M/s. Guy Carpenter & Co. Ltd., New Delhi V. ADIT, New Delhi

ITA 5646/DEL/2011

• Counselvise Citation: 564620114 RSA 2011
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-02-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K GUPTA
• Assessee Lawyers: SANJAY ARORAAR
• Keywords: Double taxation relief; Advance ruling
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI R.P. TOLANI , JM & SHRI A.N. PAHUJA, AM ITA NO.5646/DEL/2011 ASSESSMENT YEAR:2008-09 M/S GUY CARPENTER & CO. LTD., 1,TOWER PLACE WEST, TOWER PLACE, LONDON EC3R,5BU-111111 V/S . ASSISTANT DIRECTOR OF INCOME-TAX, INTERNATIONAL TAXATION, CIRCLE 1(2), NEW DELHI [PAN : AACCG 5465 A] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI PAWAN KUMAR & SANJAY ARORA,AR REVENUE BY SHRI D.K. GUPTA, DR DATE OF HEARING 15-02-2012 DATE OF PRONOUNCEMENT 24-02-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 15 TH DECEMBER, 2011 BY THE ASSESSEE AGAINST AN ORDER DATED 3 RD OCTOBER, 2011 OF THE ASSISTANT DIT, CIRCLE 1(2), INTERNATIONAL TAXATION, NEW DELHI, RAISES THE FOLLO WING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE ASSESSING OFFICER HAS ERRED IN HIS ORDER DATED OCTOBER 3,2011 IN HOLDING THAT THE RECEIPTS WHICH ARE IN THE NATURE OF REINSURANCE BROKERAGE/COMMISSION OF THE APPELLANT AMOUNTING TO ` 26,289,574 AS FEES FOR TECHNICAL SERVICES AS PER ARTICLE 13 OF THE INDIA-UNITED KINGDOM (UK) DOUBLE TAX AVOIDANCE AGREEMENT (DTAA). 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN FACT AND IN LAW THAT: ITA NO.5646/DEL./2011 2 2.1 THE SERVICES PROVIDED BY THE ASSESSEE ARE CONSULTANCY IN NATURE AND THE PAYMENTS FALL WITHIN THE DEFINITION OF FEES FOR TECHNICAL SERVICES WITHIN TH E MEANING OF SECTION 9(1)(VII) OF THE ACT. 2.2 THE CONSIDERATION RECEIVED BY THE APPELLANT MA KE AVAILABLE EXPERIENCE, SKILL OF THE APPELLANT TO THE INDIAN INSURANCE COMPANIES, ACCORDINGLY, THE PAYMENT IS AL SO COVERED BY THE DEFINITION OF FTS AVAILABLE IN PARA 4(C) OF ARTICLE 13 OF THE INDIA UK DTAA. 3. THE LEARNED ASSESSING OFFICER HAS ERRED IN NOT FOLLOWING THE HONBLE TRIBUNALS ORDER IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2006-07 WHERE THE HONBLE TRIBUNAL HAS HELD THAT THE PAYMENT RECEIVED BY THE APPELLANT COMPANY IN THE PROCESS OF PLACING THE REINSURANCE RISK OF THE INDIAN INSURANCE COMPANIES WITH INTERNATIONAL INSURANCE COMPANIES DOES NOT QUALIFY AS FEE FOR TECHNICAL SERVICES UNDER THE DTAA BETWEEN INDIA -UK, AND, THEREFORE, NOT TAXABLE IN INDIA. 4. WITHOUT PREJUDICE TO THE ABOVE, WHETHER ON THE F ACTS AND LAW, THE LEARNED AO ERRED IN LEVY OF INTEREST U /S 234B OF THE ACT IGNORING THE PROVISIONS OF SECTION 234B OF THE ACT READ WITH SECTION 191, 208 & 209 OF THE ACT WHI CH DOES NOT PROVIDE FOR CHARGE UNDER SECTION 234B OF T HE ACT /WHERE THE ENTIRE INCOME IS SUBJECT TO DEDUCTIO N OF TAX AT SOURCE. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AM END OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFORE OR A T THE TIME OF HEARING OF THIS APPEAL. 1.1 SUBSEQUENTLY VIDE LETTER DATED 27 TH JANUARY 2011 , THE ASSESSEE SOUGHT PERMISSION TO RAISE THE FOLLOWING THREE ADDI TIONAL GROUNDS OF APPEAL: - 5 THAT THE DIRECTION ISSUED BY THE HONBLE DISPUTE RESOLUTION PANEL ARE IN VIOLATION OF SECTION 144C(5 ) READ WITH SECTION 144C(8) OF THE ACT TO THE EFFECT THAT IT HAS ERRED IN CONCLUDING THAT THE INCOME OF THE APPELLAN T CONSTITUTE ROYALTIES EVEN WHEN NO SUCH ALLEGATION W AS MADE IN THE DRAFT ASSESSMENT ORDER. ITA NO.5646/DEL./2011 3 6 WITHOUT PREJUDICE TO THE GROUND NO.5 ABOVE, THE LD. DRP HAS ERRED IN FACT AND IN LAW IN HOLDING THAT TH E SERVICES RENDERED BY THE APPELLANT CAN ALSO BE COVE RED UNDER THE TERM ROYALTIES. GROUND NO.7: THAT THE LEARNED ASSESSING OFFICER HAS ERRONEOUSLY APPLIED THE TAX RATE OF 15% WHILE PASSI NG THE FINAL ASSESSMENT ORDER WITHOUT ASSIGNING ANY REASON WHEREAS IN THE DRAFT ASSESSMENT ORDER IT WAS PROPOS ED THAT THE INCOME SHALL BE TAXED AT THE RATE OF 10% A S PER SECTION 115A OF THE ACT 2. FACTS IN BRIEF, AS PER RELEVANT ORDERS ARE THAT E-RETURN DECLARING NIL INCOME FILED ON 23 RD SEPTEMBER, 2008 BY THE ASSESSEE, A FOREIGN COMPANY & TAX RESIDENT OF THE UK, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT). THE ASSESSEE, A REPUTED INSURANCE BROKING FIRM LICENSED BY THE FSA TO NEGOTIATE INSURANCE/REINSURANCE BUSINESS, DID NOT HAVE ANY OF FICE OR PLACE OF BUSINESS IN INDIA. DURING THE YEAR UNDER CONSIDERATION, THE ASS ESSEES LONDON OFFICES WERE ENGAGED BY CERTAIN INDIAN INSURANCE COMPANIES TO HE LP THEM PLACE REINSURANCE BUSINESS IN THE INTERNATIONAL MARKET. THE ASSESSEE CLAIMED THAT ALL THE ACTIVITIES RELATING TO SUCH WORK WERE CARRIED OUT OUTSIDE INDI A AND FOR PROVIDING SUCH ASSISTANCE, IT RETAINED A COMMISSION, BEING THE PRE VAILING FEE FOR SUCH WORK IN THE UK MARKET. INTER ALIA, THE ASSESSEE CLAIMED THAT A CTIVITIES CARRIED OUT IN INDIA, IF ANY, WERE PURELY PREPARATORY OR AUXILIARY TO THE CO RE ACTIVITY OF INSURANCE INTERMEDIATION CARRIED OUT IN LONDON AND ELSEWHERE. TO A QUERY BY THE AO, THE ASSESSEE SUBMITTED A COPY OF AGREEMENT WITH GENERAL INSURANCE CORPORATION OF INDIA, MUMBAI, ENTERED IN CONJUNCTION WITH J.B. BO DA REINSURANCE BROKERS PVT. LTD. AND EXPLAINED THE PROCESS OF SELECTION OF CLI ENTS AS UNDER :- A) ORIGINATING INSURER IN INDIA CONTACTS BODA FOR PLACING IDENTIFIED RISK/CLASS OF RISKS WITH INTERNATIONAL RE-INSURERS. B) BODA CONTACTS ONE OR MORE INTERNATIONAL FIRMS OF REINSURANCE BROKERS OUTSIDE INDIA REQUESTING FOR PROPOSALS FROM INTERNATIONAL RE-INSURERS/SYNDICATES. ITA NO.5646/DEL./2011 4 C) INTERNATIONAL REINSURANCE BROKERS LIKE GUY CARPE NTER CONTACT OTHER PRIMARY BROKERS AND VARIOUS SYNDICATES IN THE LLOYDS MARKET FOR COMPETITIVE PROPOSALS. D) BASED ON THE VARIOUS OFFERS RECEIVED JB BODA PRE SENTS THE VARIOUS OPTIONS TO THE INDIAN INSURERS WHICH MAKES THE FINAL DECISIONS. BASED ON THE DECISIONS MADE BY THE INDI AN INSURER THE POLICY TERMS ARE AGREED AND THE RISK IS PLACED WITH THE LLOYDS MARKET. FURTHER, AS PER NORMAL INDUSTRY PRA CTICE THE REINSURANCE PREMIUM NET OF BROKERAGE OF 10% AS PER THE POLICY CONTRACT IS REMITTED TO GUY CARPENTER FOR ONWARD TR ANSMISSION TO THE RE-INSURERS IN THE LLOYDS MARKET. E) SEPARATELY THE INTERMEDIATION FEE (BROKERAGE) IS SHARED BY A MUTUALLY AGREED RATIO WHICH ACCOUNTS FOR THEIR RELA TIVE CONTRIBUTIONS IN THE REINSURANCE PROCESS. TYPICALL Y HOWEVER THE INDIAN AND OVERSEAS REINSURANCE INTERMEDIARIES WOUL D SHARE THE TOTAL BROKERAGE INCOME EQUALLY. IT MAY HOWEVER BE NOTED THAT IN ANY RE-INSURANCE TRANSACTION MORE THAN ONE INSURANC E INTERMEDIARY MAY BE INVOLVED AT THE INDIA AND OVERS EAS LEVEL. 2.1 TO A FURTHER INQUIRY BY THE AO AS TO WHY THE A MOUNT RECEIVED BY THE ASSESSEE FOR SERVICES RENDERED FOR REINSURANCE BUSI NESS FROM INDIAN INSURANCE COMPANIES BE NOT TAXED AS FEE FOR TECHNICAL SERVIC ES IN TERMS OF PROVISIONS OF THE ACT AND THE DTAA BETWEEN INDIA AND UK, THE AS SESSEE REPLIED WHILE REFERRING TO DECISIONS IN CUSHMAN & WAKEFIELD (S) P TE LTD. IN RE [2008]305 ITR 208;SKYCELL COMMUNICATIONS LTD. VS. DCIT (119 TAXMA N 496) (MADRAS); RAYMOND LTD. VS.DCIT,86 ITD 791(MUMBAI);PAN AMSAT I NTERNATIONAL SYSTEMS INC.,103 TTJ861;CESC LTD. VS. DCIT,87 ITD 653(CAL.) ;NQA QUALITY SYSTEMS REGISTER LTD. VS. DCIT,92 TTJ 946(DEL.) THAT NO TE CHNOLOGY OR KNOWHOW WAS MADE AVAILABLE BY THE ASSESSEE TO ANY OF ITS INDIAN CLIENTS AND THEREFORE, THE INCOME RECEIVED BY THEM DID NOT QUALIFY AS FEE FOR TECHNICAL SERVICES. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS AND FOLLOWING HIS FINDINGS IN THE PRECEDING ASSESSMENT YEAR, PROPOSED TO BRING TO TAX AN AMOUNT OF ` `2,62,85,579/- RECEIVED BY THE ASSESSEE @10% IN TERMS OF PROVISION OF SECT ION 115A OF THE ACT. 3. THE ASSESSEE APPROACHED DRP AND RAISED A NUMB ER OF OBJECTIONS. THE DRP IN THEIR ORDER DATED 9.8.2011CONCLUDED AS UNDE R:- ITA NO.5646/DEL./2011 5 6. THE BASIC ISSUE PERTAINS TO WHETHER THE SERVICE S RENDERED BY THE ASSESSEE FOR ADVISING THE RIGHT REINSURANCE OPT ION TO THE INDIAN INSURANCE COMPANIES CAN BE TERMED AS FEE FOR TECHNI CAL SERVICE UNDER THE INCOME TAX ACT AND FEE FOR INCLUDED SERVI CE UNDER THE INDO-UK DTAA OR NOT. TO ANSWER THE QUESTION IT WOUL D BE IMPERATIVE TO UNDERSTAND THE KEY STEPS/PROCESS UNDE RTAKEN BY THE ASSESSEE TO EARN COMMISSION INCOME FROM INDIAN INSU RANCE COMPANIES. REINSURANCE IS INSURANCE THAT IS PURCHASED BY AN IN SURANCE COMPANY FROM ANOTHER INSURANCE COMPANY AS A MEANS O F RISK MANAGEMENT, TO TRANSFER RISK FROM THE INSURER TO RE -INSURER. IN INDIAN INSURANCE INDUSTRY, USUALLY INSURERS HAVE A PREFERRED INSURANCE BROKER IN INDIA. THE REINSURANCE BROKER L OCATED IN INDIA IN TURN CONTACTS REPUTABLE RE-INSURANCE BROKERS OUTSID E INDIA TO FIND A PROPER AND EFFICACIOUS SOLUTION OF RE-INSURANCE NEE D OF THE INDIAN INSURERS. THE ASSESSEE IS ONE OF THE REPUTED REINSU RANCE BROKERS, WHO HAVE A REPOSITORY OF CONTACTS, INFORMATION, COM MERCIAL EXPERIENCE, SKILL, KNOW-HOW OF LOCATING A PROPER SO LUTION FOR PARTICULAR KIND OF RISK SOUGHT TO BE RE-INSURED BY THE INDIAN INSURER. THE ASSESSEE CONTACTS THE REINSURANCE COMPANIES LOC ATED ABROAD AND ADVISES THE INDIAN COMPANY TO ENTER INTO CONTRA CTS WITH SUCH COMPANIES. THE NATURE OF SERVICES RENDERED BY THE A SSESSEE CLEARLY SHOWS THAT IT IS RENDERING CONSULTANCY SERV ICES TO THE INDIAN CONCERNS, WHICH IS COVERED UNDER THE DEFINITION OF FEE FOR TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT. WE ALSO FIND THAT THE CASE LAW OF RAYMOND LIMITED RELIED UPON BY THE ASSESSEE IN FACT SUPPORTS THE CONTENTION OF THE A.O. THAT TH E SERVICES RENDERED ARE IN THE NATURE OF CONSULTANCY SERVICE. IN THE CASE OF RAYMOND LIMITED, SERVICES OF UNDERWRITER IN ISSUING OF GDR WAS HELD TAXABLE AS CONSULTANCY SERVICES UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT BY THE ITAT MUMBAI. THEREAFTER THE I TAT GOES ON TO HOLD THAT SUCH SERVICES ARE NOT FIS UNDER INDO-U S TREATY. HOWEVER AS REGARDS TAXABILITY UNDER THE INCOME TAX ACT, IT WAS HELD TAXABLE AS FTS. WE FURTHER SEE THAT THE PAYMENT OF COMMISSION PAID TO THE ASSESSEE CAN ALSO BE SAID TO BE FOR THE USE OF INFO RMATION OF COMMERCIAL EXPERIENCE, SKILL, KNOW HOW ETC, WHICH A LSO FALLS WITHIN THE DEFINITION OF ROYALTIES UNDER SECTION 9(1)(VI) OF THE INCOME TAX ACT. THE CONTENTION OF THE ASSESSEE THAT THE PAYMENT IN QUESTION DOES NOT GET COVERED UNDER FEE FOR INCLUDED SERVICE UNDE R ARTICLE 13 OF INDO-UK DTAA HAS BEEN CONSIDERED. THE INDIAN INSURA NCE COMPANY WHO HAVE BEEN RECEIVING SERVICES RELATING T O FINDING OF ITA NO.5646/DEL./2011 6 APPROPRIATE REINSURANCE COMPANY WITH WHOM THEY ULTI MATELY ENTERS THE CONTRACT, GET TO KNOW THE SPECIALTY RISK BEARIN G CAPACITY, THEIR CONTACTS AS WELL. SO IN A WAY COMMERCIAL EXPERIENCE OF THE ASSESSEE ALSO BECOMES AVAILABLE TO THE INDIAN INSUR ER AND THEY CAN APPLY SUCH COMMERCIAL EXPERIENCE DIRECTLY IN CA SES WHEN THEY FIND THAT A PARTICULAR RE-INSURANCE COMPANY WITH WH OM IT HAD EARLIER ARRANGEMENT BY VIRTUE OF ADVICE GIVEN BY THE ASSESS EE, IS ABLE TO SATISFY THEIR REQUIREMENTS. THEY NEED NOT TAKE THE ADVICE OF THE REINSURANCE BROKER I.E THE ASSESSEE AGAIN. HENCE, I N A WAY, IT CAN BE SEEN AS A CASE WHERE TECHNICAL AND COMMERCIAL EX PERIENCE IS MADE AVAILABLE TO THE RECIPIENT OF SERVICE. WITHOUT PREJUDICE TO THE ABOVE, A RECENT RULING OF AAR IN THE CASE OF VERIZO N DATA SERVICES INDIA LIMITED, AFTER ELABORATELY INTERPRETING THE P ROVISIONS OF ARTICLE 12 OF THE INDOUS DTAA AND GUIDING PROTOCOL TO THE TREATY HAS CONCLUDED THAT IT IS NOT NECESSARY TO MAKE AVAILABL E CONSULTANCY KNOW HOW TO THE RECIPIENT IN ORDER TO HOLD THE SAME TAXABLE UNDER FIS. SINCE THE SCOPE OF FIS IS SIMILAR IN INDO-UK T REATY AS IN INDO- US TREATY AND ASSISTANCE OF EXPLANATION AND EXAMPLE S GIVEN IN THE PROTOCOL OF INDO-US TREATY IS WIDELY ACCEPTED, WE F IND SUFFICIENT MERIT IN THE CONTENTION THAT IT IS NOT NECESSARY TO ACTUALLY MAKE AVAILABLE THE CONSULTANCY KNOW HOW TO THE RECIPIENT IN ORDER TO BECOME TAXABLE UNDER ARTICLE 13 OF THE INDO-UK DTAA . RELEVANT EXTRACTS FROM THE RULING OF THE AAR IS REPRODUCED B ELOW:- THE APPLICANT'S CONTENTION IS THAT THESE MANAGERIA L SERVICES ARE CONSULTANCY SERVICES AND ARE COVERED UNDER ARTICLE 12 (4) OF THE DTAA. THE ARTICLE12 (4) READS AS UNDER: 4. FOR THE PURPOSES OF THIS ARTICLE, 'FEES FOR INC LUDED SERVICES' MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDE RATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PER SONNEL) IF SUCH SERVICES: (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYM ENT DESCRIBED IN PARAGRAPH 3 IS RECEIVED; OR (B) MAKE AVAILABLE TECHNICAL KNOWLEDGE/EXPERIENCE/S KILL, KNOW-HOW OR PROCESS, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. ITA NO.5646/DEL./2011 7 THE APPLICANT CONTENDS THAT AS THE MANAGERIAL SERVI CES ARE NOT MADE AVAILABLE TO THE APPLICANT, THE SERVICES RENDERED B Y THE SECONDED EMPLOYEES ARE NOT COVERED UNDER ART 12(4)(B) OF THE DTAA. IN THIS CONNECTION WE MAY REFER TO THE MEMORANDUM OF UNDERS TANDING OF THE DTAA WHICH EXPLAINS THE MEANING OF ''FEES FOR INCLU DED SERVICES' AS UNDER: 'ARTICLE 12 INCLUDES ONLY CERTAIN TECHNICAL AND CON SULTANCY SERVICES. BY TECHNICAL SERVICES WE MEAN IN THIS CONTEXT SERVI CES REQUIRING EXPERTISE IN A TECHNOLOGY. BY CONSULTANCY SERVICES WE MEAN IN THIS CONTEXT ADVISORY SERVICES. THE CATEGORIES OF TECHNI CAL AND CONSULTANCY SERVICES ARE TO SOME EXTENT OVERLAPPING BECAUSE A C ONSULTANCY SERVICE COULD ALSO BE A TECHNICAL SERVICE. HOWEVER, THE CAT EGORY OF CONSULTANCY SERVICES ALSO INCLUDES AN ADVISORY SERVICE, WHETHER OR NOT EXPERTISE IN A TECHNOLOGY IS REQUIRED TO PERFORM IT. UNDER PARAGRAPH 4, TECHNICAL AND CONSULTANCY SERVIC ES ARE CONSIDERED INCLUDED SERVICES ONLY TO THE FOLLOWING EXTENT; (1) AS DESCRIBED IN PARAGRAPH 4(A), IF THEY ARE ANCILLARY AND SUBSIDIAR Y TO THE APPLICATION OR ENJOYMENT OF A RIGHT, PROPERTY OR INFORMATION FOR W HICH A ROYALTY PAYMENT IS MADE; OR (2) AS DESCRIBED IN PARAGRAPH 4(B) IF T HEY MAKE AVAILABLE TECHNICAL KNOWLEDGE EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. THUS, UNDER PARAGRAPH 4(B), CONSULTANCY SERVICES WH ICH ARE NOT OF A TECHNICAL NATURE CANNOT BE INCLUDED SERVICES:' THE PHRASE TECHNICAL OR CONSULTANCY SERVICES APPEAR ING IN ARTICLE 12(4)(B) OF THE DTAA, IS FURTHER EXPLAINED IN THE MOU AS UND ER: ''PARAGRAPH 4(B) OF ARTICLE 12 REFERS TO TECHNICAL OR CONSULTANCY SERVICES THAT MAKE AVAILABLE TO THE PER SON ACQUIRING THE SERVICE TECHNICAL KNOWLEDGE, EXPERIEN CE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPME NT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN TO SUCH PERSON. (FOR THIS PURPOSE, THE PERSON ACQUIRING THE SERVICE SHALL BE DEEMED TO INCLUDE AN AGENT, NOMINEE, OR TR ANSFEREE OF SUCH PERSON.) THIS CATEGORY IS NARROWER THAN THE CATEGORY DESCRIBED IN PARAGRAPH 4(A) BECAUSE IT EXCLUDES ANY SERVICE ITA NO.5646/DEL./2011 8 THAT DOES NOT MAKE TECHNOLOGY AVAILABLE TO THE PERS ON ACQUIRING THE SERVICE. GENERALLY SPEAKING, TECHNOLO GY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRI NG THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FAC T THAT THE PROVISION OF THE SERVICE MAY REQUIRE TECHNICAL INPU T BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEAN T HAT TECHNICAL KNOWLEDGE, SKILLS, ETC. ARE MADE AVAILABL E TO THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANING O F PARAGRAPH 4(B). SIMILARLY, THE USE OF A PRODUCT WHI CH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE.' 7. FROM THE MEMORANDUM OF UNDERSTANDING OF THE DTAA IT IS CLEAR THAT THE SERVICES WHICH ARE NOT IN THE NATURE OF TECHNIC AL SERVICES, THE MAKE AVAILABLE CLAUSE WOULD NOT APPLY. AS THE SERVICES P ROVIDED BY GTE-OC ARE IN THE NATURE OF MANAGERIAL SERVICES, THE PAYMENTS MADE BY THE APPLICANT ARE COVERED UNDER FEE FOR INCLUDED SERVICES UNDER ART.12(4) OF THE DTAA.AS THE SERVICES ARE MANAGERIAL IN NATURE, THE PAYMENTS ARE ALSO COVERED UNDER FEE FOR TECHNICAL SERVICES AS DEFIN ED UNDER EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. SECONDLY THE SERVICES RENDERED BY THE ASSESSEE CAN ALSO BE COVERED UNDER THE TERM ROYALTIES WHICH COVERS THE P AYMENT RECEIVED AS CONSIDERATION FOR USE OR RIGHT TO USE O F INFORMATION CONCERNING COMMERCIAL ,INDUSTRIAL OR SCIENTIFIC EXP ERIENCE. IN VIEW OF THE DETAILED DISCUSSIONS IN THE FOREGOIN G PARAGRAPHS, THE PANEL IS OF THE CONSIDERED VIEW THAT THE PAYMENTS R ECEIVED BY THE ASSESSEE IS TAXABLE AS FEE FOR TECHNICAL SERVICE AN D/OR ROYALTIES UNDER RELEVANT PROVISIONS OF INCOME TAX ACT AS WELL AS DTAA BETWEEN INDIA AND UK. 8.1.6.7 ACCORDINGLY, THE AO IS RIGHT IN TAXING THE CONSIDERATION RECEIVED BY THE ASSESSEE AS ROYALTY IN TERMS OF CLA USE (V) OF EXPLANATION 2 TO CLAUSE (VI) OF SUBSECTION (1) OF S ECTION 9 OF THE ACT AS ALSO UNDER ARTICLE 13(3) OF THE INDO-UK DTAA. NO INTERVENTION IS ,THEREFORE, REQUIRED U/S 144C(5) OF THE ACT WITH RE FERENCE TO GROUND OF OBJECTION NO.1 ITA NO.5646/DEL./2011 9 4. IN THE LIGHT OF AFORESAID DIRECTIONS OF THE DRP , THE AO FOLLOWING HIS OWN FINDINGS IN THE ASSESSMENT ORDER FOR THE AY 200 6-07,CONCLUDED THAT THE SERVICES PROVIDED BY THE ASSESSEE FALL WITHIN THE D EFINITION OF FEES FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 TO SECTION 9(1 )(VII) OF THE ACT AS ALSO WITHIN THE CLAUSE 4(C )OF THE ARTICLE 13 OF THE TAX TREAT Y BETWEEN INDIA & UK READ WITH PARA 2 OF THE ARTICLE 13 OF THE TREATY. ACCORDINGLY , THE AO BROUGHT TO TAX GROSS RECEIPTS OF ` 2,62,89,574/- IN HIS ORDER DATED 3 RD OCTOBER, 2011 AS FEE FOR TECHNICAL SERVICES AND NOT BY WAY OF ROYALTY.. 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE AO. THE LD. AR ON BEHALF OF THE AS SESSEE WHILE INVITING OUR ATTENTION TO DECISION DATED 30.9.2011 OF A CO-ORDIN ATE BENCH IN THE ASSESSEES OWN CASE FOR THE AY 2006-07 IN ITA NO.2443/D/2011 P LEADED THAT THE PAYMENT RECEIVED BY THE ASSESSEE FROM INDIAN INSURANCE COMP ANY IN THE PROCESS REINSURANCE RISK PLACED WITH INTERNATIONAL REINSURA NCE COMPANIES, IS NOT TAXABLE AS FEE FOR TECHNICAL SERVICES. THE LD. AR POINTE D OUT THAT THE DRP EXCEEDED THEIR JURISDICTION WHILE HOLDING THE PAYMENT AS ROY ALTY AND IN THIS CONNECTION RELIED UPON THE DECISION OF THE HONBLE KARNATAKA H IGH COURT IN GE INDIA TECHNOLOGY CENTRE (P) LTD. VS. DISPUTE RESOLUTION P ANEL AND ANR. (2011) 338 ITR 416 (KAR).ON THE OTHER HAND, THE LD. DR SUPPOR TED THE FINDINGS OF THE AO IN THE LIGHT OF DECISION DATED 27 TH MAY, 2011 OF THE AAR IN THE CASE OF VERIZON DATA SERVICES INDIA PRIVATE LIMITED IN RE 865 OF 2010.IN HIS REJOINDER, THE LD. AR SUBMITTED THAT THE SAID DECISION OF AAR HAS BEEN SE T ASIDE BY THE HONBLE MADRAS HIGH COURT VIDE THEIR ORDER DATED 9 TH AUGUST, 2011 IN WP 14921 OF 2011. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THRO UGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON BY BOTH THE SIDES. INDISPUTABLY, THE AO IN HIS DRAFT ORDER DATED 7.12.2010, BROUGHT TO TAX THE PAYMENT RECEIVED BY THE ASSESSEE FROM INDIAN INSURANCE COMPANIES ON ACCOUNT OF REINSURANCE BUSINESS IN THE YEAR UNDER CONSIDERATION, AS FEE FOR TECHNIC AL SERVICES , ON THE BASIS OF HIS OWN FINDINGS FOR THE AY 2006-07. EVEN THOUGH THE DR P IN THEIR ORDER DATED 9 TH AUGUST,2011 OBSERVED THAT THE PAYMENT RECEIVED BY T HE ASSESSEE IS TAXABLE AS ITA NO.5646/DEL./2011 10 FEE FOR TECHNICAL SERVICE AND/OR ROYALTIES UNDER RE LEVANT PROVISIONS OF THE ACT AS WELL AS DTAA BETWEEN INDIA AND UK, THE AO IN HIS O RDER DATED 3.10.2011,TAXED THE AMOUNT AS FEE FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT AS ALSO WITHIN THE CL AUSE 4(C ) OF THE ARTICLE 13 OF THE TAX TREATY BETWEEN INDIA & UK. NOWHERE IN THE SAID ORDER, NOW DISPUTED BEFORE US, THE AO BROUGHT TO TAX THE AMOUNT AS ROYALTY. 6.1 BEFORE PROCEEDING FURTHER ,WE MAY HAVE A LOOK AT THE DECISION DATED 27 TH MAY, 2011 OF THE AAR IN THE CASE OF VERIZON DATA S ERVICES INDIA PRIVATE LIMITED IN RE 865 OF 2010 ,RELIED UPON BY THE LD. DR. IN TH AT CASE, THE ISSUE BEFORE THE AAR WAS AS TO WHETHER THE AMOUNTS ,REPRESENTING SA LARY AND BENEFITS PAYABLE BY GTE-OC TO EXPATRIATE EMPLOYEES, REIMBURSED BY TH E APPLICANT THEREIN TO GTC-OC WAS INCOME, LIABLE TO DEDUCTION OF TAX AT SO URCE U/S 195 OF THE ACT AND WHETHER THE SAME WAS TAXABLE AS FEES FOR INCLUDED S ERVICES UNDER THE ACT READ WITH INDO-US DTAA. THE AAR DECIDED BOTH THE QUESTIO NS IN THE AFFIRMATIVE. WE FIND THAT THE SAID DECISION OF AAR ON THE ISSUE OF APPLICABILITY OF ART. 12(4)(B) OF THE INDO-US DTAA HAS BEEN SET ASIDE BY THE HONBLE MADRAS HIGH COURT VIDE THEIR ORDER DATED 9 TH AUGUST, 2011 IN WP 14921 OF 2011 IN THE FOLLOWING TERMS: 28IN THE CIRCUMSTANCES ,WE FEEL THAT THIS PO RTION OF THE ORDER OF THE ADVANCE RULING AUTHORITY MERITS TO BE SET ASIDE AND HAS TO BE REMANDED BACK TO THE ADVANCE RULING AUTHORITY FOR FRESH CONSIDERATIO N ON THE ISSUE AS TO WHETHER THE SERVICES RENDERED BY THE SECONDED EMPLOYEES, WH ICH ARE RECORDED BY THE ADVANCE RULING AUTHORITY AS PURELY MANAGERIAL IN NA TURE, COULD BE FITTED IN WITH THE CONSULTANCY SERVICES AS GIVEN IN PARAGRAPH 4(B) OF ARTICLE 12 OF DTAA AND AS ENUMERATED IN THE MEMORANDUM OF UNDERSTANDING. 29. IN THE CIRCUMSTANCES, WE SET ASIDE THE ORDE R OF THE ADVANCE RULING AUTHORITY WITH REGARD TO QUESTION NO.2 AND REMIT TH E MATTER BACK TO THE ADVANCE RULING AUTHORITY FOR GIVING AN OPPORTUNITY TO THE A SSESSEE TO STATE ITS CASE AS TO THE NATURE OF SERVICES GIVEN BY THE SECONDED EMPLOY EES AND FOR RENDERING A FINDING IN TERMS OF WHAT IS PROVIDED IN PARAGRAPH 4 (B) OF ARTICLE 12 OF DTAA AND THE MEMORANDUM OF UNDERSTANDING. SINCE THE SAID ISS UE IS REMANDED , WE FEEL, IN FITNESS OF THINGS, QUESTION NOS. 3 TO 5 ALSO MER IT FRESH CONSIDERATION AT THE HANDS OF ADVANCE RULING AUTHORITY. ITA NO.5646/DEL./2011 11 6.11 IN VIEW OF AFORESAID DECISION OF THE HON BLE MADRAS HIGH COURT, WE ARE OF THE OPINION THAT RELIANCE BY THE LD. DR ON THE AFO RESAID DECISION OF THE AAR, RENDERED IN DIFFERENT FACTS AND CIRCUMSTANCES IS TO TALLY MISPLACED. 6.2 WE FURTHER NOTICE THAT AFTER THE OBJECTIO NS OF THE ASSESSEE AGAINST DRAFT ASSESSMENT ORDER WERE DISPOSED OF BY DRP VIDE THEIR ORDER DATED 9.8.2001, A CO-ORDINATE BENCH WHILE CONSIDERING AN IDENTICAL IS SUE IN THE ASSESSEES OWN CASE FOR THE AY 2006-07 IN THEIR ORDER DATED 30 TH SEPTEMBER, 2011, REFERRED TO A DECISION OF THE MUMBAI BENCH IN THE CASE OF RAYMOND LTD. VS. DCIT,86 ITD 791 AND CONCLUDED AS UNDER:- 27. IN THE ILLUSTRATIVE TRANSACTION, NEW INDIA INSU RANCE CO. LTD. IN INDIA HAS ENTERED INTO AN AGREEMENT TO REINSURE ON AN EXCESS LOSS BASIS THE CATASTROPHE RISK ARISING FROM ITS PRIMARY INSU RANCE COVER IN CONJUNCTION WITH J.B. BODA AND ALSFORD PAGE AND GEMS LTD. (THE REINSURANCE BROKERS). THE TERMS OF THE AGREEMENT SPECIFIES THAT THE ASSES SEE IN CONJUNCTION WITH J.B.BODA ARE RECOGNIZED AS INTERMEDIARY, THROUGH WH OM ALL COMMUNICATIONS RELATING TO THIS AGREEMENT SHALL PAS S. THE TERMS OF THE AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE WILL P ROVIDE ALL THE DETAILS OF AGREED ENDORSEMENTS TO THE REINSURERS BY E-MAIL OR FACSIMILE AND SHALL SUBMIT THE SLIP POLICY TO XIS (LLOYDS PROCESSING M ARKET) FOR SIGNING. THE ASSESSEE WILL ACT AS A CLAIM ADMINISTRATOR AND WILL SUBMIT CLAIMS ADVICES TO RELEVANT MARKET SYSTEMS. FOR THE SERVICES RENDERED, THE ASSESSEE ALONG WITH THE OTHER REINSURANCE BROKERS ACTING AS AN INT ERMEDIARY IN THE REINSURANCE PROCESS FOR NEW INDIA ASSURANCE CO. WIL L BE ENTITLED TO 10% BROKERAGE. FROM THE ROLE PLAYED BY THE ASSESSEE IN THE REINSURANCE PROCESS AS DISCUSSED ABOVE, IT IS EVIDENT TO US THA T THE ASSESSEE WAS RENDERING ONLY INTERMEDIARY SERVICES WHILE ACTING A S AN INTERMEDIARY/FACILITATOR IN GETTING THE REINSURANCE COVER FOR NEW INDIA INSURANCE CO. THERE EXISTS NO MATERIAL OR BASIS ON THE BASIS OF WHICH, IT COULD BE SAID THAT THE ASSESSEE WAS RENDERING ANY K IND OF TECHNICAL/CONSULTANCY SERVICE WITHIN THE MEANING OF ARTICLE 13 OF INDO-UK TREATY. THE CONSIDERATION RECEIVED BY THE ASSESSEE ACTING AS AN INTERMEDIARY IN THE REINSURANCE PROCESS CANNOT, BY ANY STRETCH OF IMAGINATION, BE QUALIFIED AS A CONSIDERATION RECEIV ED FOR RENDERING ANY FINANCIAL ANALYSIS RELATED CONSULTANCY SERVICES, RA TING AGENCY ADVISORY SERVICES, RISK BASED CAPITAL ANALYSIS ETC. AS ALLEG ED BY THE A.O. 28. ON GOING THROUGH THE DEFINITION OF FEES F OR TECHNICAL SERVICES GIVEN IN THE DTAA BETWEEN INDIA AND UK SO AS TO FIN D OUT WHETHER THE ITA NO.5646/DEL./2011 12 SERVICES RENDERED BY THE PRESENT ASSESSEE WOULD FAL L UNDER THE PURVIEW OF FEES FOR TECHNICAL SERVICES AS ENUMERATED IN ARTI CLE 13(4) OF DTAA BETWEEN INDIA& U.K., IT IS CLEAR THAT ARTICLE 13(4) EMPHASIS ON RENDERING ANY TECHNICAL OR CONSULTANCY SERVICES, WHICH ARE AN CILLARY AND SUBSIDIARY TO THE APPLICATION FOR ENJOYMENT OF ANY RIGHT, PROPERT Y OR INFORMATION FOR WHICH A PAYMENT IS RECEIVED, OR MADE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOWHOW OR PROCESSES OR CONSIST OF THE DEVEL OPMENT AND TRANSFER OF TECHNICAL PLAN OR TECHNICAL DESIGN. IN THE PRESENT CASE, WE ARE CONCERNED WITH THE SCOPE OF MEANING OF ARTICLE 13(4)(C) OF IN DO-UK TREATY, WHICH EMPHASIZES A RENDERING OF ANY TECHNICAL OR CONSULTA NCY SERVICES (INCLUDING PROVISIONS OF SERVICES OF TECHNICAL OR OTHER PERSON NEL), WHICH MADE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, K NOW-HOW OR PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF TECHNICA L PLAN OR TECHNICAL DESIGN. 28.1 FROM THE NATURE OF SERVICES RENDERED BY THE PRESENT ASSESSEE AS NOTED ABOVE, THE SERVICES DO NOT FIT INTO EITHER OF THE CATEGORIES DEFINED IN ARTICLE 13, SINCE THE SERVICES RENDERED BY THE ASSE SSEE DO NOT INVOLVED TECHNICAL EXPERTISE, NOR DID THE ASSESSEE MADE AVAI LABLE ANY TECHNICAL KNOWHOW, EXPERIENCE, SKILL ETC. WHAT WAS BEING DONE BY THE ASSESSEE WAS BASICALLY ACTING AS AN INTERMEDIARY IN THE PROCESS OF FINALIZATION OF REINSURER SUGGESTING VARIOUS OPTIONS TO THE INDIAN INSURANCE CO. FOR THEIR CONSIDERATION AND ACCEPTANCE. FROM THE AGREEMENT OF SERVICES ENTERED INTO BY THE ASSESSEE WITH INDIAN COMPANY FOR ACTING AS AN INTERMEDIARY, IT IS CLEAR THAT WHAT WAS MADE AVAILABLE BY THE ASSESS EE TO THE INDIAN INSURANCE CO. WAS ADVISORY SERVICES AND OPINION FOR SELECTION OF REINSURER IN THE INTERNATIONAL MARKET. IT HAS BEEN MENTIONED BY THE AO THAT THE SERVICES PROVIDED BY THE ASSESSEE WERE CONSULTANCY IN NATURE AS IT PROVIDES A HOST OF FINANCIAL ANALYSIS RELATED CONSU LTANCY SERVICES, RATING AGENCY ADVISORY SERVICES, RISK BASED CAPITAL ANALYS IS ETC. ON THE BASIS OF SOME OBSERVATIONS FOUND MENTIONED IN THE ASSESSEES WEBSITE BUT THE AO HAS NOT BEEN ABLE TO POINT OUT ANY MATERIAL OR EVID ENCE ON THE BASIS OF WHICH, IT COULD BE SAID THAT THE CONSIDERATION RECE IVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS TOWARDS ANY FINANCIAL ANALYSIS RELATED CONSULTANCY SERVICES, RATING AGENCY ADVISOR Y SERVICES, RISK BASED CAPITAL ANALYSIS ETC. 29. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT THE LANGUAGE USED IN ARTICLE 13(4) EXCLUDES MANAGERIAL SERVICES. IT EMPHASIZES ONLY A RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES. IT IS FURTHE R NOTICED THAT IN THE ARTICLE 13(4)(C), THE EXPRESSION USED IS MAKE AVAILABLE. THE MEANING ASCRIBED TO THE WORDS MAKE AVAILABLE HAS BEEN ELABORATELY APP RECIATED BY THE ITAT, MUMBAI BENCH `C IN THE CASE OF RAYMOND LTD. VS. DC IT (SUPRA), WHERE IT ITA NO.5646/DEL./2011 13 HAS BEEN OBSERVED THAT ONCE SEC. 9(1)(VII) OF THE I NCOME-TAX ACT STOPS WITH THE RENDERING OF TECHNICAL SERVICES, THE DTAA BET WEEN INDIA & UK GOES FURTHER AND QUALIFIES SUCH RENDERING OF SERVICES WI TH WORDS TO THE EFFECT THAT THE SERVICES SHOULD ALSO MAKE AVAILABLE TECHNICAL K NOWLEDGE, EXPERIENCE, SKILLS, KNOW-HOW OR PROCESSES TO THE PERSON UTILIZI NG THE SERVICES. THE HONBLE TRIBUNAL FURTHER OBSERVED THAT THE WORD WH ICH OCCURRING IN THE SAID ARTICLE AFTER THE WORD SERVICES AND BEFORE T HE WORDS MAKE AVAILABLE NOT ONLY DESCRIBES OR DEFINES MORE CLEARLY THE ANTE CEDENT NOUN (SERVICES) BUT ALSO GIVE ADDITIONAL INFORMATION ABOUT THE SAME IN THE SENSE THAT IT REQUIRES THAT THE SERVICES SHOULD RESULT IN MAKING AVAILABLE TO THE USER TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES ETC. THUS, THE NORMAL, PLAIN AND GRAMMATICAL MEANING OF THE LA NGUAGE EMPLOYED IN THE SAID ARTICLE 13(4)(C ) IS THAT A MERE RENDERING OF SERVICES IS NOT ROPED IN UNLESS THE PERSON UTILIZING THE SERVICES IS ABLE TO MAKE USE OF THE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILLS, KNOW-HOW OR PROCESSE S BY HIMSELF IN HIS BUSINESS OR FOR HIS OWN BENEFIT AND WITHOUT RECOURS E TO THE PERFORMER OF THE SERVICES IN FUTURE. THE TECHNICAL KNOWLEDGE, EX PERIENCE, SKILL, KNOW- HOW OR PROCESSES MUST REMAIN WITH THE PERSON UTILIZ ING THE SERVICES EVEN AFTER THE RENDERING OF THE SERVICES HAS COME TO AN END. A TRANSMISSION OF THE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILLS, KNOW-H OW OR PROCESSES FROM THE PERSON RENDERING THE SERVICES TO THE PERSON UTI LIZING THE SAME IS CONTEMPLATED BY THE ARTICLE 13(4)(C) OF THE INDO-UK TREATY. SOME SORT OF DURABILITY OR PERMANENCY OF THE RESULT OF THE REND ERING OF SERVICES IS ENVISAGED WHICH WILL REMAIN AT THE DISPOSAL OF THE PERSON UTILIZING THE SERVICES. THE FRUITS OF THE SERVICES SHOULD REMAIN AVAILABLE TO THE PERSON UTILIZING THE SERVICES IN SOME CONCRETE SHAPE SUCH AS TECHNICAL KNOWLEDGE, EXPERIENCE, SKILLS, KNOW-HOW OR PROCESSES. 29.1 BY MAKING AVAILABLE THE TECHNICAL SKILLS OR KNOW-HOW AND THE LIKE, THE RECIPIENT OF THE SERVICE WILL GET EQUIPPED WITH THAT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO TERMI NOLOGY MAKE AVAILABLE, THE TECHNICAL KNOWLEDGE, SKILLS, KNOW-HOW OR PROCE SSES MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PA RTICULAR CONTRACT COMES TO AN END. IT IS, THUS, FAIRLY CLEAR THAT MERE PROV ISION OF TECHNICAL SERVICES IS NOT ENOUGH TO ATTRACT ARTICLE 13(4)(C ) OF THE INDO -UK TREATY. IT ADDITIONALLY REQUIRES THAT THE SERVICE PROVIDER SHOULD ALSO MAKE HIS TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW ETC. KNOWN T O THE RECIPIENT OF THE SERVICE SO AS TO EQUIP HIM TO INDEPENDENTLY PERFORM THE TECHNICAL FUNCTION HIMSELF IN FUTURE, WITHOUT THE HELP OF THE SERVICE PROVIDER. IN OTHER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS FEES FOR TECHNICAL SERVICES ONLY IF THE TWIN TEST OF RENDERING SERVICES AND MAK ING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TIME IS SATISFIED. ITA NO.5646/DEL./2011 14 30 . THE IDENTICAL VIEW TAKEN BY THE INCOME-TAX APP ELLATE TRIBUNAL, MUMBAI BENCH `C IN THE CASE OF RAYMOND LTD. (SUPRA ), HAS ALSO BEEN TAKEN IN THE FOLLOWING CASES:- 1. INVENSYS SYSTEMS INC., IN RE (2009) 317 ITR 438 (AAR). 2. INTERTEK TESTING SERVICES INDIA P. LTD., IN RE ( 2008) 307 ITR418 (AAR). 3. R.R. DONNELLEY INDIA OUTSOURCE P. LTD., IN RE (2 011) 335 ITR 122(AAR). 4. CIT VS. VICE ROY HOTEL LTD. (2011) 11 TAXMANN.CO M 216 (HYD)/46 SOT 4 URO DECIDED BY ITAT, HYDERABAD BENCH . 31. IN THE PRESENT CASE, THE NEW INDIA INSURANCE CO . OR OTHER INSURANCE COMPANY IN INDIA, WHO AVAILS THE SERVICES OF THE AS SESSEE AS A BROKER IN THE PROCESS OF THE RE-INSURANCE OF THE RISK IS LEFT WITH NO TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES SO AS TO BRING THE SERVICES RENDERED BY THE ASSESSEE WITHIN THE AMBIT OF ARTICLE 13(4)(C) OF THE TREATY. AS ALREADY OBSERVED ABOVE, THE NATURE O F SERVICES RENDERED BY THE ASSESSEE ARE ALSO NOT IN THE NATURE OF ANY TECH NICAL OR CONSULTANCY SERVICES WHICH MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES TO THE USER. WE, THEREFORE, H OLD THAT THE PAYMENT RECEIVED BY THE ASSESSEE IN CONSIDERATION FOR RENDE RING INTERMEDIARY OR ADVISORY SERVICES IN THE PROCESS OF SELECTING RE-IN SURER, CANNOT BE QUALIFIED TO BE IN THE NATURE OF FEES FOR TECHNICAL SERVICES AS CONTEMPLATED UNDER ARTICLE 13(4)(C) OF THE DTAA BETWEEN INDIA & UK. SI NCE THE DTAA BETWEEN INDIA & UK APPLIES TO THE PRESENT CASE AND THE BENE FIT OF THE PROVISIONS CONTAINED IN DTAA WITH UK ARE AVAILABLE TO THE ASSE SSEE AS SO WELL SETTLED, AND SINCE THE PAYMENT RECEIVED BY THE ASSE SSEE IS NOT QUALIFIED TO BE IN THE NATURE OF FEES FOR TECHNICAL SERVICES WIT HIN THE MEANING OF ARTICLE 13(4)(C ) OF THE TREATY, WE HOLD THAT THE PAYMENT R ECEIVED BY THE ASSESSEE FROM THE INSURANCE COMPANY IN INDIA, CANNOT BE BROU GHT TO TAX IN INDIA AS FEES FOR TECHNICAL SERVICES. 32. IT IS NOT THE CASE OF THE REVENUE THAT THE ASSE SSEE HAS A PE IN INDIA SO THAT THE AMOUNT RECEIVED BY THE ASSESSEE IS OTHERWI SE TAXABLE IN INDIA UNDER ANY OTHER ARTICLES OF DTAA BETWEEN INDIA AND U.K. 33. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, WE, THEREFORE, HOLD THAT THE PAYMENT RECEIVED BY THE ASSESSEE FROM INDIAN INSURA NCE CO. IN THE PROCESS OF REINSURANCE RISK PLACED BY INDIAN INSURA NCE CO. WITH INTERNATIONAL REINSURANCE COMPANIES IS NOT TAXABLE IN INDIA AS FEES FOR TECHNICAL SERVICES. WE, THEREFORE, DELETE THE ADDI TION CONFIRMED BY THE CIT(A) BY SETTING ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND ALLOW THIS APPEAL FILED BY THE ASSESSEE. ITA NO.5646/DEL./2011 15 7. INDISPUTABLY AND AS POINTED OUT BY THE AO ALSO, THE FACTS AND CIRCUMSTANCES IN THE YEAR UNDER CONSIDERATION ARE P ARALLEL TO THE FACTS AND CIRCUMSTANCES IN THE AY 2006-07. ACCORDINGLY, FOLL OWING THE VIEW TAKEN BY THE CO-ORDINATE BENCH IN THEIR DECISION IN THE ASSESSE ES OWN CASE FOR THE AY 2006- 07, WE HAVE NO ALTERNATIVE BUT TO HOLD THAT THE PAY MENT RECEIVED BY THE ASSESSEE FROM INDIAN INSURANCE COMPANY IN THE PROCESS OF RE- INSURANCE RISK PLACED WITH INTERNATIONAL INSURANCE COMPANIES, IS NOT TAXABLE I N INDIA AS FEE FOR TECHNICAL SERVICES WITHIN THE MEANING OF ARTICLE 13(4)(C ) OF THE TRE ATY . ACCORDINGLY, ADDITION MADE BY THE AO IS DELETED. CONSEQUENTLY, G ROUND NOS. 1 TO 3 IN THE APPEAL ARE ALLOWED. 8. GROUND NO.4 RELATING TO LEVY OF INTEREST U/S 234 B OF THE ACT, BEING CONSEQUENTIAL NOR THE LD. AR HAVING MADE ANY SUBMIS SIONS BEFORE US ON THIS GROUND WHILE THE ENTIRE ADDITION MADE BY THE AO HAV ING BEEN DELETED BY US , THIS GROUND BECOMES ACADEMIC IN NATURE AND , THEREFORE, DOES NOT SURVIVE FOR OUR ADJUDICATION. 9. AS REGARDS ADDITIONAL GROUNDS NOS. 5 &6 SOUGHT TO BE RAISED BEFORE US , WE FIND THAT THE THESE ISSUES IN RELATION TO T AXATION OF INCOME AS ROYALTY ,DO NOT EMERGE FROM THE IMPUGNED ORDER DATED 3.10.2011 OF THE AO BEFORE US NOR THE LD. AR REFERRED US TO ANY SUCH FINDING OF THE AO REGARDING TAXATION OF THE AMOUNT AS ROYALTY. IT IS ONLY THE ORDER OF THE AO, WHICH IS IN DISPUTE BEFORE US AND NOT THE ORDER OF THE DRP .IN FACT, THE AO TAXED THE AMOUNT AS FEE FOR TECHNICAL SERVICES WITHIN THE MEANING OF EXPLANATION 2 TO SEC TION 9(1)(VII) OF THE ACT AS ALSO WITHIN THE CLAUSE 4(C )OF THE ARTICLE 13 OF THE TA X TREATY BETWEEN INDIA & UK. IN THESE CIRCUMSTANCES, WHEN THE ISSUES ARE PURELY ACA DEMIC, THE PRAYER FOR ADMISSION OF THESE ADDITIONAL GROUND NOS. 5 & 6 I S REJECTED. SINCE WE HAVE ALLOWED GROUND NOS.1 TO 3 IN THE APPEAL OF THE ASSE SSEE, PRAYER FOR ADMISSION OF ADDITIONAL GROUND NO.7 IS ALSO NOT ENTERTAINED. 10. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. ITA NO.5646/DEL./2011 16 11. IN RESULT, APPEAL IS ALLOWED. SD/- S D/- (R.P. TOLANI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. M/S GUY CARPENTER & CO. LTD., PWC, 11A, GA TE NO.2, SUCHETA BHAWAN, VISHNU DIGAMBAER MARG, NEW DELHI-2 2. ASSTT. DIRECTOR OF INCOME-TAX, CIRCLE 1(2) , NEW DELHI 3. CIT CONCERNED. 4. DR, ITAT,C BENCH, NEW DELHI 5. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT