CSC Technology Singapore Pte. Ltd., Singapore V. ADIT, New Delhi

ITA 5604/DEL/2010

• Counselvise Citation: 560420114 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K CHAND
• Assessee Lawyers: S K AGGARWAL
• Keywords: Presumptive income; Business income; Transfer pricing; Double taxation relief; Permanent establishment; Wholly owned subsidiary; Non-deduction of tax
• Section: 145; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI. BEFORE SMT. DIVA SINGH AND SHRI K.G. BANSAL I.T.A. NO.5604(DEL)/2010 ASSESSMENT YEAR: 2007-08 CSC TECHNOLOGY SINGAPORE PTE. LTD., A SSISTANT DIRECTOR OF INCOME (EARLIER KNOWN AS CSC COMPUTER VS. T AX, CIRCLE 1(1), SCIENCES PTE. LTD.), SINGAPORE INTERNATIONAL TAXATION, PAN: AABCC9132B NEW DELHI. (APPLICANT) (RESPONDEN T) APPELLANT BY : SHRI S.K. AGGARWAL, C.A. RESPONDENT BY: SHR I S.K. CHAND, SR. DR. DATE OF HEARIN G: 24.01.2012 DATE OF PRONOUN CEMENT: 17.02.2012. ORDER PER K.G. BANSAL : A.M THE ASSESSEE HAS TAKEN UP 9 GROUNDS IN THE APPEA L. GROUND NO. 1 HAS SEVEN SUB-GROUNDS; GROUND NO. 2 HAS THREE SUB-GROUNDS; GROUND NOS. 3 AND 4 HAVE TWO SUB-GROUNDS EACH AND GROUND NO. 5 HAS THREE SUB- GROUNDS. HOWEVER, THE LD. COUNSEL FOR THE ASSES SEE EXPLAINED THAT THE MAIN ISSUES ARE REGARDING THE SYSTEM OF ACCOUNTIN G AND ASSESSMENT OF REIMBURSEMENT OF EXPENSES BY THE AO. THEREFORE, WHILE ADMITTING THAT THE GROUNDS ARE NARRATIVE AND ARGUMENTATIVE IN NATURE AND, THEREFORE, NOT IN ACCORDANCE WITH ITAT RULES, IT IS PLEADED THAT THE APPEAL MAY BE DECIDED ITA NO. 5604(DEL)/2010 2 ON THE BASIS OF SUBMISSIONS MADE IN THE COURSE OF HEARING. HE WILL ALSO RAISE MATERIAL GROUNDS OF FACT AND ARGUMENTS I N THE COURSE OF HEARING. THESE MAY BE CONSIDERED AND THE APPEAL MAY BE DECIDED ACCORDINGLY. 2. HE FURNISHED BACKGROUND FACTS IN BRIEF THAT T HE ASSESSEE-COMPANY IS BASED IN SINGAPORE AND IT HAS NO PRESENCE IN INDIA . ITS INCOME CONSISTS OF RECEIPTS FROM LICENSING OF SOFTWARE TO FOUR CUS TOMERS IN INDIA. ONE OF THE CUSTOMERS IS CSC INDIA PVT. LTD., WHICH IS ITS HUNDRED PER CENT SUBSIDIARY COMPANY. OTHER THREE CUSTOMERS ARE U NRELATED TO THE ASSESSEE. TWO MAIN QUESTIONS ARISE IN THE APPEAL-(I) WHETHE R, THE ROYALTY/ FEES FOR TECHNICAL SERVICES (FTS FOR SHORT) IS TO BE TAXE D ON THE BASIS OF THE GROSS AMOUNT, AND (II) WHETHER, REIMBURSEMENT O F CERTAIN EXPENSES ARE TO BE INCLUDED IN THE RECEIPTS FOR THE PURPOSE OF T HE LEVY OF TAX? THERE ARE OTHER MINOR GROUND REGARDING CHARGEABILITY OF IN TEREST U/S 234B, LIABILITY TO PAY SUR-CHARGE AND RECONCILIATION OF THE RECEIP TS. 2.1 COMING TO FACTS, IT IS SUBMITTED THAT SAP SO FTWARE IS INTERNALLY USED BY ALL THE GROUP COMPANIES. THIS SOFTWARE IS PROCURED FROM AN UNRELATED PARTY. THE EXPENDITURE INCURRED FOR T HE USE OF THE LICENSE BY THE GROUP COMPANIES IS SHARED BY THEM ON THE BASI S OF THE EXTENT OF USER. ITA NO. 5604(DEL)/2010 3 THE WHOLE OF THE PAYMENT IS MADE BY THE HEAD OFFIC E. THIS EXPENDITURE PERTAINS TO THE BUSINESS OF THE GROUP COMPANIES I NCLUDING THE INDIAN SUBSIDIARY COMPANY. THEREFORE, THE EXPENDITURE I S REIMBURSED ON THE BASIS OF THE BILLS RAISED BY THE HEAD OFFICE. THIS AM OUNT IS NOT INCLUDED IN THE RECEIPTS. 2.2 ALL THE GROUP COMPANIES ALSO USE REMOTE ACCES S FACILITIES PROVIDED BY AN UNRELATED PARTY. IN RESPECT OF THE USER, REMOTE ACCESS CHARGES (RAS CHARGES) ARE PAID BY THE HEAD OFFICE. TH ESE EXPENSES ARE ALSO SPREAD OVER THE USER-GROUP COMPANIES ON THE BASI S OF ACTUAL USER. THEY REIMBURSE THE EXPENSES TO HEAD OFFICE ON THE BA SIS OF BILLS RAISED BY IT. THESE AMOUNTS ARE ALSO NOT INCLUDIBLE IN THE RECE IPTS. 2.3 THE ASSESSEE ALSO INCURS TRAVEL EXPENSES IN RESPECT OF EMPLOYEES OF THE HEAD OFFICE WHO CAME TO INDIA FOR HELPING TH E WORK OF THE INDIAN SUBSIDIARY COMPANY. THE EXPENSES ARE IN RELATION T O AIR-TICKETS, HOTEL BILLS, TAXI CHARGES ETC. THE INDIAN COMPANY HAS REIMBU RSED THESE EXPENSES TO THE HEAD OFFICE ON COST TO COST BASIS. THESE AMO UNTS ARE ALSO NOT INCLUDIBLE IN THE RECEIPTS. ITA NO. 5604(DEL)/2010 4 2.4 THE CASE OF THE LD. COUNSEL IS THAT ALL THESE REIMBURSEMENTS HAVE BEEN RECEIVED IN THE IMMEDIATELY FOLLOWING YEAR . THE QUESTIONS TO BE DECIDED IN CONNECTION WITH THESE REIMBURSEMENTS ARE (I) WHETHER ANY ELEMENT OF PROFIT IS INVOLVED IN REIMBURSEMENTS; AND (II) IF YES, WHETHER THE AMOUNTS ARE TAXABLE IN THIS OR THE NEXT YEA R? IN GENERAL, THE CASE OF THE LD. COUNSEL IS THAT NO ELEMENT OF PROFIT IS INV OLVED IN THE REIMBURSEMENTS. THEREFORE, NOTHING IS TAXABLE EITHER IN THIS OR IN THE SUCCEEDING YEAR. IN THIS CONNECTION, OUR ATTENTION HAS BEEN DRAWN TO WARDS THE PROVISION CONTAINED IN SECTION 5(2), UNDER WHICH TWO TYPE S OF INCOME DERIVED FROM WHATEVER SOURCE ARE SUBJECT TO TAX IN THE CASE OF A NON-RESIDENT PERSON (A) WHICH IS RECEIVED OR DEEMED TO BE RECEIVED I N INDIA IN SUCH YEAR BY OR ON BEHALF OF SUCH PERSON; OR (B) ACCRUES OR ARIS ES OR IS DEEM TO ACCRUE OR ARISE IN INDIA DURING SUCH YEAR. OUR ATTENTION HAS ALSO BEEN DRAWN TOWARDS THE PROVISION CONTAINED IN ARTICLE 12 OF THE DOUBLKE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND SINGAPORE (D TAA) WHICH PERMITS TAXATION OF ROYALTY/FTS ON PAYMENT BASIS. ITA NO. 5604(DEL)/2010 5 2.5 OUR ATTENTION HAS BEEN DRAWN TO PAGE NO. 51 OF THE PAPER BOOK, WHICH FURNISHES THE DETAILS OF THE REIMBURSEMENTS IN A TABULAR FORM AS UNDER:- S.N O. INVOICE NO. INVOICE DATE ADDITION (USD) ADDITION (INR) CSC INDIA 3CEB REFERENCE NATURE OF EXPENSE/REMARKS 1 SIC)706037 20.6.2007 9835 428,708 SL. NO. 39- COST ALLOCATION GROUND 1-SAP LICENSE MAINTENANCE CHARGES 2 SIC0608031 25.08.2006 3904 175,479 SL.-43 REIMBURSE MENT OF EXPENSE GROUND 1-TRAVEL EXPENSE REIMBURSEMENTS 3 2006/10-475 27.10.2006 98 4,458 -DO- GROUND 1-TRA VEL EXPENSES REIMBURSEMENT 4 2006/11-295 22.11.2006 116 5,218 -DO- GROUND 1-RA S CHARGES REIMBURSEMENT 5 SIC0701028 23.1.2007 16328 695,427 -DO- GROUND 1- TRAVEL EXPENSE REIMBURSEMENTS 6 SIC0703003W 16.3.2007 7448 197,756 -DO- GROUND 1- TRAVEL EXPENSE REIMBURSEMENTS GROUND 1 TOTAL 1,507,046 7 SIC0604012 26.4.2006 2249 100,902 -DO- GROUND 2-T RAVEL EXPENSE REIMBURSEMENTS 8 SIC0605035 26.5.2006 4319 194,738 -DO- GROUND 2-T RAVEL EXPENSE REIMBURSEMENTS GROUND 2 TOTAL 295,640 9 SIC0604024 TDS AMOUNT 28.4.2006 46,223 208,401 SL. NO. 3 TECHNICAL SERVICES PROVIDED GROUND 3-LABOUR CROSS CHARGE GROUND 3 TOTAL 208,401 10 SIC0606015 26.6.2006 REFER REMARKS 41,369 SL. NO. 1- PART OF SALE OF SOFTWARE GROUND 4- DIFFERENCE BETWEEN THE AMOUNT AS PER FORM 3CEB ISSUED ITA NO. 5604(DEL)/2010 6 BY CSC INDIA AND AMOUNT AS PER TDS CERTIFICATE RECEIVED BY CSC SINGAPORE. GROUND 4 TOTAL 41,369 THESE DETAILS HAVE BEEN SUPPORTED BY PLACING THE BILLS RAISED FOR REIMBURSEMENTS. 2.6 THE AO HAS MENTIONED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS OFFERED TO TAX ALL SUMS RECEIVED FROM INDIA AS ROYALTY/FTS UNDER THE DTAA. HOWEVER, THERE ARE CERTAIN AMOUNTS FRO M CSC INDIA PVT. LTD. WHICH HAVE NOT BEEN OFFERED FOR TAXATION, NOT IN A NY YEAR TILL DATE. BY WAY OF EXAMPLE, IT IS STATED THAT THE AMOUNT FOR GR ANT OF SOFTWARE LICENSE AS PER FORM NO. 3CEB OF CSC INDIA PVT. LTD. AND A S PER ASSESSEES STATEMENT IS RS. 62,22,779/-, HOWEVER, THE ASSES SEE HAS OFFERED TO TAX A SUM OF RS. 61,81,410/-. IT IS FURTHER MENTIONED THAT THE ASSESSEE HAS PROBABLY ACCOUNTED FOR THE AMOUNT NET OF TAX DE DUCTED AT SOURCE, BUT THE DIFFERENCE MAY BE DUE TO SOME OTHER REASON ALSO . CSC INDIA PVT. LTD. HAD CLAIMED DEDUCTION OF RS. 62,22,779/-. THERE I S A DIFFERENCE OF RS. 41,369/- ON THIS ACCOUNT. THERE ARE PAYMENTS B Y CSC INDIA LTD., WHICH PERTAIN TO THIS YEAR, HOWEVER, THE INCOME HAS BE EN DEFERRED TO THE NEXT ITA NO. 5604(DEL)/2010 7 YEAR. THE ACCOUNTING FOR OF THE INCOME IS PEND ING IN SOME CASES FOR TWO TO THREE YEARS FROM THE DATE OF THE TRANSA CTION. THIS MAY BE DUE TO FAULT IN THE RECORDING OF THE TRANSACTIONS IN THE BOOKS BY THE ASSESSEE. THE DIFFERENCE IN THE AMOUNTS CLAIMED BY CSC INDIA P VT. LTD. AND OFFERED TO TAX BY THE ASSESSEE HAS BEEN INCLUDED IN THE I NCOME OF THE ASSESSEE. ON THIS BASIS, THE INCOME OF THIS YEAR HAD BEEN E NHANCED RS. 39,28,072/-. 2.7 THE FINDINGS OF THE LD. DRP-I, NEW DELHI AR E CONTAINED IN PARAGRAPH NO. 2.1 OF THE DIRECTIONS. IT IS MENTI ONED THAT AN ADDITION OF RS. 39,28,072/- HAS BEEN PROPOSED IN THE DRAFT ORDER DATED 30.12.2009. IT WAS OBSERVED THAT THE ASSESSEE HAS NOT OFFERED TO TAX ALL SUMS RECEIVED FROM INDIA AS ROYALTY/FTS. THESE DIFFERENCES AGGREGAT E TO RS. 39,28,072/-, THE DETAILS OF WHICH ARE AS UNDER:- SL. NO. INVOICE NO. INVOICE DATE ADDITION (USD) ADDITION (INR) 1 SIC0706037 20.06.2007 9835 428708 2 SIC0608031 25.08.2006 3904 175479 3 2006/10-475 27.10.2006 98 4458 4 2006/11-295 22.11.2006 116 5218 5 SIC0701028 23.01.2007 16328 695427 6 SIC0703003W 16.03.2007 7448 197756 GROUND 1 TOTAL 1507046 7 SIC0604012 26.04.2006 2249 100902 8 SIC0605035 26.05.2006 4319 194738 GROUND 2 TOTAL 295640 9 SIC0604024 28.04.2006 46223 2084017 ITA NO. 5604(DEL)/2010 8 GROUND 3 TOTAL 2084017 10 SIC0606015 26.06.2006 REFER REMARKS 41369 TOTAL 41369 GRAND TOTAL 3928072 2.8 THE CASE OF THE LD. COUNSEL IS THAT ROYALTY/FT S ARE TAXABLE ON RECEIPT BASIS AS PROVIDED UNDER THE DTAA. THEREFORE, W HAT IS NOT RECEIVED FROM INDIA HAS NOT BEEN INCLUDED IN THE TOTAL INC OME. THE ASSESSEE IS NOT REQUIRED TO MAINTAIN INDIA-ACCOUNTS AS IT HAS NO PRESENCE IN INDIA. IT HAS FOLLOWED CASH SYSTEM OF ACCOUNTING AS IN PAST. T HEREFORE, IT IS ARGUED THAT NO ADDITION CAN BE MADE TO THE TOTAL INCOME ON THE GROUND OF DISCREPANCIES MENTIONED ABOVE. 3. IN REPLY, THE LD. SENIOR DR SUBMITTED THAT TWO MAIN QUESTIONS ARE INVOLVED IN THIS CASE-WHETHER, REIMBURSEMENT OF EXPENSES IN RESPECT OF SAP LICENSES, RAS CHARGES AND TRAVELING ETC. A RE LIABLE TO BE INCLUDED IN THE RECEIPTS AS ROYALTIES/FTS, AND (II) WHETHER, ROYALTY IS TAXABLE IN THE YEAR OF ACCRUAL OR IN THE YEAR OF RECEIPT? 3.1 HE REFERRED TO PAGE NO. 5 OF THE RETURN OF IN COME WHERE IT IS MENTIONED THAT THE ASSESSEE IS LIABLE TO MAINTAIN ACCOUNTS AS PER SECTION 44AA, BUT IS NOT LIABLE TO GET THE ACCOUNTS AU DITED U/S 44AB. IT IS ITA NO. 5604(DEL)/2010 9 FURTHER MENTIONED THAT THE ASSESSEE HAS BEEN FOL LOWING CASH SYSTEM OF ACCOUNTING. SINCE THE ASSESSEE IS LIABLE TO MA INTAIN ACCOUNTS, THE PROVISION CONTAINED IN SECTION 145 OF THE ACT IS APPLICABLE TO THE ASSESSEE. UNDER THIS PROVISION, AN ASSESSEE CAN MAINTAIN BOOKS EITHER ON MERCANTILE BASIS OR CASH BASIS. HOWEVER, THE COMPANIES ACT MANDATES THAT A COMPANY SHALL MAINTAIN ACCOUNT OF MERCANTILE BASI S. IN THE LIGHT OF THESE PROVISIONS, THE LD. DRP HAS HELD THAT THE INCOME O F THE ASSESSEE IS TAXABLE ON ACCRUAL BASIS. THE ASSESSEE HAS BEEN RECEIVI NG REVENUES FROM ITS WHOLLY OWNED SUBSIDIARY COMPANY ALSO. THEREFORE , CASH SYSTEM OF ACCOUNTING MAY LEAD TO PERPETUAL POSTPONEMENT A ND THE RECOGNITION OF REVENUES RECEIVED AT LEAST FROM THE SUBSIDIARY. THEREFORE, IT IS ARGUED THAT ON THE FACTS, THE ASSESSEE OUGHT TO HAVE FOLLOWE D MERCANTILE SYSTEM OF ACCOUNTING. 3.2 COMING TO TAXATION OF THE AMOUNTS REIMBURSED B Y THE INDIAN SUBSIDIARY COMPANY, IT IS SUBMITTED THAT THE ASSE SSEE-COMPANY HAS BEEN ARRANGING THE USE OF SAP LICENSES AND CONNECTIV ITY SERVICES FOR THE GROUP CONCERNS FROM UNRELATED PARTIES. A REFERENCE HAS BEEN MADE TO THE SAMPLE BILL RAISED BY THE ASSESSEE ON THE INDIAN SUBSIDIA RY FOR USD 9835 REGARDING ASIA SAP LICENCE MAINTENANCE FOR THE PE RIOD JANUARY TO MARCH, ITA NO. 5604(DEL)/2010 10 2007, PLACED IN THE PAPER BOOK ON PAGE 143. A S IMILAR BILL OF USD 97.76 IN RESPECT OF RAS CHARGES HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NO. 155. THESE TRANSACTIONS ARE NOT AT ARMS LENG TH AS THEY HAVE TAKEN PLACE BETWEEN RELATED PARTIES. THERE IS NO WR ITTEN AGREEMENT BETWEEN THE INDIAN SUBSIDIARY AND THE ASSESSEE COMPANIES IN THIS MATTER. THERE IS NO EVIDENCE THAT THESE SERVICES WERE REQUIRED BY THE INDIAN COMPANY FOR ITS BUSINESS. THE ASSESSEE HAS ALSO NOT FURNISHE D THE BASIS ON WHICH EXPENSES HAVE BEEN ALLOCATED AMONGST VARIOUS GRO UP CONCERNS. IT IS ARGUED THAT IF THE SERVICES HAVE BEEN PROCURED F ROM UNRELATED PARTIES FOR THE BENEFIT OF THE INDIAN SUBSIDIARY, THE PAYMENT F OR WHICH IS MADE ON THE BASIS OF THE COST INCURRED BY THE ASSESSEE COMPANY , THERE MAY BE NO TAX ANGLE AS THE ASSESSEE HAS NO PRESENCE IN INDIA. HOWEVER, THE SAME IS NOT TRUE IN RESPECT OF REIMBURSEMENT OF TRAVELING EXP ENSES. THE EXPENSES HAVE BEEN INCURRED IN RELATION TO EARNING OF THE ROYAL TY/FTS. SUCH RECEIPTS ARE TAXABLE ON GROSS BASIS. IF THE PAYER IS ALLOWED F OR DEDUCTION OF EXPENSES INCURRED FOR EARNING ROYALTY/FTS, THE PRINCIPLE OF TAXATION ON GROSS BASIS PROVIDED IN ARTICLE 12 OF THE DTAA IS VIOLATED. IN THIS CONNECTION, REFERENCES ARE MADE TO PAGE NOS. 5 AND 6 OF THE T ECHNICAL SERVICES AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE-COM PANY AND THE INDIAN SUBSIDIARY. UNDER THE HEAD FEES, IT IS PROVIDE D THAT IN CONSIDERATION OF ITA NO. 5604(DEL)/2010 11 PERFORMANCE OF SERVICES BY THE ASSESSEE COMPANY U NDER THIS AGREEMENT, THE INDIAN SUBSIDIARY COMPANY AGREES TO PAY ALL CO STS, PLUS A MARK-UP OF 8%. HOWEVER, UNDER THE SCHEME OF TAXATION OF ROY ALTY/FTS UNDER THE DTAA, THE FEE IS TAXABLE ON GROSS BASIS. THEREFO RE, THE COST INCURRED ON EARNING THE FEE CANNOT BE PASSED ON TO THE INDIA N COMPANY. ACCORDINGLY, IT IS ARGUED THAT AT LEAST REIMBURSEMENT OF TRAVELI NG EXPENSES HAS TO BE INCLUDED IN THE FEES PAID BY THE INDIAN COMPANY TO THE ASSESSEE-COMPANY FOR THE PURPOSE OF TAXATION UNDER ARTICLE 12 OF T HE DTAA. 3.3 IT IS ALSO SUBMITTED THAT THERE ARE SOME MIN OR ISSUES. GROUND NO. 5.1 IS IN RESPECT OF AN AMOUNT OF RS. 41,369/-, W HICH HAS BEEN HELD TO BE TAXABLE IN THE HANDS OF THE ASSESSEE. IT WAS SUB MITTED BEFORE THE LD. DRP THAT THE AMOUNT REPRESENTS LOSS INCURRED ON ACCOU NT OF FLUCTUATION IN RATE OF EXCHANGE AND IT DOES NOT REPRESENT THE AMOUNT R EALIZED BY THE ASSESSEE. IT IS ARGUED THAT IT IS A MATTER OF DETAIL, WHIC H MAY BE LEFT TO THE AO FOR VERIFICATION. 3.4 IT IS ALSO ARGUED THAT AT THE TIME OF ESTIMA TING THE INCOME LIABLE TO ADVANCE-TAX, THE ASSESSEE WAS IN KNOWLEDGE OF T HE FACT THAT THE PAYER HAD NOT DEDUCTED TAX AT SOURCE. IT IS FOR THE ASSE SSEE TO ESTIMATE THE INCOME ITA NO. 5604(DEL)/2010 12 LIABLE TO TAX AND COMPUTE TAX PAYABLE THEREON. IN SPITE OF THE KNOWLEDGE THAT TAX HAD NOT BEEN DEDUCTED, THE ASSESSEE DID NOT PAY ANY TAX. THEREFORE, INTEREST IS CHARGEABLE U/S 234B. 3.5 IT IS ALSO SUBMITTED THAT THE PROVISION CONTA INED IN THE DTAA DO NOT GOVERN THE FINANCE ACT. THE LEVY OF SURCHARGE IS AUTHORIZED BY THE FINANCE ACT AND NOT BY THE INCOME TAX ACT. THER EFORE, THE ASSESSEE IS LIABLE TO PAY SURCHARGE. 4. IN THE REJOINDER REPLY, THE LD. COUNSEL REITE RATED THAT NONE OF THE AMOUNTS REIMBURSED TO IT IS LIABLE TO BE TAXED I N INDIA. FURTHER, THE ASSESSEE HAS BEEN FOLLOWING CASH SYSTEM OF ACCOUN T, THEREFORE, THE RECEIPTS ARE NOT TAXABLE ON ACCRUAL BASIS. THE PROVISIONS CONTAINED IN THE COMPANIES ACT ARE APPLICABLE TO ONLY THOSE COMPANI ES WHICH ARE REGISTERED IN INDIA. THE ASSESSEE IS NOT REGIST ERED IN INDIA AND IT HAS NO PRESENCE IN INDIA. THEREFORE, ITS INCOME SHOULD BE TAXED ON THE BASIS OF CONSISTENT METHOD OF ACCOUNTING FOLLOWED BY IT. THE ASSESSEE IS ALSO NOT LIABLE TO PAY INTEREST U/S 234B OF THE ACT. ITA NO. 5604(DEL)/2010 13 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE ASSESSEE IS A COMPANY INCORPORAT ED UNDER THE LAWS OF SINGAPORE. IT HAS NO BRANCH OFFICE IN INDIA. TO PUT IT DIFFERENTLY, IT HAS NO PERMANENT ESTABLISHMENT (PE) IN INDIA. IT IS L IABLE TO MAINTAIN ACCOUNTS BY DINT OF PROVISIONS CONTAINED IN SECTION 44AA. HOWEVER, IT IS CLAIMED THAT THE ACCOUNTS ARE NOT LIABLE TO BE AUDITED U/S 44AB, THE REASON FOR WHICH HAS NOT BEEN EXPLAINED. THE RECEIPTS OF THE ASSESSEE EXCEEDS RS. 40.00 LAKH. THEREFORE, ON A PRIMA FACIE BASIS, IT CAN BE CONCLUDED THAT ITS ACCOUNTS IN RESPECT OF INDIAN RECEIPTS ARE LIAB LE TO BE AUDITED U/S 44AB. ALTHOUGH IT HAS BEEN STATED THAT IT IS LIABLE TO MAINTAIN ACCOUNTS U/S 44AA, IT HAS NO WHERE BEEN ASSERTED OR SHOWN THAT THE ACCOUNTS HAVE BEEN MAINTAINED. 6. THE FIRST QUESTION IS-WHETHER, REVENUES RECEI VED BY WAY OF ROYALTY/FTS ARE LIABLE TO BE TAXED ON ACCRUAL BAS IS OR RECEIPT BASIS? IN PARAGRAPH NO. 2, THE AO HAS MENTIONED THAT THE ASSESSEE HAS OFFERED TO TAX ALL SUMS RECEIVED FROM INDIA AS ROYALTY/FTS. HOW EVER, IT HAS NOT OFFERED CERTAIN SUMS FOR TAXATION IN THIS YEAR AND NOT EVEN TILL DATE. SOME EXAMPLES HAVE BEEN MENTIONED. IT IS ALSO NOTED THAT THE INDIAN SUBSIDIARY HAS CLAIMED DEDUCTION IN RESPECT OF CERTAIN AMOUN TS BUT THE ASSESSEE- ITA NO. 5604(DEL)/2010 14 COMPANY HAS NOT OFFERED SUCH AMOUNTS FOR TAXATION. THE LD. DRP HAS RECORDED A FINDING THAT THE ASSESSEE IS REQUIRED TO MAINTAIN ACCOUNTS ON MERCANTILE BASIS AS IT IS A COMPANY. THE CASE OF THE LD. COUNSEL IS THAT THE ASSESSEE IS NOT REQUIRED TO MAINTAIN INDIA-SPECIFIC ACCOUNTS AS IT HAS NO PE IN INDIA. THIS SUBMISSION IS CONTRARY TO THE REPRE SENTATION MADE IN THE RETURN OF INCOME THAT IT IS OBLIGED TO MAINTAIN ACCOUNTS U/S 44AA. IN THIS CONNECTION, WE HAVE ALREADY HELD THAT IN SO FAR A S THE PROVISIONS OF THE ACT ARE CONCERNED, THE ASSESSEE IS OBLIGED TO MAI NTAIN INDIA-SPECIFIC ACCOUNTS AND TO GET THEM AUDITED UNDER SECTION S 44AA AND 44AB RESPECTIVELY. BEING A COMPANY, THE ACCOUNTS ARE E XPECTED TO BE MAINTAINED ON MERCANTILE BASIS IN SO FAR AS THE PROVISIONS OF INCOME TAX ACT ARE READ ALONG SIDE THE PROVISIONS OF THE COMPANIES ACT. HOWEVER, IT IS ALSO THE CASE OF THE ASSESSEE THAT IT IS COVERED UNDER THE DTAA. A NUMBER OF CASES HAVE ARISEN IN WHICH THIS MATTER HAD BE EN CONSIDERED AND DECIDED. THEREFORE, WE MAY DISCUSS THE CASES ON WHICH RIVAL PARTIES HAVE PLACED RELIANCE. 6.1 IN THE CASE OF DEPUTY CIT VS. UHDE GMBH. (19 96) 54 TTJ 355 (BOM.), THE ONLY GROUND BEFORE THE TRIBUNAL WAS T HAT THE LD. CIT(APPEALS) WAS IN ERROR IN DIRECTING THE AO TO TAX THE INCOME ON VARIOUS PROJECTS ON ITA NO. 5604(DEL)/2010 15 RECEIPT BASIS AS AGAINST ACCRUAL BASIS AND FUR THER ERRED IN DIRECTING THAT PROVISIONS OF SECTION 145 WERE NOT APPLICABLE FOR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IT IS MENTIONED THAT TH ERE CANNOT BE ANY DISPUTE THAT WHERE THERE IS A CONFLICT BETWEEN THE DTAA AND THE DOMESTIC LAW RELATING TO TAXATION OF INCOME ARISING IN THE CO NTRACTING STATE, THE FORMER HAS TO PREVAIL. IN EARLIER YEARS, FTS WAS NO T TAXED AT ALL IN INDIA AS IT DID NOT HAVE A PE IN INDIA. THE FEES WERE IN T HE NATURE OF INDUSTRIAL AND COMMERCIAL PROFITS. THE INCOME OF THIS NATURE BECA ME LIABLE TO BE TAXED IN INDIA BECAUSE OF NEW TREATY ENTERED INTO BETWEEN INDIA AND THE FEDERAL REPUBLIC OF GERMANY. PARAGRAPH NO. 2 OF ARTICLE VIIIA PROVIDES THAT FTS COULD BE TAXED IN THE CONTRACTING STATE IN WHICH THEY AROSE AND ACCORDING TO THE LAW OF THAT STATE. ALTHOUGH UNDER SECTI ON 5(2)(B) OF THE ACT, APPLICABLE IN THE CASE OF A NON-RESIDENT PERSON, INCOME WHICH ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN IND IA IS TAXABLE, THE SPECIFIC PROVISION OF ARTICLE VIIIA PROVIDES FOR TAXATION OF ONLY THOSE SUMS WHICH HAVE BEEN PAID TO HIM. THIS MEANS THAT THE LIABILITY ARISES ONLY WHEN THE SUM IS RECEIVED AND IT IS NOT TAXABLE ON A CCRUAL BASIS. 6.2 IN THE CASE OF NATIONAL ORGANIC CHEMICAL IN DUSTRIES LTD. VS. DY. CIT, (2005) 96 TTJ 765 (BOM.), IT IS MENTIONED T HAT THE REMITTANCE MADE ITA NO. 5604(DEL)/2010 16 BY THE ASSESSEE IS LIABLE TO BE TAXED IN INDIA AS FTS UNDER ARTICLE 13 OF INDO-FRENCH DTAA. THE REMITTANCE IN QUESTION WAS PAYMENT IN RESPECT OF INVOICE NO. 08-25181, DATED 25.05.1996. IN TERMS OF PROVISIONS OF ARTICLE 12 OF INDO-SWISS TAX TREATY, TWIN CONDITIONS OF ACCRUAL AND PAYMENT ARE TO BE SATISFIED FOR THE PURPOSE OF TAXATION. T HUS, EVEN IF FTS HAS ACCRUED OR HAS ARISEN, BUT THE SAME IS NOT PAID, THE TA XABILITY UNDER ARTICLE 12 IN THE SOURCE COUNTRY DOES NOT COME INTO PLAY. 6.3 AS AGAINST AFORESAID CASE, THE LD. SENIOR DR RELIED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS. STAN DARD TRIUMPH MOTOR CO. LTD., (1979) 119 ITR 573. THE QUESTION BEFORE TH E COURT WAS-WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT ROYALTY AMOUNTS SHOULD BE ASSESSED ON CASH BASIS FOR ASSESSMENT YEARS 1967-68 TO 1969-70 IF THE BOOKS AND BALANCE-SHEET OF SUCH RECEIPTS ARE FOUND TO BE MAINTAINED ON CA SH BASIS AND IN DIRECTING FRESH ASSESSMENT ON SUCH BASIS? THE COURT MENTI ONED THAT IT MUST BE REMEMBERED THAT SECTION 145 IS ONLY A MACHINERY PROVISION AND IT CANNOT CONTROL THE CHARGING SECTION SO AS TO M AKE THE LATTER OTIOSE. THEREFORE, SECTION 145(1) SHOULD NOT BE PERMITTED TO APPLY IN SUCH CIRCUMSTANCES AS THOSE WHICH ARISE FROM THE FAC TS OF THE CASE. IT IS ITA NO. 5604(DEL)/2010 17 IMMATERIAL WHETHER THE ASSESSEE IS KEEPING ACCO UNTS ON A REGULAR BASIS BY FOLLOWING CASH METHOD. EVEN IN THIS SITUATI ON HE IS LIABLE TO BE ASSESSED U/S 5(2)(B). TO HOLD OTHERWISE WOULD BE TO TAKE THE INCOME OUTSIDE THE PURVIEW OF TAXATION UNDER THE ACT, TH OUGH SUCH INCOME HAD ACCRUED IN INDIA TO A NON-RESIDENT. 6.4 AFTER CONSIDERING THE FACTS OF THE CASE AND PRECEDENTS RELIED UPON BY THE RIVAL PARTIES, WE FIND THAT THE LD. SENIOR DR HAS PRIMARILY RELIED UPON THE PROVISION CONTAINED IN SECTION 5(2). T HE DECISION IN THE CASE OF STANDARD TRIUMPH MOTORS CO. LTD. (SUPRA) ALSO DEA LS WITH HARMONIOUS INTERPRETATION OF THE PROVISIONS CONTAINED IN SEC TIONS 145 AND 5(2). THE DECISION AND THE SUBMISSIONS DO NOT TAKE INTO ACC OUNT THE PROVISIONS OF THE DTAA AS PROBABLY NONE EXISTED AT THAT TIME . THESE HAVE BEEN CONSIDERED BY THE TRIBUNAL IN THE CASE OF UHDE GM BH. AND NATIONAL ORGANIC CHEMICAL INDUSTRIES LTD. (SUPRA). IT HA S BEEN MENTIONED THAT IN CASE OF CONFLICT BETWEEN THE PROVISIONS OF THE DTAA AND ACT, THE PROVISIONS CONTAINED IN THE TREATY SHALL PREVAIL. CONSEQUENTLY, IT HAS BEEN HELD THAT THE TAXATION OF ROYALTY/FTS IS ON RECE IPT BASIS. IN OTHER WORDS, THE AMOUNT WHICH HAS ACCRUED AS INCOME TO A FORE IGN COMPANY CANNOT BE TAXED IN THE SOURCE COUNTRY, BEING INDIA IN THI S CASE, UNLESS THE AMOUNT ITA NO. 5604(DEL)/2010 18 HAS BEEN RECEIVED BY THE FOREIGN COMPANY. IT IS ALSO THE CASE OF THE LD. SENIOR DR THAT SUCH AN INTERPRETATION CAN LEAD TO DEFERMENT OF PAYMENT OF TAX FOR SOME TIME OR FOR INDEFINITE TIME. WE HAVE CONSIDERED THIS MATTER ALSO. THIS ISSUE HAS TO BE DECIDED ON THE BASIS O F CONDUCT OF THE TWO PARTIES, WHICH ARE ASSOCIATED ENTERPRISES (AES) IN THIS CASE. IT IS NO DOUBT TRUE THAT THE PROVISION MAY BE USED AS A DEVIC E TO DEFER THE TAX FOR ANY LENGTH OF TIME BY MUTUAL UNDERSTANDING OF THE PAR TIES. HOWEVER, TO COME TO SUCH A CONCLUSION IN A PARTICULAR CASE, THE CO NDUCT OF THE PARTIES HAS TO BE SEEN AND THEREAFTER A CONCLUSION HAS TO BE ARRIVED AT THAT DEFERMENT OF PAYMENT WAS A DEVICE USED FOR THE PURPOSE OF DELAYING THE PAYMENT OF TAX. NO SUCH FINDING HAS BEEN RECORDED IN THIS CA SE. SUCH IS ALSO NOT THE CASE OF LD. SENIOR D.R. THEREFORE, EVEN IF THE RE IS FORCE IN THE ARGUMENT THAT THE INTERPRETATION MAY LEAD TO DELAY IN PAYME NT OF TAX, IT WILL BE USEFUL ONLY IN SUCH CASES WHERE THE AO MAKES OUT A CASE THAT THE DELAY WAS WITH A VIEW TO DEFER THE PAYMENT OF TAX. IN ABSENCE OF SUCH A FINDING BY THE AO, IT IS HELD THAT THE ARGUMENT IS NOT AP PLICABLE TO THE FACTS OF THIS CASE. ACCORDINGLY, IT IS HELD THAT ROYALTY AND F TS ARE TAXABLE ON PAYMENT BASIS AND NOT ON ACCRUAL BASIS. ITA NO. 5604(DEL)/2010 19 7. THIS BRINGS US TO THE SECOND QUESTION REGARDING TAXATION OF REIMBURSEMENTS. WE HAVE SEEN THAT REIMBURSEMENT I N RESPECT OF SAP LICENCE AND RAS CHARGES ARE FOR THE USE OF THE LICENCE BELONGING TO A THIRD PARTY AND GETTING THE CONNECTIVITY. NEIT HER THE AO NOR THE LD. SENIOR DR HAS BEEN ABLE TO MAKE OUT A CASE THAT THE EX PENDITURE HAS BEEN INCURRED IN CONNECTION WITH EARNING OF ROYALTY/FT S. IT COULD BE ARGUED THAT THE ASSESSEE-COMPANY SHOULD HAVE CHARGED REAS ONABLE MARGIN FROM THE INDIAN SUBSIDIARY. HOWEVER, INCOME, IF ANY, WOULD BE IN THE NATURE OF BUSINESS INCOME. THE ASSESSEE DOES NOT HAVE A P E IN INDIA. THEREFORE, SUCH INCOME IS NOT LIABLE TO BE TAXED IN INDIA. ACC ORDINGLY, IT IS HELD THAT REIMBURSEMENTS OF SAP LICENCE AND RAS CHARGES ARE NOT TAXABLE IN INDIA. 7.1 HOWEVER, THE POSITION OF REIMBURSEMENT OF TRA VELING EXPENSES IS QUITE DIFFERENT. THESE EXPENSES HAVE BEEN INCURRED IN CONNECTION WITH TECHNICAL SERVICES AGREEMENT. THEREFORE, THE EXP ENDITURE HAS BEEN INCURRED FOR EARNING ROYALTY/FTS. IN SPITE OF THE FACT T HAT THE AGREEMENT PROVIDES INTER-ALIA FOR ADEQUATE LEVEL OF SUPPORT AND POS TING ITS PERSONNEL, THE EXPENSES FOR WHICH WILL BE REIMBURSED, THE FACT REMAINS THAT THE EXPENDITURE HAS BEEN INCURRED FOR EARNING THE ROYA LTY/FTS. THE ITA NO. 5604(DEL)/2010 20 EXPENDITURE IS THAT OF THE ASSESSEE AND NOT THAT OF THE INDIAN SUBSIDIARY COMPANY. ARTICLE 12 PROVIDES FOR TAXATION OF R OYALTY/FTS IN THE SOURCE COUNTRY ON GROSS BASIS AT A CONCESSIONAL RATE O F TAX. THIS MEANS THAT THE EXPENDITURE INCURRED FOR EARNING ROYALTY/FTS IS NO T DEDUCTIBLE IN COMPUTING GROSS ROYALTIES OR GROSS FTS RECEIVED BY THE AS SESSEE COMPANY. THE ASSESSEE HAS FOUND THAT TAXATION UNDER THE INCOME TAX ACT, 1961 IS NOT MORE BENEFICIAL TO IT. THEREFORE, THE RECEIPTS H AVE BEEN OFFERED FOR TAXATION UNDER ARTICLE 12 OF THE DTAA. IT IS C LEAR FROM THE LANGUAGE THAT THIS ARTICLE TAXES ROYALTY/FTS ON GROSS BASIS A ND DOES NOT PERMIT DEDUCTION OF EXPENSES. THEREFORE, IT IS HELD THAT THE ALLEGED REIMBURSEMENT OF EXPENSES FOR TRAVELING OR THE EXPENSES OF THE ASSESSEE-COMPANY ARE ITS EXPENSES, LIABLE TO BE INCLUDED IN ITS GROSS RECEIPTS. ALTHOUGH THE DECISION IN THE CASE OF CIT & ANOTHER VS. HALLIBU RTON OFFSHORE SERVICES INC. (2008) 300 ITR 268 (UTTRAKHAND) WAS RENDERE D UNDER SECTION 44BB, YET, IT DEALS WITH THE AMOUNTS RECEIVED BY THE AS SESSEE IN INDIA ON ACCOUNT OF PROVISION OF SERVICES AND FACILITIES IN CONNEC TION WITH, OR SUPPLY OF PLANT AND MACHINERY ON HIRE, USED OR TO BE USED, IN THE PROSPECTING FOR, OR EXTRACTION OR PRODUCTION OF, MINERAL OILS. IT HA S BEEN HELD THAT THE REIMBURSEMENTS WILL HAVE TO BE INCLUDED IN THE RE CEIPTS FOR ARRIVING AT THE PRESUMPTIVE INCOME, BEING 10% OF THE RECEIPTS. T HIS DECISION DOES ITA NO. 5604(DEL)/2010 21 SUPPORT OUR AFORESAID CONCLUSION THAT GROSS R ECEIPTS WILL INCLUDE REIMBURSEMENT OF EXPENDITURE INCURRED BY THE ASSE SSEE FOR THE PURPOSE OF COMPUTING GROSS RECEIPTS. IT IS HELD ACCORDING LY. 7.2 IN A NUTSHELL, IT IS HELD THAT ROYALTIES AND FTS ARE TAXABLE ON PAYMENT BASIS, AND REIMBURSEMENT OF TRAVELING E XPENSES WILL HAVE TO BE INCLUDED IN THE GROSS RECEIPTS FOR THE PURPOSE OF TAXATION. 8. WE NOW TURN OUR CONTENTION TO THE MINOR ISS UES. THE FIRST ISSUE IS- WHETHER, THE ASSESSEE IS LIABLE TO PAY SURCHARGE? IN THIS CONNECTION, THE LD. COUNSEL REFERRED TO THE RATE OF 10% UNDER THE D TAA, APPLICABLE ON GROSS RECEIPTS BY WAY OF ROYALTY/FTS. THEREAFTER , HE REFERRED TO THE PROVISION CONTAINED IN SECTION 90(2), WHICH INTER- ALIA PROVIDES THAT THE TAX SHALL BE LEVIED IN ACCORDANCE WITH THE DTAA, A ND THE PROVISIONS OF THE ACT WILL BE APPLICABLE IN SO FAR AS THEY ARE MORE BENEFICIAL TO THE ASSESSEE. HE ALSO REFERRED TO BOARD CIRCULAR NO. 734 DATED 24.01.1996 ISSUED IN CONNECTION WITH RATES OF TAXES APPLICA BLE UNDER DTAA BETWEEN INDIA AND THE UAE. IN PARAGRAPH NO. 3, IT IS CLAR IFIED THAT IN RESPECT OF PAYMENT TO BE MADE TO THE NON-RESIDENT INDIAN AT THE UAE, TAX AT SOURCE MUST BE DEDUCTED AS UNDER:- ITA NO. 5604(DEL)/2010 22 5% OF THE GROSS AMOUNT OF DIVIDENDS IF THE BENEFIC IAL OWNER IS A COMPANY WHICH OWNS AT LEAST 10% OF THE SHARES OF THE C OMPANY PAYING THE DIVIDENDS, AND 15% OF THE GROSS AMOUNT OF DIVIDENDS IN ALL OTHE R CASES. THE RATES FOR TAX DEDUCTION AT SOURCE HAVE ALSO BEEN MENTIONED IN R ESPECT OF PAYMENT OF INTEREST AND ROYALTIES. THE CIRCULAR DOES NOT ME NTION ANYTHING ABOUT SURCHARGE. THE CASE OF THE LD. COUNSEL IS THAT T HE ASSESSEE IS REQUIRED TO PAY TAX PRESCRIBED UNDER ARTICLE 12 AND NO SURCHA RGE IS PAYABLE. 8.1 IN REPLY, THE LD. SENIOR DR SUBMITS THAT THE R ATES ARE PRESCRIBED UNDER THE FINANCE ACT AND NOT THE INCOME-TAX ACT. SECTION 90(2) OF THE ACT DOES NOT CONTEMPLATE TREATY OVERRIDE OVER THE FINANCE ACT. THEREFORE, THE ASSESSEE IS LIABLE TO PAY SURCHARGE. 8.2 WE HAVE CONSIDERED THE SUBMISSIONS OF THE RIVA L PARTIES. WE FIND THAT CIRCULAR NO. 734 DOES NOT MENTION ANYTHING ABOUT SURCHARGE FOR THE PURPOSE OF DEDUCTION OF TAX AT SOURCE FROM PAYME NTS BY WAY OF DIVIDENDS, INTEREST AND ROYALTIES. WHAT IS GOOD FOR THE TDS IS ALSO GOOD ITA NO. 5604(DEL)/2010 23 FOR THE TAXATION. THEREFORE, IT IS HELD THAT THE ASSESSEE IS NOT LIABLE TO PAY SURCHARGE. 9. THE SECOND QUESTION IS-WHETHER, THE ASSESSEE IS LIABLE TO PAY INTEREST U/S 234B. THE CASE OF THE ASSESSEE IS THAT ALL ITS RECEIPTS ARE SUBJECT TO TAX DEDUCTION AT SOURCE U/S 195 OF THE ACT THERE FORE, IT IS NOT LIABLE TO PAY INTEREST U/S 234B. IN THIS CONNECTION, RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME- TAX VS. ERICSSON AB AND VICE-VERSA AND ANOTHER IN ITA NOS. 504, 507, 508, 511 AND 397 OF 2007 DATED 23.12.2011, A COPY OF WHICH HAS BEEN PLACED BEFORE US. ON THE OTHER HAND, THE CASE OF THE LD. SENIOR DR IS THAT AT THE TIME OF ESTIMATING INCOME LIABLE FOR ADVA NCE-TAX, THE ASSESSEE WAS AWARE THAT ITS SUBSIDIARY COMPANY HAS NOT DEDUCT ED TAX AT SOURCE FROM THE PAYMENTS. THEREFORE, THE ASSESSEE OUGHT TO HAVE PAID THE TAX. HAVING CONSIDERED SUBMISSIONS FROM BOTH THE SIDES, WE FIN D THAT THE ISSUE IS NO LONGER RES-INTEGRA AS IT STANDS COVERED BY THE JUDGMENTS IN THE CASE OF ERICSSON AB (SUPRA) AND DIT VS. JACQBS CIVIL INCO RPORATED AND ANOTHER, (2011) 330 ITR 578 (DEL). RESPECTFULLY FOLLOWI NG THESE DECISIONS, IT IS HELD THAT THE ASSESSEE IS NOT LIABLE TO PAY INT EREST U/S 234B. IT MAY INCIDENTALLY BE MENTIONED THAT THE REVENUE HAS RE COURSE TO THE PAYER FOR ITA NO. 5604(DEL)/2010 24 CHARGING INTEREST FOR FAILURE TO DEDUCT TAX A T SOURCE FROM THE PAYMENT BY WAY OF ROYALTY/FTS. 10. FINALLY, IN THE RECONCILIATION OF THE AMOUNT RECEIVED BY THE ASSESSEE, THERE IS A DIFFERENCE OF AN AMOUNT OF R S. 41,369/-. THE CASE OF THE LD. COUNSEL IS THAT IT IS DUE TO FLUCTUATION I N THE RATE OF FOREIGN EXCHANGE. BOTH THE PARTIES SUBMIT THAT THIS MATTE R MAY BE RESTORED TO THE FILE OF THE AO FOR PROPER VERIFICATION. ACCORDIN GLY, THE MATTER IS RESTORED TO THE FILE OF THE AO FOR RECONCILING THE AMOUNT A ND DECIDING THE GROSS AMOUNT OF ROYALTY/FTS LIABLE FOR TAXATION IN THI S YEAR ON PAYMENT BASIS. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED A S INDICATED IN THE ORDER. SD/- SD/- (DIVA SINGH) (K.G. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- CSC TECHNOLOGY SINGAPORE PTD. LTD., SINGAPORE. ASSISTANT DIT (E), CIRCLE- 1(1), INTERNATIONAL TA XATION, NEW DELHI. CIT(A) CIT, THE D.R., ITAT, NEW DELHI. ASSISTANT REGISTRAR.