M/S. Skaps Industries India Pvt. Ltd., Ahmedabad V. ITO, INTL-II, Ahmedabad

ITA 479/AHD/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8088 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Assessee Lawyers: S N SOPARKAR
• Keywords: Residential status; Double taxation relief; Permanent establishment; Advance ruling; Non-deduction of tax
• Section: 90

Judgement Text

ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD D BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND MADHUMITA ROY JM] ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 SKAPS INDUSTRIES INDIA PVT LTD ...... .....APPELLANT C/O VINIT MOONDRA, CA OPP NAVJIVAN PRESS, ASHRAM ROAD AHMEDABAD 380 014 [PAN: AADCP2779D] VS INCOME TAX OFFICER INTERNATIONAL TAXATION, AHMEDABAD ..... ..RESPONDENT APPEARANCES BY S N SOPARKAR AND PARIN SHAH FOR THE APPELLANT V K SINGH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JUNE 15, 2018 DATE OF PRONOUNCEMENT : JUNE 21, 2018 O R D E R PER PRAMOD KUMAR, AM: 1. THE HEARING OF THESE APPEALS WAS CONCLUDED ON 9 TH MAY 2018. HOWEVER, DURING THE COURSE OF FINALIZING THE DRAFT ORDER, IT WAS CONSID ERED NECESSARY TO HEAR THE PARTIES AGAIN- THIS TIME WITH RESPECT TO A FACET OF SECTION 90(4) OF TH E INCOME TAX ACT, 1961. ACCORDINGLY, THE MATTER WAS REFIXED FOR HEARING ON 14 TH JUNE, 2018 AND LEARNED COUNSEL FOR THE ASSESSEE TA X- DEDUCTOR WAS HEARD ON THAT ASPECT OF THE MATTER. WI TH A VIEW TO GIVE SOME TIME TO ENABLE THE LEARNED DEPARTMENTAL REPRESENTATIVE TO MAKE A WELL CONSIDERED RESPONSE TO THOUGHT PROVOKING ARGUMENTS OF THE LEARNED COUNSEL, THE HEA RING CONTINUED ON 15 TH JUNE 2018 AS WELL. 2. THESE TWO APPEALS PERTAIN TO THE SAME ASSESSEE T AX-DEDUCTOR, INVOLVE A COMMON ISSUE SPREAD OVER TWO ASSESSMENT YEARS, AND WERE HEARD TO GETHER. AS A MATTER OF CONVENIENCE, THEREFORE, WE DISPOSING OF BOTH THE APPEALS BY WAY OF THIS CONSOLIDATED ORDER. THE ORDERS IMPUGNED ARE TWO SEPARATE BUT MATERIALLY IDENTICAL ORDERS PASSED BY THE CIT(A), BOTH DATED 22 ND JANUARY 2018, IN THE MATTER OF TAX WITHHOLDING DEM ANDS UNDER SECTION 201 R.W.S. 195 OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEARS 2013-14 AND 2014-15. 3. GRIEVANCE OF THE ASSESSEE TAX-DEDUCTOR, IN SUBST ANCE, IS THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN TREATING THE PAYMENT AGGREGATING TO RS 7 4,70,220 (AY 2013-14) AND RS. 2,97,45,710 (AY 2014-15), MADE TO TEEMS ELECTRIC IN C USA, AS LIABLE TO TAX WITHHOLDING UNDER SECTION 195 OF THE ACT, AND IN RAISING RESULT ANT TAX WITHHOLDING DEMANDS UNDER SECTION ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 2 OF 11 201 R.W.S. 195, ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE FROM THESE PAYMENTS MADE BY THE ASSESSEE TAX-DEDUCTOR. LEARNED REPRESENTATIVES FAIRLY AGREE TO THIS PROPOSITION. 4. THE ISSUE IN APPEALS LIES IN A RATHER NARROW COM PASS OF MATERIAL FACTS. THE ASSESSEE TAX-DEDUCTOR HAS MADE CERTAIN PAYMENTS TO A US BASE D ENTITY BY THE NAME OF TEEMS ELECTRIC INC. (TEI OR THE US ENTITY, IN SHORT). THESE PA YMENTS ARE MADE IN CONSIDERATION FOR THE SERVICES RENDERED BY TEIS PERSONNEL FOR INSTALLATI ON AND COMMISSIONING OF CERTAIN EQUIPMENT PURCHASED BY THE ASSESSEE. THE ASSESSING OFFICER WA S OF THE VIEW, THAT THESE PAYMENTS BEING IN THE NATURE OF PAYMENT FOR ELECTRICAL LABOUR AND MECHANICAL LABOUR BY THE ASSESSEE, TO TEEMS ELECTRIC CO INC USA, IS FOR SERVICES OF ENGIN EERS IN INDIA AND IS COVERED BY THE DEFINITION OF FEES FOR TECHNICAL SERVICES UNDER SEC TION 9(1)(VII) OF THE INCOME TAX ACT, AND THE ASSESSEE WAS LIABLE FOR WITHHOLDING OF TAX. WITH RESPECT TO THE TREATY PROTECTION SOUGHT BY THE ASSESSEE UNDER THE DOUBLE TAXATION AVOIDANCE AG REEMENT BETWEEN INDIA AND USA [ INDO US TAX TREATY , IN SHORT; (1991) 187 ITR (STAT) 102 ], THE STAND OF THE ASSESSEE WAS THAT THERE WERE FOUR INDEPENDENT REASONS FOR WHICH THE FEES SO PAID BY THE INDIAN COMPANY WAS NOT TAXABLE IN INDIA- (A) THE INSTALLATION AND COMMISS IONING ACTIVITIES WERE INEXTRICABLY LINKED TO THE PURCHASE OF THE EQUIPMENT; (B) THERE WAS NO T RANSFER OF TECHNOLOGY OR TECHNOLOGY BEING MADE AVAILABLE; AND (C) THE ENTIRE INSTALLA TION CHARGES WERE CAPITALIZED. AS REGARDS THE INSTALLATION AND COMMISSIONING SERVICES BEING I NEXTRICABLY LINKED TO THE PURCHASE OF EQUIPMENT, THE ASSESSING OFFICER WAS OF THE VIEW TH AT THE TRANSACTION OF PURCHASING THE EQUIPMENT AND AVAILING THE INSTALLATION AND COMMISS IONING SERVICES WERE NOT INTERDEPENDENT TRANSACTIONS IN THE SENSE THAT THESE WERE FROM DIFF ERENT VENDORS, THAT THESE WERE SEPARATE COMMERCIAL TRANSACTIONS AND THAT THE SERVICES REND ERED BY TEI WENT WELL BEYOND THE SCOPE OF INSTALLATION AND COMMISSIONING ACTIVITY. IT WAS THUS CONCLUDED THAT THE SERVICES PROVIDED BY TEEMS ELECTRIC CO INC WERE NOT AT ALL LINKED TO THE SALE OF THE PROPERTY. AS REGARDS THE PLEA OF THE ASSESSEE THAT THESE SERVICES DONOT, IN ANY EVENT, SATISFY THE MAKE AVAILABLE TEST IN ARTICLE 12(4)(B) OF THE INDIA US DOUBLE TAXATION AV OIDANCE AGREEMENT, THE ASSESSING OFFICER REJECTED THIS PLEA ON THE GROUND THAT TEI IS THE ONLY SOURCE OF OBTAINING SUCH HIGH DEGREE OF TECHNICAL EXPERTISE THAT IRRESPECTIVE OF (WHO SUPPLIES THE PLANT) MATERIALS SUPPLY, ONLY IT HAS THE DESIRED LEVEL OF EXPERTISE IS INSTA LLING AND COMMISSIONING OF A PARTICULAR MACHINE OWNED BY THE ASSESSEE AND THEREFORE, THE SERVICES PROVIDED BY TEEMS ELECTRIC CO INC USA CLEARLY FALL WITHIN THE CLAUSE 4(A) AS WELL AS CLAUSE 4(B) OF ARTICLE 12 OF THE (APPLICABLE) TAX TREATY. IT WAS IN THIS BACKDROP THAT THE ASS ESSEE WAS TREATED AS AN ASSESSEE IN DEFAULT FOR NOT DEDUCTING TAX AT SOURCE FROM THE SE PAYMENTS, AND, ACCORDINGLY, A DEMAND UNDER SECTION 201 R.W.S, 195 WAS RAISED ON THE ASSE SSEE. COMING TO THE PLEA WITH RESPECT TO CAPITALIZATION, THE ASSESSING OFFICER WAS OF THE VI EW THAT THIS PLEA IS IRRELEVANT FROM THE POINT OF VIEW OF TAX DEDUCTIBILITY AS THE CHARACT ER OF RECEIPT HAS TO BE SEEN IN THE HANDS OF THE RECEIVER AND NOT THE PAYER AND THAT IT MAY BE THAT THE SERVICES ARE BEING UTILIZED IN SETTING UP OF A PLANT BUT FOR THE US ENTITY, IT IS AN INCOME ON THE REVENUE ACCOUNT. THE JUDICIAL PRECEDENTS CITED BY THE ASSESSEE WERE DIST INGUISHED ON FACTS. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER HELD THAT THE ASSESSEE W AS TAXABLE IN INDIA IN RESPECT OF THE FEES FOR TECHNICAL SERVICES UNDER SECTION 9(1)(VII) READ WIT H SECTION 115A, AND THE APPLICABLE TAX RATE UNDER SECTION 115A AT 10% BEING LESSER THAN THE TAX RATE AT 15% ENVISAGED BY THE INDO US TAX TREATY. THE PAYMENT HAVING ALREADY BEEN MADE BY THE ASSESSEE WITHOUT DEDUCTING TAX AT SOURCE, THE ASSESSING OFFICER ALSO DIRECTED THE ASS ESSEE TO APPLY SECTION 195A FOR GROSSING UP OF THE TAX LIABILITY. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. QUITE TO THE CONTRARY, THERE W ERE SOME NEW ISSUES WHICH WERE TAKEN UP, FOR THE FIRST TIME, BY THE CIT(A) WITH RESPECT TO ( A) TAX RESIDENCY CERTIFICATE REQUIREMENT ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 3 OF 11 UNDER SECTION 90(4); (B) JOINING THE ISSUE WITH RES PECT TO DECLARATION OF NON-EXISTENCE OF THE PERMANENT ESTABLISHMENT TEI; AND (C) ASCERTAINING T HE NUMBER OF DAYS OF STAY OF EMPLOYEES AND ASSOCIATES OF TEI. LEARNED CIT(A), AFTER HER EL ABORATE ANALYSIS, CONCLUDED (A) THAT, IN THE ABSENCE OF A TAX RESIDENCY CERTIFICATE HAVING BEEN FURNISHED BY THE TEI AND IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 90(4), THE TEI CANNO T BE GRANTED PROTECTION OF INDO US TAX TREATY; (B) THAT IN THE ABSENCE OF INFORMATION ABOU T THE DAYS OF STAY OF THE TEI EMPLOYEES, AND GIVEN THE ADMITTED FACTS ON RECORDS, IT IS REASONAB LE TO CONCLUDE THAT THE WORK CONTINUED IN INDIA FOR 16 WEEKS PLUS 30 DAYS, AND, THEREFORE, TH E TEI HAD AN INSTALLATION PE UNDER ARTICLE 5(2)(K) OF INDO US TAX TREATY; (C) THAT THE INSTALL ATION AND COMMISSIONING SERVICES CANNOT BE SAID TO BE PURCHASE OF EQUIPMENT, AND THUS COVERED BY EXCLUSION CLAUSE IN ARTICLE 12(5)(A) OF TREATY, AS THE VENDORS FOR SERVICE AND EQUIPMENT AR E DIFFERENT; (D) THAT THE SERVICES RENDERED BY THE TEI APPARENTLY INCLUDED TRAINING OF EMPLOYEE S OF THE TAX-DEDUCTOR COMPANY AS ALSO DEVELOPMENT OF DOCUMENTATION AND THAT THE WORK INVO LVED BEING HIGHLY TECHNICAL, THE SERVICES RENDERED BY THE TEI AMOUNT TO MAKING AVAIL ABLE KNOWLEDGE, SKILL, TECHNICAL KNOW HOW AND PROCESS, AND, SUCH, COVERED BY THE DEFINITI ON OF FEES FOR INCLUDED SERVICES UNDER ARTICLE 12(4); AND (E) THAT SINCE THE TEI HAS A PE IN INDIA, THE FEES EARNED BY TEI IN INDIA WILL BE TAXABLE IN INDIA ON NET BASIS AND UNDER SECTION 44DA OF THE ACT. THE ASSESSEE TAX-DEDUCTOR WAS THUS HELD TO BE LIABLE TO DEDUCT TAX AT SOURCE. THE ACTION OF THE ASSESSING OFFICER WAS THUS NOT ONLY CONFIRMED BUT FURTHER FORTIFIED BY TH E LEARNED CIT(A). THE ASSESSEE IS AGGRIEVED AND IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. THE FIRST QUESTION THAT WE MUST ADDRESS, AT THE THRESHOLD ITSELF, IS WHETHER THE TEI, I.E. THE US ENTITY TO WHICH THE PAYMENTS WERE MADE BY TH E ASSESSEE COMPANY, WAS ENTITLED TO THE BENEFITS OF INDO US TAX TREATY. THERE ARE TWO ASPEC TS TO THIS FUNDAMENTAL QUESTION- FIRST, WHETHER THE TREATY PROTECTION COULD BE DECLINED TO TEI SIMPLY ON THE SHORT GROUND THAT THE TEI WAS NOT ABLE TO, OR DID NOT, FURNISH THE TAX RE SIDENCY CERTIFICATE UNDER SECTION 90(4) OF THE ACT; SECOND, WHETHER TEI DID NOT, ON MERITS, SATISF Y THE REQUIREMENTS OF THE INDO US TAX TREATY. AS FOR THE FIRST ASPECT, THE STAND OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT NON FURNISHING OF THE TAX RESIDENCY CERTIFICATE UND ER SECTION 90(4) ITSELF, ON A STANDALONE BASIS, CAN BE REASON ENOUGH FOR DECLINING THE TREAT Y PROTECTION. IN SUPPORT OF THIS PROPOSITION, RELIANCE IS PLACED ON THE WORDINGS OF SECTION 90(4) WHICH PROVIDE THAT AN ASSESSEE, NOT BEING A RESIDENT, TO WHOM AN AGREEMENT REFERRED TO IN SUB SECTION (1) APPLIES, SHALL NOT BE ENTITLED TO CLAIM ANY RELIEF UNDER SUCH AGREEMEN T UNLESS A CERTIFICATE OF HIS BEING A RESIDENT IN ANY COUNTRY OUTSIDE INDIA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE MAYBE, IS OBTAINED BY HIM FROM THE GOVERNMENT OF TH AT COUNTRY OR SPECIFIED TERRITORY . IT IS THUS CONTENDED THAT FURNISHING OF THE TAX RES IDENCY CERTIFICATE IS A CONDITION PRECEDENT FOR INVOKING THE TREATY PROTECTION UNDER SECTION 90(2) OF THE ACT. AS WE DEAL WITH THIS ASPECT OF THE MATTER AND PROCEED TO ADJUDICATE UPON THE ARGUM ENTS OF THE PARTIES ON THE SAME, LET US TAKE A QUICK LOOK AT THE STATUTORY PROVISIONS OF SE CTION 90 WHICH DEAL WITH THE DOUBLE TAXATION AVOIDANCE AGREEMENTS ENTERED INTO BY INDIA. THE STA TUTORY PROVISION, AS IT STANDS NOW, IS AS FOLLOWS: SECTION 90- AGREEMENT WITH FOREIGN COUNTRIES OR SPE CIFIED TERRITORIES. (1) THE CENTRAL GOVERNMENT MAY ENTER INTO AN AGREEM ENT WITH THE GOVERNMENT OF ANY COUNTRY OUTSIDE INDIA OR SPECIFIED TERRITORY OUTSID E INDIA, ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 4 OF 11 (A) FOR THE GRANTING OF RELIEF IN RESPECT OF (I) INCOME ON WHICH HAVE BEEN PAID BOTH INCOME-TAX UNDER THIS ACT AND INCOME-TAX IN THAT COUNTRY OR SPECIFIED TERRITORY, AS THE CASE MAY BE, OR (II) INCOME-TAX CHARGEABLE UNDER THIS ACT AND UNDER THE CORRESPONDING LAW IN FORCE IN THAT COUNTRY OR SPECIFIED TERRITORY , AS THE CASE MAY BE, TO PROMOTE MUTUAL ECONOMIC RELATIONS, TRADE AND INVEST MENT, OR (B) FOR THE AVOIDANCE OF DOUBLE TAXATION OF INCOME UNDER THIS ACT AND UNDER THE CORRESPONDING LAW IN FORCE IN THAT COUNTRY OR SPECI FIED TERRITORY, AS THE CASE MAY BE, OR (C) FOR EXCHANGE OF INFORMATION FOR THE PREVENTION OF EVASION OR AVOIDANCE OF INCOME-TAX CHARGEABLE UNDER THIS ACT OR UNDER THE C ORRESPONDING LAW IN FORCE IN THAT COUNTRY OR SPECIFIED TERRITORY, AS THE CASE MA Y BE, OR INVESTIGATION OF CASES OF SUCH EVASION OR AVOIDANCE, OR (D) FOR RECOVERY OF INCOME-TAX UNDER THIS ACT AND U NDER THE CORRESPONDING LAW IN FORCE IN THAT COUNTRY OR SPECIFIED TERRITORY, AS THE CASE MAY BE, AND MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, M AKE SUCH PROVISIONS AS MAY BE NECESSARY FOR IMPLEMENTING THE AGREEMENT. (2) WHERE THE CENTRAL GOVERNMENT HAS ENTERED INTO A N AGREEMENT WITH THE GOVERNMENT OF ANY COUNTRY OUTSIDE INDIA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE MAY BE, UNDER SUB-SECTION (1) FOR GRANTING RELIEF OF TAX, O R AS THE CASE MAY BE, AVOIDANCE OF DOUBLE TAXATION, THEN, IN RELATION TO THE ASSESSEE TO WHOM SUCH AGREEMENT APPLIES, THE PROVISIONS OF THIS ACT SHALL APPLY TO THE EXTENT TH EY ARE MORE BENEFICIAL TO THAT ASSESSEE. (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECT ION (2), THE PROVISIONS OF CHAPTER X-A OF THE ACT SHALL APPLY TO THE ASSESSEE EVEN IF SUCH PROVISIONS ARE NOT BENEFICIAL TO HIM. (3) ANY TERM USED BUT NOT DEFINED IN THIS ACT OR IN THE AGREEMENT REFERRED TO IN SUB- SECTION (1) SHALL, UNLESS THE CONTEXT OTHERWISE REQ UIRES, AND IS NOT INCONSISTENT WITH THE PROVISIONS OF THIS ACT OR THE AGREEMENT, HAVE THE S AME MEANING AS ASSIGNED TO IT IN THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT IN TH E OFFICIAL GAZETTE IN THIS BEHALF. (4) AN ASSESSEE, NOT BEING A RESIDENT, TO WHOM AN A GREEMENT REFERRED TO IN SUB-SECTION (1) APPLIES, SHALL NOT BE ENTITLED TO CLAIM ANY REL IEF UNDER SUCH AGREEMENT UNLESS A CERTIFICATE OF HIS BEING A RESIDENT IN ANY COUNTRY OUTSIDE INDIA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE MAY BE, IS OBTAINED BY H IM FROM THE GOVERNMENT OF THAT COUNTRY OR SPECIFIED TERRITORY. (5) THE ASSESSEE REFERRED TO IN SUB-SECTION (4) SHA LL ALSO PROVIDE SUCH OTHER DOCUMENTS AND INFORMATION, AS MAY BE PRESCRIBED. EXPLANATION 1.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY DECLARED THAT THE CHARGE OF TAX IN RESPECT OF A FOREIGN COMPANY AT A RATE HIGHER THAN THE RATE AT WHICH A DOMESTIC COMPANY IS ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 5 OF 11 CHARGEABLE, SHALL NOT BE REGARDED AS LESS FAVOURABL E CHARGE OR LEVY OF TAX IN RESPECT OF SUCH FOREIGN COMPANY. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, 'S PECIFIED TERRITORY' MEANS ANY AREA OUTSIDE INDIA WHICH MAY BE NOTIFIED AS SUCH BY THE CENTRAL GOVERNMENT. EXPLANATION 3. FOR THE REMOVAL OF DOUBTS, IT IS HE REBY DECLARED THAT WHERE ANY TERM IS USED IN ANY AGREEMENT ENTERED INTO UNDER SUB-SECTION (1) AND NOT DEFINED UNDER THE SAID AGREEMENT OR THE ACT, BUT IS ASSIGNED A MEANING TO IT IN THE NOTIFICATION ISSUED UNDER SUB-SECTION (3) AND THE NOTIFICATION ISSUED THEREUNDER BEING IN FORCE, THEN, THE MEANING ASSIGNED TO SUCH TERM SHALL BE DEEMED TO HAVE EFFECT FROM THE DATE ON WHI CH THE SAID AGREEMENT CAME INTO FORCE. EXPLANATION 4.FOR THE REMOVAL OF DOUBTS, IT IS H EREBY DECLARED THAT WHERE ANY TERM USED IN AN AGREEMENT ENTERED INTO UNDER SUB-SECTION (1) IS DEFINED UNDER THE SAID AGREEMENT, THE SAID TERM SHALL HAVE THE SAME MEANING AS ASSIGNED T O IT IN THE AGREEMENT; AND WHERE THE TERM IS NOT DEFINED IN THE SAID AGREEMENT, BUT DEFINED I N THE ACT, IT SHALL HAVE THE SAME MEANING AS ASSIGNED TO IT IN THE ACT AND IF ANY, EXPLANATION G IVEN TO IT BY THE CENTRAL GOVERNMENT.. 7. A PLAIN LOOK AT THE ABOVE PROVISIONS WOULD SHOW THAT SECTION 90(2) IS SOMEWHAT UNIQUE IN PROVIDING AN UNQUALIFIED, WHAT IS, IN IND IA, OFTEN TERMED AS, TREATY OVERRIDE IN THE SENSE THAT NO MATTER WHAT BE THE PROVISIONS OF THE INCOME TAX ACT, 1961, IN RESPECT OF A PERSON TO WHOM AN AGREEMENT ENTERED INTO UNDER SECT ION 90(1) APPLIES, THE PROVISIONS OF THIS ACT SHALL APPLY (ONLY) TO THE EXTENT THEY ARE MORE BENEFICIAL TO THAT ASS ESSEE . GOING BY THE PLAIN WORDS OF THE STATUTE, THE PROVISIONS O F THE ACT, IN A SITUATION COVERED BY THE TAX TREATY, CANNOT PUT THE ASSESSEE TO ANY GREATER BURD EN THAN THE BURDEN PLACED BY THE PROVISIONS OF APPLICABLE TAX TREATY. THE ONLY LIMITATION PLACE D ON THIS UNQUALIFIED, RATHER ALMOST UNQUALIFIED- POST INSERTION OF SUB SECTION 2(A), IS THAT (N)OTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION (2), THE PROVISIONS OF CHA PTER X-A (DEALING WITH THE GENERAL ANTI AVOIDANCE RULES) OF THE ACT SHALL APPLY TO THE ASSESSEE EVEN IF SUC H PROVISIONS ARE NOT BENEFICIAL TO HIM . SECTION 90(2A) IS THE ONLY STATUTORY PROVISION I N THE INCOME TAX ACT, 1961, WHICH STARTS WITH A NON-OBSTANTE CLAUSE VIS- -VIS THE PROVISIONS OF SECTION 90(2), AND, IN THAT SENSE, IT IS THE ONLY RIDER TO THE TREATY O VERRIDE PROVISION SET OUT IN SECTION 90(2). THAT IS THE ONLY RIDER TO THE SUPERIORITY OF TAX TREATY PROVISIONS VIS--VIS THE PROVISIONS OF THE INDIAN INCOME TAX ACT, 1961, IS THE EXCEPTION CARVE D OUT FOR THE APPLICATION OF GENERAL ANTI AVOIDANCE RULES SET OUT IN CHAPTER X-V. 8. IN THE LIGHT OF OUR THIS ANALYSIS, WHEN WE TURN TO SECTION 90(4), AS INDEED OTHER SUB SECTIONS OF SECTION 90, WE FIND THAT THESE PROVISIO NS DO NOT START WITH A OBSTANTE CLAUSE VIS-- VIS SECTION 90(2) AND, THEREFORE, THESE SUB SECTION S CANNOT BE CONSTRUED AS LIMITATION TO, OR RIDER TO, SOMEWHAT UNQUALIFIED TREATY OVERRIDE STIP ULATED IN SECTION 90(2). WHATEVER INTERPRETATION ONE ASSIGNS TO THIS SUB SECTION, ESS ENTIALLY THE FUNDAMENTAL APPROACH HAS TO BE THAT THIS SUB SECTION WILL BE APPLICABLE ONLY WHEN THE SAME ARE MORE BENEFICIAL TO THE ASSESSEE VIS--VIS THE PROVISIONS OF THE APPLICABLE TAX TREA TY; THAT PRINCIPLE OF TREATY OVERRIDE, AS SET OUT IN SECTION 90(2), REMAINS UNAFFECTED BY THESE PROVI SIONS. AS WE HOLD SO, WE MAKE IT CLEAR THAT WHETHER THE SAME POSITION WILL ALSO APPLY WITH RESPECT TO EXPLANATIONS TO SECTION 90 OR NOT IS STILL AN OPEN QUESTION, UNINFLUENCED BY THES E DISCUSSIONS, AS EXPLANATIONS TO SECTION 90 MAY PERHAPS NOT HAVE THE SAME LEGAL CONNOTATIONS AS THE SUB SECTIONS TO SECTION 90. WE LEAVE IT THAT FOR THE TIME BEING. ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 6 OF 11 9. WHATEVER MAY HAVE BEEN THE INTENTION OF THE LAWM AKERS AND WHATEVER THE WORDS EMPLOYED IN SECTION 90(4) MAY PRIMA FACIE SUGGEST, THE GROUND REALITY IS THAT AS THE THINGS STAND NOW, THIS PROVISION CANNOT BE CONSTRUED AS A LIMITATION TO THE SUPERIORITY OF TREATY OVER THE DOMESTIC LAW. IT CAN ONLY BE PRESSED INTO SERVI CE AS A PROVISION BENEFICIAL TO THE ASSESSEE. THE MANNER IN WHICH IT CAN BE CONSTRUED AS A BENEFI CIAL PROVISION TO THE ASSESSEE IS THAT ONCE THIS PROVISION IS COMPLIED WITH IN THE SENSE THAT T HE ASSESSEE FURNISHES THE TAX RESIDENCY CERTIFICATE IN THE PRESCRIBED FORMAT, THE ASSESSING OFFICER IS DENUDED OF THE POWERS TO REQUISITION FURTHER DETAILS IN SUPPORT OF THE CLAIM OF THE ASSESSEE FOR THE RELATED TREATY BENEFITS. APPROVING THIS APPROACH, HONBLE PUNJAB & HARYANA H IGH COURT, IN THE CASE OF SERCO BPO PVT LTD VS AUTHORITY FOR ADVANCE RULING [(2015) 379 ITR 256 (P&H)], HAS OBSERVED AS FOLLOWS: 32. (LEARNED COUNSELS) RELIANCE IN THIS REGARD UPO N THE PROPOSED AMENDMENT TO SECTION 90 OF THE ACT IS WELL FOUNDED. IT SETS AT REST THE DOUBT, IF ANY, IN THIS REGARD. (A) SECTION 90(4) OF THE ACT AS IS STOOD AT THE R ELEVANT TIME I.E. IN RESPECT OF THE ASSESSMENT YEAR 2010-11 READS AS UNDER: '90 (4) AN ASSESSEE, NOT BEING A RESIDENT, TO WHOM AN AGREEMENT REFERRED TO IN SUB-SECTION (1) APPLIES, SHALL NOT BE ENTITLED TO CLAIM ANY REL IEF UNDER SUCH AGREEMENT UNLESS [A CERTIFICATE OF HIS BEING A RESIDENT] IN ANY COUNTRY OUTSIDE IND IA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE MAY BE, IS OBTAINED BY HIM FROM THE GOVERNMENT OF THAT COUNTRY OR SPECIFIED TERRITORY.' (B) THE FINANCE BILL, 2013 AS INTRODUCED IN THE L OK SABHA ON 28.02.2013 WAS TO GIVE EFFECT TO THE FINANCIAL PROPOSALS OF THE CENTR AL GOVERNMENT FOR THE FINANCIAL YEAR 2013- 14. CLAUSE 21 OF THE BILL PROPOSED THE FOLLOWING AM ENDMENT: '21. IN SECTION 90 OF THE INCOME TAX ACT, (A) TO (B)** ** ** (C) AFTER SUB-SECTION (4) AND BEFORE EXPLANATION 1, THE FOLLOWING SUB-SECTION SHALL BE INSERTED, NAMELY: (5) THE CERTIFICATE OF BEING A RESIDENT IN A COUNTR Y OUTSIDE INDIA OR SPECIFIED TERRITORY OUTSIDE INDIA, AS THE CASE MAY BE, REFERRED TO IN S UB-SECTION (4), SHALL BE NECESSARY BUT NOT A SUFFICIENT CONDITION FOR CLAIMING ANY REL IEF UNDER THE AGREEMENT REFERRED TO THEREIN.' THE PROPOSED SUB SECTION (5) WAS NOT IMPLEMENTED. PARLIAMENT WAS OBVIOUSLY, THEREFORE, CONSCIOUS OF THE CIRCULAR NO. 789 OF 200 0 AND THE EFFECT THEREOF, NAMELY, THAT THE CERTIFICATE OF RESIDENCE ISSUED BY THE MAURITIAN AU THORITIES WOULD CONSTITUTE SUFFICIENT EVIDENCE FOR ACCEPTING THE STATUS OF RESIDENCE AS W ELL AS THE BENEFICIAL OWNERSHIP FOR APPLYING THE DTAC ACCORDINGLY. THOUGH AN AMENDMENT IN THE FI NANCE BILL WAS PROPOSED WHICH WOULD AFFECT THE CIRCULAR, THE SAME WAS NEVER IMPLEMENTED . (C) THE REASON FOR PARLIAMENT NOT IMPLEMENTING TH E AMENDMENT IS ALSO EVIDENT FROM THE CLARIFICATION DATED 01.03.2013 ISSUED BY T HE FINANCE MINISTRY SPECIFICALLY REGARDING TAX RESIDENCY CERTIFICATES. IT IS NECESSARY TO SET OUT THE ENTIRE CIRCULAR AS IT IS OF VITAL IMPORTANCE. IT ESTABLISHES BEYOND DOUBT NOW THAT TH E CIRCULAR NO. 789 WAS IN FULL FORCE AND OUGHT TO HAVE BEEN GIVEN EFFECT TO. THE CIRCULAR RE ADS AS UNDER: 'FINANCE MINISTRY CLARIFICATION REGARDING TAX RES IDENCY CERTIFICATE (TRC) MARCH 2, 2013 ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 7 OF 11 CONCERN HAS BEEN EXPRESSED REGARDING THE CLAUSE I N THE FINANCE BILL THAT AMENDS SECTION 90 OF THE INCOME-TAX ACT THAT DEALS WITH DO UBLE TAXATION AVOIDANCE AGREEMENTS. SUB-SECTION (4) OF SECTION 90 WAS INTRODUCED LAST Y EAR BY FINANCE ACT, 2012. THAT SUB-SECTION REQUIRES AN ASSESSEE TO PRODUCE A TAX RESIDENCY CER TIFICATE (TRC) IN ORDER TO CLAIM THE BENEFIT UNDER DTAA. DTAAS RECOGNIZE DIFFERENT KINDS OF INCOME. THE DT AAS STIPULATE THAT A RESIDENT OF A CONTRACTING STATE WILL BE ENTITLED TO THE BENEFITS OF THE DTAA. IN THE EXPLANATORY MEMORANDUM TO THE FINANCE ACT, 2012, IT WAS STATED THAT THE TAX RESIDENCY CERTIFICATE CONTAINING PRESCRIBED PARTICU LARS IS A NECESSARY BUT NOT SUFFICIENT CONDITION FOR AVAILING BENEFITS OF THE DTAA. THE SA ME WORDS ARE PROPOSED TO BE INTRODUCED IN THE INCOME-TAX ACT AS SUB-SECTION (5) OF SECTION 90 . HENCE, IT WILL BE CLEAR THAT NOTHING NEW HAS BEEN DONE THIS YEAR WHICH WAS NOT THERE ALREADY LAST YEAR. HOWEVER, IT HAS BEEN POINTED OUT THAT THE LANGUAGE OF THE PROPOSED SUB-SECTION (5) OF SECTION 90 COULD MEAN THAT THE TAX RESIDENCY CER TIFICATE PRODUCED BY A RESIDENT OF A CONTRACTING STATE COULD BE QUESTIONED BY THE INCOME TAX AUTHORITIES IN INDIA . THE GOVERNMENT WISHES TO MAKE IT CLEAR THAT THAT IS NOT THE INTENTION OF THE PROPOSED SUB-SECTION (5) OF SECTION 90. THE TAX RESIDENCY CERTIFICATE PRODUCED BY A RESIDEN T OF A CONTRACTING STATE WILL BE ACCEPTED AS EVIDENCE THAT HE IS A RES IDENT OF THAT CONTRACTING STATE AND THE INCOME TAX AUTHORITIES IN INDIA WILL NOT GO BEHIND THE TRC AND QUESTION HIS RESIDENT STATUS. IN THE CASE OF MAURITIUS, CIRCULAR NO. 789 DATED 13.4.2000 CONTINUES TO BE IN FORCE, PENDING ONGOING DISCUSSIONS BETWEEN INDIA AND MAURI TIUS. HOWEVER, SINCE A CONCERN HAS BEEN EXPRESSED ABOUT THE LANGUAGE OF SUB-SECTION (5) OF SECTION 90, THIS CONCERN WILL BE ADDRESSED SUITA BLY WHEN THE FINANCE BILL IS TAKEN UP FOR CONSIDERATION.' (EMPHASIS SUPPLIED) 33. SUB-SECTION (4) MERELY REQUIRES A CERTIFICATE O F BEING RESIDENT. THE NEWLY ADDED SUB SECTION (5) REQUIRES THE PERSON TO ALSO PROVIDE SUC H OTHER DOCUMENTS AND INFORMATION AS MAY BE PRESCRIBED. NOTHING HAS BEEN PRESCRIBED TO DATE. 34. THE ENTIRE SEQUENCE OF EVENTS NAMELY THE FINANC E BILL, 2013, THE CLARIFICATION ISSUED BY THE FINANCE MINISTRY REGARDING THE TAX RESIDENCY CE RTIFICATE DATED 01.03.2013 AND THE FINANCE ACT, 2013 ESTABLISH BEYOND DOUBT THAT THE RESIDENCE CERTIFICA TE ISSUED BY THE MAURITIUS AUTHORITIES MUST BE ACCEPTED PROVIDED OF COURSE IT IS ESTABLISHED THAT IT HAS BEEN ISSUED BY THE APPROPRIATE MAURITIUS AUTHORITIES . AS WE MENTIONED EARLIER IT IS NOT DISPUTED THAT THE RESIDENCE CERTIFICATE RELIED UPON BY BLACK STONE MAURITIUS AND BARCLAYS WERE ISSUED BY THE MAURITIUS AUTHORITIES. [EMPHASIS, BY UNDERLINING, SUPPLIED BY US] 10. THE JUDICIAL APPROVAL WAS, THEREFORE, TO THE US E OF SECTION 90(4) IN FAVOUR OF THE ASSESSEE IN THE MANNER SET OUT ABOVE. IN VIEW OF TH E PROVISIONS OF SECTION 90(2), THERE CANNOT BE ANY CONTROVERSY ON THIS ASPECT. THAT IS QUALITAT IVELY MUCH DIFFERENT FROM THE STAND OF THE CIT(A) CALLED INTO QUESTION BEFORE US. OUR RESEARCH DID NOT INDICATE ANY JUDICIAL PRECEDENT WHICH HAS APPROVED THE INTERPRETATION IN THE MANNER SOUGHT TO BE CANVASSED BEFORE US I.E. SECTION 90(4) BEING TREATED AS A LIMITATION TO THE TREATY SUPERIORITY CONTEMPLATED UNDER SECTION 90(2), AND THAT ISSUE IS AN OPEN ISSUE AS O N NOW. IN THE LIGHT OF THIS POSITION, AND IN ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 8 OF 11 THE LIGHT OF OUR FOREGOING ANALYSIS WHICH LEADS US TO THE CONCLUSION THAT SECTION 90(4), IN THE ABSENCE OF A NON-OBSTANTE CLAUSE, CANNOT BE READ AS A LIMITATION TO THE TREATY SUPERIORITY UNDER SECTION 90(2), WE ARE OF THE CONSIDERED VIEW THAT A N ELIGIBLE ASSESSEE CANNOT BE DECLINED THE TREATY PROTECTION UNDER SECTION 90(2) ON THE GROUND THAT THE SAID ASSESSEE HAS NOT BEEN ABLE TO FURNISH A TAX RESIDENCY CERTIFICATE IN THE PRESCRIB ED FORM. TO THIS EXTENT, THE APPROACH OF LEARNED CIT(A) IS CLEARLY ERRONEOUS. 11. THAT, HOWEVER, IS NOT THE END OF THE MATTER 12. AS LEARNED DEPARTMENTAL REPRESENTATIVE RIGHTLY SUGGESTS, EVEN IF IN A RATHER SIMPLISTIC WAY, IRRESPECTIVE OF WHETHER SECTION 90(4) APPLIES OR NOT, THERE HAS TO BE REASONABLE EVIDENCE ABOUT ENTITLEMENT OF THE US ENTITY TO THE BENEFITS OF THE INDO US TAX TREATY. HE SUBMITS THAT JUST A US ADDRESS CANNOT PER SE BE SUFFICIENT TO CLAIM THE PROTECTION OF INDO US TAX TREATY, AND THAT ONCE THE ISSUE ABOUT TREATY EN TITLEMENT HAS BEEN RAISED BY THE LEARNED CIT(A), IT HAS TO BE TAKEN TO A LOGICAL CONCLUSION. WE SEE MERITS IN THIS PLEA. IN OTHER WORDS, EVEN IF WE ARE TO HOLD THAT SECTION 90(4) IS INAPPL ICABLE, WE HAVE TO, ON THE PECULIAR FACTS OF THIS CASE, GIVE A FINDING WHETHER THE US ENTITY WAS ENTITLED TO THE TREATY PROTECTION, AND THAT WOULD ONLY BE POSSIBLE WHEN THERE IS SOME MATERIAL TO COME TO THE CONCLUSION THAT THE US ENTITY WAS REQUIRED TO BE TREATED AS A RESIDENT OF UNITED STATES UNDER THE PROVISIONS OF THE INDO US TAX TREATY. HAVING HELD THAT AN ELIGIBLE AS SESSEE CANNOT BE DECLINED TREATY PROTECTION UNDER SECTION 90(2) SIMPLICITOR ON THE GROUND THAT HE HAS NOT COMPLIED WITH THE PR OVISIONS OF SECTION 90(4), IT IS ALSO IMPORTANT TO BEAR IN MIN D THE FACT THAT DE HORS THE STATUTORY PROVISION UNDER SECTION 90(4), THE ASSESSEE HAS TO SATISFY HI S ELIGIBILITY FOR TREATY PROTECTION NEVERTHELESS AND THE ONUS OF SATISFYING THE SAME B Y ANY OTHER MODE, I.E. OTHER THAN A TRC, APPEARS TO BE MUCH MORE DEMANDING THAN FURNISHING O F A TRC. TO BE ENTITLED FOR INDO US TAX TREATY BENEFITS IN INDIA, A FOREIGN ENTERPRISE HAS TO ESTABLISH THAT IT IS A RESIDENT OF THE OTHER CONTRACTING STATE, I.E. THE UNITED STATES. WHILE ON THIS ISSUE, IT WILL BE USEFUL TO TAKE A LOOK AT ARTICLE 4(1) OF THE INDO US TAX TREATY, WHICH PROVI DES AS FOLLOWS: ARTICLE 4-RESIDENCE 1. FOR THE PURPOSES OF THIS CONVENTION, THE TERM 'R ESIDENT OF A CONTRACTING STATE' MEANS ANY PERSON WHO, UNDER THE LAWS OF THAT STATE, IS LIABLE TO TAX THEREIN BY REASON OF HIS DOMICILE, RESIDENCE, CITIZENSHIP, PLACE OF MANAGEMENT, PLACE OF INCORPORATION, OR ANY OTHER CRITERION OF A SIMILAR NATURE, PROVIDED, HOWEVER, THAT (A) THIS TERM DOES NOT INCLUDE ANY PERSON WHO IS LI ABLE TO TAX IN THAT STATE IN RESPECT ONLY OF INCOME FROM SOURCES IN THAT STATE; AND (B) IN THE CASE OF INCOME DERIVED OR PAID BY A PART NERSHIP, ESTATE, OR TRUST, THIS TERM APPLIES ONLY TO THE EXTENT THAT THE INCOME DERIVED BY SUCH PARTNERSHIP, ESTATE, OR TRUST IS SUBJECT TO TAX IN THAT STATE AS THE INCOME OF A RESIDENT, EITHER IN ITS HANDS OR IN THE HANDS OF ITS PARTNERS OR BENEFICIARIES. 13. ARTICLE 4(1) THUS PROVIDES THAT, AS A PRELIMINA RY REQUIREMENT AND IN ORDER TO BE TREATED AS RESIDENT OF A CONTRACTING STATE, A TAXPAYER HA S TO DEMONSTRATE THAT HE IS LIABLE TO TAX IN THAT JURISDICTION BY THE REASON OF DOMICILE, RESIDENCE, CITIZENSHIP, PLACE OF MANAGEMENT, PLACE OF INCORPORATION OR ANY OTHER CRITERION OF SIMILAR NAT URE. THE RESIDUARY CLAUSE I.E. ANY OTHER CRITERION OF SIMILAR NATURE, AS HAS BEEN JUDICIALL Y NOTED IN THE CASE OF DCIT VS GENERAL ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 9 OF 11 ELECTRIC CO PLC & ORS [(2001) 71 TTJ 973 (CAL)] , SHOULD BE UNDERSTOOD TO MEAN ANY LOCALITY-RELATED ATTACHMENT THAT ATTRACTS RESIDENCE -TYPE TAXATION. UNLESS IT IS ESTABLISHED THAT THE ASSESSEE IS ABLE TO SATISFY THE ABOVE PRELIMINA RY REQUIREMENT FOR BEING TREATED AS RESIDENT OF A CONTRACTING STATE (I.E. USA IN THIS CASE), THE ASSESSEE CANNOT BE HELD TO BE ENTITLED FOR THE TREATY PROTECTION IN THE OTHER CONTRACTING STATE (I .E. INDIA IN THIS CASE). AS AN ADDITIONAL REQUIREMENT UNDER ARTICLE 4(1)(A), DEFINITION OF TH E EXPRESSION RESIDENT OF CONTRACTING STATE DOES NOT INCLUDE ANY PERSON WHO IS LIABLE TO TAX I N THAT STATE IN RESPECT ONLY OF INCOME FROM SOURCES IN THAT STATE. IN OTHER WORDS, THE TAXABIL ITY IN USA HAS TO BE NOT ONLY OF THE INCOME SOURCED IN THE UNITED STATES, BUT THE GLOBAL INCOME OF THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO GIVE SUFFICIENT AND REASONABLE EVIDENCE OF SATISFYING THE REQUIREMENTS OF ARTICLE 4(1)- PARTICULARLY WHEN THE SAME IS CALLED INTO QUE STION. THESE REQUIREMENTS ARE FAR MORE ONEROUS THAN FURNISHING OF TRC; THE LATTER WOULD H AVE BEEN A MUCH SIMPLER A COURSE OF ACTION. BE THAT AS IT MAY, THERE IS NO, AND THERE C ANNOT BE, ANY ESCAPE FROM SUBSTANTIATING THE STATUS OF THE US ENTITY AS A PERSON RESIDENT OF THE UNITED STATES, IN TERMS OF ARTICLE 4(1) OF THE INDO US TAX TREATY, IN ORDER TO CLAIM THE BENEFITS OF THE SAID TAX TREATY. LET US, IN THIS LIGHT, TURN TO THE EVIDENCE, IN SUPPORT OF HIS ELIGIBILITY FOR INDO US TAX TREATY PROTECTION, FURNISHED BY THE US ENTITY. SO FAR AS THE ASSESSMENT STAGE IS CONCERNED, THE ASSESSEE APPLICANT DID NOT FURNISH ANY EVIDENCE IN SUPPORT OF THE TREATY ENTIT LEMENTS OF THE US ENTITY BUT THEN, IN ALL FAIRNESS, THE ASSESSING OFFICER DID NOT DOUBT THE T REATY ENTITLEMENTS EITHER. THEREFORE, ONCE WE HOLD THAT SECTION 90(4) DOES NOT ACT AS A BAR FO R TREATY ENTITLEMENT IN THE SENSE IT CAN NOT BE SEEN AS A LIMITATION OF SUPERIORITY OF TREATY PR OVISIONS VIS--VIS THE DOMESTIC LAW PROVISIONS, AS WE HAVE INDEED HELD EARLIER THIS ORD ER, THE MERE NON-FURNISHING OF TRC CANNOT PER SE BE TREATED AS A TRIGGER TO DISENTITLEMENT TO THE T REATY BENEFITS. AT THE FIRST APPELLATE STAGE, HOWEVER, LEARNED CIT(A) DID SPECIFICALLY ASK FOR THE TRC AND ALL THAT THE ASSESSEE FURNISHED WAS A FORM W 9 WHICH IS MEANT FOR USE IN THE CONTEXT OF DOMESTIC TAX WITHHOLDING REQUIREMENTS IN THE UNITED STATES. IT HAS BEEN REJE CTED FOR THE REASON THAT IT WAS ISSUED ON 9 TH OCTOBER 2017 AND IT DOES NOT DISCLOSE THE RESIDENTI AL STATUS OF THE US ENTITY IN THE RELEVANT PERIOD. HOWEVER, WE HAVE NOTED THAT THE ASSESSEE WA S ASKED, FOR THE FIRST TIME, TO FILE TRC ON 11 TH DECEMBER 2017 AND THERE WAS HARDLY ENOUGH TIME BET WEEN THIS DATE OF REQUISITION AND THE DATE OF PASSING THE IMPUGNED ORDER, I.E. 22 ND JANUARY 2018, SO AS TO GIVE AN EFFECTIVE OPPORTUNITY TO THE ASSESSEE TO COMPLY WITH THIS REQ UISITION. WHETHER THE CONDUCT OF THE ASSESSEE, THEREFORE, CAN BE FAULTED OR NOT, THE REQ UIREMENTS FOR ESTABLISHING TREATY ENTITLEMENTS UNDER ARTICLE 4(1) ARE TO BE SATISFIED ESTABLISHED NEVERTHELESS. LET US, THEREFORE, EXAMINE WHETHER FORM W9, AS SUBMITTED BY THE ASSESSEE, CAN LEAD US TO THE CONCLUSION THAT THE CONDITIONS LAID DOWN IN ARTICLE 4(1) ARE SATISFIED. 14. THE PURPOSE OF FORM W9, WHICH IS GIVEN UNDER US INTERNAL REVENUE CODE, IS FOR PROVIDING THE CORRECT TIN TO THE PERSON WHO IS REQU IRED TO FILE AN INFORMATION RETURN WITH THE IRS. THE INFORMATION CONTAINED ON THE US IRS WEBSI TE POINTS OUT THAT AN INDIVIDUAL OR ENTITY (FORM W-9 REQUESTER) WHO IS REQUIRED TO FILE AN INFORMATION RETURN WITH THE IRS MUST OBTAIN YOUR CORRECT TAXPAYER IDENTIFICATION NU MBER (TIN) WHICH MAY BE YOUR SOCIAL SECURITY NUMBER (SSN), INDIVIDUAL TAXPAYER I DENTIFICATION NUMBER (ITIN), ADOPTION TAXPAYER IDENTIFICATION NUMBER (ATIN), OR EMPLOYER IDENTIFICATION NUMBER (EIN), TO REPORT ON AN INFORMATION RETURN THE AMOUN T PAID TO YOU, OR OTHER AMOUNT REPORTABLE ON AN INFORMATION RETURN . IN PLAIN WORDS, IT IS MERELY A DECLARATION SO A S TO PROVIDE INPUTS TO THE TAX-DEDUCTOR FOR FULFILLING R EPORTING OBLIGATIONS TO THE US IRS. IT HAS NO RELEVANCE IN THE PRESENT CONTEXT. IT IS THUS IMPORT ANT TO APPRECIATE THAT EVEN FROM A US TAX LAW AND PRACTICE PERSPECTIVE, FORM W 9 IS WHOLLY IRRELE VANT IN RESPECT OF TAX WITHHOLDINGS OUTSIDE ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 10 OF 11 THE UNITED STATES. WE HAVE NOTED THAT FORM W 9 IS M ERELY A DECLARATION BY THE US BASED ENTITY, AND, IN OUR CONSIDERED VIEW, IT CANNOT BE T REATED AS A CERTIFICATION BY ANY AUTHORITY. A DECLARATION BY THE US ENTITY, WITHOUT ANY MATERIAL TO SUBSTANTIATE THE BASIC FACTS SET OUT IN THE DECLARATION, CANNOT BE ACCEPTED AS LEGALLY SUSTAINA BLE FOUNDATION FOR A FINDING OF FACT. 15. EVEN ON THE MERITS OF THE CONTENTS OF FORM W9, THE APPELLANT DOES NOT GET ANY RELIEF EITHER. WE HAVE NOTED THAT FORM W 9 DOES STATE THA T THE US ENTITY IS A C CORPORATION- AN EXPRESSION WHICH IS, IN US TAXATION CONTEXT, USED TO DISTINGUISH THIS TYPE OF COMPANY FROM TRANSPARENT ENTITIES, AS ITS PROFITS ARE TAXED SEP ARATELY FROM ITS OWNERS UNDER SUBCHAPTER C OF THE INTERNAL REVENUE CODE, AND BUT THEN WHAT IT D OES NOT STATE IS WHETHER THE SAID COMPANY IS FISCALLY DOMICILED IN THE UNITED STATES OR NOT. SIMILARLY, THE STATEMENT MADE IN W9 IS THAT IT IS NOT A SINGLE MEMBER LLC OR S CORPORATION SO AS T O HAVE A PASS-THROUGH STATUS COULD ONLY BE RELEVANT WHEN IT IS A COMPANY FISCALLY DOMICILED , FOR TAX PURPOSES, IN UNITED STATES. IN ANY EVENT, W9 IS JUST A STATEMENT MADE BY THE US ENTITY AND IT IS NOT SUPPORTED BY ANY EVIDENCES IN SUPPORT OF THE CONTENTS OF FORM W9. IN ANY EVEN T, AS LEARNED CIT(A) RIGHTLY POINTS OUT, THE INFORMATION PERTAINS TO A LATER YEAR AND THERE IS N OTHING TO EVEN INDICATE, LEAVE ASIDE ESTABLISH, THAT THIS WILL HOLD GOOD FOR THE RELEVANT PERIOD AS WELL. A CHANGE IN THOSE FACTS FOR DIFFERENT YEARS. KEEPING SECTION 90(4) ASIDE FOR A MINUTE, EV EN ON MERITS, THERE IS NOTHING TO ESTABLISH THE TREATY ENTITLEMENT OF THE US ENTITY. 16. IT IS DIFFICULT TO COMPREHEND THE CONCEPTUAL JU STIFICATION FOR LITIGATION ON SUCH A PROCEDURAL ISSUE. THE ENTIRE CONTROVERSY ABOUT 90(4 ) BEING A LIMITATION TO SECTION 90(2), FROM THE POINT OF VIEW OF REASONABLENESS, IS A NON-ISSUE . WHETHER SECTION 90(4) IS A LEGALLY VALID LIMITATION ON SECTION 90(2) OR NOT, A TRC CAN BE OB TAINED BY THE US ENTITY, AS THE PUBLIC INFORMATION ON US IRS WEBSITE INDICATES, FOR A MODE ST USER FEE OF US $ 85 AND A STATUTORY FORM BEING FILED BY THE US ENTITY. IN OUR HUMBLE UN DERSTANDING, WHATEVER ITS WORTH, TRC IS CERTAINLY A FAR EASIER MODE OF DISCHARGING THE ONUS ABOUT ESTABLISHING RESIDENTIAL STATUS, UNDER A TAX TREATY, OF A FOREIGN ENTERPRISE. YET, WE HAVE A LITIGATION INCLUDING THIS FACET AS WELL. 17. LEARNED COUNSEL HAS THUS SUCCEEDED IN HIS LEGA L SUBMISSIONS BUT, FOR ALL PRACTICAL PURPOSES, THIS SUCCESS IS RATHER HOLLOW, ON THE FAC TS OF THIS CASE, INASMUCH AS IT DOES NOT BRING ANY RELIEF, AS ON THIS STAGE, TO THE ASSESSEE TAX-D EDUCTOR. EVEN WHEN WE KEEP THE REQUIREMENTS OF SECTION 90(4) ASIDE, THE ELIGIBILITY OF TEI FOR INDO US TAX TREATY ENTITLEMENT IS NOT ESTABLISHED, AND, THEREFORE, ALL THE ERUDITE ARGUME NTS OF DISTINGUISHED SENIOR COUNSEL, ON THE SCOPE OF VARIOUS PROVISIONS OF INDO US TAX TREATY A RE, AT THIS STAGE, PURELY ACADEMIC AND WHOLLY INFRUCTUOUS. 18. IN ALL FAIRNESS, HOWEVER, WE MUST ALSO REMAIN ALIVE TO THE FACT THAT AT NO STAGE WAS THE ASSESSEE ASKED TO SUBMIT EVIDENCES IN SUPPORT OF HI S RESIDENTIAL STATUS SO AS TO SATISFY THE CONDITIONS LAID DOWN UNDER ARTICLE 4(1). THE ASSESS ING OFFICER DID NOT DEAL WITH THIS ASPECT OF THE MATTER AT ALL, AND SIMPLY PROCEEDED TO APPLY L AW ON THE ASSUMPTION THAT THE US ENTITY WAS ENTITLED TO THE BENEFITS OF THE INDO US TAX TREATY, AND WHILE LEARNED CIT(A) WAS INDEED CONSCIENTIOUS TO TAKE NOTE OF THIS LEGAL REQUIREMEN T, SHE ONLY ASKED THE ASSESSEE TO PRODUCE A TAX RESIDENCY CERTIFICATE UNDER SECTION 90(4) WHICH , AS WE HAVE HELD EARLIER IN THIS ORDER, DOES NOT DILUTE THE SUPERIORITY OF THE TREATY LAW OVER T HE DOMESTIC LAW. EVEN THIS REQUISITION WAS MADE SHORTLY BEFORE THE HEARING WAS CONCLUDED BY TH E LEARNED CIT(A). ON THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT THE OPPORTUNITY GRANTED , ON THIS ASPECT, BY THE LEARNED CIT(A) TO THE ASSESSEE WAS LESS THAN REASONABLE AND LESS THAN FAIR. WE HAVE ALSO NOTED THAT THERE ITA NOS. 478 AND 479/AHD/2018 ASSESSMENT YEARS: 2013-14 AND 2014-15 PAGE 11 OF 11 APPEARS TO BE SOME COMMUNICATION GAP BETWEEN THE CI T(A) AND THE ASSESSEE ON THE NUMBER OF DAYS ON WHICH THE REPRESENTATIVES OF THE US ENTI TY WORKED IN INDIA, AND THAT ASPECT HAS A VITAL BEARING ON DETERMINATION OF QUESTION AS TO WH ETHER THE US ENTITY HAD A PE IN INDIA OR NOT. LEARNED SENIOR COUNSELS SUBMISSION IS THAT T HERE ARE CERTAIN OTHER CLEAR FACTUAL AND LEGAL MISTAKES, WITH RESPECT TO APPLICATION OF INDO US TA X TREATY PROVISIONS, WHICH, ON THE FACE OF IT, ARE SO FUNDAMENTAL IN NATURE THAT THESE MISTAKE S MAY INDEED END UP VITIATING THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A), BUT, FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE, IT WILL NOT REALLY BE APPROPRIATE FOR US TO DEAL WITH THESE ALLEGED MISTAKES AT THIS STAGE. 19. IN THE LIGHT OF THESE DISCUSSIONS, WE ARE OF TH E CONSIDERED VIEW THAT THE MATTER SHOULD BE REMITTED TO THE FILE OF THE CIT(A) FOR FRESH ADJ UDICATION, INTER ALIA, AFTER (I) GIVING THE ASSESSEE A FRESH OPPORTUNITY OF FURNISHING EVIDENCE S NOT LIMITED TO, BUT INCLUDING, THE TAX RESIDENCY CERTIFICATE UNDER SECTION 90(4), IN SUPPO RT OF US ENTITYS ENTITLEMENT TO THE BENEFITS OF INDO US TAX TREATY BENEFITS; (II) TAKING INTO AC COUNT THE INFORMATION FURNISHED BY THE ASSESSEE WITH RESPECT TO THE TIME SPENT BY THE REPR ESENTATIVES OF THE US ENTITY AND ALL SUCH OTHER INFORMATION AND SUBMISSIONS AS MAY BE FILED B Y THE ASSESSEE; AND (III) GIVING THE ASSESSEE YET ANOTHER OPPORTUNITY OF HEARING WHILE G IVING EFFECT TO THESE DIRECTIONS. 20. AS THE MATTER IS BEING REMITTED TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION, INTER ALIA , ON THE FUNDAMENTAL ASPECT OF TREATY ENTITLEMENT, IT WOULD NOT BE APPROPRIATE FOR US TO DEAL WITH OTHER QUESTIONS WITH RESPECT TO THE TREAT Y PROVISIONS WHICH SEEM TO ACADEMIC AS ON THIS STAGE. WE CANNOT ADDRESS OURSELVES TO SUCH ACA DEMIC ISSUES. HOWEVER, NOW THAT THE MATTER IS GOING BACK TO THE CIT(A) FOR FRESH ADJUDI CATION IN THE TERMS INDICATED ABOVE, WE ALSO DEEM IT PROPER TO ADD THAT ALL THE ISSUES WILL REMAIN OPEN FOR FRESH CONSIDERATION BY THE CIT(A) AND THE ASSESSEE IS AT LIBERTY TO RAISE ALL SUCH ISSUES AS HE DEEM FIT AND THE CIT(A) WILL DISPOSE OF THE SAME, IN ACCORDANCE WITH THE LA W, BY WAY OF A SPEAKING ORDER AND AFTER GIVING ASSESSEE A REASONABLE OPPORTUNITY OF HEARING TO THE PARTIES. 21. IN THE RESULT, THE APPEALS ARE ALLOWED FOR STAT ISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 21 ST DAY OF JUNE 2018. SD/- SD/- MADHUMITA ROY PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED THE 21 ST DAY OF JUNE, 2018 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD FIT FOR PUBLICATION (JM) (AM)