CHAMBER OF COMMERCE AND INDUST RY (320 ITR 124) AAR VICEROY HOTELS LTD. (11 TAXMANN.COM 216)ITAT HYDERA BAD RAYMOND LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX (86 ITD 791) ITAT 24. ON ANALYSIS OF THE FACTS, WE FIND THAT THE ASSE SSEE STARTED CHARGING MANAGEMENT SUPPORT SERVICES FROM FY2011-12 ONLY. SO, IT IS THE FIRST YEAR WHEN THE MANAGEMENT SUPPOR T SERVICES WERE PROVIDED TO IHG INDIA, ASSESSEE SUBMITTED THAT THE SIZE OF HOTEL MANAGEMENT OPERATIONS OF IHG INDIA WERE RELAT IVELY SMALL IN PRIOR YEARS. 25. THE DETAILED ANALYSIS OF SERVICES RENDERED BY T HE ASSESSEE TO M/S IHG INDIA TO APPRECIATE WHETHER 'MAKE AVAILA BLE' CONDITION GETS SATISFIED IN DELIVERY OF SUCH SERVIC ES BY THE ASSESSEE. AS REGARDS THE RELIANCE PLACE BY THE APPL ICANT TO THE MEANING OF 'MAKE AVAILABLE' IN THE MOU IN INDIA-US DTAC, IT MAY BE NOTED THAT A CONVENTION IS A TREATY ENTERED INTO BY TWO SOVEREIGN STATES RELATING TO RIGHTS AND DUTIES OF S UBJECTS OR CITIZENS OF THE RESPECTIVE STATES IN ONE ANOTHER'S POSSESSION. NO DOUBT ONE CAN LOOK INTO THE PROTOCOL ATTACHED TO A TREATY BETWEEN TWO COUNTRIES TO FIND THE MEANING OF AN EXP RESSION USED IN THE TREATY, BUT TO REFER TO A TREATY TO WHI CH TWO COUNTRIES ARE NOT PARTIES, WOULD NOT BE APPROPRIATE . IT CAN AT THE BEST HAVE PERSUASIVE VALUE. THE EXPRESSION 'MAK E AVAILABLE' ONLY MEANS THAT THE RECIPIENT OF THE SER VICE SHOULD BE IN A POSITION TO DERIVE AN ENDURING BENEFIT AND BE IN A POSITION TO UTILIZE THE KNOWLEDGE OR KNOW-HOW IN FUTURE ON H IS OWN. THE LIST OF SERVICES RENDERED BY THE ASSESSEE TO M/S IH G INDIA, AS ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 13 PER SCHEDULE 1 OF THE SERVICE AGREEMENT BETWEEN IHG (ASIA PACIFIC) I.E. THE ASSESSEE COMPANY AND IHG INDIA, A RE AS UNDER: 1. OPERATIONAL SUPPORT PROVIDE ADVICE TO AND ASSIST LOCAL GENERAL CMH. HOT EL MANAGEMENT IN THE PRODUCTION OF DATA IN LINE WITH T HE AA REGION STRATEGIC PLAN AND CO-ORDINATE THE IMPLEMENT ATION OF SUCH PLAN; PROVIDE ADVICE, INFORMATION AND COMPETITIVE EXPERTI SE TO LOCAL GENERAL CMH HOTEL MANAGEMENT ON THE OPERATION OF HOTELS IN ACCORDANCE WITH BRAND STANDARDS. MAINTAIN THE HIGHEST QUALIFICATION AVAILABLE WITH R EGARD TO THE INTERNATIONAL HOTEL BUSINESS AND ITS MANAGEMENT TECHNIQUES. CO-ORDINATE THE MANAGERIAL PLAN AND ACTIONS WITHIN THE AA REGION; ADVISE LOCAL GENERAL CMH HOTEL MANAGEMENT ON TRENDS AND CHANGES IN THE HOTEL BUSINESS IN GENERAL. PROVIDE ADVICE ON THE PRODUCTION OF OPERATING AND C APITAL BUDGETS AT THE LEVEL OF THE CMH HOTELS, WHICH ARE CONSISTENT WITH THE STRATEGIC PLAN; PROVIDE TO LOCAL GENERAL CMH HOTEL MANAGEMENT ON A PERIODIC BASIS REGIONAL FINANCIAL REPORTS AND STATE MENTS FOR OPERATING PERFORMANCE COMPARISONS WHICH ALLOW LOCAL MANAGEMENT TO MAKE BUSINESS DECISIONS; IMPROVE FINANCE RESOURCES OF CMH HOTELS WHICH ARE S UBJECT TO SEASONAL FLUCTUATION BY PROVISION OF TREASURY AS SISTANCE; PROVIDE FINANCIAL ADVICE ON THE VIABILITY OF NEW PR OJECTS; ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 14 CO-ORDINATE THE IMPLEMENTATION OF THE RULES OF OPER ATIONS IN CMH HOTELS; ADVISE CMH HOTELS IN APPLYING THE RULES OF OPERATIO NS, TAKING INTO ACCOUNT THE FACT THAT CMH HOTELS OPERAT E IN A NUMBER OF COUNTRIES IN THE AA REGION; CENTRALIZE INFORMATION ON THE QUALITY PERFORMANCE O F CMH HOTELS; PROVIDE ADVICE ON TECHNICAL ASPECTS OF SITE SELECTI ON FOR NEW CMH HOTELS PROVIDE ADVICE AND SUPPORT FOR THE MAINTENANCE OF T HE EXISTING PROPERTIES OF THE AA REGION; MAINTAIN A LIST OF SELECTED CONTRACTORS AVAILABLE T O LOCAL MANAGEMENT; ADVISE ON SAFETY, INSURANCE AND RISK ASPECTS OF THE PROPERTIES; PROVIDE TECHNICAL SERVICES, INCLUDING ENGINEERING, ARCHITECTURAL, INTERIOR AND GRAPHIC DESIGN ADVISORY SERVICES REQUIRED FOR NEW HOTEL CONSTRUCTION AND RENOVATION PROGRAMS AND ANY ASSOCIATED PROPERTY RELATED SERVIC ES 2. ANALYTICAL AND ACCOUNTING SUPPORT ASSIST AND ADVISE PARTICIPANT IN THE PRODUCTION OF REPORTS REGARDING BUDGETS, CASH-FLOW, CAPITAL REQUIREMENTS AND ANNUAL ACCOUNTS/QUARTERLY REPORTS; MONITOR AND ENSURE CONSISTENCY IN APPLICATION OF ACCOUNTING STANDARDS AND POLICIES. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 15 ASSIST AND ADVISE ON THE IMPLEMENTATION AND THE USE OF ACCOUNTING SYSTEMS FOR THE AA REGION INCLUDING FRON T AND BACK OFFICE SYSTEMS; PROVIDE SUPPORT AS NECESSARY FROM THE GLOBAL AND RE GIONAL FINANCE FUNCTIONS AND THE BUSINESS SERVICE CENTRE. 3. LEGAL ADVICE PROVIDE ADVICE, COUNSEL AND OPINIONS ON NATIONAL AN D INTERNATIONAL LEGAL PROBLEMS CONNECTED WITH THE BUS INESS ACTIVITY IN PARTICULAR WITH RESPECT TO LEGAL ASPEC TS OF MANAGEMENT CONTRACTS, LEASE, REAL ESTATE, LITIGATIO N, FORM OF ORGANIZATIONS, TAXATION, EMPLOYEE RELATIONS AND INDUSTRIAL PROPERTY RIGHTS, TRADEMARK AND COPYRIGHT PROTECTION IN THE COUNTRIES WHERE PARTICIPANT OPERA TES, INCLUDING THE LEGAL MANAGEMENT OF ALL AFFILIATES; PROVIDE SUPPORT, AS NECESSARY, FROM THE BUSINESS REPUTATION AND RESPONSIBILITY FUNCTION. 4. INFORMATION TECHNOLOGY ADVISE ON AND SUPPORT THE IMPLEMENTATION OF HARDWAR E AND SOFTWARE SYSTEMS AS WELL AS LOCAL AREA NETWORKS IN THE CMH HOTEL (S); PROVIDE IT SUPPORT, AS NECESSARY, TO CMH HOTELS. 5. PURCHASING CO-ORDINATE INTERNATIONAL PURCHASING OF FURNITURE, EQUIPMENT AND SUPPLIES; ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 16 NEGOTIATE, EXECUTE AND IMPLEMENT SERVICE AGREEMENTS AND AGREED PRICING STRUCTURES WITH THIRD PARTY SUPPLIER S OF GOODS AND SERVICES. PERFORM PRICE AND QUALITY COMPARISONS AND NEGOTIATE WITH SUPPLIERS ON VOLUME PURCHASE; 6. PERSONNEL AND TRAINING PROVIDE ADVICE ON AND CO-ORDINATE THE CAREER PLANNI NG OF ALL MANAGEMENT EMPLOYEES AND CMH HOTELS; PROVIDE ADVICE ON AND CO-ORDINATE COMPENSATION AND BENEFIT PLANS INCLUDING PENSIONS PLANS FOR CMH HOTE L EMPLOYEES IN THE AA REGION; PROVIDE EMPLOYEES OF THE REGIONAL POOLING COMPANY O R ITS AFFILIATES, TO PARTICIPANT FROM TIME TO TIME ON SEC ONDMENT; ASSIST AND ADVISE ON THE DEVELOPMENT OF AN INDIVIDU AL MANPOWER SPECIFICATION AND ITS APPLICATION TO MANAG ERIAL SELECTION; ASSIST IN RECRUITMENT, SELECTION AND PROVISION FOR SENIOR PERSONNEL FOR CMH HOTELS; PROVIDE SUPPORT AS NECESSARY FROM THE GLOBAL HUMAN RESOURCES TEAM AND THE BUSINESS SERVICES CENTRE; ASSIST IN OBTAINING NECESSARY VISAS, WORK PERMITS A ND IN DEFINING RELOCATION REQUIREMENTS; CO-ORDINATE INTERNATIONAL MANPOWER PLANNING AND UNI FORM EMPLOYMENT POLICIES; MONITOR AND NEGOTIATE ON LABOUR RELATION ISSUES. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 17 7. MISCELLANEOUS PROVIDE AIL OTHER RELEVANT AREAS OF ADVICE AND SUPP ORT IN CONNECTION WITH THE OWNING AND-OR MANAGING OF CMH HOTELS. 26. IT IS NOT IN DISPUTE THAT IHG INDIA HAS RECEIVE D THE ABOVE SERVICES FROM THE ASSESSEE COMPANY IN TERMS OF MANA GEMENT SERVICE AGREEMENT. IT IS OBVIOUS THAT THE ASSESSEE COMPANY PROVIDES HIGHLY TECHNICAL SERVICES WHICH ARE USED B Y IHG INDIA FOR TAKING MANAGERIAL DECISION, BUDGETING & ACCOUNT ING DECISION, RISK MANAGEMENT DECISION, ETC. THE KNOWLEDGE & EXPE RTISE IN THE FIELD OF HOTEL OPERATION & MANAGEMENT & RELATED AREAS WHICH WAS ACCUMULATED THROUGH STUDY, EXPERIENCE AND EXPERIMENTATION WITH REGARD TO MANAGEMENT, BUDGETIN G, RISK, ETC. OF THE SAME BUSINESS IS NOTHING BUT A TECHNICA L KNOWLEDGE. FURTHER, ANDHRA PRADESH HIGH COURT IN G.V.K. INDUST RIES LTD. V. ITO [1997] 228 ITR 564/(1998] 96 TAXMAN 179, HELD T HAT THE ADVICE GIVEN BY NON-RESIDENT COMPANY IN TAKING A FI NANCIAL DECISION EITHER TO PROCURE LOAN OR TO STRENGTHEN TH E FINANCE WOULD BE A TECHNICAL OR CONSULTANCY SERVICES. THIS SHOWS THAT THE ADVISE GIVEN RELATED TO MANAGERIAL INCLUDING OP ERATIONAL AND FINANCIAL ASPECTS WOULD TANTAMOUNT TO DELIVERY OF M ANAGERIAL, CONSULTANCY OR TECHNICAL SERVICES. FURTHERMORE, IN THE CASE OF CBDT VS. OBREROI HOTELS (INDIA) PVT. LTD., HON'BLE SUPREME COURT OF INDIA ECHOED THE FACT THAT MANAGEMENT SUPP ORT INVOLVE GREAT DEAL OF EXPERTISE, SKILL AND TECHNICAL KNOWLE DGE. THE RELEVANT EXTRACTS ARE REPRODUCED AS UNDER: ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 18 THERE IS NO GAIN SAYING THAT RUNNING A WELL EQUIPP ED MODERN HOTEL IS NO ORDINARY AFFAIR. ONCE NEEDS A GREAT DEA L OF EXPERTISE SKILL AND TECHNICAL KNOWLEDGE FOR THE PURPOSE... 27. IN VIEW OF THE ABOVE, THERE IS NO DOUBT THAT TH E SERVICES RENDERED BY THE ASSESSEE WERE IN THE NATURE OF MANA GERIAL /TECHNICAL/CONSULTANCY SERVICES. 28. THE RATIONALE OF THE LD. CIT(A)WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER IS AS UNDER: ON THE BASIS OF THE INPUT, ADVICE, ASSISTANCE AND SERVICE PROVIDED BY THE ASSESSEE COMPANY, THE DECISION IS TAKEN BY I HG INDIA TO MANAGE THE HOTELS IN INDIA AND OTHER PARTS OF SOUTH WEST ASIA ('SWA'). IT IS ALSO TO BE REMEMBERED THAT THE ASSES SEE COMPANY IS. GIVING SERVICES IN RESPECT OF PERSONNEL & TRAINING TO THE IHG INDIA EMPLOYEES IN MAKING USE OF THE INPUTS, EXPERIENCE, EXPERIMENTATION, ASSISTANCE AND ADVICE RENDERED BY THEM FOR TAKING A BETTER AND POSSIBLE DECISION IN ORDER TO ACHIEVE THE DESIRED O BJECTIVES / GOAL. THEREFORE, IN THE CONTEXT OF PROFESSIONAL MANAGEMEN T AND DECISION MAKING PROCESS, THE ADVICE AND SERVICE RENDERED BY THE ASSESSEE COMPANY WHICH WAS MADE USE BY IHG INDIA IN MANAGERI AL DECISION MAKING PROCESS IS IN THE NATURE OF TECHNICAL SERVIC ES WHICH FACILITATE IHG INDIA TO TAKE CORRECT AND SUITABLE DECISION TOW ARDS ACHIEVEMENT OF THE DESIRED OBJECTS AND BUSINESS GOAL. PARA 8.1( A) OF THE MANAGEMENT AGREEMENT BETWEEN TODAY HOTELS PVT. LTD. (HOTEL CROWNE PLAZA GURGAON) AND SC HOTELS & RESORTS (INDI A) PTE. LTD. (IHG INDIA) (SUBMITTED VIDE LETTER DATED 28.02.2017 ) STATES THAT THE MANAGER (IHG INDIA) SHALL SECOND THE GENERAL MANAGE R TO OWNER (THE CROWNE PLAZA HOTEL) WHO SHALL EMPLOYEE THAT PERSON DIRECTLY THROUGHOUT THE PERIOD OF SECONDMENT. THE PROCESS OF ENGAGEMENT OF SECONDED EMPLOYEES FROM THE IHG INDIA TO THIRD PART Y OWNED HOTELS CLEARLY REFLECTS THE TRANSFER OF KNOWLEDGE & EXPERT ISE OF A PARTICULAR ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 19 INSTITUTION TO OTHER INSTITUTE. FURTHER, PARA 3.3 O F AFORESAID MANAGEMENT AGREEMENT STATES THAT THE MANAGER (IHG I NDIA) WILL HAVE THE RIGHT TO DETERMINE ALL POLICIES AND PROCED URES RELATING TO OPERATION OF THE HOTEL INCLUDING MARKETING AND SALE S POLICIES, PERSONNEL POLICIES ETC. IHG INDIA HAS PLAYED THE RO LE OF BRIDGE IN CONNECTING THE ASSESSEE COMPANY TO THE THIRD PARTY OWNERS. THEREFORE, IT MAY NOT BE CORRECT TO SAY THAT THE SE RVICES DELIVERED BY THE ASSESSEE COMPANY DID NOT MAKE AVAILABLE THE KNO WLEDGE, KNOWHOW AND SKILL TO IHG INDIA TO APPLY/USE THE SAM E IN ITS DECISION MAKING PROCESS. THE ASSESSEE RELIED ON THE VARIOUS CASE LAWS TO SUPPORT ITS CLAIM WITHOUT APPRECIATING THAT THE FAC TS OF THE PRESENT CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE CITE D CASES. THE EXTRACTS OF THE SERVICES RENDERED BY IHG INDIA AS PER THE TRANSFER PRICING STUDY REPORT OF IHG INDIA IS REPRO DUCED AS UNDER: 'TO PROVIDE OPERATIONAL ASSISTANCE TO THE FAMILY OF HOTEL BRANDS IN SOUTH WEST ASIA, AS IHG AP/SCHI MAY REASONABLY REQU EST. SUCH ASSISTANCE MAY INCLUDE, BUT IS NOT LIMITED TO, TECH NICAL SERVICES, FINANCIAL MANAGEMENT GUIDANCE, LEGAL SERVICES, HUMA N RESOURCES, RISK MANAGEMENT AND INSURANCE, TAX, TREASURY, MARKE TING ADVICE, AND OTHER GENERAL CORPORATE SERVICES. WITH RESPECT TO MANAGEMENT SERVICES, PRE-COMMENCEME NT SERVICES AND TECHNICAL SERVICES, THESE SERVICES ARE PROVIDED TO THIRD-PARTY HOTEL OWNERS. THE AGREEMENT FOR THE PROVISION OF TH ESE SERVICES IS BETWEEN IHG INDIA AND THIRD PARTY HOTEL OWNER. FOR THE PRE- COMMENCEMENT SERVICES, IHG INDIA HAS THIS SEPARATE DESIGN AND ENGINEERING TEAM OF PERSONNEL TO WORK WITH THIRD PA RTY HOTEL OWNERS ON DESIGN AND ENGINEERING ASPECTS OF THE HOTELS. TH E TEAM WORKS WITH THE OWNERS OF HOTELS TO MANAGE THE CONSTRUCTIO N OR REFURBISHMENT OF THE HOTELS, PUTTING IN PLACE THE P RE-COMMENCEMENT PROCESSES FOR THE HOTELS TO ENSURE THAT THE HOTELS CAN OPEN ON TIME AND ON BRAND. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 20 THE TEAM PROVIDES REVIEWS THE DESIGN CONCEPT, DETAI LED SCHEMATIC AND ACTIVITIES; RELATED TO CONSTRUCTION, REVIEW AND APPROVE THE DESIGN AND DRAWINGS, MONITOR THE PROGRESS OF THE PR OJECTS, CONDUCT ORE-OPENING REVIEWS AND INSPECTIONS, ASSIST IN THE SELECTION OF VENDORS AND MATERIALS, AND PROVIDE NECESSARY GUIDAN CE AND SUPPORT TO OTHER EXTERNAL CONSULTANTS HIRED BY THE OWNER (V IZ. ARCHITECTS, INTERIOR DESIGNERS, ENGINEERS ETC.). THE TEAM MAY A LSO PROVIDE RECOMMENDATION TO THE HOTEL OWNER ON WHICH EXTERNAL CONSULTANTS MAY BE HIRED FOR THE PROJECT. THE GUIDANCE PROVIDED BY THE TEAM RELATE TO ASPECTS SUCH AS BRAND STANDARD, ENGINEERI NG, FIRE SAFETY ETC. SOME OF THE KEY OBJECTIVES FOR THE DESIGN AND ENGINEERING TEAM ARE TO ENSURE THAT THE CONSTRUCTED HOTEL MEETS THE BRAND STANDARDS AND THE SAME ADHERES TO THE RELEVANT SAFETY NORMS A ND LOCAL REGULATIONS SO AS TO BRING OUT THE BRAND PROPOSITIO N WHICH THE OWNER WISHES TO OPERATE THE HOTEL AS. FOR THE HOTEL MANAGEMENT SERVICES, IHG INDIA IS RES PONSIBLE FOR MANAGING THE HOTELS ON BEHALF OF THIRD PARTY OWNERS . THE SERVICES TYPICALLY COMPRISE OF SUPPORT IN THE AREAS RELATED TO HOTEL OPERATIONS, COMMERCIAL SUPPORT (SALES AND MARKETING ), AND OTHER BUSINESS SUPPORT FUNCTIONS (FINANCE, HUMAN RESOURCE S, IT ETC.). IHG INDIA WORKS CLOSELY WITH HOTEL OWNERS TO DEVELOP AN D MONITOR BUSINESS PLANS, CAPITAL EXPENDITURE BUDGETS, OPERAT IONAL STRATEGIES, COMMUNICATING AND PROVIDING GUIDANCE TO THE HOTELS IN ROLLING OUT VARIOUS INITIATIVES, CONDUCT ANNUAL REVIEW AND OPER ATIONAL AUDITS OF THE HOTELS ETC. GUIDANCE ARE PROVIDED TO THE GENERA L MANAGERS ('GM') OF THE HOTELS IN ANALYZING INFORMATION AND D IAGNOSING OPERATIONAL ISSUES AND DEVELOP ACTION PLANS TO IMPR OVE THE PERFORMANCE OF THE HOTELS INCLUDING COORDINATION BE TWEEN VARIOUS CORPORATE FUNCTIONS AND THE HOTELS. THE RESPECTIVE FUNCTIONAL TEAMS IN THE AREAS OF HUMAN RESOURCE, IT AND NEW HOTEL OP ENINGS SUPPORT THE RELATED NEEDS FOR THE THIRD PARTY HOTEL MANAGEM ENT BUSINESS. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 21 29. IN THIS BACKGROUND, THE ONLY ISSUE REMAINS TO B E ADJUDICATED IS WHETHER THE MEANING OF MAKE AVAILAB LE IS APPLICABLE TO THE SERVICES MENTIONED UNDER SUB-CLAU SE (B) OF ARTICLE 12(4) OF THE TREATY OR NOT. THE LD. CIT (A) GAVE THE REASONS THE SERVICES OF OPERATION SUPPORT, ANALYTIC AL AND ACCOUNTING SUPPORT, LEGAL ADVICE, PURCHASING, PERSO NAL TRAINING SHOULD BE TREATED AS THE SERVICES WHICH HAVE BEEN C OVERED UNDER MAKE AVAILABLE. THE ARGUMENTS OF THE ASSESS EE ARE THAT THE SERVICES WERE NOT MADE AVAILABLE BUT ONLY RENDE RED TO THE CLIENTS. 30. WE HAVE GONE THROUGH THE AGREEMENT AND THE TP S TUDY REPORT OF THE IHG INDIA WITH REGARD TO THE SERVICES PROVIDED. WE FIND THAT THE OPERATIONAL SUPPORT SUCH AS PROVIDING ADVICE, INFORMATION AND COMPETITIVE EXPERTISE TO LOCAL GENE RAL CMH HOTEL MANAGEMENT ON THE OPERATION OF HOTELS IN ACCO RDANCE WITH BRAND STANDARDS, MAINTAINING THE QUALIFICATION AVAILABLE WITH REGARD TO THE INTERNATIONAL HOTEL BUSINESS AND ITS MANAGEMENT TECHNIQUES AND COORDINATING THE MANAGERI AL PLAN AND ACTIONS, ADVISING LOCAL GENERAL CMH HOTEL MANAG EMENT ON TRENDS AND CHANGES IN THE HOTEL BUSINESS IN GENERA L AND PROVIDE ADVICE ON THE PRODUCTION OF OPERATING AND C APITAL BUDGETS AT THE LEVEL OF THE CMH HOTELS, WHICH ARE C ONSISTENT WITH THE STRATEGIC PLAN CAN AT BEST BE THE MANAGERI AL CONSULTANCY SERVICE BUT NOT THE SERVICES MADE AVAIL ABLE SO THAT THE RECIPIENT CAN USE OR REPLICATE THE SUCH SERVICE S RECEIVED FROM THE ASSESSEE. ITA NO.4524/DEL/2017 INTER CONTINENTAL HOTELS GROUP (ASIA PACIFIC) PTE. LTD. 22 31. WITH REGARD TO ACCOUNTING SUPPORT THE BENCH HAS POSED A PERTINENT QUESTION AS TO WHY NOT THE ACCOUNTING SUP PORT GIVEN BE TREATED AS THE TECHNICAL KNOWLEDGE MADE AVAILAB LE. IT WAS ANSWERED THAT THE ACCOUNTING SUPPORT GIVEN WAS IN R ELATION TO THE PREPARATION OF BALANCE SHEET AND MODALITIES AND TO ADVICE PRODUCTION OF REPORTS REGARDING THE BUDGETS FROM TI ME TO TIME AND THE SERVICES ARE RENDERED REPEATATIVELY BASED O N THE REQUIREMENTS OF THE CLIENTS AND HENCE IT CANNOT BE TREATED AS A SERVICE WHICH WAS MADE AVAILABLE TO BE APPLIED IN DEPENDENTLY AND IN TIMES TO COME. WE, AFTER GOING THROUGH THE T YPE OF SERVICES RENDERED, HEREBY CONCUR WITH THE EXPLANATI ON GIVEN BY THE LD. AR. 32. SIMILARLY, THE SERVICES RENDERED IN CONNECTION WITH TRAINING & RECRUITMENT AND MANPOWER SPECIFICATION, WE FIND T HAT THERE IS NEITHER TECHNOLOGY TRANSFER, KNOWLEDGE TRANSFER NOR TRANSFER OF ANY SKILL OR KNOW-HOW. 33. HENCE, WE HOLD THAT THE PROVISIONS OF THE ARTIC LE 12(4) COULD NOT BE APPLIED TO THE SERVICES RENDERED BY TH E ASSESSEE IN THE STRICT SENSE OF THE PROVISIONS OF DTAA. HENCE, WE HOLD THAT THE DECISION OF THE LD. CIT (A) CANNOT BE SUPPORTED . 34. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/09/2021. SD/- SD/- (KUL BHARAT) ( DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 24/09/2021 *SUBODH KUMAR, SR. PS*