ATOS INFORMATION TECHNOLOGY HK LTD., MUMBAI V. DCIT (INTL. TAX) RANGE 1(1)(2), MUMBAI

ITA 6436/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7752 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 03-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHOUHAN
• Keywords: Retrospective amendment; Initiation of penalty proceedings
• Section: 234B

Judgement Text

, INCOME-TAX APPE LLATE TRIBUNAL -LBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/6436/MUM/2016, /ASSESSMENT YEAR:2009-10 ./ITA/6437/MUM/2016, /ASSESSMENT YEAR:2010-11 ./ITA/6438/MUM/2016, /ASSESSMENT YEAR:2013-14 ATOS INFORMATION TECHNOLOGY HK LIMITED C/O. ATOS INDIA PVT. LTD. PLANT NO.5, GODREJ & BOYCE MFG. CO.LTD.,PIROJSHANAGAR, LBS MARG, VIKHROLI (W) , ,, , MUMBAI-400 097 PAN: AAKCS 8720 L VS. DCIT(INTL. TAXATION)-1(1)(2) SCINDIA HOUSE MUMBAI. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY :SHRI DHANESH BAFNA / RESPONDENT BY : MS.JASBIR CHOUHAN / DATE OF HEARING : 29.03.2017 / DATE OF PRONOUNCEMENT :29 .03.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) / PER RAJENDRA, AM - CHALLENGING THE ORDERS OF THE ASSESSING OFFICERS(AO .S),PASSED, U/S. 143 (3) R.W.S.144C (13) OF THE ACT,IN PURSUANCE OF THE DIRECTIONS OF THE DI SPUTE RESOLUTION PANEL (DRP-I),MUMBAI, DATED 22/07/2016, THE ASSESSEE HAS FILED THE APPEAL S FOR THE ABOVE-MENTIONED THREE AY.S (AY.S) RAISING VARIOUS GROUNDS OF APPEAL. AS THE IS SUES INVOLVED IN ALL THE APPEALS ARE ALMOST SIMILAR,SO WE ARE ADJUDICATING THEM BY WAY OF THIS CONSOLIDATED ORDER. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING SERVICES/FACIL ITIES FOR PROCESSING THE DATA THROUGH COMPUTER SOFTWARE AND IS INCORPORATED IN HONG KONG. THE DETAILS OF DATES OF FILING OF THE RETURNS OF INCOME, RETURNED INCOMES, ASSESSED INCOM ES ETC. CAN BE SUMMARISED AS UNDER: A.Y. ROI FILED ON RETURNED INCOME ASSESSMENT DATE A SSESSED INCOME 2009-10 24.03.2011 NIL 01/09/2016 RS.21,39,71,104/- 2010-11 30.09.2011 NIL 01/09/2016 RS.42,28,05,363/- 2013-14 30.09.2011 NIL .. .. .. RS.59,93,15,781/- ITA/6436/MUM/2016-AY.2009-10: FIRST EFFECTIVE GROUND OF APPEAL IS ABOUT HOLDING T HE SUM OF RS. 21.93 CRORES AS ROYALTY/FEES FOR TECHNICAL SERVICES U/S. 9 (1) (VI)/9 (1)(VII) O F THE ACT. IT WAS BROUGHT OUR NOTICE THAT IN THE EARLIER YEARS, THE IDENTICAL ISSUE WAS DELIBERATED UPON AND WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL(ITA.S/237-240/MUMBAI/2016- AY.S2006-07TO2008-09 AND 2012- 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 2 13,DATED 09/02/ 2017). WE WOULD LIKE TO REPRODUCE T HE RELEVANT PORTION OF THE ORDER AND IT READS AS UNDER: 18. WE HAVE CAREFULLY CONSIDERED THE ENTIRE GAMUT O F FACTS AS DISCUSSED ABOVE, RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS THE RIVAL SUBMISSIONS MADE BEFORE US. THE MAIN ISSUE INVOLVED, WHICH HAS BEEN RAISED VIDE GRO UND NO. 1.1 IS, WHETHER THE PAYMENTS MADE BY STANDARD CHARTERED BANK INDIA (SCB) TO THE ASSESSEE IS IN THE NATURE OF ROYALTY U/S 9(1)(VI) OR FEES FOR TECHNICAL SERVICES . SINCE THE ASSESSEE-COMPANY IS INCORPORATED IN HONG KONG AND IS PROVIDING SERVICES/FACILITIES FOR PROCESSING DATA TO SCB FROM HONG KONG, THEREFORE, THE PAYMENT MADE BY SCB INDIA TO ASSESSE E HAS TO BE SEEN FROM THE PERSPECTIVE OF DOMESTIC LAW, I.E. INCOME-TAX ACT AND NOT UNDER ANY TREATY. THE ASSESSEE-COMPANY IS MAINLY ENGAGED IN THE BUSINESS OF PROVIDING SERVICES/FACIL ITIES FOR DATA PROCESSING THROUGH COMPUTER HARDWARE AND SOFTWARE TO BANKING ENTITIES. IT HAD E NTERED INTO AN AGREEMENT WHICH HAS BEEN TERMED AS COCTEAU AGREEMENT WITH SCB FOR PROVISIO N OF DATA PROCESSING SUPPORT, WHICH IS FOR 68 COUNTRIES WITH VARIOUS BRANCHES. UNDER THE S AID COCTEAU AGREEMENT , THE ROLE AND RESPONSIBILITIES OF ASSESSEE IN 39 ITA NOS. 237 TO 240/MUM/2016 ATOS INFORMATION TECHNOLOGY HK LTD. RESPECT OF PROVIDING DATA PROCES SING SERVICES HAS ALREADY BEEN DISCUSSED IN DETAIL IN THE EARLIER PART OF THE ORDER INCLUDIN G THE MANNER IN WHICH THE ENTIRE PROCESSING ACTIVITY IS CARRIED OUT. THE REVENUE S CASE IS THAT FIRST OF ALL, IT IS IN THE NATURE OF ROYALTY AND FOR COMING TO THIS CONCLUSION, THE MAIN CONTENTION OF ASSESSING OFFICER IS THAT, FIRSTLY, THE ASSESSEE IS NOT MERELY PROVIDING DATA PROCESSING SE RVICES, BUT ALSO PROVIDING TECHNOLOGY IN THE FORM OF DATA CENTRE, INFRASTRUCTURE, CONNECTIVI TY AND APPLICATION TECHNOLOGY FOR ITS BANKING OPERATIONS; AND SECONDLY, IT HAS CREATED AN D PROVIDED FACILITY IN THE FORM OF DEDICATED CENTRES FOR EXCLUSIVE USE OF SCB WITH DIS ASTER RECOVERY FACILITY AND STORAGE FACILITY. THESE INFRASTRUCTURE FACILITIES IN THE FORM OF DATA CENTRE, STORAGE AREA NETWORK, DISASTER RECOVERY FACILITY AND DEDICATED NETWORK CONNECTIVIT Y IS TRANSLATED INTO FUNCTIONAL PROCESS BY DEFINED SERVICE FLOW FOR THE VARIOUS GEOGRAPHIC LOC ATIONS FOR VARIOUS BUSINESS APPLICATION WHICH WOULD CONSTITUTE PROCESS. THE ASSESSEE IN THI S PROCESS HAS ALSO MADE AVAILABLE SCB USE OF ITS EQUIPMENT, MODEL, DESIGN, INVENTION AND PROC ESS. AFTER COMING TO THE CONCLUSION THAT THE PAYMENT IS IN THE NATURE OF ROYALTY WITHIN TH E SCOPE OF SECTION 9(1)(VI), THE REVENUE WENT FURTHER TO HOLD THAT, SINCE ASSESSEE HAS PROVI DED TECHNICAL, MANAGERIAL AND CONSULTANCY SERVICES TO SCB, THEREFORE, IT ALSO FALLS IN THE NA TURE OF FTS AND FOR COMING TO THIS CONCLUSION, CERTAIN CLAUSES IN THE COCTEAU AGREEMEN T HAS BEEN REFERRED TO. 19. FIRST OF ALL, WE WILL DEAL WITH THE ISSUE WHETH ER THE SAID PAYMENT FALLS WITHIN THE REALM OF ROYALTY OR NOT. FROM THE PERUSAL OF THE VARIOUS CLAUSES OF THE AGREEMENT WHICH HAS BEEN REFERRED TO EXTENSIVELY BY BOTH THE PARTIES AT THE TIME OF HEARING AND DISCUSSED HEREIN ABOVE, WE FIND THAT THE MAIN OBJECTIVE OF THE COCTEAU AGR EEMENT IS TO PROVIDE SCB GROUP ALL ACROSS THE WORLD, PROCESSING OF DATA THROUGH A NETW ORK OF COMPUTER SYSTEMS IN HONG KONG. IN THE ENTIRE AGREEMENT THERE IS NO WHISPER OF ANY TECHNOLOGY TRANSFER OR APPLICATION OF TECHNOLOGY PER SE TO SCB. THIS IS A KIND OF OUTSOUR CING ACTIVITY WHICH HAS BEEN GIVEN BY SCB TO ATOS TO PROCESS ITS DATA FROM VARIOUS BRANCHES A CROSS THE COUNTRY. WE AGREE WITH THE CONTENTION OF THE LD. COUNSEL THAT THE REFERENCE TO THE VARIOUS DETAILS IN THE AGREEMENT IS MERELY TO ENSURE QUALITY, STANDARD AND VARIOUS SAFE GUARDS WHICH ARE TO BE ADOPTED IN THE COURSE OF PROCESSING DATA ESPECIALLY LOOKING THE VO LUME OF DATA REQUIRED TO BE PROCESSED FROM ALL AROUND THE GLOBE. THE PROVISIONS MAINLY CO NTAINS ASSESSEE S RESPONSIBILITY TO ENSURE ADEQUATE FACILITY, SYSTEMS AND SOFTWARE WHICH ARE L OCATED IN HONG KONG AND TO ENSURE THAT ALL THE HARDWARE WHICH IS USED IN HONG KONG IS MAIN TAINED AND HOUSED IN SECURED BUILDING SPACE AND INFRASTRUCTURE, MANAGE PROPER PERFORMANCE OF THE HARDWARE AND OPERATING SYSTEMS, ENSURE ADEQUATE TECHNICAL SUPPORT OF OPERA TING SYSTEMS, TO ENSURE SYSTEM PERFORMANCE, MAINTAIN ADEQUATE SECURITY MEASURES AN D EFFECTIVE INTERNAL CONTROL ENVIRONMENT AND ALSO PUT IN PLACE APPROPRIATE DISASTER RECOVERY PLAN. ALL THESE ARE TO BE MAINTAINED BY THE ASSESSEE TO CONDUCT THE PROCESSING OF DATA THRO UGH COMPUTERS. THERE IS NO PROVIDING OR GIVING ANY USE OR RIGHT TO USE OF ANY PROCESS TO SC B. THE TECHNOLOGY, INFRASTRUCTURE, DATA CENTRE, CONNECTIVITY, ETC. IS SOLELY USED BY THE AS SESSEE FOR ITS OWN PURPOSES AND NOT TO MAKE 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 3 AVAILABLE ANY SUCH THING TO SCB AS EXPLAINED BY THE LD. COUNSEL. AT THE FIRST STAGE, SCB TRANSMITS RAW DATA THROUGH OPERATING SOFTWARE OWNED BY IT TO THE HARDWARE FACILITY OF ASSESSEE IN HONG KONG. THE ASSESSEE IN HONG KONG MA INLY RECEIVES THE DATA SO TRANSMITTED AND AT THIS STAGE THERE IS ABSOLUTELY NO USE OR RIG HT TO USE OF ANY PROCESS OF ASSESSEE IN HONG KONG BY SCB. AT THE SECOND STAGE, THE RAW DATA TRAN SMITTED BY SCB IS PROCESSED BY THE ASSESSEE IN ITS COMPUTER SYSTEM/HARDWARE AS PER THE REQUIREMENT OF SCB AND AT TIMES MAY BE USING THE APPLICATION SOFTWARE OWNED BY SCB. AT THI S STAGE ALSO, SCB DOES NOT USE OR HAVE ANY RIGHT TO USE ANY PROCESS. AT THE THIRD STAGE, T HE PROCESSED DATA IS TRANSMITTED ELECTRONICALLY TO SCB IN INDIA AND AT THIS STAGE AL SO THERE IS NO USE OR RIGHT TO USE OF ANY PROCESS WHICH IS GIVEN OR MADE AVAILABLE TO SCB. HE RE, IN THIS CASE THERE IS ABSOLUTELY NO USE OF EQUIPMENT ALSO AS ALLEGED BY THE DEPARTMENT WITH IN THE DEFINITION GIVEN IN CLAUSE (IV A) OF EXPLANATION 2 TO SEC. 9(1)(VI) OF THE ACT. THE SAID CLAUSE DEALS MAINLY WITH THE USE OR RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT AND APPLIES ONLY TO INCOME FROM LEASING OF SUCH INDUSTRIAL, COMMERCIAL OR SCIE NTIFIC EQUIPMENT. THIS IS BORNE OUT FROM THE MEMORANDUM TO THE FINANCE BILL, 2001 THROUGH WH ICH THE SAID CLAUSE WAS INSERTED W.E.F. 1.4.2002, THE RELEVANT EXTRACT OF THE MEMORANDUM HA S ALREADY BEEN INCORPORATED IN THE EARLIER PART OF OUR ORDER AND SAME PROPOSITION IS A LSO HELD BY MUMBAI BENCH IN YAHOO INDIA P, LTD. VS DCIT (SUPRA). HERE, IN THE CASE OF ASSES SEE, THERE IS NO INCOME FROM LEASING OF ANY EQUIPMENT. THE LEGISLATURE THUS, HAS CLEARLY ENVISA GED THAT CLAUSE (IVA) IS TO COVER LEASE RENT OF INDUSTRIAL, COMMERCIAL AND SCIENTIFIC EQUIPMENT IN THE DEFINITION OF ROYALTY AND THE SAID DEFINITION HAS BEEN WIDENED TO THAT EXTENT ONLY. TH US, THERE IS NO CONCEPT OF RIGHT TO USE OF EQUIPMENT HERE IN THIS CASE. SO FAR AS APPLICABILIT Y OF EXPLANATION 5 & 6 ARE CONCERNED, WE AGREE WITH THE CONTENTIONS OF LD. COUNSEL, AS REPR ODUCED ABOVE, THAT SAME WOULD NOT BE APPLICABLE AT ALL IN THE CASE OF ASSESSEE BECAUSE, FIRSTLY, EXPLANATION 6 ENLARGES THE SCOPE OF PROCESS TO INCLUDE TRANSMISSION BY SATELLITE CABLE, FIBRE OPTIC, ETC.; AND SECONDLY, EXPLANATION 5 IS APPLICABLE WHERE CONSIDERATION IS OF ANY RIGHT , PROPERTY OR INFORMATION AS DEFINED IN CLAUSES (I) TO (V) OF EXPLANATION 2 ONLY AND NOT IN CLAUSE (IVA) FOR THE REASON THAT EXPLANATION 5 HAS BEEN INSERTED WITH RETROSPECTIVE EFFECT FROM JUNE 1, 1976. IN OTHER WORDS, EXPLANATION 5 HAS BEEN INSERTED RETROSPECTIVELY FROM THE BIRTH OF SECTION 9(1)(VI) TO CLARIFY THE INTENTION BEHIND THE LEGISLATION. HENCE, EXPLANATION 5 IS TO BE READ WITH THE SECTION 9(1)(VI) WHICH WAS THERE ON THE STATUTE AS ON APRIL 1, 1976. WHEREAS C LAUSE (IVA) TO EXPLANATION 2 WAS INSERTED FROM APRIL 1, 2002. THUS, RETROSPECTIVE EFFECT OF C LAUSE (IVA) CANNOT BE DEEMED FROM 1.06.1976 AND HENCE IT CANNOT BE HELD THAT EXPLANAT ION 5 ALSO APPLIES TO THE SAID CLAUSE AS THIS CLAUSE NEVER EXISTED AS ON APRIL 1, 1976 AND A CCORDINGLY, THE LEGISLATION CANNOT CLARIFY THE INTENTION OF THE CLAUSE WHICH NEVER EXISTED ON THE SAID DATE. HENCE EXPLANATION 5 & 6 WOULD NOT BE APPLICABLE IN THE CASE OF ASSESSEE. 20. FURTHER, FOR ANY PAYMENT TO FALL WITHIN THE TER M OF ROYALTY IT IS SINE QUA NON THAT THERE SHOULD BE SOME KIND OF A TRANSFER OF ANY RIGHT IN R ESPECT OF VARIOUS ITEMS AS GIVEN IN EXPLANATION 2 OR ANY IMPARTING OF ANY INFORMATION OR USE OF ANY PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA, PROCESS, ETC. HERE, IN THIS CASE, THERE IS NEITHER TRANSFER OF ANY OF RIGHT IN RESPECT OF ANY PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADEMARK OR ANY SIMILAR PROPERTY BY THE ASSESSEE TO SCB, NOR TH ERE IS ANY IMPARTING OF ANY INFORMATION OR USE OF ANY OF SIMILAR NATURE OF THINGS. HERE, THE E NTIRE EQUIPMENT AND TECHNOLOGY WHICH ARE USED FOR PROCESSING THE DATA IS SOLELY FOR PERFORMI NG THE ACTIVITY OF ASSESSEE FOR ITSELF WHILE RENDERING DATA PROCESSING SERVICES TO SCB. THERE IS ABSOLUTELY NO TRANSFER OF ANY TECHNOLOGY, INFORMATION, KNOWHOW OR ANY OF THE TERMS USED IN EX PLANATION 2 OR ANY KIND OF PROVIDING OF TECHNOLOGY IN THE FORM OF DATA CENTRE, INFRASTRUCTU RE, CONNECTIVITY AND APPLICATION TECHNOLOGY BY THE ASSESSEE TO SCB FOR SCB S BANKING OPERATIONS. THUS, WE ARE OF THE OPINION T HAT THE PAYMENT MADE BY SCB TO ASSESSEE-COMPANY DOES NOT FA LL WITHIN THE REALM OF ROYALTY AND HENCE CANNOT BE TAXED IN INDIA AS ROYALTY U/S 9(1)( VI) OF THE ACT. 21. AS REGARDS WHETHER THE PAYMENT IS IN THE NATURE OF FTS OR NOT, WE FIND THAT THE PROVISION REGARDING SERVICES PROVIDED BY ASSESSEE TO SCB IS M AINLY A STANDARD FACILITY AND THERE IS NO CONSTANT HUMAN ENDEAVOUR OR HUMAN INTERVENTION WHIC H IS REQUIRED TO PROVIDE THE DATA SERVICING SERVICE. AS STATED EARLIER, RAW DATA FED INTO BY SCB INDIA ARE TRANSMITTED TO ASSESSEE AND THE DATA SO TRANSMITTED STANDS CAPTURE D BY THE MAINFRAME COMPUTERS OWNED BY 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 4 ASSESSEE WHEREIN SUCH DATA ARE PROCESSED AUTOMATICA LLY AND THE FINAL RESULT IS THEN TRANSMITTED TO SCB INDIA. ALL THESE TRANSMISSION AN D PROCESSING OF DATA IS DONE AUTOMATICALLY BY COMPUTERS AND THERE IS NOT MUCH HUMAN INVOLVEMEN T OR INTERVENTION. THERE IS NO APPLICATION OF MIND BY THE EMPLOYEES OF ASSESSEE ON SAID DATA BECAUSE, THEY ARE PROCESSED THROUGH PROGRAMMED SOFTWARE AND NEITHER ANY VERIFIC ATION NOR ANY ANALYSIS IS CARRIED OUT BY THE ASSESSEE ON SUCH DATA. THE EMPLOYEES OF THE ASS ESSEE-COMPANY ARE ONLY REQUIRED TO OVERSEE AS TO WHETHER THE COMPUTER SYSTEMS ARE 44 I TA NOS. 237 TO 240/MUM/2016 ATOS INFORMATION TECHNOLOGY HK LTD. FUNCTIONING PROPERLY AND PERFORMING WELL AND IF THERE IS ANY BREAKDOWN OR FAULT, THEN SAME NEEDS TO BE TAKEN CAR E OF. THE HUMAN INTERVENTION IF AT ALL IS MAINLY FOR REPAIRING AND MONITORING THE HARDWARE AN D SOFTWARE OF THE ASSESSEE WHICH ARE PROCESSING THE RAW DATA OF SCB AND THERE IS NO HUMA N INVOLVEMENT OR ENDEAVOUR FOR RENDERING ANY KIND OF TECHNICAL OR CONSULTANCY SERV ICES IN DATA PROCESSING. IT HAS BEEN STATED THAT BEFORE US THAT EVEN THE FAULTS ARE CORRECTED A UTOMATICALLY. FURTHER, LOOKING TO THE NUMBER OF VOLUME OF TRANSACTIONS TRANSMITTED BY SCB TO ASS ESSEE, IT WOULD BE IMPOSSIBLE FOR ANY NUMBER OF HUMANS TO APPLY THEIR MIND AND GENERATE R EPORTS. THIS HAS BEEN DEMONSTRATED BY THE LD. COUNSEL BEFORE US BY WAY OF AN EXAMPLE WHIC H HAS BEEN ALREADY INCORPORATED ABOVE. THUS, THE MAGNITUDE OF TRANSACTIONS UNDERTAKEN BY A SSESSEE ITSELF GOES TO SHOW THAT THE COMPUTER SYSTEMS INSTALLED BY THE ASSESSEE IN HONG KONG IS STANDARD FACILITY THROUGH WHICH DATA IS PROCESSED. IN THIS REGARD, STRONG RELIANCE WAS PLACED ON THE DECISION OF ITAT, MUMBAI BENCH IN THE CASE OF SIEMENS LIMITED (SUPRA), WHERE IN THE TRIBUNAL HAS EMPHASISED UPON THE ELEMENT OF HUMAN INTERVENTION FOR RENDERING OF TECH NICAL SERVICES. THE RELEVANT OBSERVATION IN THIS REGARD READS AS UNDER:- ------------------------IN OUR OPINION, THIS CANNOT BE THE CRITERIA FOR UNDERSTANDING THE TERM 'TECHNICAL SERVICES' AS CONTEMPLATED IN EXPLAN ATION 2 TO SECTION 9 (1)(VII). IF ANY PERSON DELIVERS ANY TECHNICAL SKILLS OR SERVICES OR MAKE AVAILABLE ANY SUCH SERVICES THROUGH AID OF ANY MACHINE, EQUIPMENT OR ANY KIND O F TECHNOLOGY, THEN SUCH A RENDERING OF SERVICES CAN BE INFERRED AS 'TECHNICAL SERVICES'. IN SUCH A SITUATION THERE IS A CONSTANT HUMAN ENDEAVOUR AND THE INVOLVEMENT O F THE HUMAN INTERFACE. ON THE CONTRARY, IF ANY TECHNOLOGY OR MACHINE DEVELOPED BY HUMAN AND PUT TO OPERATION AUTOMATICALLY, WHEREIN IT OPERATES WITHOUT ANY MUCH OF HUMAN INTERFACE OR INTERVENTION, THEN USAGE OF SUCH TECHNOLOGY CANNOT PER SE BE HELD AS RENDERING OF 'TECHNICAL SERVICES' BY HUMAN SKILLS. IT IS OBVIOUS THAT IN SUCH A SITUATION SOME HUMAN INVOLVEMENT COULD BE THERE BUT IT IS NOT A CO NSTANT ENDEAVOUR OF THE HUMAN IN THE PROCESS. MERELY BECAUSE CERTIFICATES HAVE BEEN PROVIDED BY THE HUMANS AFTER A TEST IS CARRIED OUT IN A LABORATORY AUTOMATICALLY B Y THE MACHINES, IT CANNOT BE HELD THAT SERVICES HAVE BEEN PROVIDED THROUGH THE HUMAN SKILLS. EVEN IN THE LATEST DECISION OF HON'BLE SUPREME COUR T IN THE CASE OF M/S. KOTAK SECURITIES LTD. (SUPRA), (THE RELEVANT PORTION OF WHICH HAS ALREADY BEEN REPRODUCED ABOVE), THE HON BLE COURT OPINED THAT, IF SERVICES ARE PROVIDED THROUGH FULLY AUTOMATED STANDARD FACILITY, THE SAME CANNOT BE RECKONED AS RENDERING OF TECHNICAL S ERVICES AS CONTEMPLATED U/S 9(1)(VII) OF THE ACT. THE RELEVANT OBSERVATION READS AS UNDER:- '8. ..... ALL SUCH SERVICES, FULLY AUTOMATED, ARE AVAILABLE TO ALL MEMBERS OF THE STOCK EXCHANGE IN RESPECT OF EVERY TRANSACTION THAT IS EN TERED INTO. THERE IS NOTHING SPECIAL, EXCLUSIVE OR CUSTOMIZED SERVICE THAT IS RENDERED BY THE STOCK EXCHANGE. 'TECHNICAL SERVICES' LIKE 'MANAGERIAL AND CONSULTANCY SERVICE' WOULD DENOTE SEEKING OF SERVICES TO CATER TO THE SPECIAL NEEDS OF THE CONSU MER/ USER AS MAY BE FELT NECESSARY AND THE MAKING OF THE SAME AVAILABLE BY THE SERVICE PROVIDER. IT IS THE ABOVE FEATURE THAT WOULD DISTINGUISH / IDENTIFY A SERVICE PROVIDE D FROM A FACILITY OFFERED. WHILE THE FORMER IS SPECIAL AND EXCLUSIVE TO THE SEEKER OF TH E SERVICE, THE LATTER, EVEN IF TERMED AS A SERVICE, IS AVAILABLE TO ALL AND WOULD THEREFO RE STAND OUT IN DISTINCTION TO THE FORMER. THE SERVICE PROVIDED BY THE STOCK EXCHANGE FOR WHICH TRANSACTION CHARGES ARE PAID FAILS TO SATISFY THE AFORESAID TEST OF SPE CIALIZED, EXCLUSIVE AND INDIVIDUAL REQUIREMENT OF THE USER OF CONSUMER WHO MAY APPROAC H THE SERVICE PROVIDER FOR SUCH ASSISTANCE/SERVICE.IT IS ONLY SERVICE OF THE ABOVE KIND THAT ACCORDING TO US, SHOULD COME WITHIN THE AMBIT OF THE EXPRESSION 'TECHNICAL SERVICES' APPEARING IN 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 5 EXPLANATION 2 OF SECTION 9(1)(VII) OF THE ACT. IN T HE ABSENCE OF THE ABOVE DISTINGUISHING FEATURE, SERVICE, THOUGH RENDERED, W OULD BE MERE IN THE NATURE OF A FACILITY OFFERED OR AVAILABLE WHICH WOULD NOT BE CO VERED BY THE AFORESAID PROVISION OF THE ACT.' BEFORE US, THE LD. COUNSEL HAS ALSO POINTED OUT THA T ASSESSEE IS ALSO PROVIDING SIMILAR SERVICES TO OTHER CLIENTS LIKE HONG KONG GOVERNMENT AND OTHE R BIG MNES AND THERE IS NOTHING SPECIAL OR EXCLUSIVE ABOUT THE SERVICES WHICH ARE BEING REN DERED TO SCB. IN VIEW OF THE ENTIRE GAMUT OF FACTS AS DISCUSSED ABOVE, WE ARE OF THE OPINION THAT THE PAYMENT MADE BY SCB TO ASSESSEE COMPANY DOES NOT FALL WITHIN THE REALM OF FEES FOR TECHNICAL SERVICES AS CONTAINED IN SEC. 9(1)(VII), ALBEIT THE ASSESSEE HAS ONLY PROVIDED A STANDARD FACILITY FOR DATA PROCESSING WITHOUT ANY HUMAN INTERVENTION. ACCORDINGLY, WE HOLD THAT T HE SAID PAYMENT IS NOT TAXABLE IN INDIA AS FEES FOR TECHNICAL SERVICES IN TERMS OF SEC. 9(1)(VII) OF THE ACT. THUS, THE I SSUE RAISED IN GROUND NO. 1.1 IS DECIDED IN FAVOUR OF THE ASSESSEE . RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FO R THE EARLIER YEARS, WE DECIDE FIRST EFFECTIVE GROUND OF APPEAL(GOA-1&2) IN FAVOUR OF THE ASSESSEE . 3. NEXT TWO GROUNDS DEAL WITH DENYING THE BENEFIT OF T HE RATE PRESCRIBED U/S. 115A OF THE ACT. REPRESENTATIVES OF BOTH THE SIDES AGREED THAT IDENT ICAL ISSUE WAS DECIDED BY THE TRIBUNAL IN THE EARLIER YEARS ALSO.WE ARE REPRODUCING THE RELEV ANT PORTION OF THE ORDER OF THE TRIBUNAL, DATED 09/ 02/2017 (SUPRA). IT READS AS FOLLOW: 22. SO FAR AS THE ISSUE RAISED IN GROUND NO. 1.2 WI TH REGARD TO RATE OF TAX U/S 115A OF THE ACT, IT HAS BEEN SUBMITTED THAT THE ASSESSING OFFICER HA S TAKEN 40% OF THE GROSS AMOUNT ON THE GROUND THAT SCB INDIA HAS NO ROLE IN COCTEAU AGREE MENT . THE LD. COUNSEL POINTED OUT THAT THE RATE APPLICABLE SHOULD BE RECKONED FROM THE CUT -OFF DATE OF THE AGREEMENT, WHICH FOR THE PURPOSE OF SEC. 115A OF THE ACT IS BEFORE 1.6.2005 THEN IT IS 20% AND IF AGREEMENT IS POST 1.6.2005 THEN IT IS 10%. EVEN, THOUGH WE AGREE WITH THE LD. COUNSEL, HOWEVER THIS ISSUE WILL BECOME PURELY ACADEMIC BECAUSE WE HAVE ALREADY HELD THAT THE AMOUNT OF PAYMENT RECEIVED BY ASSESSEE FROM SCB IS NOT TAXABLE IN INDIA. LIKEW ISE, THE ISSUE RAISED IN GROUND NO. 1.3 IS ALSO BEING RENDERED INFRUCTUOUS. RESPECTFULLY,FOLLOWING THE SAME,WE HOLD THAT BOTH T HE GROUNDS OF APPEAL HAVE BECOME INFRUCTUOUS. 4. FIFTH GROUND OF APPEAL IS ABOUT GRANTING SHORT CRED IT OF TDS, AMOUNTING TO RS.9.54 LAKHS. WE FIND THAT THE TRIBUNAL AND ITS ORDER DATED 09/02 /2017 (SUPRA) HAS DEALT THE ISSUE AS UNDER:. 23. REGARDING GROUND NO. 2 IT HAS BEEN POINTED OUT THAT ASSESSING OFFICER MAY BE DIRECTED TO GIVE CREDIT OF TAX PAID AMOUNTING TO RS. 2 CRORES. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO LOOK INTO THIS ISSUE AND ALLOW CREDIT OF TAX PAI D AS PER THE DIRECTIONS GIVEN BY TRIBUNAL IN THE STAY PETITION. THE AO IS DIRECTED TO VERIFY THE CLAIM MADE BY THE ASSESSEE AND ALLOW THE CREDIT,IF DUE.GROUND OF APPEAL (GOA) 5 IS PARTLY ALLOWED. 5. NEXT EFFECTIVE GROUND OF APPEAL IS ABOUT CHARGING O F INTEREST U/S. 234A/B OF THE ACT.IT IS FOUND THAT IDENTICAL ISSUE WAS DECIDED BY THE TRIBU NAL IN THE EARLIER YEARS,AS UNDER: 24. REGARDING CHARGEABILITY OF INTEREST U/S 234B OF THE ACT, IT IS ADMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE IN VIEW OF THE DECISI ON OF HON'BLE BOMBAY HIGH COURT IN THE 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 6 CASE OF NGC NETWORK ASIA LLC, 313 ITR 187 (BOM.). A CCORDINGLY, RESPECTFULLY FOLLOWING THE SAME WE DIRECT TO DELETE THE INTEREST U/S 234B. RESPECTFULLY FOLLOWING THE ABOVE, WE DIRECT THE AO TO DELETE INTERESTS LEVIED UNDER BOTH THE SECTIONS.GROUNDS NO.6-7ARE ALLOWED. 6. GROUND NO. 8 IS ADMITTED TO BE PREMATURE AND ACCORD INGLY, SAME IS DISMISSED. ITA/6437/MUMBAI/2016-AY. 2010-11: 7. FOLLOWING OUR ORDER FOR THE EARLIER YEAR,WE DECIDE GROUNDS NO.1-2 IN FAVOUR OF THE ASSESSEE. GROUND NO.3-4 ARE TREATED INFRUCTUOUS.AO IS DIRECTE D TO VERIFY THE PAYMENT OF TDS AND GIVE DUE CREDIT TO THE ASSESSEE.FIFTH GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART.NEXT THREE GROUNDS OF APPEAL DEAL WITH THE INTEREST LEVIED U/S .234 A,B AND C.FOLLOWING OUR ORDER FOR EARLIER YEAR WE DIRECT THE AO TO DELETE THE INTERES T U/S.234B AND 234C AND TO RECOMPUTED THE INTEREST U/S.234A AS PER THE PROVISIONS OF LAW.GROU ND NO.6 IS PARTLY ALLOWED AND GROUNDS NO.7-8 STAND ALLOWED. LAST GROUND OF APPEAL IS ABOU T INITIATING PENALTY U/S.271(1)(C)OF THE ACT.WE DISMISS THE GROUND TREATING THE SAME AS PREM ATURE. ITA/6437/MUMBAI/2016-AY. 2011-12: 8. FOLLOWING OUR ORDERS FOR THE EARLIER YEAR WE DECIDE FIRST TWO GROUNDS IN FAVOUR OF THE ASSESSEE. NEXT TWO GROUNDS ARE TREATED INFRUCTUOUS. FIFTH GROUND OF APPEAL IS ABOUT RATE OF SURCHARGE. AO IS DIRECTED TO VERIFY THE RATES AND L EVY THE SURCHARGE ACCORDINGLY.SIXTH GROUND DEALS WITH LIVING OF INTEREST U/S. 234B OF THE ACT. FOLLOWING THE EARLIER YEARS ORDERS,WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE.LAST GROUND OF APPEAL IS ABOUT INITIATION OF PENALTY PROCEEDINGS. AS THE ISSUES PREMATURE AND IS STANDS DISMISSED. A RESULT, APPEALS FILED BY THE ASSESSEE FOR ALL THE THREE AY.S STAND PARTLY ALLOWED. . . . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH MARCH,2017. 29 ! , 2017 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI, DATE:29.03.2017 JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 6436-38/M/16(09-10;10-11 &13-14) ATOS INFORMATION TECHNOLOGY HK LTD. 7 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.