AC NIELSEN CORPORATION, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (INTERNATIONAL TAX) 1(1)(1), MUMBAI

ITA 7216/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7312 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2004-2005
• Appeal Filed On: 20-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT SAMAIYA
• Keywords: Double taxation relief; Advance ruling; Set aside
• Section: 143(3); 244A; 205; 90; 11

Judgement Text

1 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION IN THE INCOME-TAX APPELLATE TRIBUNAL I BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 7216/MUM/2017 (ASSESSMENT YEAR 2004-05 ) ITA NO. 7217/MUM/2017 (ASSESSMENT YEAR 2005-06 ) ITA NO. 7218/MUM/2017 (ASSESSMENT YEAR 2006-07 ) THE NIELSEN COMPANY C/O NIELSEN (INDIA) PVT. LTD., 6 TH FLOOR, BLOCK-C, GODREJ IT PARK, 02 GODREJ BUSINESS, DISTRICT, PHIROJSHAH NAGAR, LBS MARG, VIKHROLI (W), MUMBAI- 400079. PAN: AAEC8632R VS. DCIT (IT) -1(1)(1) AAYAKAR BHAWAN, MAHARSHI KARVE ROAD, MUMBAI. -400020 APPELLANT RESPONDE NT APPELLANT BY : SHRI MADHUR AGRAWAL (AR) RESPONDENT BY : SH. NISHANT SAMAIYA (SR. DR) DATE OF HEARING : 22.07.2019 DATE OF PRONOUNCEMEN T : 22 .07.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS GROUP OF THREE APPEAL BY ASSESSEE UNDER SECTIO N 253 OF INCOME-TAX ACT IS DIRECTED AGAINST THE SEPARATE ORDERS OF LD. CIT(A)-55, MUMBAI DATED 18.09.2017, FOR ASSESSMENT YEAR 2004-05 TO 2 006-07 RESPECTIVELY. IN ALL THE APPEALS THE ASSESSEE HAS IDENTICAL GROUN DS OF APPEALS EXCEPT VARIATIONS OF FIGURE OF ADDITIONS, THUS ALL THE APP EALS WERE CLUBBED, HEARD AND ARE DECIDED BY COMMON ORDER FOR THE SAKE OF CON VENIENCE AND TO 2 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION AVOID THE CONFLICTING DECISIONS. FOR APPRECIATION OF FACTS THE GROUNDS OF APPEAL IN APPEAL FOR AY 2004-05 ARE REFERRED BELOW: (1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION O F THE ASSESSING OFFICER IN TREATING THE GSA RECEIPTS AMOUNTING TO RS. 189,2 43,151 AS 'FEES FOR INCLUDED SERVICES' AS PER ARTICLE 12 OF THE TAX TRE ATY BETWEEN INDIA AND USA. (2) WITHOUT PREJUDICE TO THE ABOVE GROUND OF APPEAL, TH E LEARNED CIT(A) ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO APPORTION AND TREAT AS NOT TAXABLE, SOME PORTION OF THE TOTAL RECEIPTS TOWARDS SERVICES , WHICH BY THEIR VERY NATURE DO NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDG E, EXPERIENCE, SKILL, 'KNOW-HOW TO THE INDIAN ENTITIES (IN TERMS OF THE T AX TREATY BETWEEN INDIA AND USA). (3) THE LEARNED CIT(A) ERRED IN NOT ADJUDICATING THE GR OUND THAT LD DCIT ERRED IN COMPUTING THE INTEREST UNDER SECTION 244A OF THE ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A TAX RESIDENT OF USA. THE ASSESSEE IS A GROUP COMPANY OF AC NEILSON GROUP WHI CH IS ONE OF WORLD LEADING BUSINESS, MANAGEMENT AND MARKET RESEARCH CO MPANIES. THE ASSESSEE GROUP IS REPRESENTED IN INDIA THROUGH ITS TWO LEGAL ENTITY I.E. AC NEILSON ORG-MARG PRIVATE LTD (ACNOM) FOR CUSTOMISED RESEARCH SERVICES AND RETAILS MEASUREMENT SERVICES AND ACT N EILSON RESEARCH PRIVATE LTD. (ACNRS). DURING THE RELEVANT PERIOD FO R THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE RECEIVED RS. 77679163/- FOR PROVIDING SERVICES AS CONTEND IN GENERAL SERVICE AG REEMENT. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U NDER SECTION 143(3) ON 13.12.2006 TREATED THE SAID RECEIPT AS ROYALTY U NDER SECTION 9(1)(VI) AND ARTICLE 12 OF INDIA-US TAX TREATY. ON APPEAL, T HE ACTION OF ASSESSING OFFICER WAS CONFIRMED. ON FURTHER APPEAL BEFORE THE TRIBUNAL, THE MATTER WAS RESTORED BACK TO THE FILE OF ASSESSI NG OFFICER IN ITA NO. 1901/MUM/2010 VIDE ORDER DATED 08.08.2014. THE ASSE SSING OFFICER IN 3 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION REMAND/RESTORATION PROCEEDING AGAIN CONFIRMED THE R ECEIPT AS FEES FOR INCLUDED SERVICE (FIS) AS PER ARTICLE 12(4) OF INDI A-US TAX TREATY AS WELL AS UDDER SECTION 9(1)(VI). ON FURTHER APPEAL, THE A CTION OF ASSESSING OFFICER WAS CONFIRMED BY LD. CIT(A) IN THE ORDER IM PUGNED BEFORE US. HENCE, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE AS SESSEE ARE BEFORE THIS TRIBUNAL IN SECOND ROUND OF APPEAL. THE FACT FOR TH E ASSESSMENT YEAR 2005-06 & 2006-07 ARE ALSO BASED ON SIMILAR SET OF FACTS. 3. AT THE OUTSET OF HEARING THE LD AR FOR THE ASSESSEE SUBMITS THAT THE GROUNDS OF APPEAL RAISED BY ASSESSEE ARE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TRIBUNAL DATED 22.05.2019, IN ASSES SEES GROUP CASE IN THE NEILSON COMPANY US LLC IN ITA NO. 4362/MUM/2015 FOR ASSESSMENT YEAR 2010-11. THE LD. AR OF THE ASSESSEE FURNISH THE COPY OF DECISION OF TRIBUNAL DATED 22.05.2019. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE AFTER GOING THROUGH THE CONTENTS OF DECISION IN ASSESSEES GROUP CASE IN TH E NEILSON COMPANY US LLC IN ITA NO. 4362/MUM/2015 FOR ASSESSMENT YEAR 2010-11 SUBMITS THAT HE STRONGLY RELY UPON THE ORDER OF LOW ER AUTHORITIES. 5. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES AND THE DEC ISION OF TRIBUNAL IN ASSESSEES GROUP CASE IN THE NEILSON COMPANY US LLC IN ITA NO. 4362/MUM/2015 FOR ASSESSMENT YEAR 2010-11. WE HAVE NOTED THAT ON 4 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SIMILAR SET OF FACT, THE CO-ORDINATE BENCH OF TRIBU NAL WHILE CONSIDERING THE SIMILAR GROUND OF APPEAL PASSED THE FOLLOWING O RDER: 9. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AN D HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE ASSESSMENT THE ASSESSEE CLAIMED THAT THE RECEIPT FROM SERVICE AGRE EMENT DO NOT QUALIFY AS FEE FOR INCLUDED SERVICES AS PER ARTIC LE 12 OF THE INDIA-US DTAA. THE ASSESSING OFFICER ASKED THE ASSESSEE TO P ROVIDE THE SERVICE AGREEMENT AND EXPLAIN THE NATURE OF ADVISORY SERVIC ES. THE ASSESSEE FILED ITS REPLY DATED 19.12.2013 AND ALSO PROVIDED THE DETAILS OF THE SERVICES RENDERED UNDER THE GENERAL SERVICE AGREEME NT. THE ASSESSING OFFICER RECORDED THE SUBMISSIONS OF THE ASSESSEE IN PARA 6 OF HIS ORDER. HOWEVER, THE EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER TRE ATED THE RECEIPT IN THE NATURE OF FEE FOR INCLUDED SERVICES (FIS). THE ASSE SSING OFFICER ALSO CONCLUDED THAT FIS HAS BEEN DEFINED IN ARTICLE 12(4 ) OF INDIA-US DTAA, ACCORDING TO WHICH THE PAYMENT IN CONSIDERATI ON FOR RENDERING OF ANY CONSULTANCY SERVICES, WHICH CONSIST OF PROVI SION OF SERVICES FOR TECHNICAL OR OTHER PERSONNEL, IF SUCH SERVICES INTE R ALIA MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNI CAL PLAN OR TECHNICAL DESIGN. IT WAS FURTHER CONCLUDED THAT MEMO OF UNDER STANDING ATTACHED WITH INDIA-US DTAA, THE TERM MAKE AVAILABLE MEANS THAT THE PERSON ACQUIRING THE SERVICES IS ENABLED TO INDEPEN DENTLY APPLY THE TECHNOLOGY. THE FACTS THAT THE SERVICES ARE CONTIN UOUS DOES NOT ITSELF IMPLY THAT THEY DO NOT ENABLE THE RECIPIENT TO INDE PENDENTLY APPLY THE KNOWLEDGE/ SKILL THAT IS PROVIDED. THE WORD ENAB LE IS USED IN THE SENSE THAT THE SERVICES SHOULD BE SUCH THAT THEY MA KE THE RECIPIENT ABLE OR WISER IN THE SUBJECT MATTER. THE SERVICES A RE CONTINUOUS TO ENSURE THAT THE KNOWLEDGE PROVIDED AND APPLIED BY T HE RECIPIENT CAN BE REVIVED FOR FURTHER ENABLING IT TO PERFORM ITS T ASK BETTER. 10. THE ASSESSING OFFICER FURTHER CONCLUDED THAT ARTICL E 12(4)(B) OF DTAA BETWEEN INDIA AND USA ALL THE ADMINISTRATIVE AND MA NAGEMENT 5 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SUPPORT SERVICES RENDERED AS PER GENERAL SERVICE AG REEMENT IN INTRA GROUP SERVICES ARE WITH THE PRIMARY INTENTION TO MA INTAIN THE BRAND NAME OF ASSESSEE AND KNOW-HOW, WITH THE INTENTION O F CARRYING ON THE BUSINESS IN LINE WITH THE BEST PRACTICE GLOBALLY. T HE ENTITY MAY NOT BE PART OF THE GROUP BUT THE PAYMENT IS FOR THE USAGE OF BRAND NAME OF ASSESSEE AND HENCE MANAGEMENT SUPPORT SERVICES IS I N THE NATURE OF FIS. THE ASSESSING OFFICER ALSO CONCLUDED THAT THE ADVISORY SERVICES HAVE BEEN USED BY THE INDIAN ENTITIES IN THE COURSE OF THEIR BUSINESS ACTIVITIES WHICH ARE UTILISED FOR THE BETTERMENT AN D IMPROVEMENT OF THEIR BUSINESS MODEL AND OTHER PRACTICES, WHICH HAS ULTIMATELY REFLECTED IN THE INCREASE OF PROFITABILITY OF INDIA N ENTITY. THE EMPLOYEES OF INDIAN ENTITY ARE HIGHLY QUALIFIED AND EDUCATED. THEREFORE, THE RECEIPT OF GENERAL SERVICE AGREEMENT WAS TREATED BY ASSESSING OFFICER AS FEE FOR INCLUDE SERVICES. THE ASSESSING OFFICER ALSO RELIED ON THE DECISION OF AAR IN PERFETTI VAN HOLDI NG B.V (CASE NO. AAR NO.869 OF 2010 DATED 09.12.2011). 11. BEFORE LD CIT(A) THE ASSESSEE FILED DETAILED WRITTE N SUBMISSIONS AS MADE BEFORE US. IT WAS ALSO SPECIFICALLY BROUGHT TO THE NOTICE OF LD CIT(A) THAT THE DECISION RENDERED BY AAR IN PERFETT I VAN HOLDING B.V (SUPRA) RELIED BY THE ASSESSING OFFICER HAS AL READY BEEN SET ASIDE BY DELHI HIGH COURT, DIRECTING AAR TO PASS THE ORDE R AFRESH. THE LD CIT(A) CONFIRMED THE ORDER OF ASSESSING OFFICER WIT HOUT GIVING ANY DIFFERENT FINDING. 12. WE HAVE ALSO EXAMINED THE SERVICE AGREEMENT DATED 0 9.01.2009 BETWEEN ASSESSEE AND ACNOM. THE ASSESSEE HAS AGREE TO PROVIDE THE SERVICES TO ACNOM WHICH WE HAVE NOTED IN PARA 4(SUP RA). WE HAVE ALSO PERUSED THE PROVISIONS OF INDIA USA DTAA AS NO TIFIED BY THE GOVERNMENT OF INDIA IN NOTIFICATION NO.GSR 990(E), DATED 20-12- 1990. ARTICLE 12 OF DTAA BETWEEN INDIA AND USA DEALS WITH ROYALTIES AND FEES FOR INCLUDED SERVICE. FEE FOR IN CLUDED SERVICE IS DEFINED IN CLAUSE 4 OF ARTICLE 12 OF DTAA. FOR THE PURPOSE OF APPRECIATION, CLAUSE 4 OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND USA IS EXTRACTED BELOW: 6 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION '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 SERVI CES (INCLUDING THROUGH THE PROVISION OF SERVICES OF TECHNICAL OR O THER PERSONNEL) 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, SKILL, KNOW- HOW, OR PROCESSES, OR CONSIST OF DEVELOPMENT AND TR ANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN.' 13. AS PER THE ABOVE DEFINITION IN DTAA, FEES FOR INCLU DED SERVICES MEANS PAYMENT OF ANY KIND TO ANY PERSON IN CONSIDER ATION FOR RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES. WE HAVE NOTED THAT THE TERM 'MANAGERIAL SERVICE' AS PRESCRIBED IN EXP LANATION 2 TO SECTION 9(1)(VII) OF THE INDIAN INCOME-TAX ACT, 1961 IS NOT FOUND IN CLAUSE 4 OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND USA. 14. FOR FURTHER APPRECIATION OF THE RELEVANT PORTION OF THE MEMORANDUM OF UNDERSTANDING EXECUTED BETWEEN INDIA AND USA ON 15T H MAY, 1989 IS ALSO EXTRACTED BELOW: 'UNDER PARAGRAPH 4, TECHNICAL AND CONSULTANCY SERVI CES ARE CONSIDERED INCLUDED SERVICES ONLY TO THE FOLLOWING EXTENT: (1) AS DESCRIBED IN PARAGRAPH 4(A), IF THEY ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF A RIGHT, PROPERTY O R INFORMATION FOR WHICH ARE ROYALTY PAYMENT IS MADE; OR (2) AS DE SCRIBED IN PARAGRAPH 4(B), IF THEY MAKE AVAILABLE TECHNICAL KN OWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSI ST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TEC HNICAL DESIGN. THUS, UNDER PARAGRAPH 4(B), CONSULTANCY SERVICES WH ICH ARE NOT OF A TECHNICAL NATURE CANNOT BE I PARAGRAPH 4( A ) PARAGRAPH 4( A ) OF ARTICLE 12 REFERS TO TECHNICAL OR CONSULTANCY SERVICES THAT ARE ANCILLARY AND SUBSIDIARY TO THE A PPLICATION OR ENJOYMENT OF ANY RIGHT, PROPERTY, OR INFORMATION FO R WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3( A ) OR ( B ) IS RECEIVED. THUS, PARAGRAPH 4( A ) INCLUDES A TECHNICAL AND CONSULTANCY SERVICES THA T ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF AN INTANGIBLE FOR WHICH A ROYALTY IS RECEIVED UNDER A LICENCE OR SALE AS DESCRIBED IN PARAGRAPH 3( A ), AS WELL AS THOSE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF INDUS TRIAL, 7 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION COMMERCIAL, OR SCIENTIFIC EQUIPMENT FOR WHICH A ROY ALTY IS RECEIVED UNDER A LEASE AS DESCRIBED IN PARAGRAPH 3( B ). IT IS UNDERSTOOD THAT, IN ORDER FOR A SERVICE FEE T O BE CONSIDERED 'ANCILLARY AND SUBSIDIARY' TO THE APPLICATION OR EN JOYMENT OF SOME RIGHT, PROPERTY, OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3( A ) OR ( B ) IS RECEIVED, THE SERVICE MUST BE RELATED TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY , OR INFORMATION. IN ADDITION, THE CLEARLY PREDOMINANT P URPOSE OF THE ARRANGEMENT UNDER WHICH THE PAYMENT OF THE SERVICE FEE AND SUCH OTHER PAYMENTS ARE MADE MUST BE THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY, OR INFORMATION DESCRIBED IN PA RAGRAPH 3. THE QUESTION OF WHETHER THE SERVICE IS RELATED TO THE A PPLICATION OR ENJOYMENT OF RIGHT, PROPERTY, OR INFORMATION DESCRI BED IN PARAGRAPH 3 AND WHETHER THE CLEARLY PREDOMINANT PUR POSE OF THE ARRANGEMENT IS SUCH APPLICATION OR ENJOYMENT MUST B E DETERMINED BY REFERENCE TO THE FACTS AND CIRCUMSTANCES OF EACH CASE. 15. FROM THIS MEMORANDUM OF UNDERSTANDING, IT IS OBVIOU S THAT AS PROVIDED IN CLAUSE 4(B) OF ARTICLE 12 OF THE INDIA USA DTAA, THAT IF THE TECHNICAL OR CONSULTANCY SERVICES MADE AVAILABL E ARE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSE S, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN ARE CONSIDERED TO BE TECHNICAL OR CONSULTANCY SERVI CES. IT IS ALSO CLARIFIED THAT CONSULTANCY SERVICES NOT OF TECHNICA L NATURE CANNOT FALL UNDER 'INCLUDED SERVICES'. IN VIEW OF THIS MEMORAND UM OF UNDERSTANDING BETWEEN TWO SOVEREIGN COUNTRIES, THE CONSULTANCY SERVICES WHICH ARE TECHNICAL IN NATURE ALONE ARE TO BE INCLUDED AS TECHNICAL AND CONSULTANCY SERVICES FOR THE PURPOSE OF FEES FOR INCLUDED SERVICES AS PER SUB CLAUSE 4(B) OF ARTICLE 12 OF DTAA BETWEEN INDIA AND USA. 16. IN VIEW OF THE ABOVE PROVISIONS OF THE INDIA USA DT AA, WE HAVE SEEN THE SERVICE AGREEMENT EXECUTED BETWEEN THE ASS ESSEE AND THE SERVICE PROVIDER. THE SERVICES PROVIDED BY THE ASSE SSEE CONSIST OF DEVELOPMENT AND DETERMINATION OF SHORT AND LONG TER M BUSINESS STRATEGIES; OVERALL MANAGEMENT AND COORDINATION IN RELATION TO GENERAL POLICIES AND STRATEGIES PER COUNTRY AND PER DIVISIO N, MAINTENANCE OF EXTERNAL RELATIONSHIPS TO THE EXTENT THAT THESE SER VICES DO NOT COMPRISE 8 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SHAREHOLDER SERVICES; HUMAN RESOURCES SERVICES REGA RDING GROUP POLICIES; LEGAL SERVICES; INSURANCE SERVICES; DEVEL OPMENT, CONTROL AND MAINTENANCE OF MANAGEMENT INFORMATION SYSTEMS; ADMI NISTRATIVE SUPPORT TO GROUP COMPANIES, INCLUDING ANALYSIS OF M ANAGEMENT INFORMATION; DEVELOPMENT OF SHORT AND LONG TERM IT POLICIES AND STRATEGIES; MANAGEMENT AND CO-ORDINATION OF IT POLI CIES BETWEEN GROUP COMPANIES; TAX SERVICES; FINANCIAL RISK MANAG EMENT SERVICES, TO THE EXTENT THESE SERVICES DO NOT COMPRISE FINANCING SERVICES; SUPPORT IN THE AREA OF INTERNATIONAL STAFFING, CAREER DEVEL OPMENT AND INTERNATIONAL JOB ROTATION; MARKET RESEARCH, TARGE T RESEARCH AND COMPETITOR RESEARCH AND STOCK BASED COMPENSATION. W E HAVE NOTED THAT WHILE UNDERTAKING THE ABOVE SERVICES THE ASSES SEE HAS NOT EXECUTED ANY CONTRACTED TO MAKE AVAILABLE ANY TECHN ICAL EXPERTISE SO AS TO USE THOSE SERVICES INDEPENDENTLY BY THE LICEN SEE. ALL THE SERVICES UNDER TAKEN BY THE ASSESSEE ARE EITHER SUP PORT SERVICES, IT ENABLE SERVICES, COORDINATION OR TAX SERVICES AS RE FERRED ABOVE ARE NOT SUCH WHICH REQUIRE TRANSFER OF TECHNOLOGY, SKILL T O THE RECEIPT COMPANY. 17. THE HONBLE KARNATAKA HIGH COURT IN CIT VS DE BEERS INDIA MINERALS (P) LTD. WHILE CONSIDERING THE SIMILAR QUE STION OF LAW WHILE CONSIDERING THE PROVISIONS OF INDIA- NETHERLAND DOU BLE TAX AVOIDANCE AGREEMENT (INDIA- NETHERLAND DTAA), WHILE CONSIDERI NG THE FACTS THAT WHERE A NETHERLAND COMPANY RENDERED TECHNICAL SERVICES TO THE ASSESSEE, WITHOUT MAKING AVAILABLE ANY TECHNICAL EX PERTISE SO AS TO ENABLE ASSESSEE USE THOSE SERVICES INDEPENDENTLY IN FUTURE, PAYMENT MADE FOR SUCH SERVICES CANNOT BE TERMED AS FEE FOR TECHNICAL SERVICES, THE RELEVANT PART OF THE DECISION IS EXT RACTED BELOW; 13. UNDER THE ACT IF THE CONSIDERATION PAID FOR RENDERI NG TECHNICAL SERVICES CONSTITUTES INCOME BY WAY OF FEES FOR TECH NICAL SERVICES, IT IS TAXABLE. HOWEVER, ARTICLE 12 OF THE AFORESAID INDIA- NETHERLANDS TREATY DEFINES FEES FOR TECHNICAL SERVI CES FOR THE PURPOSE OF ARTICLE 12 WHICH DEALS WITH ROYALTIES AN D FEES FOR TECHNICAL SERVICES. THE FEES FOR TECHNICAL SERVICES MEANS THE 9 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION PAYMENT OF ANY AMOUNT TO ANY PERSON IN CONSIDERATIO N FOR RENDERING OF ANY TECHNICAL SERVICES ONLY, IF SUCH S ERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERTISE, SKILL, KN OW-HOW OR PROCESSES. IF THE TECHNICAL KNOWLEDGE EXPERTISE, SK ILL, KNOW HOW OR PROCESS IS NOT MADE AVAILABLE BY THE SERVICE PRO VIDER, WHO HAS RENDERED TECHNICAL SERVICE FOR THE PURPOSE OF ARTIC LE 12 OF DTAA IT WOULD NOT CONSTITUTE FEES FOR TECHNICAL SERVICES . TO THAT EXTENT THE DEFINITION OF FEE FOR TECHNICAL SERVICES FOUND IN THE AGREEMENT IS INCONSISTENT WITH THE DEFINITION OF FEES FOR TEC HNICAL SERVICES PROVIDED IN EXPLANATION 2 TO CLAUSE (VII) OF SUB SECTION (1) OF SECTION 9. IN VIEW OF SECTION 90 THE DEFINITION OF FEES FOR TECHNICAL SERVICES CONTAINED IN THE AGREEMENT OVERRIDES THE S TATUTORY PROVISIONS CONTAINED IN THE ACT. IN FACT, THE LATES T AGREEMENT BETWEEN INDIA END SINGAPORE FURTHER CLARIFIES THIS POSITION, WHERE THEY HAVE EXPLAINED THE MEANING OF THE WORD 'MAKE A VAILABLE'. ACCORDING TO THE AFORESAID DEFINITION FEES FOR TECH NICAL SERVICE MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDE RATION FOR SERVICES OF TECHNICAL NATURE IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESSES, WHICH ENABLES THE PERSON ACQUIRING THE SERVICE TO A PPLY TECHNOLOGY CONTAINED THEREIN. THOUGH THIS PROVISION IS NOT CONTAINED IN INDIA NETHERLANDS TREATY, BY VIRTUE OF PROTOCOL IN THE AGREEMENT, CLAUSE (IV) (2) READS AS UNDER:- 'IF AFTER THE SIGNATURE OF THIS CONVENTION UNDER AN Y CONVENTION OR AGREEMENT BETWEEN INDIA AND THIRD STATE WHICH IS A MEMBER OF THE OECD INDIA SHOULD LIMIT ITS TAXATION AT SOUR CE ON DIVIDENDS, INTERESTS, ROYALTIES, FEES FOR TECHNICAL SERVICES OR PAYMENTS FOR THE USE OF EQUIPMENT TO A RATE LOWER O R A SCOPE MORE RESTRICTED THAN THE RATE OR SCOPE PROVIDED FOR IN THIS CONVENTION ON THE SAID ITEMS OF INCOME, THEN AS FRO M THE DATE ON WHICH THE RELEVANT INDIAN CONVENTION OR AGREEMEN T ENTERS INTO FORCE THE SAME RATE OR SCOPE AS PROVIDED FOR I N THAT CONVENTION OR AGREEMENT ON THE SAID ITEMS OF INCOME SHALL ALSO APPLY UNDER THIS CONVENTION.' 14. THEREFORE THE CLAUSE IN SINGAPORE AGREEMENT WHICH EXPLICITLY MAKES IT CLEAR THE MEANING OF THE WORD 'MAKE AVAILA BLE', THE SAID 10 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION CLAUSE HAS TO BE APPLIED, AND TO BE READ INTO THIS AGREEMENT ALSO. THEREFORE, IT FOLLOWS THAT FOR ATTRACTING THE LIABI LITY TO PAY TAX NOT ONLY THE SERVICES SHOULD BE OF TECHNICAL IN NATURE, BUT IT SHOULD BE MADE AVAILABLE TO THE PERSON RECEIVING THE TECHNICA L SERVICES. THE TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON WHO RECEIVED SERVICE IS ENABLED TO APPLY THE TECHNO LOGY. THE SERVICE PROVIDER IN ORDER TO RENDER TECHNICAL SERVI CES USES TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESSES . TO ATTRACT THE TAX LIABILITY, THAT TECHNICAL KNOWLEDGE, EXPERIENCE , SKILL, KNOW HOW OR PROCESS WHICH IS USED BY SERVICE PROVIDER TO REN DER TECHNICAL SERVICE SHOULD ALSO BE MADE AVAILABLE TO THE RECIPI ENT OF THE SERVICES, SO THAT THE RECIPIENT ALSO ACQUIRES TECHN ICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESSES SO AS TO R ENDER SUCH TECHNICAL SERVICES. ONCE ALL SUCH TECHNOLOGY IS MAD E AVAILABLE IT IS OPEN TO THE RECIPIENT OF THE SERVICE TO MAKE USE OF THE SAID TECHNOLOGY. THE TAX IS NOT DEPENDENT ON THE USE OF THE TECHNOLOGY BY THE RECIPIENT. THE RECIPIENT AFTER RECEIVING OF TECHNOLOGY MAY USE OR MAY NOT USE THE TECHNOLOGY. IT HAS NO BEARIN G ON THE TAXABILITY ASPECT IS CONCERNED. WHEN TECHNICAL SERV ICE IS PROVIDED, THAT TECHNICAL SERVICE IS TO BE MADE USE OF BY THE RECIPIENT OF THE SERVICE IN FURTHER CONDUCT OF HIS BUSINESS. MERELY BECAUSE HIS BUSINESS IS DEPENDENT ON THE TECHNICAL SERVICE WHIC H HE RECEIVES FROM THE SERVICE PROVIDER, IT DOES NOT FOLLOW THAT HE IS MAKING USE OF THE TECHNOLOGY WHICH THE SERVICE PROVIDER UTILIS ES FOR RENDERING TECHNICAL SERVICES. THE CRUX OF THE MATTER IS AFTER RENDERING OF SUCH TECHNICAL SERVICES BY THE SERVICE PROVIDER, WHETHER THE RECIPIENT IS ENABLED TO USE THE TECHNOLOGY WHICH THE SERVICE PRO VIDER HAD USED. THEREFORE, UNLESS THE SERVICE PROVIDER MAKES AVAILA BLE HIS TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW HOW OR PROCESS T O THE RECIPIENT OF THE TECHNICAL SERVICE, IN VIEW OF THE CLAUSES IN THE DTAA THE LIABILITY, TO TAX IS NOT ATTRACTED. 15. THE LEARNED ADDITIONAL SOLICITOR GENERAL RELIED ON 3 JUDGMENTS TO POINT OUT THAT WAS THE EARLIER VIEW. NOW THERE I S A DEPARTURE 11 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SUPPORTING THE DEPARTMENT. THE FIRST JUDGMENT ON WH ICH RELIANCE IS PLACED IS, THE JUDGMENT OF THE ADVANCE RULING AUTHO RITY IN THE CASE OF PERFETTI VAN MELLE HOLDING B.V. , IN RE [2012] 204 TAXMAN 166/[2011] 16 TAXMANN.COM 207 (AAR-NEW DELHI) WHERE IT WAS HELD AS UNDER:- ' THE EXPRESSION 'MAKE AVAILABLE' ONLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE IN A POSITION TO DERIVE AN EN DURING BENEFIT AND BE IN A POSITION TO UTILISE THE KNOWLEDGE OR KN OW-HOW IN FUTURE ON HIS OWN. 'BY MAKING AVAILABLE THE TECHNICAL SKIL LS OR KNOW HOW, THE RECIPIENT OF THE SAME WILL GET EQUIPPED WITH TH AT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER. SO WHEN THE EXPERTISE IN RUNNING THE INDUSTRY RUN BY THE GROUP IS PROVIDED TO THE INDIAN ENTITY IN TH E GROUP TO BE APPLIED IN RUNNING THE BUSINESS, THE EMPLOYEES OF T HE INDIAN ENTITY GET EQUIPPED, TO CARRY ON THAT BUSINESS MODEL OR SE RVICE MODEL ON THEIR OWN WITHOUT REFERENCE TO THE SERVICE PROVIDER , WHEN THE SERVICE AGREEMENT COMES TO AN END. IT IS NOT AS IF FOR MAKING AVAILABLE, THE RECIPIENT MUST ALSO BE CONVEYED SPEC IFICALLY THE RIGHT TO CONTINUE THE PRACTICE PUT INTO EFFECT AND ADOPTE D UNDER THE SERVICE AGREEMENT ON ITS EXPIRY.' 16. IN THE AFORESAID CASE, THE APPLICANT HOLDING COMPA NY WAS TO PROVIDE TO ITS SUBSIDIARY COMPANY IN INDIA THE LICE NCE TO MANUFACTURE AND SELL PRODUCTS, THE LICENCE TO USE T ECHNOLOGY, TECHNICAL MARKETING AND COMMERCIAL KNOW-HOW IN THE MANUFACTURE, SALES AND ADVERTISEMENT AND PROMOTION OF THE PRODUC TS, OFFER TECHNICIANS, MARKETERS, SALESMAN, IN-HOUSE LEGAL CO UNSEL AND THE EXPERIENCED EMPLOYEES TO ASSIST IN THE ACTIVITIES M ENTIONED ABOVE. UNDER THE SERVICE AGREEMENT, SPECIFICALLY THE SERVI CE RECIPIENT REQUIRE THE USE OF PROPRIETARY KNOWLEDGE AND PROCES SES BELONGING TO PERFETTI GROUP. SPECIFIED SERVICES SUCH AS ACCOU NTING BUDGETING, SALES, MARKETING, FOREX MANAGEMENT, LOANS, HR, LEGA L SUPPORT ETC. AND SPECIFIED SERVICES ARE TO BE PROVIDED ON CONTIN UOUS BASIS. THEREFORE, IT WAS HELD IN THE AFORESAID CASE, THAT THE CASE FALLS 12 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION WITHIN THE PURVIEW OF ARTICLE 12.5(A) OF THE DTAC O N SUCH SERVICE WHICH ARE ANCILLARY AND SUBSIDIARY TO THE APPLICANT OR ENJOYMENT OF RIGHT PROPERTY OR INFORMATION FOR WHICH THE PAYMENT PRESCRIBED IN PARAGRAPH 4 OF THE ARTICLE IS TO BE MADE. THEREFORE , IT IS A CASE OF ROYALTY AND NOT FEE FOR TECHNICAL SERVICE. EVEN OTH ERWISE IT IS CLEAR UNDER THE TERMS OF THE AGREEMENT THE TECHNICAL KNOW -HOW IN THE MANUFACTURING, SALES, ADVERTISEMENT AND PROMOTION O F THE PRODUCTS IS MADE AVAILABLE. THEREFORE, THE AFORESAID FINDING RECORDED IS LEGAL AND CANNOT BE FOUND FAULT WITH. 17. YET ANOTHER JUDGMENT RELIED ON IS IN THE CASE OF SHELL INDIA MARKETS (P.) LTD ., IN RE [2012] 205 TAXMAN 288 / 18 TAXMANN.COM 46 (AAR-NEW DELHI) WHERE ALSO THE AUTHORITY FOR ADV ANCE RULING HELD RELYING ON FINDINGS RECORDED IN PERFETTI MARKE TING CASE WHERE IT WAS HELD THAT 'THE EXPRESSION 'MAKE AVAILABLE' O NLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE IN A POSITIO N TO DERIVE AN ENDURING BENEFIT AND BE IN A POSITION TO UTILISE TH E KNOWLEDGE OR KNOW-HOW IN FUTURE ON HIS OWN.' HERE, THE INDUSTRIA L SPECIFIC EXPERTISE IS PROVIDED TO THE INDIAN ENTITY WHICH IS APPLIED IN RUNNING ITS BUSINESS. THE EMPLOYEES OF THE INDIAN C OMPANY GET EQUIPPED TO CARRY ON THEIR BUSINESS, MARKET OR SERV ICE MARKET ON THEIR OWN WITHOUT REFERENCE TO THE SERVICE PROVIDER WHEN THE SERVICE . AGREEMENT COMES TO AN END. IT IS A CASE O F MAKING AVAILABLE THE TECHNICAL KNOWLEDGE. THE RECIPIENT OF THE SERVICE WAS CONVEYED SPECIFICALLY THE RIGHT TO CONTINUE THE PRA CTICE PUT INTO EFFECT AND ADOPT IT UNDER THE AGREEMENT ON ITS EXPI RY. 18. FROM THE AFORESAID STATEMENT OF LAW IT IS CLEAR TH E TEST IS WHETHER THE RECIPIENT OF THE SERVICE IS EQUIPPED TO CARRY ON HIS BUSINESS WITHOUT REFERENCE TO THE SERVICE PROVIDER, IF HE IS ABLE TO CARRY ON HIS BUSINESS IN FUTURE WITHOUT THE TECHNIC AL SERVICE OF THE SERVICE PROVIDER IN RESPECT OF SERVICES RENDERED TH EN, IT WOULD BE SAID THAT TECHNICAL KNOWLEDGE IS MADE AVAILABLE. 19. THE 3RD JUDGMENT ON WHICH RELIANCE WAS PLACED IS AREVA T & D INDIA LTD. AGAIN THE OPINION EXPRESSED BY THE ADVANCE RULING 13 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION AUTHORITY WHEREUNDER UNDER THE TERMS OF THE AGREEME NT THE FRENCH COMPANY HAS TO PROVIDE SUPPORT SERVICE TO THE CENTR AL TEAM IN THE AREA OF INFORMATION TECHNOLOGY TO THE APPLICANT AND TO ITS SUBSIDIARIES IN THE WORLD. THE PROVISION OF SUPPORT SERVICES BY THE FRENCH COMPANY WOULD ITSELF MAKE AVAILABLE, THE TEC HNICAL KNOWLEDGE/EXPERIENCE TO THE APPLICANT. IN THAT CONT EXT IT WAS HELD THAT THE SERVICE PROVIDER UNDER THE IT AGREEMENT AR E IN THE NATURE OF FEES FOR TECHNICAL SERVICES AND TAXABLE UNDER THE D TAA AS WELL AS UNDER THE ACT. 20. IN THE AFORESAID CASE THE BUSINESS OF THE APPLICAN T BEING THAT OF EXECUTING THE PROJECTS FOR TRANSMISSION AND DISTRIB UTION OF POWER ON TURNKEY BASIS, IT IS THE FRENCH COMPANY AND OTHER G ROUP COMPANIES WHICH CONTINUOUSLY UPGRADE DESIGNS, MODEL AND OTHER ENGINEERING PLANS AND FORMULAE WHICH ARE USED BY TH E APPLICANT FOR THE PURPOSE OF ITS BUSINESS. THE MAIN OBJECTIVE OF SETTING UP OF AN EXCLUSIVE PLATFORM IS NOT FOR PROVIDING INFORMATION TECHNOLOGY BUT FOR ENABLING THE APPLICANT TO USE DATA IN THE FORM OF DESIGNS, PLAN, MODEL AND ENGINEERING FORMULAE ETC., IN 2D & 3D FOR M. THE CHARACTER OF THE PAYMENT IS CLEARLY ROYALTY AS DEFI NED IN ARTICLE 13(3) OF DTAA AS WELL AS TO EXPLANATION 2 TO SECTION 9(1)(VI) OF THE ACT. THE AGREEMENT CLEARLY ESTABLISHES THAT THE APPLICANT AS TO PREPARE FOR THE INSTALLATION AT THE FIXED GATEWAY S ITES FOR PROPER INSTALLATION OF EQUIPMENT BY FRANCE TELECOM. IT IS TO ACT AS BAILEE OF THE EQUIPMENT WHICH IS UNDER ITS CONTROL AND USE FO R ITS BUSINESS. THE USE OF EQUIPMENT IS WITH THE USUAL CONDITION OF WARRANTY AND THE NETWORK COULD BE MANAGED BY THE APPLICANT. THE EQUIPMENT INSTALLED IS TO BE INTEGRATED INTO AREVA NET GLOBAL NETWORK WHICH IS MANAGED AND CONTROLLED BY THE FRENCH COMPANY FOR EQUIPMENT INSTALLATION AT GATEWAY SITES IN NOIDA AND CHENNAI CONSTITUTE PE IN INDIA AS THE EQUIPMENT HAS BEEN USED BY THE FRENCH COMPANY IN THE COURSE OF ITS BUSINESS IN PROVIDING TECHNICAL D ATA TO THE GROUP COMPANIES. 14 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION 21. THEREFORE FROM THE AFORESAID JUDGMENTS IT IS NOT P OSSIBLE TO HOLD THAT THERE IS A DEPARTURE BY THE ADVANCE RULIN G AUTHORITY IN RESPECT OF ITS EARLIER VIEWS. IT IS IN THIS BACKGRO UND WE HAVE TO LOOK AT THE FACTS OF THIS CASE, IN ORDER TO FIND OUT WHE THER THE SERVICE PROVIDER HAS MADE AVAILABLE THE TECHNICAL KNOWLEDGE TO THE ASSESSEE SO AS TO FOIST THE LIABILITY OF PAYMENT OF TAX. 22. WHAT IS THE MEANING OF 'MAKE AVAILABLE'. THE TECHN ICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NA TURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNOWLE DGE, KNOW-HOW AND THE LIKE. THE SERVICE SHOULD BE AIMED AT AND RE SULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZ E THE KNOWLEDGE OR KNOW-HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLO GY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL?, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PA RTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOUGH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT O F TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HA VE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT TH E RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTU RE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CON SIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERV ICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISIO N OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PUR CHASING THE SERVICE, WITHIN THE MEANING OF PARAGRAPH (4)(B). SI MILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTH ER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TESTS OF RENDERING 15 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE A T THE SAME TIME IS SATISFIED. 18. THE COORDINATE BENCH OF AHMEDABAD TRIBUNAL WHILE CO NSIDERING THE PROVISIONS OF INDIA- CANADA DTAA AND FOLLOWING THE DECISION OF HONBLE KARNATAKA HIGH COURT IN DEE BEERS INDIA (P) LTD (SUPRA) HELD THAT RENDITION OF IT SUPPORT SERVICES TO ASSESSEE BY A CANADIAN COMPANY, EVEN IF CERTAIN EQUIPMENT WERE TO BE USED, THAT BY ITSELF DID NOT VEST ANY RIGHT IN ASSESSEE TO USE EQUIPMENT AND THUS, PAYMENTS MADE BY ASSESSEE COULD NOT BE VIEWED AS PAYMENTS FO R 'USE OR RIGHT TO USE' ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIP MENT. THE RELEVANT PART OF THE ORDER IS EXTRACTED BELOW; 15. WE FIND THAT SO FAR AS TAXABILITY UNDER ARTICLE 12 , I.E. WITH RESPECT TO 'ROYALTIES AND FEES FOR INCLUDED SERVICE S' IS CONCERNED, WE FIND THAT ARTICLE 12(4) PROVIDES THAT, 'THE TERM 'FEES FOR TECHNICAL INCLUDED SERVICES' AS USED IN THIS ARTICL E MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR SERVICES OF A MANAGERIAL, TECHNICAL OR CONSULTANCY NATURE (I NCLUDING THE PROVISION OF SUCH SERVICES THROUGH TECHNICAL OR OTH ER PERSONNEL) IF SUCH SERVICES : (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3 IS RECEIVED ; OR ( B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, K NOW-HOW OR PROCESSES, WHICH ENABLES THE PERSON ACQUIRING THE S ERVICES TO APPLY THE TECHNOLOGY CONTAINED THEREIN'. IN ORDER T O INVOKE ARTICLE 12(4)(A) IT IS NECESSARY THAT SUCH SERVICES SHOULD 'MAKE AVAILABLE' TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW, O R PROCESSES OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNI CAL PLAN OR TECHNICAL DESIGN THE SERVICES PROVIDED BY BT CANADA WERE SIMPLY MANAGEMENT SUPPORT OR CONSULTANCY SERVICES W HICH DID NOT INVOLVE ANY TRANSFER OF TECHNOLOGY. IT IS NOT E VEN THE CASE OF THE ASSESSING OFFICER THAT THE SERVICES WERE SUCH T HAT THE RECIPIENT OF SERVICE WAS ENABLED TO PERFORM THESE SERVICES ON ITS OWN WITHOUT ANY FURTHER RECOURSE TO THE SERVICE PROVIDE R. IT IS IN THIS CONTEXT THAT WE HAVE TO EXAMINE THE SCOPE OF EXPRES SION 'MAKE AVAILABLE'. 16. AS FOR THE CONNOTATIONS OF MAKE AVAILABLE CLAUSE I N THE TREATY, THIS ISSUE IS NO LONGER RES INTEGRA. THERE ARE AT LEAST TWO NON- JURISDICTIONAL HIGH COURT DECISIONS, NAMELY HON'BLE DELHI HIGH COURT IN THE CASE OF DIT V. GUY CARPENTER & CO LTD [2012] 346 ITR 504/207 TAXMAN 121/20 TAXMANN.COM 807 AND HON'B LE 16 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION KARNATAKA HIGH COURT IN THE CASE OF CIT V. DE BEERS INDIA MINERALS (P.) LTD [2012] 346 ITR 467/208 TAXMAN 406 /21 TAXMANN.COM 214 IN FAVOUR OF THE ASSESSEE, AND THER E IS NO CONTRARY DECISION BY HON'BLE JURISDICTIONAL HIGH CO URT OR BY HON'BLE SUPREME COURT. IN DE BEERS CASE ( SUPRA ), THEIR LORDSHIPS POSED THE QUESTION, AS TO 'WHAT IS MEANIN G OF MAKE AVAILABLE', TO THEMSELVES, AND PROCEEDED TO DEAL WI TH IT AS FOLLOWS: 'THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOU LD BE OF SUCH A NATURE THAT IT 'MAKES AVAILABLE' TO THE RECIPIENT TECHNICAL KNOWLEDGE, KNOW-HOW AND THE LIKE. THE SERVICE SHOUL D BE AIMED AT AND RESULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC., SO THAT THE PAYER OF THE SERVICE COULD DERIVE AN ENDURING BENEF IT AND UTILIZE THE KNOWLEDGE OR KNOW-HOW ON HIS OWN IN FUTURE WITH OUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INT O THE TERMINOLOGY 'MAKING AVAILABLE', THE TECHNICAL KNOWLEDGE, SKILL? , ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOU GH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOL OGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT TH E RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN THE FUTU RE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CON SIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERV ICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILL , ETC., DOES NOT MEAN THAT TECHNOLOGY IS MADE AVAILABLE TO THE PERSO N PURCHASING THE SERVICE, WITHIN THE MEANING OF PARAGRAPH (4)(B) . SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHALL NO T PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTH ER WORDS, PAYMENT OF CONSIDERATION WOULD BE REGARDED AS 'FEE FOR TECHNICAL/INCLUDED SERVICES' ONLY IF THE TWIN TESTS OF RENDERING SERVICES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE A T THE SAME TIME IS SATISFIED. 19. FURTHER, THE COORDINATE BENCH OF PUNE TRIBUNAL IN S ANDVIK PTY. LTD VS DCIT (SUPRA) WHILE CONSIDERING THE PROVISIONS OF IN DIAAUSTRALIA DTAA HELD THAT THE ASSESSEE HAD ONLY PROVIDED BACK -UP SERVICES AND IT SUPPORT SERVICES FOR SOLVING IT RELATED PROBLEMS TO ITS INDIAN SUBSIDIARY AND SERVICES WERE NOT MADE AVAILABLE, PA YMENT RECEIVED FOR 17 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION SUCH SERVICES COULD NOT BE TAXED IN INDIA IN VIEW O F ARTICLE 12(3)(G) OF INDO-AUSTRALIA TREATY. THE RELEVANT PART OF THE DEC ISION IS REPRODUCED BELOW: 13. WE ARE CONCERNED WITH PARA NO. 3 OF ARTICLE 12, WH ICH DEFINES THE TERM ROYALTY. UNDER THE IT ACT, THE TERM ROYALT Y AND EXPRESSION FTS ARE CLASSIFIED AS TWO DIFFERENT CONNOTATIONS, I .E. 9(1)(VI) AND 9(1)(VII). SO FAR AS ARTICLE 12 IS CONCERNED, FTS I S INCLUDED IN THE TERM 'ROYALTY' FOR THE PURPOSE OF DECIDING IN WHICH CONTRACTING STATE THE INCOME FROM THE SAME IS TO BE TAXED. CLAUSE (G) IN ARTICLE 12(3) GOES TO THE ROOTS OF THE ISSUE. MAIN THRUST OF THE ARGUMENT OF THE LD. COUNSEL IS THAT IT IS NOT ONLY SUFFICIENT TO RENDER THE SERVICES BUT THE SAME SHOULD BE MADE AVAILABLE TO THE RECIPIENT AND THIS PARTICULAR IMPORTANT ASPECT IS MISSED BY THE DRP/TPO. WE FIND THAT THE EXPRESSION 'MAKING AVAILABLE' IS VERY MUCH IMPORTAN T TO DECIDE IN WHICH CONTRACTING STATE THE AMOUNT RECEIVED FOR REN DERING THE SERVICES RELATING TO THE TECHNICAL KNOW-HOW IS TO B E TAXED. THE EXPRESSION 'MAKE AVAILABLE' IS USED IN THE CONTEXT OF SUPPLYING OR TRANSFERRING TECHNICAL KNOWLEDGE OR TECHNOLOGY TO A NOTHER. IT IS DIFFERENT THAN THE MERE OBLIGATION OF THE PERSON RE NDERING THE SERVICES OF THAT PERSONS OWN TECHNICAL KNOWLEDGE OR TECHNOLOGY IN PERFORMANCE OF THE SERVICES. THE TECHNOLOGY WILL BE CONSIDERED AS MADE AVAILABLE WHEN THE PERSON RECEIVING THE SERVIC ES IS ABLE TO APPLY THE TECHNOLOGY BY HIMSELF. 14. THE EXPRESSION 'MAKE AVAILABLE' HAS COME FOR CONSI DERATION BEFORE THE HON'BLE HIGH COURT OF KARNATAKA IN THE C ASE OF DE BEERS INDIA MINERALS (P.) LTD. ( SUPRA ). IN THE SAID CASE, THE TREATY BETWEEN INDIA AND NETHERLANDS WAS FOR THE CONSIDERATION OF THEIR LORDSHIPS. THE ASSESSEE IN THAT APPEAL WAS A PROVIDING COMPANY ENGAGED IN THE BUSINESS OF PROSPECTING AND MINING FOR DIAMONDS AND OTHER MINERALS. THEY HAVE BEEN GRANTED LICENCES (RECONNAISSANCE PER MITS) BY THE STATE GOVERNMENT OF KARNATAKA, ANDHRA PRADESH AND C HHATTISGARH. DURING THE EARLY STAGE, VARIOUS TECHNIQUES WERE EMP LOYED FOR THE PURPOSE OF CARRYING OUT GEOPHYSICAL SURVEY, THE ASS ESSEE ENTERED INTO 18 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION AGREEMENT WITH M/S.FUGRO ELBOCON B.V. NETHERLANDS, WHO HAD A TEAM OF EXPERTS SPECIALISED IN AIR BORNE GEOPHYSICA L SERVICES FOR CLIENTS. FOR THE TECHNICAL SERVICES RENDERED BY THE M THE SAID ASSESSEE HAD PAID CONSIDERATION. THE ASSESSING OFFICER APPLI ED ARTICLE 12 OF THE INDO-NETHERLANDS TREATY AND HELD THAT THE SAME WAS TAXABLE IN THE HANDS OF THE NETHERLANDS COMPANY. AS THE WORDIN GS OF ARTICLE 12 IN THE INDO-NETHERLANDS TREATY ARE ANALOGOUS TO ARTICLE 12 OF THE INDIA AUSTRALIA TREATY, AS EXPRESSION 'MAKE AVAILAB LE' IS ALSO USED WHILE DETERMINING FISCAL JURISDICTION OF THE CONTRA CTING STATE, THE HON'BLE HIGH COURT EXPLAINED THE MEANING OF THE EXP RESSION 'MAKE AVAILABLE' WHICH WAS APPEARING IN THE INDO-NETHERLA NDS TREATY. 20. IN VIEW OF THE ABOVE FACTUAL AND LEGAL DISCUSSIONS, WE HOLD THAT THE ASSESSING OFFICER ERRED IN TAXING THE SERVICE AGREE MENT RECEIPT AS FEE FOR INCLUDED SERVICES AS PER ARTICLE 12(4) OF INDI A USA DTAA FOR SUCH SERVICES AS MENTIONED IN PARA 4 (SUPRA), IN AB SENCE OF CLAUSE IN THE SERVICE AGREEMENT DATED 09.01.2009, THAT THE RE CIPIENT WOULD BE ABLE TO PERFORM THESE SERVICES OF ITS OWN WITHOUT A NY FURTHER ASSISTANCE OF THE ASSESSEE. 21. THE RATIO OF DECISION OF COCHIN TRIBUNAL IN M/S US TECHNOLOGY RESOURCES PVT. LTD. VS. ACIT (SUPRA) RELIED BY LD. DR FOR THE REVENUE IS NOT HELPFUL TO THE REVENUE. IN THE SAID CASE THE ASSESSEE RENDERING THE SERVICES IN THE FIELD OF MANAGEMENT DECISION MA KING. FURTHER, IN THE SAID CASE IT WAS CLEARLY HELD THE EXPERTISE AND TECHNOLOGY WAS MADE AVAILABLE BY USA COMPANY WAS A TECHNICAL SERVI CES WITHIN MEANING OF ARTICLE 12(4)(B) OF INDIA-USA DTAA. 22. IN THE RESULT THE GROUND NO. 2 OF THE APPEAL IS ALL OWED. 6. CONSIDERING THE DECISION OF COORDINATE BENCH (AUTHO RED BY SAME COMBINATION) ON SIMILAR SET OF FACTS AND ON SIMILAR GROUNDS OF APPEAL FOR TAXING THE SIMILAR RECEIPT FOR SERVICES, THE GROUND OF APPEAL NO. 1&2 OF THE APPEAL IS ALLOWED. 19 ITA NO. 7216 TO 7218/M/2017 AC NIELSEN CORPORATION 7. GROUND NO. 3 RELATES TO COMPUTATION OF INTEREST UND ER SECTION 244A. THIS GROUNDS OF APPEAL IS CONSEQUENTIAL, THUS, THE ASSES SING OFFICER IS DIRECTED TO RECOMPUTE THE INTEREST AS PER LAW. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ITA NO. 7217 &7218/MUM/2017, FOR AY 2005-06 & 2000- 07 9. AS WE HAVE NOTED EARLIER, THE ASSESSEE HAS RAISED I DENTICAL GROUNDS OF APPEAL FOR THESE YEARS AS WELL, THEREFORE CONSIDERI NG OUR FINDING IN APPEAL FOR AY 2004-05, THESE APPEALS ARE ALSO ALLOWED WITH SIMILAR OBSERVATION. 10. IN THE RESULT, APPEALS OF THE ASSESSEE FOR AY 2005- 06 & 200607 ARE ALSO ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/07/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 22.07.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR I BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI