ASSISTANT COMMISSIONER OF INCOME TAX,(IT-4(1)(1), MUMBAI V. RELIANCE GLOBALCOM LIMITED, BERMUDA, MUMBAI

ITA 5881/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9890 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 15-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Keywords: Business income; Depreciation; Deemed to accrue or arise in india; Set aside
• Section: 234B; 133(6); 195

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI BEFORE SHRI M. BALAGANESH , AM & SHRI RAVISH SOOD , JM ITA NO. 5881 / MUM/20 17 ( ASSESSMENT YEAR : 2013 - 14 ) ASSISTANT COMMISSIONER OF INCOME TAX (IT) - 4 (1)(1), MUMBAI, ROOM NO.1712, 17 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 VS. M/S. RELIANCE GLOBALCOM LTD., BERMUDA C/O. JITENDRA SANGHAVI & CO., 706A, MOTI MAHAL 195J, TATA ROAD CHURCHGATE, MUMBAI 400 020 PAN/GIR NO. AAACF4015D ( APPELLANT ) .. ( RESPONDENT ) ITA NO. 5806 /MUM/20 17 ( ASSESSMENT YEAR : 2013 - 14 ) M/S. RELIANCE GLOBALCOM LTD., BERMUDA C/O. JITENDRA SANGHAVI & CO., 706A, MOTI MAHAL 195J, TATA ROAD CHURCHGATE, MUMBAI 400 020 VS. ASSISTANT COMMISSIONER OF INCOME TAX (IT) - 4 (1)(1), MUMBAI, ROOM NO.1712, 17 TH FLOOR, AIR I NDIA BUILDING, NARIMAN POINT, MUMBAI 400 021 PAN/GIR NO. AAACF4015D (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI NISHANT SAMAIYA ASSESSEE BY SHRI JITENDRA SANGHAVI DATE OF HEARING 14 / 03 /201 9 DATE OF PRONOUNCEMENT 27 / 03 /201 9 / O R D E R PER M. BALAGANESH (A.M) : THESE CROSS APPEALS FILED BY ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 58, MUMBAI ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 2 [HEREINAFTER REFERRED TO AS THE LD CITA] , DATED 19/06/2017 FOR A.Y.2013 - 14 IN T HE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 144C( 1 3) OF THE INCOME TAX ACT. THESE CROSS APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS BEFORE US: - 1.THE LD. CIT (A) HAS ERRED IN CONCLUDING THAT THE AMOUNT OF RS. 10,48,73,710 / - PAID TO THE ASSESSEE BY AN INDIAN RESIDENT AS 'STANDBY MAINTENANCE CHARGES' WAS NOT IN NATURE OF 'FEE FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT, 1961 WITHOUT APPR ECIATING THAT MAINTENANCE OF INFRASTRUCTURE BY WAY OF DEPLOYING CABLE SHIPS, SUBMERSIBLE EQUIPMENT, KEEPING TRAINED STAFF ON STANDBY, AND MAINTENANCE AND OPERATION OF NETWORK OPERATION CENTRE AS PER THE CONSTRUCTION AND MAINTENANCE AGREEMENT DATED 14.12.19 95, CONSTITUTED RENDERING OF SERVICES FOR THE PURPOSE OF CONSTANTLY MONITORING THE UNDER - SEA CABLE SYSTEMS AND HENCE THE SAID PAYMENT IS FOR MANAGERIAL AND TECHNICAL SERVICES RENDERED BY THE ASSESSEE WHICH IS COVERED UNDER SECTION 9(1)(VII) OF THE ACT.' 2 . 'THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THE AMOUNT OF RS. 10,48,73,710 RECEIVED BY ASSESSEE AS STANDBY MAINTENANCE CHARGES WAS NOT IN NATURE OF 'FEE FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT NO SE RVICES WERE RENDERED DURING THE YEAR, IGNORING THE INVOICE AVAILABLE ON RECORD INDICATING CHARGES PAID TOWARDS SUCH SERVICES AND WITHOUT APPRECIATING THE FACT THAT BY WAY OF MAINTENANCE AND REPAIRS OF CABLE SYSTEM, THE ASSESSEE RENDERED MANAGERIAL AND TECH NICAL SERVICE IN THE FORM OF COMMERCIAL ADVANTAGE TO ASSIGNEES BY ENSURING THAT THE CABLE SYSTEM WAS IN SEAMLESS OPERATIONAL CONDITION AT ALL TIMES AND IN CASE OF ACTUAL NEED FOR THE REPAIRS AND MAINTENANCE, THE SAME COULD BE CARRIED WITHIN LEAST TIME.' 3 . 'THE LD. CIT(A) ERRED IN CONCLUDING THAT THE AMOUNT RECEIVED BY ASSESSEE AS STANDBY MAINTENANCE CHARGES WERE NOT OF THE NATURE OF TEE FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VII) OF THE ACT ON THE GROUND THAT SERVICE WAS NOT RENDERED WHILE HOLDING AT THE SAME TIME THAT WHENEVER PAYMENT IS RECEIVED ON ACCOUNT OF ACTUAL REPAIR OR MAINTENANCE CARRIED OUT, THEN SAME WOULD DEFINITELY FALL WITHIN THE AMBIT OF FTS CHARGEABLE TO TAX U/S 9(1)(VII) AND THE LD. CIT(A) SHOULD HAVE APPRECIATED THAT STANDBY MAINTENA NCE SERVICE WAS ONLY A PRELUDE AND PART OF THE FINAL RESPONSIBILITY OF ASSESSEE FOR CARRYING REPAIRS AND MAINTENANCE OF CABLE SYSTEM.' ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 3 4. 'THE LD. CIT(A) ERRED IN CONCLUDING THAT THE AMOUNT RECEIVED BY ASSESSEE AS STANDBY MAINTENANCE CHARGES WERE NOT OF T HE NATURE OF 'FEE FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VII) OF THE ACT ON THE GROUND THAT THEY WERE IN NATURE OF REIMBURSEMENT WITHOUT ANY PROFIT ELEMENT OR MARK UP WITHOUT APPRECIATING THAT PROFIT ELEMENT OR MARK UP CANNOT BE HELD AS A VALID GROUND FOR DETERMINING THE CHARACTERIZATION OF INCOME AS FEES FOR TECHNICAL SERVICES. 5. 'THE LD. CIT(A) ERRED IN CONCLUDING THAT THE AMOUNT OF RS. 10,48,73,710 RECEIVED BY ASSESSEE AS STANDBY MAINTENANCE CHARGES WAS NOT IN NATURE OF 'FEE FOR TECHNICAL SERVICES' UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT NO SERVICES WERE RENDERED DURING THE YEAR, IGNORING THE EVIDENCE IN THE FORM OF REPLY TO NOTICE U/S 133(6) EMAIL COMMUNICATION BETWEEN TATA COMMUNICATIONS LIMITED (TCL) ENGINEERS AND A SSESSEE, CLEARLY EVIDENCING THAT SERVICES ARE RENDERED AGAINST THE STANDBY MAINTENANCE CHARGES LEVIED BY ASSESSEE FROM TCL.' 6. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) MAY BE SET ASIDE ON THE ABOVE GROUND AND THAT OF THE ASSESSING OFFICER RESTOR ED.' 7. 'THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY.' 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - A. TAXABILITY OF RECEIPTS OF STANDBY MAINTENANCE CHARGES IN INDIA: 1. ON THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 58, MUMBAI ('THE CIT(A)') ERRED IN HOLDING THE ACTION OF DEPUTY COMMISSIONER OF INCOME - TAX (INTERNATIONAL TAXATION) - 4(1 )(1), MUMBAI ('THE ASSESSING OFFICER') THAT TH E RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TATA COMMUNICATIONS LIMITED ('TCL') (FORMERLY KNOWN AS VIDESH SANCHAR NIGAM LIMITED) IS TAXABLE IN INDIA. THE APPELLANT SUBMITS THAT THE RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL IS NOT TAXABLE IN INDIA AS THE WHOLE ACTIVITY HAVE BEEN CARRIED OUT OUTSIDE INDIA DURING THE YEAR UNDER CONSIDERATION. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THE ACTION OF THE ASSESSING OFFICER THAT THE RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL IS TAXABLE IN INDIA WITHOUT APPRECIATING THE FACTS THAT NO INCOME ACCRUING OR ARISING, WHETHER DIRECTLY OR INDIRECTLY, THROUGH OR FROM ANY BUSINESS CONNECTION IN ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 4 INDIA, OR THROUGH OR FROM ANY PROPERTY IN INDIA, OR THROUGH OR FR OM ANY ASSET OR SOURCE OF INCOME IN INDIA. THE APPELLANT SUBMITS THAT THE SAID RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL IS NOT TAXABLE IN INDIA. WITHOUT PREJUDICE TO THE ABOVE GROUND: 3. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ACCEPT THE LOSS AS COMPUTED IN THE COMPUTATION OF INCOME BY THE APPELLANT. THE APPELLANT SUBMITS THAT THE INCOME / (LOSS) AS PER THE COMPUTATION OF INCOME OUGHT TO HAVE BEEN ACCEPTED. 4. ON THE FACT A ND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ENTIRE TURNOVER (RECEIPTS FROM THE INDIAN PARTIES) IS TO BE TREATED AS TURNOVER FOR THE PURPOSE OF TAXATION IN INDIA WITHOUT GIVING ANY NOTICE FOR ENHANCEMENT OR OPPORTUNITY TO THE APPELLANT. THE APPELLANT SUBMITS THAT ENTIRE RECEIPT FROM THE INDIAN PARTIES IS NOT TAXABLE IN INDIA. 5. ON THE FACT AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL CANNOT BE AP PORTIONED BASED ON THE LENGTH OF CABLE IN INDIA. THE APPELLANT SUBMITS THAT THE RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL IS ON ACCOUNT OF STANDBY MAINTENANCE ACTIVITIES OUTSIDE INDIA AND WITHOUT PREJUDICE, TO THE FACT THAT THE SAID REVENUE IS NOT T AXABLE IN INDIA, IT CAN BE, AT THE MOST, BE APPORTIONED AND TAXED IN INDIA BASED ON THE CABLE LENGTH IN INDIA. B. CHARGING OF INTEREST UNDER SECTION 234B OF THE INCOME - TAX ACT, 1961 ('THE ACT'): 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LEARNED CIT(A) ERRED IN HOLDING THE ACTION OF THE ASSESSING OFFICER THAT CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT IS CONSEQUENTIAL IN NATURE AND NO SPECIFIC DIRECTION CAN BE IS SUED TO THE ASSESSING OFFICER. THE APPELLANT SUBMITS THAT THE RECEIPT OF STANDBY MAINTENANCE CHARGES FROM TCL IS SUBJECTED TO WITHHOLDING TAX UNDER SECTION 195 OF THE ACT AND THE APPELLANT HAS NO LIABILITY TO PAY ADVANCE TAX AND CONSEQUENTIAL THE INTEREST U/S. 234B OF THE ACT IS WRONGLY CHARGED. C. GENERAL: ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 5 7. T HE APPELLANT CRAVES LEAVE, TO ADD, AMEND OR ALTER THE ABOVE GROUNDS OF APPEAL. 3. BEFORE WE PROCEED TO ADDRESS THE RESPECTIVE GROUNDS OF APPEAL RAISED, THE BRIEF BACKGROUND OF THE DISPUTE CAN BE SUMMARIZED AS FOLLOWS . AT THE OUTSET, IT WAS A COMMON GROU ND BETWEEN THE PARTIES THAT SOME OF THE SIMILAR DISPUTE CAME UP BEFORE THE TRIBUNAL IN VARIOUS ASSESSMENT YEARS STARTING FROM THE YEAR 1998 - 1999. THESE DISPUTES WERE DISPOSED OFF BY THIS TRIBUNAL IN ITA NO.6254/MUM/2003 DATED 06/02/2015. SIMILARLY, THIS T RIBUNAL VIDE ITS ORDER IN ITA NO.225 5/MUM/2006 DATED 15/06/2015 REITERATED ITS EARLIER DECISION FOR THE A.Y.2001 02 TO 2008 - 09. THE PRESENT DISPUTES RAISED FOR THE A.Y.2011 - 12 ARE TO BE LOOKED INTO IN THIS BACKGROUND. 3.1. THE ASSESSEE BEFORE US IS A COMPA NY INCORPORATED IN BERMUDA AND OWNS HIGH CAPACITY FIBRE OPTIC TELECOMMUNICATION CABLE USED FOR PROVIDING DATA AND VOICE SERVICES. THE ASSESSEE - COMPANY IS A TAX RESIDENT OF BERMUDA AND ITS FIBRE OPTIC TELECOMMUNICATION CABLE, WHICH IS LAID UNDER SEA, PROVID ES A TELECOMMUNICATION LINK BETWEEN U.K AND JAPAN. AT THE TIME OF HEARING, IT WAS EXPLAINED THAT A MAJOR PART OF THE CABLE SYSTEM IS INSTALLED OUTSIDE THE TERRITORIAL WATERS OF THE RESPECTIVE COUNTRIES AND THE CABLE HAS TO COME ASHORE, WHICH IS CALLED AS LANDING POINTS, IN CERTAIN COUNTRIES IN ORDER TO PROVIDE CONNECTION WITH THE DOMESTIC TELECOMMUNICATION SYSTEMS. TO ACHIEVE THIS, ASSESSEE - COMPANY HAS CONTRACTED WITH THE DOMESTIC TELECOMMUNICATIONS COMPANIES OF THE RESPECTIVE COUNTRIES IN WHICH THE CABLE LANDS, AND SUCH CONCERNS ARE TERMED AS LANDING PARTIES. SO FAR AS THE DISPUTE BEFORE US IS CONCERNED, IT WOULD BE SUFFICE TO KNOW THAT THE CABLE LANDS IN INDIA AT MUMBAI AND THE LANDING PARTY IN INDIA IS TATA COMMUNICATIONS LTD. (TCL). AS PER THE TERMS OF AGREEMENT WITH THE TELECOMMUNICATION COMPANIES WORLDWIDE OR THE LANDING PARTIES, ASSESSEE AGREED TO PROVIDE MAINTENANCE ON BEHALF OF ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 6 SUCH COMPANIES TO KEEP THE CABLE SYSTEM IN PROPER WORKING CONDITION AT ALL TIMES. SUCH SERVICES ARE PROVIDED BY THE AS SESSEE BY CONTRACTING WITH CONCERNS IN THIS BEHALF WITH A VIEW TO MINIM IZING INTERRUPTIONS TO THE USE OF NETWORK CAPACITY CONTAINED IN THE CABLE SYSTEM. THE MAINTENANCE ACTIVITY SO UNDERTAKEN BY THE ASSESSEE IS A PART OF ITS NORMAL BUSINESS ACTIVITY WHICH, INTER - ALIA, CONSISTS OF ARRANGING FOR A STANDBY FACILITY. THE STANDBY FACILITY IS BY WAY OF TWO CABLE SHIPS AVAILABLE IN THE SEA TO RESPOND AND REPAIR ANY BREAKDOWNS. SUCH STANDBY FACILITY CARRIES OUT MAINTENANCE OR ARRANGES MAINTENANCE OF CABLE CROSSIN G VARIOUS COUNTRIES AND SAME ALSO, INTER - ALIA, INVOLVES SURVEILLANCE AND CO - ORDINATION CENTRE FOR CABLE SYSTEM, ETC. ASSESSEE RECOVERED STANDBY MAINTENANCE CHARGES FROM VARIOUS LANDING PARTIES, INCLUDING FROM TCL. THE STAND OF THE ASSESSEE WAS THAT THE I NCOME FROM SUCH STANDBY MAINTENANCE ACTIVITY, IF ANY, WAS TAXABLE IN INDIA UNDER THE PROVISIONS OF SEC. 9(1)(I) OF THE ACT BECAUSE OF EXISTENCE OF THE CABLE SYSTEM IN INDIA ALSO. AS ONLY A PORTION OF THE CABLE SYSTEM WAS LOCATED IN INDIA, ASSESSEE CONTENDE D THAT ONLY A REASONABLE PORTION OF THE NET INCOME FROM STANDBY MAINTENANCE ACTIVITY COULD BE TAXED IN INDIA. THEREFORE, IN THE COMPUTATION OF INCOME ANNEXED TO THE RETURN, ASSESSEE DETERMINED THE STANDBY MAINTENANCE REVENUES RECEIVED IN RESPECT OF THE CAP ACITY IN THE NETWORK CABLE SYSTEM AND THEREAFTER DETERMINED THE PROFITS ATTRIBUTABLE TO INDIA BASED ON THE LENGTH OF THE CABLE IN THE TERRITORIAL WATERS OF INDIA VIS - A - VIS THE LENGTH OF CABLE WORLDWIDE. THE REVENUES SO ATTRIBUTABLE TO INDIA WERE FURTHER RE DUCED BY ALL RELATED EXPENSES AND THE RESULTANT WAS SOUGHT TO BE DETERMINED AS THE PROFIT OR LOSS DEEMED TO ACCRUE OR ARISE IN INDIA IN TERMS OF SEC. 9(1)(I) OF THE ACT. 3.2. THE ASSESSEE HAD RETURNED A LOSS OF RS.2,09,758/ - IN ITS RETURN OF INCOME FILED ON 29/09/2013 AS THE LOSS ATTRIBUTABLE TO INDIA OF STANDBY MAINTENANCE ACTIVITY. HOWEVER, THE LEARNED ASSESSING OFFICER WAS NOT ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 7 SATISFIED WITH THE STAND OF THE ASSESSEE IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AS, ACCORDING TO HIM, THE AMOUNTS RECEIVED BY THE ASSESSEE FROM TCL WERE IN THE NATURE OF FEE FOR TECHNICAL SERVICES AS DEFINED IN EXPLANATION - 2 TO SECTION 9(1)(I) OF THE ACT AND, THEREFORE, HE BROUGHT TO TAX THE SAME @ 20% IN TERMS OF SEC. 115A OF THE ACT. MOREOVER, THE LEARNED ASSESSING OFFICE R BROUGHT TO TAX THE ENTIRE STANDBY MAINTENANCE SERVICE REVENUE RECEIVED ON GROSS BASIS FROM TCL, WHICH WAS CONTRARY TO ASSESSEES ASSERTION OF ATTRIBUTING SUCH REVENUE ON THE BASIS OF THE LENGTH OF THE CABLE IN INDIAN TERRITORIAL WATERS. THE ASSESSEE HAD SOUGHT DETERMINATION OF REVENUE BY APPLYING PROPORTION OF CABLE LENGTH IN INDIA VIS - A - VIS TOTAL CABLE LENGTH WORLDWIDE. IN THIS MANNER, THE LEARNED ASSESSING OFFICER BROUGHT TO TAX THE STANDBY MAINTENANCE CHARGES AS FEES FOR TECHNICAL SERVICES AT RS.10,4 8,73,710/ - WHICH WAS TAXED @ 20% U/S 115A OF THE ACT. 3.3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO DISAGREED WITH THE STAND OF THE LEARNED ASSESSING OFFICER THAT THE IMPUGNED AMOUNT WAS FEE FOR TECHNICAL SERVICES. INSTEA D, AS PER THE LEARNED CIT(A), THE AMOUNTS DO NOT REPRESENT FEE FOR TECHNICAL SERVICES AND THAT THE SAME WAS LIABLE TO BE TAXED AS BUSINESS INCOME, BUT ONLY TO THE EXTENT OF ITS REFERENCE TO THE BUSINESS CONNECTION IN INDIA. THIS ASPECT OF THE DECISIO N OF LEARNED CIT(A) IS CHALLENGED BY THE REVENUE IN ITS APPEAL BEFORE US. 3.4. AFTER TREATING THE AMOUNTS TO BE IN THE NATURE OF BUSINESS INCOME, THE LEARNED CIT(A) HELD THAT THE SAME ARE LIABLE TO BE TAXED IN INDIA VIS - A - VIS THE TURNOVER ARISING TO THE ASSESSEE WITH REFERENCE TO THE INDIAN BUSINESS CONNECTION. THE LEARNED CIT(A) NOTICED THAT IN THE COMPUTATION MADE BY THE ASSESSEE, IT HAD NOT INCLUDED THE TOTAL RECEIPTS FROM TCL AS ITS TURNOVER WHILE COMPUTING THE GAIN/LOSS. OSTENSIBLY, THE ASSESSEE HAD ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 8 OFFERED THE REVENUES FROM THIS ACTIVITY BY HOLDING THAT ONLY A PORTION OF THE TOTAL RECEIPTS FROM TCL COMPUTED IN THE RATIO OF THE LENGTH OF CABLE IN INDIAN TERRITORIAL WATERS VIS - A - VIS THE TOTAL LENGTH WORLDWIDE IS ATTRIBUTABLE TO OPERATIONS IN INDIA. TH E LEARNED CIT(A) DIFFERED WITH THE ASSESSEE ON TREATING THE LENGTH OF CABLE AS A REASONABLE BASIS FOR APPORTIONING OF TURNOVER BETWEEN THE INDIAN BUSINESS CONNECTION VIS - A - VIS THE TOTAL RECEIPTS FROM WORLDWIDE LENGTH OF CABLE. AS PER THE LEARNED CIT(A), TH E STANDBY MAINTENANCE CHARGES DO NOT HAVE ANY CONNECTION WITH THE LENGTH OF CABLE AND, IN FACT, THEY REPRESENT FIXED AND RUNNING COSTS WITH REFERENCE TO MAINTAINING THE STANDBY FACILITY. HE, THEREFORE, UPHELD THE STAND OF THE LEARNED ASSESSING OFFICER THAT THE ENTIRE TURNOVER, I.E. GROSS RECEIPTS FROM THE INDIAN LANDING PARTY, I.E. TCL, WAS LIABLE TO BE TREATED AS TURNOVER FOR THE PURPOSE OF COMPUTING THE INCOME ATTRIBUTABLE TO BUSINESS CONNECTION IN INDIA. 4. AGAINST SUCH A DECISION OF THE LEARNED CIT(A) , ASSESSEE IS IN APPEAL BEFORE US ON THE AFORES AID G ROUNDS OF APPEAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS. WE FIND THAT GROUNDS RAISED BY THE REVENUE AND THE G ROUND NOS.1 TO 5 RAISED BY THE ASSESSEE ARE ADJUDICATED BY THIS TRIBUNAL UNDER SIMILAR CIRCUMSTANC ES IN ASSESSEES OWN CASE IN ITA NO.2084 & 2085/MUM/2016 FOR A.Y. 2010 - 11 & 2011 - 12 DATED 04/05/2018 WHEREIN IT WAS HELD AS UNDER: - 8. IN THIS MANNER, THE RIVAL COUNSELS HAVE MADE THEIR SUBMISSIONS. WE FIND THAT THE ISSUE REGARDING THE NATURE OF SERVICES CAME - UP BEFORE THE TRIBUNAL FOR THE FIRST TIME IN ASSESSMENT YEARS 1998 - 99 TO 2000 - 01, AND VIDE ORDER DATED 06.02.2015 IT WAS HELD THAT THE SAME ARE NOT IN THE NATURE OF FEE FOR TECHNICAL SERVICES. SUBSEQUENTLY, FOR ASSESSMENT YEARS 2001 - 02 TO 2008 - 09, THE MATTER AGAIN CAME - UP BEFORE THE TRIBUNAL, AND VIDE ORDER DATED 15.06.2015, THE AMOUNT HAS BEEN HELD NOT TO BE IN THE NATURE OF FEE FOR TECHNICAL SERVICES U/S 9(1)(VII) OF THE ACT. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 06.02.2015 (SUPRA) IS AS UNDER : - 68. THE SECOND ISSUE RELATES TO TAXABILITY OF STANDBY MAINTENANCE CHARGES AS FEES FOR TECHNICAL SERVICES U/S 9(1)(VII), AS RAISED BY THE ASSESSEE IN GROUND NO. 4. AS STATED EARLIER, THE ASSESSEE ALONG WITH CONSORTIUM OF OTHER PA RTIES HAS BUILT THE SUBMARINE FIBRE OPTIC CABLE ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 9 PROVIDING TELECOMMUNICATION LINK BETWEEN UK AND JAPAN. UNDER THE TERMS OF C&MA THE FLAG CABLE SYSTEM IS TO BE JOINTLY OPERATED AND MAINTAINED IN EFFICIENT WORKING CONDITION OR ALONG WITH THE FOUNDING SIGNATOR Y I.E. FLAG AND THE LANDING PARTY SIGNATORIES. THE OPERATION AND MAINTENANCE DUTIES AND RIGHTS HAS BEEN ELABORATED IN PARA 10 ALONG WITH VARIOUS SUB CLAUSES. THE ENTIRE CABLE SYSTEM IS TO BE OPERATED AND MAINTAINED BY FOUNDING SIGNATORY IN CO - ORDINATION WI TH RELEVANT LANDING PARTY SIGNATORY. FLAG NETWORK OPERATION CENTRE (FNOC) HAS TO PROVIDE OVERALL NETWORK SERVICE SURVEILLANCE AND OVER ALL CO - ORDINATION OF MAINTENANCE AND REPAIR OPERATIONS OF FLAG CABLE SYSTEM. THE FLAG HAS TO CO - ORDINATE THE DEPLOYMENT O F THE VESSELS FOR REPAIRS AND MAINTENANCE OPERATION IN ACCORDANCE WITH THE PROCEDURE DEFINED. PARA 11 ALONG WITH VARIOUS SUB CLAUSES PROVIDES THE RESPONSIBILITY FOR OPERATION AND MAINTENANCE COST. CLAUSE 11.11 GIVES THE DETAILS OF ACTIVITIES, EXPENSES AND COST INCURRED. THE RELEVANT CLAUSE READS AS UNDER: - 11.1 THE COST OF STANDBY MAINTENANCE OF SEGMENTS S.X - 1 AND X - 2, INCLUDING, BUT NOT LIMITED TO, THE MAINTENANCE OF SEGMENTS S X - 1 AND X - 2, THE FNOC, THE PROCUREMENT OF CABLE SHIP SERVICES COVERING, INT ER ALIA, SHIP DEPRECIATION, SHIP RETROFIT, CREW, INSURANCE (EXCEPT INSURANCE AT SEA), IN - PORT EXPENSES, THE STORAGE OF SUBMERSIBLE PLANT, REMOTELY OPERATED VEHICLES AND OTHER DEVICES WHEN INCLUDED IN THE WET MAINTENANCE ZONE AGREEMENT STANDBY CHARGES, SHAL L BE RECOVERED BY THE FOUNDING SIGNATORY THROUGH FIXED CHARGES PAYABLE BY THE SIGNATORIES AND OTHER HOLDERS OF ASSIGNABLE CAPACITY, IN ACCORDANCE WITH SCHEDULES H - 1 THROUGH H - 55 AND J. ADJUSTED TO REFLECT INFLATION. 11.2 THE COST OF RUNNING CHARGES, WHIC H SHALL BE LIMITED TO RECOVERY THE DIRECT INCREMENTAL COSTS INCURRED IN CONNECTION WITH A REPAIR OPERATION INVOLVING SEGMENT S OR SEGMENT X - 1 OR SEGMENT X - 2, INCLUDING, BUT NOT LIMITED TO, THE COST OF FUEL, AT SEA INSURANCE, ADDITIONAL CREW AT SEA, CREW OV ERTIME, VICTUAL LING, TELECOMMUNICATIONS, MOBILIZATION AND DE - MOBILIZATION EXPENSES, CONSUMABLES, REPLENISHED EQUIPMENT, AND REMOTELY OPERATED VEHICLES, THE EXTENT NOT INCLUDED IN THE WET MAINTENANCE AGREEMENT STANDBY CHARGES, SHALL BE APPORTIONED AMONG SI GNATORIES (EXCLUDING THE FOUNDING SIGNATORY) AND OTHER HOLDERS OF ASSIGNABLE CAPACITY ON THE AFFECTED SEGMENT S OR SEGMENT X - 1 OR SEGMENT X - 2 IN ACCORDANCE WITH SCHEDULE F. 69. THUS, UNDER THE C&MA THE RESPONSIBILITY OF MAINTENANCE AND REPAIRS BELONGS TO BOTH, ASSESSEE AND THE LANDING PARTIES. THE MAINTENANCE ACTIVITIES UNDER TAKEN BY THE ASSESSEE FOR THE PURPOSE OF STANDBY MAINTENANCE WHICH IS THE IMPUGNED ISSUE, WAS FOR THE ARRANGEMENT FOR STANDBY COVER AND MAINTENANCE AND OPERATION OF FNOC. SO FAR AS S TANDBY MAINTENANCE CHARGES IS CONCERNED, IT IS NOT IN RESPECT OF ANY ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 10 ACTUAL RENDERING OF SERVICES BUT TO MAINTAIN INFRASTRUCTURES FOR CO - ORDINATION AND SETTING UP CONDITIONS FOR EFFICIENT RENDERING OF SERVICES IN RELATION TO MAINTENANCE AND REPAIRS OF CABL E SYSTEM. THERE IS A SEPARATE CHARGE FOR REPAIR AND MAINTENANCE UNDER THE C&MA WHEREBY, THE ASSESSEE IS ACTUALLY REQUIRED TO UNDERTAKE REPAIR AND MAINTENANCE AND FOR WHICH THE ASSESSEE SEPARATELY CHARGES. SUCH A REPAIR AND MAINTENANCE IS SEPARATE FROM STAN DBY MAINTENANCE COST, WHICH IS IN THE NATURE OF REIMBURSEMENT OF FIXED COST. THE STANDBY MAINTENANCE IS A FIXED ANNUAL CHARGE WHICH IS PAYABLE NOT FOR PROVIDING OR RENDERING SERVICES BUT FOR ARRANGING STANDBY MAINTENANCE ARRANGEMENT WHICH IS REQUIRED FOR A SITUATION WHENEVER SOME REPAIR WORK IN THE UNDERSEA CABLE OR TERRESTRIAL CABLE IS ACTUALLY TO BE PERFORMED OR RENDERED. IT IS A FACILITY OR INFRASTRUCTURE MAINTAINED FOR READY TO USE OR RENDER THE TECHNICAL SERVICES OR REPAIR SERVICES, IF REQUIRED. ON THE SE FACTS WE HAVE TO EXAMINE WHETHER ASSESSEE IS PROVIDING ANY SERVICE TO VSNL IN RESPECT OF STANDBY MAINTENANCE. 70. EXPLANATION 2 TO SECTION 9(1)(VII) DEFINES FEES FOR TECHNICAL SERVICES IN THE FOLLOWING MANNER: - EXPLANATION (2) - FOR THE PURPOSE OF THIS CLAUSE, FEES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION (INCLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICE OF TECHNICAL OR OTHER PERSONNEL) BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES. FROM THE ABOVE DEFINITION IT IS EVIDENT THAT IF THE INCOME IS TO BE CHARACTERIZED AS FTS, THEN IT HAS TO BE NECESSARILY FROM THE SERVICES PROVIDED FOR THE FOLLOWING TYPES, VIZ; MANAGERIAL, TECHNICAL OR CONSULTANCY. ANOTHER VERY IMPORTANT PHRASE PRECEDING THE WORD MANAGERIAL, TECHNICAL AND CONSULTANCY SERVICES IS, RENDERING. THE WORD RENDERING QUALIFIES THE OTHER TERMS USED FOR THE FTS. THE WORD RENDERING CONNOTES TO PROVIDE OR DELIVER OR TO DO SOMETHING. THUS, RENDERING SERVICES MEAN SOME KIND OF ACTUAL SERVICES IS BEING PROVIDED OR DELIVE RED WHICH ARE IN THE NATURE OF MANAGERIAL TECHNICAL OR CONSULTANCY. THE WORD MANAGERIAL HAS TO BE UNDERSTOOD IN THE CONTEXT OF RUNNING AND MANAGING THE BUSINESS OF THE CLIENT OR ONE WHO IS IN CHARGE FOR MANAGEMENT AND CONTROL OF ITS BUSINESS. HERE THE PA YMENT MADE BY VSNL IS NOT IN THE NATURE OF MANAGERIAL. AGAIN THE TERM CONSULTANCY HAS TO BE UNDERSTOOD AS ADVISORY SERVICES WHEREIN NECESSARY ADVICE AND CONSULTATION IS GIVEN TO THE CLIENT FOR THE PURPOSE OF CLIENTS BUSINESS. IT IS ACT OF CONSULTING OR GIVING ADVICE OR GUIDANCE. AGAIN HERE - IN - THIS CASE THERE IS NO CONSULTANCY SERVICES. THE WORD TECHNICAL SERVICES CONNOTE SERVICES WHICH ARE PROVIDED IN TECHNICAL ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 11 FIELD OR BY THE PERSON WHO HAS SKILL, KNOWLEDGE EXPERTISE IN THE AREA OF TECHNICAL OR SCIENC E. HERE - IN - THIS CASE IF THE ASSESSEE IS PROVIDING SOME KIND OF REPAIR SERVICES IN THE CABLE SYSTEM, THEN IT CAN BE TERMED AS TECHNICAL SERVICES, HOWEVER, IF THERE IS NO ACTUAL RENDERING OF SERVICES, BUT MERE COLLECTION OF ANNUAL CHARGE TO RECOVER THE COST OF STANDBY FACILITY, AGREED BY ALL THE MEMBERS OF THE CONSORTIUM ON PROPORTIONATE COST BASIS, THEN IT CANNOT BE HELD THAT IT IS PROVIDING ANY KIND OF TECHNICAL SERVICES. HERE THE MOST CRUCIAL POINT WHICH HAS TO BE SEEN IS FIRSTLY, WHETHER THERE IS ANY ACTU AL RENDERING OF SERVICES; SECONDLY, IS THERE ANY MARK UP OR ELEMENT OF PROFIT IN THE CHARGE RECEIVED FOR STANDBY MAINTENANCE; AND LASTLY WHETHER IT IS IN THE NATURE OF FIXED ANNUAL CHARGE WHICH IS TO BE RECOVERED AS PROPORTIONATE COST OF MAINTAIN THE STAN DBY FACILITY READY FOR CARRYING OUT ANY MAINTENANCE OR REPAIR SERVICES. THIS CHARGE IS DIFFERENT FROM AN ANNUAL MAINTENANCE CONTRACT, WHEREBY REPAIRS AND MAINTENANCE IS COVERED FOR A CERTAIN PERIOD OR SERVICES. IN THE PRESENT CASE AS EVIDENT FROM THE CLAUS E 11.1, THAT SO FAR AS STANDBY MAINTENANCE CHARGES IS CONCERNED, IT IS IN THE FORM OF FIXED ANNUAL CHARGE WHICH IS IN THE NATURE OF REIMBURSEMENT. IT HAS BEEN ALSO BROUGHT ON RECORD THAT ONLY ACTUAL COST INCURRED HAS BEEN RECOVERED FROM VSNL IN PROVIDING T HE STANDBY MAINTENANCE SERVICES. THERE IS NO PROFIT ELEMENT OR MARK UP INVOLVED. THE ASSESSEE HAS ALSO PROVIDED THE DETAILS OF RECEIPT AND COST INVOLVED IN PROVIDING STANDBY MAINTENANCE SERVICES TO VSNL FOR A.YS. 1998 - 99, 1999 - 2000 AND 2000 - 01 WHICH ARE A S UNDER: - PARTICULARS AMOUNT IN US$ A.Y. 1998 - 99 A.Y. 1999 - 00 A.Y. 2000 - 01 REVENUES FROM STANDBY MAINTENANCE CHARGES 512,955 1,226,860 2,072,453 TOTAL COSTS INCURRED (AS PER AUDITORS CERTIFICATE) (857,093) (2,0,77,219) (2,800,495) PROFIT/(LOSS) F ROM STANDBY MAINTENANCE ACTIVITIES (344,138) (850,359) (728,042) IT HAS BEEN CONTENDED THAT THERE IS A LOSS IN THIS ACCOUNT. 71. THUS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS LOOKING TO THE NATURE OF STANDBY MAINTENANCE COST, WE HOLD THA T THE RECEIPTS FROM STANDBY MAINTENANCE CHARGES FROM VSNL CANNOT BE TAXED AS FTS, WITHIN THE DEFINITION AND MEANING OF SECTION 9(1)(VII) AS THERE IS NO RENDERING OF SERVICES. HOWEVER, WHENEVER PAYMENT IS RECEIVED ON ACCOUNT OF ACTUAL REPAIR OR MAINTENANCE CARRIED OUT, THEN SAME WOULD DEFINITELY FALL WITHIN THE AMBIT OF FTS CHARGEABLE TO TAX U/S 9(1)(VII). ACCORDINGLY THE ORDER OF THE CIT(A) IS SET ASIDE AND ASSESSEES GROUND ON THIS SCORE IS ALLOWED. ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 12 9. THEREFORE, FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEARS, SO FAR AS THE GROUNDS RAISED BY THE REVENUE ARE CONCERNED, WE FIND NO REASONS TO INTERFERE WITH THE DECISION OF THE CIT(A), WHICH IS IN LINE WITH THE PRECEDENTS IN ASSESSEES OWN CASE BY WAY OF ORDERS OF THE TR IBUNAL (SUPRA). AT THE TIME OF HEARING, IT WAS ALSO A COMMON GROUND BETWEEN THE PARTIES THAT THE SAID DECISIONS OF THE TRIBUNAL CONTINUE TO HOLD THE FIELD AND HAVE NOT BEEN ALTERED BY ANY HIGHER AUTHORITY. THEREFORE, FOLLOWING THE PRECEDENTS, QUA THE GROUN DS RAISED BY THE REVENUE, THE ORDER OF CIT(A) IS AFFIRMED AND REVENUE FAILS IN ITS APPEAL. 10. INSOFAR AS THE APPEAL OF THE ASSESSEE IS CONCERNED, IT PRIMARILY RELATES TO DETERMINATION OF BUSINESS INCOME TAXABLE IN INDIA ON ACCOUNT OF STANDBY MAINTENANCE CHARGES RECEIVED FROM THE INDIAN LANDING PARTY, I.E. TCL. 11. ON THIS ASPECT, THE STAND OF THE ASSESSEE IS THAT THE TURNOVER (RECEIPTS OF STANDBY MAINTENANCE CHARGES FROM TCL) THAT IS ATTRIBUTABLE TO THE OPERATIONS CARRIED OUT IN INDIA HAS TO BE CALCULA TED ON THE BASIS OF APPORTIONMENT OF CABLE LENGTH IN INDIA VIS - A - VIS THE WORLDWIDE CABLE LENGTH. ON THE CONTRARY, THE STAND OF THE REVENUE IS THAT THE TURNOVER OF THE ASSESSEE DERIVED FROM STANDBY MAINTENANCE CHARGES HAS NO CONNECTION WITH THE LENGTH OF TH E CABLE LAID IN INDIA. AS PER THE REVENUE, THE STANDBY MAINTENANCE CHARGES RELATE TO EXPENDITURE INCURRED BY THE ASSESSEE IN MAINTAINING THE STANDBY FACILITY AND NETWORK OPERATING CENTRE (NOC) FOR A QUICK RESPONSE TO REPAIR THE INTERRUPTIONS AND CO - ORDINAT ION OF MAINTENANCE. THE SAID FACILITY IS MAINTAINED AND CAN BE MOBILISED AT SHORT NOTICE FOR RENDERING ANY REPAIR WORK WHATEVER AND WHEREVER NEEDED. THEREFORE, AS PER THE REVENUE, THE STANDBY MAINTENANCE CHARGES ARE RELATABLE TO THE CABLE CAPACITY ASSIGNED TO VARIOUS LANDING PARTIES AND NOT THE LENGTH OF THE CABLE. IN OTHER WORDS, AS PER THE REVENUE, ONCE SUCH EXPENSES ON STANDBY MAINTENANCE CHARGES IS ALLOCATED TO TCL, I.E. THE INDIAN LANDING PARTY, WITH REFERENCE TO THE CAPACITY USED, IT CANNOT BE FURTHER APPORTIONED BASED ON THE LENGTH OF THE CABLE SO AS TO DETERMINE PROFIT OF THE ASSESSEE ATTRIBUTABLE TO THE BUSINESS CONNECTION IN INDIA. 12. THE LEARNED REPRESENTATIVE, HOWEVER, POINTED OUT THAT THE INCOME OF THE ASSESSEE, WHICH IS TO BE TAXED IN INDIA, CAN BE APPROPRIATELY CALCULATED ONLY AFTER APPORTIONING THE REVENUE ON THE BASIS OF LENGTH OF CABLE IN THE TERRITORIAL WATERS OF INDIA FOR WHICH THE STANDBY FACILITY IS BEING MAINTAINED BY THE ASSESSEE. THEREFORE, ACCORDING TO HIM, IT IS ONLY SUCH PART OF THE TOTAL REVENUE RECEIVED FROM TCL WHICH IS PROPORTIONATE TO THE LENGTH OF CABLE IN THE TERRITORIAL WATERS OF INDIA WHICH CAN BE CONSIDERED TO COMPUTE ASSESSEES INCOME TAXABLE IN INDIA AND THE SAME HAS BEEN CORRECTLY DONE BY THE ASSESSEE IN ITS RETURN O F INCOME. ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 13 13. AT THIS STAGE, WE MAY ALSO REFER TO THE ADDITIONAL GROUND OF APPEAL NO. 2 WHICH HAS BEEN RAISED BEFORE US AND WHICH READS AS UNDER : - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE RECEIPTS FROM INDIAN PARTIES IS TO BE TREATED S TURNOVER FOR THE PURPOSE OF TAXATION IN INDIA IGNORING THE FACT THAT NO OPERATIONS ARE CARRIED OUT IN INDIA. THE APPELLANT SUBMITS THAT CONSIDERING CLAUSE (A) OF EXPLANATION 1 TO SECTION 9(1)(I) THE RECEIP TS FROM INDIAN PARTIES IS NOT LIABLE TO TAX IN INDIA. 14. BY WAY OF THE SAID ADDITIONAL GROUND OF APPEAL, ASSESSEE HAS SOUGHT TO CANVASS THAT NO PART OF THE RECEIPT FROM INDIAN LANDING PARTY, I.E. TCL, IS LIABLE TO BE TREATED FOR THE PURPOSE OF DEDUCING ASSESSEES INCOME ATTRIBUTABLE TO BUSINESS CONNECTION IN INDIA BECAUSE NO SUCH OPERATIONS ARE INDEED CARRIED OUT IN INDIA. IN OTHER WORDS, AS PER THE ASSESSEE, THE STANDBY MAINTENANCE CHARGES RECOVERED FROM TCL ARE FOR MAINTENANCE OF STANDBY FACILITY, I. E. THE SHIPS, WHICH ARE NOT IN THE INDIAN TERRITORIAL WATERS AND, THEREFORE, NO PART OF THE SAME CAN BE TREATED AS PART OF INCOME TAXABLE IN INDIA. 15. AT THE TIME OF HEARING, IT WAS BROUGHT TO THE NOTICE OF THE ASSESSEE THAT THE AFORESAID PLEA RAISED IN THE ADDITIONAL GROUND IS DIRECTLY CONTRARY TO THE STAND OF THE ASSESSEE TAKEN IN THE RETURN OF INCOME AND, IN RESPONSE, THE LEARNED REPRESENTATIVE SUBMITTED THAT THE SAID GROUND BE TAKEN AS WITHDRAWN. WE HOLD SO. 16. INSOFAR AS THE OTHER ADDITIONAL GROU NDS OF APPEAL NOS. 1 & 3 ARE CONCERNED, WHICH READ AS UNDER, THE SAME ARE PRIMARILY IN SUPPORT OF THE ORIGINAL GROUNDS RAISED IN THE MEMO OF APPEAL. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) 58, MUMBAI (THE CIT(A)) ERRED IN HOLDING THAT THE ENTIRE TURNOVER (RECEIPTS FROM THE INDIAN PARTIES) IS LIABLE TO BE TREATED AS TURNOVER FOR THE PURPOSE OF TAXATION IN INDIA. THE APPELLANT SUBMITS THAT THE SAID RECEIPT OF STANDBY MAINTENANCE CHARG ES FROM TCL CANNOT BE TREATED AS TURNOVER FOR TAXATION PURPOSE IN INDIA. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ENTIRE TURNOVER (RECEIPTS FROM THE INDIAN PARTIES) OF STANDBY MAINTENANCE CHAR GES FROM ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 14 TCL IS TURNOVER FOR THE PURPOSE OF TAXATION IN INDIA WITHOUT GIVING NOTICE FOR ENHANCEMENT OR OPPORTUNITY TO THE APPELLANT. THE APPELLANT SUBMITS THAT THE CIT(A) OUGHT NOT TO HAVE HELD THAT THE ENTIRE TURNOVER (RECEIPT FROM THE INDIAN PARTIES) I S LIABLE TO BE TREATED AS TURNOVER FOR THE PURPOSE OF TAXATION IN INDIA. 17. ON THIS ASPECT, THE SHORT DISPUTE RELATES TO THE MANNER IN WHICH THE INCOME FROM STANDBY MAINTENANCE CHARGES TAXABLE IN INDIA U/S 9(1)(I) OF THE ACT IS TO BE COMPUTED. SAID CHARG ES HAVE BEEN RECEIVED BY THE ASSESSEE FROM TCL AND, AS PER THE ASSESSEE, PORTION THEREOF WHICH IS RELATABLE TO THE LENGTH OF CABLE IN INDIAN TERRITORIAL WATERS VIS - A - VIS THE LENGTH OF CABLE WORLDWIDE BE TAKEN AS THE TOTAL REVENUE DEEMED TO ACCRUE OR ARISE IN INDIA FROM WHICH RELATABLE EXPENSES ARE TO BE REDUCED SO AS TO COMPUTE THE INCOME ACCRUING OR ARISING IN INDIA U/S 9(1)(I) OF THE ACT. ON THE CONTRARY, THE STAND OF THE CIT(A) IS THAT THE ENTIRE AMOUNT OF REVENUE RECEIVED ON THIS SCORE FROM TCL SHOULD B E CONSIDERED. 18. AS THE AFORESAID DISCUSSION SHOWS, THE DISPUTE REVOLVES AROUND COMPUTATION OF THE INCOME FROM STANDBY MAINTENANCE ACTIVITIES ATTRIBUTABLE IN INDIA. ON THIS ASPECT, BEFORE PROCEEDING FURTHER, WE NOTICE THAT IN ASSESSMENT YEARS 2001 - 02 TO 2008 - 09, THE TRIBUNAL VIDE ORDER DATED 15.06.2015 (SUPRA) HAS DEALT WITH SIMILAR ISSUE, OF COURSE QUA THE REVENUES EARNED FROM RESTORATION SERVICES. ON THIS ASPECT, THE TRIBUNAL HELD SUCH RECEIPTS TO BE IN THE NATURE OF BUSINESS INCOME, AND AFTER HOLD ING SO, THE TRIBUNAL WENT ON TO DEDUCE THE METHOD IN TERMS OF WHICH THE REVENUE COULD BE APPORTIONED TO INDIA OPERATIONS IN ORDER TO DETERMINE THE INCOME TAXABLE IN INDIA. ON THIS ASPECT, THE TRIBUNAL DEEMED IT FIT TO APPORTION THE REVENUE ON THE BASIS OF LENGTH OF CABLE IN THE TERRITORIAL WATERS OF INDIA. THOUGH THE DECISION HAS BEEN RENDERED WITH RESPECT TO THE RESTORATION ACTIVITY, SO HOWEVER, THE METHODOLOGY WHICH HAS BEEN FOUND TO BE REASONABLE BY THE TRIBUNAL IS BASED ON THE FRACTION OF LENGTH OF ENTI RE CABLE SYSTEM CONNECTED TO INDIA IN ITS TERRITORIAL WATERS. DRAWING AN ANALOGY FROM THE SAME, IN THE INSTANT CASE TOO, WE FIND THAT THE STANDBY MAINTENANCE CHARGES RECOVERED BY THE ASSESSEE FROM TCL ONLY QUA THE LENGTH OF CABLE IN THE TERRITORIAL WATERS OF INDIA NEEDS TO BE CONSIDERED FOR COMPUTING THE PROFITS OR INCOME ACCRUING TO THE ASSESSEE U/S 9(1)(I) OF THE ACT. THE REASONING ADVANCED BY THE REVENUE TO THE EFFECT THAT THE STANDBY MAINTENANCE CHARGES ARE LINKED TO THE CABLE CAPACITY IS OF NO CONSEQUE NCE FOR THE PRESENT INASMUCH AS WHAT IS REQUIRED TO BE DECIDED IS THE INCOME ATTRIBUTABLE TO THE BUSINESS CONNECTION IN INDIA, WHICH POSSIBLY IS THE LENGTH OF THE CABLE IN THE TERRITORIAL WATERS OF INDIA. THEREFORE, IN OUR VIEW, IT IS ONLY THE REVENUE FROM TCL WHICH IS ON ACCOUNT OF STANDBY MAINTENANCE CHARGES PROPORTIONATE TO THE CABLE LENGTH IN INDIA THAT DESERVES TO BE CONSIDERED FOR COMPUTING THE PROFIT OR LOSS FROM STANDBY MAINTENANCE ACTIVITY ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 15 ATTRIBUTABLE TO INDIA IN TERMS OF SEC. 9(1)(I) OF THE ACT. THEREFORE, ON THIS ASPECT, WE UPHOLD THE PLEA OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO VERIFY THE CALCULATION MADE BY THE ASSESSEE IN THIS REGARD IN ITS COMPUTATION OF INCOME AND RECOMPUTE THE INCOME ACCORDINGLY. THUS, ON THIS ASPECT, ASSESSEE S UCCEEDS AS ABOVE. 5.1 . THE GROUNDS RAISED BY THE REVENUE AND GROUND NOS. 1 TO 5 RAISED BY THE ASSESSEE ARE DISPOSED OFF IN LINE WITH THE AFORESAID FINDINGS OF THIS TRIBUNAL IN ASSESSEES OWN CASE. 5.2. THE GROUND NO.6 RAISED BY THE ASSESSEE IS WITH RE GARD TO CHARGEABILITY OF INTEREST U/S.234B OF THE ACT. WE FIND THAT THIS ISSUE WAS THE SUBJECT MATTER OF ADJUDICATION BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.YRS 2010 - 11 AND 2011 - 12 REFERRED TO SUPRA VIDE ORDER DATED 04/05/2018 WHEREIN IT WAS HEL D AS UNDER: - 19. THE OTHER ONLY ISSUE IS WITH REGARD TO THE CHARGING OF INTEREST U/S 234B OF THE ACT. ON THIS ASPECT, THE LEARNED REPRESENTATIVE POINTED OUT THAT IT IS A SETTLED PROPOSITION IN TERMS OF THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CAS E OF NGC NETWORK ASIA LLC, 313 ITR 187 (BOM.) THAT THERE WOULD BE NO CHARGEABILITY OF INTEREST U/S 234B OF THE ACT AS THE RECEIPTS ON ACCOUNT OF STANDBY MAINTENANCE CHARGES FROM TCL ARE SUBJECTED TO WITHHOLDING TAX U/S 195 OF THE ACT. ON THIS ASPECT, IT WA S ALSO A COMMON POINT BETWEEN THE PARTIES THAT THE SAID PROPOSITION HAS ALSO BEEN AFFIRMED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ORDERS DATED 06.02.2015 (SUPRA) AND ALSO 15.06.2015 (SUPRA). THUS, ON THIS ASPECT, ASSESSEE SUCCEEDS. 5.3 . IT IS NOT IN DISPUTE THAT IN THE INSTANT CASE , TAX WAS DULY DEDUCTED AND HENCE, RESPECTFULLY FOLLOWING THE AFORESAID JUDICIAL PRECEDENTS, WE HOLD THAT NO INTEREST U/S.234B OF THE ACT COULD BE CHARGED IN THE INSTANT CASE AND ACCORDINGLY, THE GROUND NO.6 RAISED BY THE ASSESSEE IS ALLOWED. 6. THE GROUND NO. 7 RAISED BY THE ASSESSEE IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. ITA NO.5881/MUM/2017 & 5806/MUM/2017 M/S. RELIANCE GLOBALCOM LTD., BERMUDA 16 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND APPEAL OF THE REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 03 /201 9 SD/ - ( RAVISH SOOD ) SD/ - ( M.BALAGANESH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 27 / 03 /201 9 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//