DCIT, Chandigarh V. M/s Pugmarks Interweb Ltd., Chandigarh

ITA 769/CHANDI/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0050 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Double taxation relief; Permanent establishment; Advance ruling; Non-deduction of tax
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 769 TO 772/CHD/2013 A.YS: 2007-08 TO 2010-11 THE DCIT, VS M/S PUGMARKS INTERWEB LTD. CIRCLE 4(1), SCO 343-45, SECTOR 34-A, CHANDIGARH. CHANDIGARH. PAN: AABCP0712E (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI S.K.MITTAL RESPONDENT BY : SHRI AJAY JAIN, C.A. DATE OF HEARING : 21.04.2016 DATE OF PRONOUNCEMENT : 27.04.2016 O R D E R PER BHAVNESH SAINI,JM ALL THE APPEALS BY REVENUE ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS) CHANDIGARH DAT ED 01.04.2013 AND 30.04.2013 FOR ASSESSMENT YEARS 2007 - 08 TO 2010-11. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. LD. REPRESENTATIVES OF THE PARTIES SUBMITTED THAT I SSUE IS SAME IN ALL THE APPEALS AND MAINLY ARGUED APPEAL FOR ASSESSMENT YEAR 2007-08 AND STATED THAT ORDER IN OT HER 2 CASES MAY BE FOLLOWED. WE, THEREFORE, TAKE UP THE APPEAL FOR ASSESSMENT YEAR 2007-08 AS UNDER. ITA 769/2013 (A.Y. 2007-08) 3. THE REVENUE HAS FILED THIS APPEAL ON THE FOLLOWI NG GROUNDS : 1. 0N THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT AP PRECIATING THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED, IN THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW IN HOLDING THAT APPELLANT WAS NOT LIABLE FOR DEDUCT ION OF TAX U/S 195 OF THE ACT ON PAYMENT OF WEB HOSTING CHARGES.' 3. THE LD.CIT(A) HAS ERRED, IN THE FACTS AND CIRCU MSTANCES OF THE CASE AND IN LAW, IN HOLDING THAT THE PAYMENT BY THE ASSESSEE OF WEB HOSTING CHARGES DOES NOT FALL IN THE DEFINITION OF ROYALTY FOR THE PURPOSE OF S. 9(L)(VI) AND HENCE OUT OF THE PURVIEW OF S.195 AND S. 40(A)(IA); BY IGNORING THE CLAUSE (VI) READ WITH CLAUSE (IVA) OF EXPLANATION 2 TO S. 9(L)(VI). 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 4. THE ISSUE BEFORE LD. CIT(APPEALS) WAS AGAINST TREATING THE WEB HOSTING CHARGES AMOUNTING TO RS. 59,99,826/- PAID TO US COMPANY AS ROYALTY AND AGAIN ST INVOLVING PROVISIONS OF SECTION 195 OF THE INCOME T AX ACT AND MAKING THE ADDITION UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT THOUGH THE AMOUNT WHICH ACTUALLY BEEN PAID. 5. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE H AD DEBITED AN AMOUNT OF RS. 59,99,826/- TO THE PROFIT AND LOSS ACCOUNT AS EXPENDITURE TOWARDS WEB HOSTING 3 SERVICES PAID TO ITS U.S. SUBSIDIARY M/S PUGMARKS I NC. AND TWO OTHER COMPANIES/PERSONS. AS THE PAYMENTS HA D BEEN MADE IN THE US DOLLARS TO THE COMPANIES AND TO THE PERSONS LOCATED OUTSIDE INDIA, THE ASSESSING OFFICE R QUESTIONED THE ASSESSEE ABOUT NON-DEDUCTION OF TAX ON THESE PAYMENTS U/S 195 OF THE ACT. THE ASSESSEE HAD FILED A REPLY, BUT THE ASSESSING OFFICER HELD THAT THE ASSESSEE SHOULD HAVE DEDUCTED TAX U/S 195 IN VIEW O F THE CLAUSE (IVA) OF EXPLANATION-2 TO SECTION 9(L)(V I), WHICH GIVES THE DEFINITION OF ROYALTY AS 'THE USE O R RIGHT TO USE ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT'. THE ASSESSING OFFICER MAINLY RELIED UPO N THE DECISION OF HON'BLE ITAT, DELHI IN THE CASE OF M/S MILLENNIUM INFOCOM TECHNOLOGIES LTD. (117 ITD 114). 6. DURING THE COURSE OF APPELLATE PROCEEDINGS THE L D. COUNSEL FOR THE APPELLANT HAS FILED A WRITTEN SUBMISSION, RELEVANT PORTION OF WHICH IS REPRODUCED BELOW: 'IN THIS RESPECT WE SUBMITTED THAT THE APPELLANT CO MPANY IS NOT IN POSSESSION OF THE EQUIPMENT NOR IT IS USING THE EQU IPMENT SOLELY FOR ITS OWN PURPOSES, HENCE THE PAYMENT CANNOT BE TREATED A S 'ROYALTY', AND AS SUCH, IN THE ABSENCE OF PERMANENT ESTABLISHMENT OF THE FOREIGN COMPANY IN INDIA, THE PROVISIONS OF TDS U/S 195 OF THE INCOME TAX ACT, 1961 DOES NOT APPLY TO THE ASSESSEE COMPANY. A S PER THE PROVISIONS OF SECTION 5(2) OF THE INCOME TAX ACT, 1961, THE TO TAL INCOME OF ANY PREVIOUS YEAR OF A PERSON WHO IS NON RESIDENT INCLU DES ALL INCOME WHICH: - (A) IS RECEIVED OR IS DEEMED TO BE RECEIVED IN IN DIA, OR (B) ACCRUES OR ARISES OR IS DEEMED TO ACCRUE OR ARISE IN INDIA. FU RTHER, AS A GENERAL RULE OF SECTION 195 OF THE INCOME TAX ACT, 1961, IF THE SERVICES ARE GIVEN 4 OUTSIDE INDIA BY A NON RESIDENT WHO IS ALSO PAID OU TSIDE INDIA, THE PROVISIONS OF THIS SECTION DOES NOT APPLY. IN THE I NSTANT CASE AS THE COMPANY WHO HAD PROVIDED HOSTING SERVICES WAS LOCAT ED OUTSIDE INDIA AND SERVER WAS ALSO LOCATED OUTSIDE INDIA, THE INCO ME THAT HAS ARISEN TO IT SHALL NOT BE TAXABLE IN INDIA. THE LEARNED OFFICER ALSO WRONGLY CONTENDED T HAT THE WEB HOSTING CHARGES PAID BY THE ASSESSEE ARE IN THE NATURE OF P AYMENT OF ROYALTY FOR USING ANY SCIENTIFIC AND INDUSTRIAL EQUIPMENT. THE LEARNED OFFICER ALSO REFERRED TO THE EXPLANATION 2 OF THE PROVISO OF SEC TION 9(L)(VI) OF THE LT. ACT FOR APPLICABILITY OF SECTION 195 OF THE LT. ACT ON THE PAYMENTS MADE BY THE ASSESSEE COMPANY. HE ALSO REFERRED THE ITAT, DELHI BENCH 'E' DECISION ON M/S MILLENNIUM INFOCOM TECHNO LOGIES LIMITED VS. ACIT, CIRCLE 6(1), NEW DELHI, (2009) 117 ITD 114 (DELHI) TO SUBSTANTIATE HIS DECI SION. THE LEARNED ASSESSING OFFICER ALSO WRONGLY CONTENDED THAT NOWHE RE IN THE DEFINITION OF ROYALTY UNDER CLAUSE (IVA) OF EXPLANATION 2 TO S ECTION 9(L)(VI) OF THE I.T. ACT THE WORD 'EXCLUSIVE' USE HAS BEEN MENTIONE D. IN THIS RESPECT WE SUBMITTED THAT AS PER THE PROVIS IONS OF SECTION 9(L)(VII) OF THE INCOME TAX ACT, 1961 AND AS DISCUS SED IN THE ITAT, MUMBAI BENCH 'D' IN THE CASE OF 'PACIFIC INTERNET ( INDIA) PVT. LTD. VS. ITO', THE TECHNICAL SERVICES CONTEMPLATES RENDERING OF A SERVICE TO THE PAYER OF THE FEE. MERE COLLECTION OF A FEE FOR USE OF A STANDARD FACILITY PROVIDED TO ALL THOSE WILLING TO PAY FOR IT DOES NO T AMOUNT TO THE FEE HAVING BEEN REACHED FOR TECHNICAL SERVICES. FURTHER, IN THE CASE OF 'COMMISSIONER OF INCOME TAX , DELHI VS. M/S ESTEL COMMUNICATIONS PVT. LTD.', THE INCOME TAX APP ELLATE TRIBUNAL, DELHI BENCH 'G' HELD THAT THE USE OF INTERNET FACIL ITY MAY REQUIRE SOPHISTICATED EQUIPMENT, BUT THAT DOES NOT MEAN THA T TECHNICAL SERVICES WERE RENDERED BY TELEGLOBE TO THE ASSESSES. IT WAS A SIMPLE CASE OF PURCHASE OF INTERNET BANDWIDTH BY THE ASSESSEE FROM TELEGLOBE. FURTHER, IN THE CASE OF DELL INTERNATIONAL SERV ICES (INDIA) PVT. LTD., THE AUTHORITY FOR ADVANCE RULING DECIDED THAT : DELL INDIA HAS NO RIGHTS OVER ANY EQUIPMENT OF BTA THAT BTA UTILIZES FOR PROVIDING THE BANDWIDTH THE SAME FIBER LINK CABLES AND OTHER 5 EQUIPMENT ARE USED BY BTA FOR ALL CUSTOMERS, INCLUD ING DELL INDIA. THE TELECOM BANDWIDTH IS PROVIDED THROUGH A HUGE NE TWORK OF OPTICAL FIBRE CABLES LAID UNDER THE OCEAN ACROSS SEVERAL CO UNTRIES. BTA IS USING THE SOUTH EAST ASIA-MIDDLE EAST-WEST EUROPE CABLE N ETWORK, WHICH IS OWNED BY A CONSORTIUM OF 16 INTERNATIONAL TELECOMMU NICATIONS COMPANIES (INCLUDING VSNL AND TWO OTHER COMPANIES F ROM INDIA). BTA USES ONLY A SMALL FRACTION OF THIS NETWORK AND THE SPACE IN THE CABLE NETWORK IS NOT DEDICATED TO DELL INDIA ALONE, BUT A LSO IS USED BY HUNDREDS OF BTA'S CUSTOMERS IN AND OUTSIDE INDIA.TH E TRANSACTION IS ESSENTIALLY ONE OF PROVIDING BANDWIDTH SERVICES FOR THE TWO-WAY TRANSMISSION OF VOICE AND DATA. BTA RENDERS SUCH SE RVICES BY MEANS OF A POINT-TO-POINT DEDICATED CIRCUIT THAT IT OWNS. THE PROVISION OF SERVICES WHERE A SERVICE PROVIDER USES ITS OWN EQUI PMENT DOES NOT FALL WITH IN THE DEFINITION OF 'ROYALTY' UNDER INDIAN LA W. THE CONSIDERATION STIPULATED IS ONLY FOR DELIVERY OF A PACKAGE OF SER VICES, DELL INDIA BEING THE RECIPIENT OF SUCH SERVICES. POSSESION AND CONTR OL OF THE LEASED CIRCUIT AND RELATED EQUIPMENT IS IN THE HANDS OF BTA AND NO T WITH DELL INDIA. BTA HAS TO MAINTAIN AND MONITOR THE NETWORK AND INF RASTRUCTURE FOR THE PURPOSE OF RENDERING SERVICES TO DELL INDIA. THE EQ UIPMENT, IF ANY, PLACED AT DELL INDIA'S PREMISES CANNOT BE CHANGED O R TEMPERED WITH BY DELL INDIA AND SUCH PLACEMENT IS ONLY FOR THE RENDE RING OF SERVICES BY BTA, NOT TO FACILITATE ITS USE BY DELL INDIA.BASED ON THE ABOVE, DELL INDIA ARGUED THAT THE PAYMENTS IT MADE COULD NOT BE CHARA CTERIZED AS ROYALTIES OR FEES FOR TECHNICAL SERVICES. THE AAR D ETERMINED THAT 'SERVICE' IS AN UNBROKEN THREAD RUNNING THROUGH THE ENTIRE FABRIC OF THE AGREEMENT BETWEEN THE PARTIES. THERE IS NO DOUB T THAT THE ENTIRE NETWORK (CONSISTING OF UNDERSEA CABLES, DOMESTIC AC CESS LINES AND BTA EQUIPMENT), REGARDLESS OF WHAT IS KEPT AT THE C ONNECTING POINT, IS FOR PROVIDING A SERVICE TO FACILITATE THE TRANSMISSION OF VOICE AND DATA ACROSS THE GLOBE. ONE OF THE MANY CIRCUITS FORMING PART OF THE NETWORK IS DEVOTED AND EARMARKED TO DELL INDIA. FROM THAT, IT DOES NOT FOLLOWS THAT ALL OF THE COMPONENTS AND EQUIPMENTS CONSTITUT ING THE NETWORK ARE RENTED OUT TO DELL INDIA OR THAT THE CONSIDERATION IN THE FORM OF MONTHLY CHARGES IS INTENDED FOR THE USE OF EQUIPMENT OWNED AND INSTALLED BY BTA. THE AAR NOTED THAT, IF AN ADVANTAGE IS OBTAINED FRO M SOPHISTICATED EQUIPMENT INSTALLED AND. PROVIDED BY ANOTHER, IT IS DIFFICULT TO SAY THAT THE RECIPIENT/ CUSTOMER USES THE EQUIPMENT AS SUCH. THE CUSTOMER 6 MERELY MAKES USE OF THE FACILITY, EVER THOUGH IT DO ES NOT USE THE EQUIPMENT ITSELF. FURTHER, BY AVAILING ITSELF OF TH E FACILITY BTA PROVIDED THROUGH THE NETWORK/ CIRCUITS, THERE IS NO USE OF E QUIPMENT BY DELL INDIA EXCEPT IN A VERY LOOSE SENSE, SUCH AS, THE AA R ANALOGIZED, USING A ROAD BRIDGE OR A TELEPHONE CONNECTION. THE USE OF E QUIPMENT CONNOTED THAT THE GRANTEE HAS POSSESSION AND CONTROL OVER TH E EQUIPMENT AND THE EQUIPMENT IS AT HIS DISPOSAL. DELL INDIA IS NOT CON CERNED WITH THE INFRASTRUCTURE OR THE ACCESS LINE INSTALLED BY BTA OR ITS AGENT OR THE EMBEDDED ' COMPONENTS. RESPONSIBILITY FOR THE OPERA TION, CONTROL AND MAINTENANCE OF THE EQUIPMENT RESTS ENTIRELY WITH BT A OR ITS AGENT(BEING THE DOMESTIC PROVIDER). DELL INDIA DOES NOT POSSESS NOR HAS ACCESS TO THE EQUIPMENT BELONGING TO BTA. HENCE, THE PAYMENT COULD NOT BE CHARACTERIZED AS A 'ROYALTY', NOR COULD IT BE CHARA CTERIZED AS 'FEES FOR INCLUDED SERVICES' UNDER THE INDIA-U.S. TREATY BECA USE NO TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, ETC., WAS BEING 'MADE AVAILABLE' TO DELL INDIA. ON. THE BASIS OF THE ABOVE FACTS, IT IS VERY MUCH CLEAR THAT AS THE COMPANY IS NOT IN POSSESSION OF THE EQUIPMENTS NOR IT IS USING THE EQUIPMENT SOLELY FOR ITS OWN PURPOSES, HENCE THE PA YMENT CANNOT BE TREATED AS ROYALTY OR PAYMENT FOR TECHNICAL SERV ICES AND AS SUCH IN THE ABSENCE OF PERMANENT ESTABLISHMENT OF THE FOREI GN COMPANY IN INDIA THE PROVISIONS OF TDS UNDER SECTION 195 OF T HE INCOME TAX ACT, 1 961 DOES NOT APPLY TO THE ASSESSEE COMPANY. THE RELIANCE IS PLACED ON AUTHORITY FOR ADVA NCE RULING JUDGMENT IN CASE OF ISRO SATELLITE CENTRE (ISAC), 307 ITR 59, W HICH RELIED UPON ITS EARLIER JUDGMENT IN CASE OF DELL INTERNATIONAL SERV ICE (P) LTD., IN RE (2008) 218 CTR (AAR) 209 AND HELD THAT PAYMENT MADE BY APP LICANT TO IGL, A UK COMPANY FOR USE OF IGL'S NAVIGATION TRANSPONDER CAPACITY BY TAKING ON LEASE THE SPACE SEGMENT CAPACITY NAVIGATI ON TRANSPONDER OF ITS SATELLITE IS NEITHER IN THE NATURE OF ROYALTY N OR FEES FOR TECHNICAL SERVICES EITHER UNDER THE ACT OR UNDER DTAA BETWEEN INDIA AND UK, HENCE NOT TAXABLE. THE LEARNED ASSESSING OFFICER ALSO WRONGLY CO NTENDED THAT IF THE PAYMENT IS MADE FOR SERVICES WHICH ARE UTILIZED IN A BUSINESS CARRIED ON BY THE PAYER IN INDIA FOR THE PURPOSE OF MAKING ANY INCOME FROM A SOURCE IN INDIA, THEY WILL BE DEEMED TO ACCRUE OR ARISE IN INDIA. IN THIS RESPECT WE PLACED RELIANCE ON DELHI HIGH CO URT JUDGMENT IN CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VS. D IRECTOR OF INCOME TAX, 7 238 CTR 233, WHICH HELD THAT ASSESSEE, A NON RESIDE NT COMPANY WHICH HAS LEASED OUT TRANSPONDER CAPACITY ON ITS SA TELLITES TO TV CHANNELS TO RELAY THEIR SIGNALS FOR INDIAN VIEWERS CANNOT BE SAID TO BE CARRYING OUT BUSINESS OPERATIONS IN INDIA AS THE PR OGRAMS ARE UPLINKED BY THE GTV CHANNELS OUTSIDE INDIA AND ARE RELAYED BY SATELLITES SITUATED OUTSIDE INDIAN AIRSPACE WITHOUT USING ANY MAN, MACHINERY OR COMPUTER IN INDIA AND THEREFORE, SECTI ON 9(1) (I) IS NOT ATTRACTED, '(SIC.) 7. THE LD. CIT(APPEALS), CONSIDERING THE FACTS AND MATERIAL ON RECORD IN THE LIGHT OF VARIOUS DECISION S, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DEL ETED THE ADDITION. THE FINDINGS OF LD. CIT(APPEALS) IN PARA 3.3 TO 3.3.4 ARE REPRODUCED AS UNDER : 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL. THE WORD 'USE' IN CLAUSE (IVA) OF EXPLANATION-2 BELOW S ECTION 9(L)(VI) OF THE ACT IS REGARDING USE OF EQUIPMENT IN ACTUAL SENSE. THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO THE CASES OF M/S STAN DARD CHARTERED BANK (ITA NO. 3824/MUM/2006) AND M/S ATOS ORIGIN IT SERV ICES SINGAPORE (P) LTD. (ITA NO. 1457/MUM/2008), DECIDED BY HON'BL E ITAT, MUMBAI VIDE ORDER DATED 11.05.2011 IN WHICH HON'BLE ITAT H AD HELD THAT THE PAYMENT MADE COULD NOT BE TREATED AS 'ROYALTY'. THE HON'BLE ITAT, MUMBAI HAD OBSERVED AS UNDER IN THESE CASES : 'THE APPELLANTS AS ALREADY SEEN HAVE NO RIGHT TO AC CESS THE COMPUTER HARDWARE EXCEPT FOR TRANSMITTING RAW DATA FOR FURTHER PROCESSING. THE APPELLANTS HAVE NO CONTROL OVER THE COMPUTER HARDWARE OR PHYSICAL ACCESS TO IT. THE RE IS NOTHING TO SHOW POSITIVE ACT OF UTILIZATION, APPLIC ATION OR EMPLOYMENT OF EQUIPMENT FOR THE DESIRED PURPOSE. TH E APPELLANTS CANNOT COME FACE TO FACE WITH THE EQUIPM ENT, OPERATE IT OR CONTROL ITS FUNCTIONS IN SOME MANNER. THE APPELLANTS HAD NO POSSESSORY RIGHTS IN RELATION TO THE COMPUTER MAINFRAME. THE APPELLANTS TOOK ADVANTAGE OF A FACIL ITY OF 8 USE OF SOPHISTICATED EQUIPMENT INSTALLED AND PROVID ED ANOTHER, IT COULD NOT BE SAID THAT THE RECIPIENT/CU STOMER 'USED' THE EQUIPMENT AS SUCH. THE APPELLANT MERELY MADE USE OF THE FACILITY, THOUGH THEY DID NOT THEMSELVE USE THE EQUIPMENT. THERE IS NOTHING ON RECORD TO ESTABLISH THAT THE HARDWARE COULD BE ACCESSED AND PUT TO USE BY THE APPELLANTS BY MEANS OF POSITIVE ACTS.' 3.3.1 IN THE INSTANT CASE, THE APPELLANT HAD NOTHIN G TO DO WITH THE EQUIPMENT AND IT ONLY MADE USE OF THE FACILITY CREATED BY THE SERVICE PROVIDERS, WHO WERE THE OWNERS OF ENTIRE NE TWORK AND THE RELATED EQUIPMENT. AS THE APPELLANT COMPANY IS NEIT HER IN POSSESSION OF EQUIPMENT NOR IT USES THE EQUIPMENT S OLELY FOR ITS OWN PURPOSES, THE PAYMENT CANNOT BE TERMED AS 'ROYA LTY'. IF THE SERVICES ARE RENDERED OUTSIDE INDIA BY A NON-RESIDE NT AND ARE ALSO PAID OUTSIDE INDIA, THE PROVISIONS OF SECTION 195 DO NOT APPLY IN CASE OF SUCH PAYMENTS. AS THE COMPANY WHO HAD PR OVIDED WEB HOSTING SERVICES WAS LOCATED OUTSIDE INDIA AND THE SERVER WAS ALSO LOCATED OUTSIDE INDIA, THE INCOME THAT HAD ARISEN I S NOT TAXABLE IN INDIA. FURTHER, IN THE ABSENCE OF PERMANENT ESTABLI SHMENT OF THE FOREIGN COMPANY IN INDIA. THE PROVISIONS OF SEC TION 195 DO NOT APPLY. 3.3.2 THE ASSESSING OFFICER HAS RELIED UPON THE DEC ISION OF HON'BLE ITAT, DELHI IN THE CASE OF M/S MILLENNIUM I NFOCOM TECHNOLOGIES LTD. (SUPRA), BUT HON'BLE ITAT, MUMB AI HAD, IN THE CASE OF M/S STANDARD CHARTERED BANK (SUPRA), CONSID ERED THIS DECISION OF HON'BLE ITAT, DELHI AND HAD OBSERVED AS UNDER: 'THE DECISION IN THE CASE OF MILLENNIUM INFOCOM TEC HNOLOGIES LTD. VS. ACIT(SUPRA) WAS A CASE WHERE THE QUESTION WAS W HETHER PAYMENT FOR HOSTING WEBSITES ON SERVERS IN USA I.E. , WHEREBY SPACE IS PROVIDED, ON THE SERVERS BY -THE NON-RESIDENT FO R THE PURPOSE OF HOSTING WEBSITE WAS A ROYALTY. THE TRIBUNAL RULED THAT CLAUSE (IVA) TO EXPL.2 TO SEC.9(L)(IU) WAS INSERTED BY THE FINAN CE ACT, 2001 W.E.F. 1-4-2002 WHEREBY THE USE OR RIGHT TO USE ANY INDUSTRIAL, 9 COMMERCIAL OR SCIENTIFIC EQUIPMENT BUT NOT INCLUDIN G THE AMOUNTS REFERRED TO IN SEC.44BB WAS TO BE TREATED AS ROYALT Y. SINCE THE CASE RELATED TO AY 01-02 THE TRIBUNAL HELD THAT THE PAYMENT WAS NOT ROYALTY. ACCORDING TO THE LEARNED D.R. THE CASE OF THE ASSESSEE BEING ONE RELATING TO PERIOD AFTER 1-4-200 2, THE PAYMENTS SHOULD BE TREATED AS COVERED BY CLAUSE(IVA ) TO EXPLN.2 TO SEC.9(L)(IV) OF THE ACT. IN OUR VIEW THE DECISION R ENDERED AS ABOVE CANNOT BE SAID TO BE STRICTLY A PRECEDENT AS THE IS SUE WAS NEITHER DISCUSSED OR ARGUED BY THE PARTIES. BESIDES THE ABO VE, THE SAID DECISION IS CONTRARY TO DECISION OF THE HON'BLE DEL HI HIGH COURT IN THE CASE OF ASIA SATELLITE (SUPRA). THE DECISIONS R ELIED UPON BY THE LEARNED 'D.R. DO NOT THEREFORE SUPPORT THE CASE OF THE REVENUE.' 3.3.3 IN FACT, HON'BLE ITAT MUMBAI IN THE CASE OF Y AHOO (INDIA) PVT. LTD. IN ITA NO. 506/MUM/2008 HAD, VIDE ITS ORDER DA TED 24.06.2011, CLEARLY HELD THAT UNLESS THERE WAS MATERIAL TO ESTA BLISH THAT CIRCUIT/EQUIPMENT COULD BE ACCEDED AND PUT TO USE B Y THE CUSTOMERS BY MEANS OF POSITIVE ACTS, IT DID NOT FALL WITHIN THE CATEGORY OF ROYALTY AS PROVIDED IN CLAUSE (IVA) OF EXPLANATION-2 BELOW SEC TION 9(1)(VI) OF THE ACT. THE HON'BLE ITAT HAD HELD AS UNDER IN THIS CAS E : .THE CONTEXT AND COLLOCATION OF THE TWO EXPRES SIONS USE AND RIGHT TO USE' FOLLOWED BY THE WORD 'EQUIPMENT' INDICATED THAT THERE MUST BE SOME POSITIVE ACT OF UTILIZATION , APPLICATION OR EMPLOYMENT OF EQUIPMENT FOR THE DESIRED PURPOSE. IF AN ADVANTAGE WAS TAKEN FROM SOPHISTICATED EQUIPMENT INSTALLED AN D PROVIDED BY ANOTHER, IT COULD NOT BE SAID THAT THE RECIPIENT /CUSTOMER 'USED' THE EQUIPMENT AS SUCH. THE CUSTOMER MERELY M ADE USE OF THE FACILITY, THOUGH HE DID NOT HIMSELF USE THE EQU IPMENT. WHAT WAS CONTEMPLATED B THE 'WORD 'USE IN CLAUSE (IVA) OF E XPLANATION 2 TO SECTION 9(L)(VI) WAS THAT THE CUSTOMER CAME FACE TO FACE WITH THE EQUIPMENT, OPERATED IT OR CONTROLLED ITS JUNCTIONS IN SOME MANNER. BUT IF IT DID NOTHING TO OR WITH THE EQUIPMENT AND DID NOT EXERCISE ANY POSSESSORY RIGHT IN RELATION THERETO, IT ONLY MADE USE OF THE FACILITY CREATED BY THE SERVICE PROVIDER WHO WAS THE OWNER OF THE ENTIRE NETWORK AND RELATED EQUIPMENT. THERE WAS NO SCOPE TO INVOKE CLAUSE (IVA) IN SUCH A CASE BECAUSE THE ELEMENT 10 OF SERVICE PREDOMINATED. THE PREDOMINANT FEATURES A ND UNDERLYING OBJECT OF THE AGREEMENT UNERRINGLY EMPHASIZED THE C ONCEPT OF SERVICE. THAT EVEN WHERE AN EARMARKED CIRCUIT WAS P ROVIDED FOR OFFERING THE FACILITY, UNLESS THERE WAS MATERIAL TO ESTABLISH THAT THE CIRCUIT/ EQUIPMENT COULD BE ACCESSED AND PUT TO USE BY THE CUSTOMER BY MEANS OF POSITIVE ACTS, IT DID NOT FALL WITHIN THE CATEGORY OF 'ROYALTY' IN CLAUSE (IVA) OF EXPLANATIO N 2 TO SECTION 9(L)(VI) OF THE ACT .......... ' 3.3.4 IN VIEW OF THE ABOVE, IT IS HELD THAT THE AS SESSING OFFICER WAS NOT RIGHT IN HOLDING THAT THE APPELLANT WAS LIABLE FOR DEDUCTING TAX U/ S 195 OF THE ACT ON WEB HOSTING CHARGES AND CONS EQUENTLY MAKING THE ADDITION U/S 40(A)(I) OF THE ACT. THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCORDINGLY DELETED. GROUNDS O F APPEAL NOS. 2 AND 3 ARE ALLOWED. 8. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT CLAUSE (IVA) TO EXPLANAT ION-2 TO SECTION 9(1)(VI) THE USE OR RIGHT TO USE ANY IND USTRIAL, COMMERCIAL OR SCIENTIFIC INSTRUMENT WOULD FALL WITH IN THE DEFINITION OF ROYALTY, THEREFORE, LD. CIT(APP EALS) SHOULD NOT HAVE DELETED THE ADDITION. THE LD. DR R ELIED UPON FOLLOWING DECISIONS : 1. ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VS DIT (2011) 197 TAXMAN 263/9 TAXMAN.COM 168 (DELHI). 2. CIT VS SAMSUNG ELECTRONICS CO. LTD. (2011) 203 TAXMAN 477/16 TAXMANN.COM 141 (KAR.). 3. CIT VS WIPRO LTD. (2011) 203 TAXMAN 621 / 16 TAXMANN.COM 275 (KAR.). 11 4. CIT VS SYNOPSIS INTERNATIONAL OLD LTD. (2012) 28 TAXMANN.COM 162 (2013) 212 TAXMAN 454 (KAR.). 9. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE HAS SUBMITTED THAT ASSESSEE HAS NO CONTR OL OVER THE EQUIPMENT AS WELL AS OPERATING SYSTEM. EQUIPMENTS ARE USED BY NON RESIDENT INC TO PROVIDE SERVICE TO THE ASSESSEE. THERE IS NO TRANSFER OF A NY TECHNOLOGY, SKILL OR KNOW-HOW OR KNOWLEDGE FROM THE NON RESIDENT INC. SERVICES PROVIDED WERE IN THE NA TURE OF DATA STORAGE, DATA SECURITY ETC. THE TAX PAYER IS NOT ONLY ONE WHO IS RECEIVING SERVICE FROM NON RESIDENT INC, BUT THERE ARE LARGE NUMBER OF CUSTOMERS OF THE NON RESIDENT INC TO WHOM THE STANDARD SERVICE IS PROVID ED. THE PAYMENTS ARE NOT FOR USE OR RIGHT TO USE INDUST RIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT AND WOULD NOT FA LL WITHIN THE MEANING OF ROYALTY UNDER SECTION 9(1)( VI) OF THE ACT OR UNDER THE TAX TREATY, PAYMENT IS BUSINE SS INCOME IN THE HANDS OF NON RESIDENT INC AND IS NOT LIABLE TO TAX IN THE ABSENCE OF PE IN INDIA. THERE IS NO AGREEMENT TO HIRE OR LEASE OUT ANY EQUIPMENT BUT ON LY SERVICE LEVEL AGREEMENT AND PAYMENTS WERE MADE FOR STANDARD FACILITIES. EQUIPMENTS/SERVERS WERE UNDER THE CONTROL AND POSSESSION OF NON RESIDENT INC FOR PROVIDING FACILITIES. THE LD. COUNSEL FOR THE ASSE SSEE RELIED UPON FOLLOWING DECISIONS : 12 1. DECISION OF DELHI HIGH COURT IN THE CASE OF ASIA SATELLITE TELECOMMUNICATIONS CO. LTD. VS DIRECTOR OF INCOME TAX 332 ITR 340 IN WHICH IT WAS HELD AS UNDER : ASSESSEE A NON-RESIDENT COMPANY, WHICH HAS LEASED OUT TRANSPONDER CAPACITY ON ITS SATELLITES TO V CHANNELS TO RELAY THEIR SIGNALS FOR INDIAN VIEWERS CANNOT BE SAID TO BE CARRYING OUT BUSINESS OPERATIONS IN INDIA AS THE PROGRAMMES ARE UPLINKED BY THE TV CHANNELS OUTSIDE INDIA AND ARE RELAYED BY SATELLITES SITUATED OUTSIDE INDIAN AIRSPACE WITHOUT USING ANY MAN, MACHINERY OR COMPUTER IN INDIA AND, THEREFORE, S. 9(L)(I) IS NOT ATTRACTED. 2. ORDER OF ITAT MUMBAI BENCH IN THE CASE OF YAHOO INDIA (P) LTD. VS DCIT 140 TTJ 195 IN WHICH IT WAS HELD AS UNDER : PAYMENT MADE BY ASSESSEE TO A FOREIGN COMPANY FOR THE SERVICES RENDERED BY IT FOR UPLOADING AND DISPLAY OF THE BANNER ADVERTISEMENT ON ITS PORTAL WAS IN THE NATURE OF BUSINESS PROFIT AND NOT ROYALTY AND SUCH PAYMENT WAS NOT CHARGEABLE TO TAX IN INDIA AS THE RECIPIENT HAS NO PE IN INDIA AND, THEREFORE, ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT FOR SUCH SERVICES AND THE SAME CANNOT BE DISALLOWED BY INVOKING THE PROVISIONS OF S. 40(A)(I) FOR NON- DEDUCTION OF TAX. 3. DECISION OF AUTHORITY FOR ADVANCE RULINGS IN THE CASE OF DELL INTERNATIONAL SERVICES INDIA (P) LTD., IN RE 305 ITR 37 IN WHICH IT WAS HELD AS UNDER : 13 PROVISION OF TELECOM BANDWIDTH FACILITY BY MEANS OF DEDICATED CIRCUITS AND OTHER NETWORK INSTALLED AND MAINTAINED BY THE SERVICE PROVIDER OR ITS AGENT DOES NOT AMOUNT TO A LEASE OF EQUIPMENT AND, THEREFORE, FIXED MONTHLY CHARGE PAID BY INDIAN COMPANY TO THE US COMPANY FOR PROVIDING TWO WAY TRANSMISSION OF VOICE AND DATA THROUGH TELECOM BANDWIDTH IS NOT ROYALTY, DEFINITION OF 'ROYALTY' IN ART, 12(3) OF INDO-US DTAA IS ALSO NOT ATTRACTED AS THE INDIAN COMPANY DOES NOT MAKE USE OF ANY SECRET PROCESS; PAYMENT ALSO DOES NOT CONSTITUTE 'FEE FOR INCLUDED SERVICE' WITHIN THE MEANING OF ART. 12(4) AS THERE IS NO TRANSFER OF ANY TECHNOLOGY IN THE SENSE THAT THE RECIPIENT OF THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY BY ITSELF. 4. DECISION OF AUTHORITY FOR ADVANCE RULINGS IN THE CASE OF ISRO SATELLITE CENTRE IN RE 307 ITR 59 IN WHICH IT WAS HELD AS UNDER : PAYMENT MADE BY APPLICANT TO IGL, A UK COMPANY FOR USE OF IGL'S NAVIGATION TRANSPONDER CAPACITY BY TAKING ON LEASE THE SPACE SEGMENT CAPACITY NAVIGATION TRANSPONDER OF ITS SATELLITE IS NEITHER IN THE NATURE OF ROYALTY NOR FEES FOR TECHNICAL SERVICES EITHER UNDER THE ACT OR UNDER DTAA BETWEEN INDIA AND UK, HENCE NOT TAXABLE. 5. ORDER OF ITAT MUMBAI BENCH IN THE CASE OF ITO VS PEOPLE INTERACTIVE (I) P. LTD. 33 CCH 261 (MUM) IN WHICH IT WAS HELD AS UNDER PAYMENT MADE FOR WEBSITE HOSTING SERVICES TO NON-RESIDENTS IS NOT ROYALTY WITHIN THE MEANING OF SECTION 9(1)(VI) OR UNDER THE DTAA BETWEEN INDIA AND USA WHEN THE EQUIPMENT 14 WAS NOT OPERATED, USED OR UNDER THE CONTROL OF THE ASSESSEE. 6. JUDGEMENT OF SUPREME COURT DATED 23.03.2016 IN CIVIL APPEAL NO. 3141/16 IN THE CASE OF CIT VS M/S KOTAK SECURITIES LTD. IN WHICH IN PARA 8, 9 AND 10 IT IS HELD AS UNDER : 8. A READING OF THE VERY ELABORATE ORDER OF THE ASSESSING OFFICER CONTAINING A LENGTHY DISCOURSE ON THE SERVICES MADE AVAILABLE BY THE STOCK EXCHANGE WOULD GO TO SHOW THAT APART FROM FACILITIES OF A FACELESS SCREEN BASED TRANSACTION, A CONSTANT UPGRADATION OF THE SERVICES MADE AVAILABLE AND SURVEILLANCE OF THE ESSENTIAL PARAMETERS CONNECTED WITH THE TRADE INCLUDING THOSE OF A PARTICULAR/ SINGLE TRANSACTION THAT WOULD LEAD CREDENCE TO ITS AUTHENTICITY IS PROVIDED FOR BY THE STOCK EXCHANGE. ALL SUCH SERVICES, FULLY AUTOMATED, ARE AVAILABLE TO ALL MEMBERS OF THE STOCK EXCHANGE IN RESPECT OF EVERY TRANSACTION THAT IS ENTERED INTO. THERE IS NOTHING SPECIAL, EXCLUSIVE OR CUSTOMISED 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 CONSUMER/USER AS MAY BE FELT NECESSARY AND THE MAKING OF THE SAME AVAILABLE BY THE SERVICE PROVIDER. IT IS THE ABOVE FEATURE TH AT WOULD DISTINGUISH/IDENTIFY A SERVICE PROVIDED FROM A FACILITY OFFERED. WHILE THE FORMER IS SPECIAL AND EXCLUSIVE TO THE SEEKER OF THE SERVICE, THE LATTER, EVEN IF TERMED AS A SERVICE, IS AVAILABLE TO ALL AND WOULD THEREFORE 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 SPECIALIZED, EXCLUSIVE AND INDIVIDUAL 15 REQUIREMENT OF THE USER OR CONSUMER WHO MAY APPROACH 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 EXPLANATION 2 OF SECTION 9(1)(VII) OF THE ACT. IN THE ABSENCE OF THE ABOVE DISTINGUISHING FEATURE, SERVICE, THOUGH RENDERED, WOULD BE MERE IN THE NATURE OF A FACILITY OFFERED OR AVAILABLE WHICH WOULD NOT BE COVERED BY THE AFORESAID PROVISION OF THE ACT. 9. THERE IS YET ANOTHER ASPECT OF THE MATTER WHICH, IN OUR CONSIDERED VIEW, WOULD REQUIRE A SPECIFIC NOTICE. THE SERVICE MADE AVAILABLE BY THE BOMBAY STOCK EXCHANGE [BSE ONLINE TRADING (BOLT) SYSTEM] FOR WHICH THE CHARGES IN QUESTION HAD BEEN PAID BY THE APPELLANT ASSESSEE ARE COMMON SERVICES THAT EVERY MEMBER OF THE STOCK EXCHANGE IS NECESSARILY REQUIRED TO AVAIL OF TO CARRY OUT TRADING IN SECURITIES IN THE STOCK EXCHANGE. THE VIEW TAKEN BY THE HIGH COURT THAT A MEMBER OF THE STOCK EXCHANGE HAS AN OPTION OF TRADING THROUGH AN ALTERNATIVE MODE IS NOT CORRECT. A MEMBER WHO WANTS TO CONDUCT HIS DAILY BUSINESS IN THE STOCK EXCHANGE HAS NO OPTION BUT TO AVAIL OF SUCH SERVICES. EACH AND EVERY TRANSACTION BY A MEMBER INVOLVES THE USE OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE FOR WHICH A MEMBER IS COMPULSORILY REQUIRED TO PAY AN ADDITIONAL CHARGE (BASED ON THE TRANSACTION VALUE) OVER AND ABOVE THE CHARGES FOR THE MEMBERSHIP IN THE STOCK EXCHANGE. THE ABOVE FEATURES OF THE SERVICES PROVIDED BY THE STOCK EXCHANGE WOULD MAKE THE SAME A KIND OF A FACILITY PROVIDED BY THE STOCK EXCHANGE FOR 16 TRANSACTING BUSINESS RATHER THAN A TECHNICAL SERVICE PROVIDED TO ONE OR A SECTION OF THE MEMBERS OF THE STOCK EXCHANGE TO DEAL WITH SPECIAL SITUATIONS FACED BY SUCH A MEMBER(S) OR THE SPECIAL NEEDS OF SUCH MEMBER(S) IN THE CONDUCT OF BUSINESS IN THE STOCK EXCHANGE. IN OTHER WORDS, THERE IS NO EXCLUSIVITY TO THE SERVICES RENDERED BY THE STOCK EXCHANGE AND EACH AND EVERY MEMBER HAS TO NECESSARILY AVAIL OF SUCH SERVICES IN THE NORMAL COURSE OF TRADING IN SECURITIES IN THE STOCK EXCHANGE. SUCH SERVICES, THEREFORE, WOULD UNDOUBTEDLY BE APPROPRIATE TO BE TERMED AS FACILITIES PROVIDED BY THE STOCK EXCHANGE ON PAYMENT AND DOES NOT AMOUNT TO TECHNICAL SERVICES PROVIDED BY THE STOCK EXCHANGE, NOT BEING SERVICES SPECIFICALLY SOUGHT FOR BY THE USER OR THE CONSUMER. IT IS THE AFORESAID LATTER FEATURE OF A SERVICE RENDERED WHICH IS THE ESSENTIAL HALLMARK OF THE EXPRESSION TECHNICAL SERVICES AS APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. 10. FOR THE AFORESAID REASONS, WE HOLD THAT THE VIEW TAKEN BY THE BOMBAY HIGH COURT THAT THE TRANSACTION CHARGES PAID TO THE BOMBAY STOCK EXCHANGE BY ITS MEMBERS ARE FOR 'TECHNICAL SERVICES' RENDERED IS NOT AN APPROPRIATE VIEW. SUCH CHARGES, REALLY, ARE IN THE NATURE OF PAYMENTS MADE FOR FACILITIES PROVIDED BY THE STOCK EXCHANGE. NO TDS ON SUCH PAYMENTS WOULD, THEREFORE, BE DEDUCTIBLE UNDER SECTION 194J OF THE ACT. 10. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE A BOVE 17 JUDGMENTS AND JUDGEMENT RELIED UPON BY LD. CIT(APPEALS). HE HAS SUBMITTED THAT THE DECISION C ITED BY LD. DR ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DR HEAVILY RELIED UPON CLAUSE (IVA) OF EXPLANATION-2 BELOW SECTION 9(1)(VI ) OF THE ACT REGARDING USE OR RIGHT TO USE ANY INDUS TRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT AND CONTENDED TH AT THE WEB HOSTING CHARGES ARE ROYALTY IN NATURE. T HE WORD USE OR RIGHT TO USE IN CLAUSE (IVA) OF EXPLANATION-2 BELOW SECTION 9(1)(IVA) OF OF THE ACT IS REGARDING USE OF EQUIPMENT IN ACTUAL SENSE. IN THE PRESENT CASE, IT WAS FOUND THAT ASSESSEE HAD NOTHIN G TO DO WITH THE EQUIPMENTS AND HAD ONLY MADE USE OF FACILITIES CREATED BY THE SERVICE PROVIDER WHO WERE THE OWNERS OF ENTIRE INFRASTRUCTURE AND RELATED EQUIPME NTS. THE ASSESSEE COMPANY IS NEITHER IN POSSESSION OF EQUIPMENTS NOR IT USES THE EQUIPMENT SOLELY FOR ITS OWN PURPOSE. THE EQUIPMENTS ARE USED BY THE NON RESIDE NT INC TO PROVIDE SERVICE TO THE ASSESSEE AND OTHERS, THEREFORE, ASSESSEE HAS NO CONTROL OVER THE EQUIPME NTS AS WELL AS OPERATING SYSTEM. WHEN THE EQUIPMENTS W ERE NOT OPERATED, USED OR UNDER CONTROL OF THE ASSESSEE , THEN PAYMENTS MADE FOR AVAILING THE SERVICES OF US SUBSIDIARY M/S PUGMARKS INC & OTHERS CANNOT BE SAID AS ROYALTY. WHEN THE PAYMENTS ARE NOT IN THE NAT URE 18 OF ROYALTY AS PER EXPLANATION-II (VIA) OF SECTION 9(1)(VI) OF THE ACT, THEN RECIPIENT OF THE SAID PAYMENTS, BE ING NON RESIDENT, HAVING NO PE IN INDIA, IS NOT LIABLE TO TAX IN INDIA. THEREFORE, PAYMENTS IN THE HANDS OF M/S PUGMARKS INC & OTHERS ARE NOT TAXABLE IN INDIA AND CONSEQUENTLY, NO TAX REQUIRED TO BE DEDUCTED UNDER SECTION 195 ON SUCH PAYMENT/REMITTANCE BY THE ASSESSEE. SUCH PAYMENTS, THEREFORE, CANNOT BE TERM ED AS ROYALTY. FURTHER, IT WAS FOUND THAT SERVICES ARE RENDERED OUTSIDE INDIA BY NON-RESIDENT AND PAID OUT SIDE INDIA, THEN THE PROVISIONS OF SECTION 195 DO NOT AP PLY IN CASE OF SUCH PAYMENTS. AS THE COMPANY WHO HAD PROVIDED WEB HOSTING SERVICES, WAS LOCATED OUTSIDE INDIA AND THE SERVER WAS ALSO LOCATED OUTSIDE INDIA, INCO ME THAT HAD ARISEN IS NOT TAXABLE IN INDIA. 12. THE DECISIONS RELIED UPON BY LD. CIT(APPEALS) SQUARELY APPLY TO THE FACTS OF THE CASE. DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESSEE ALSO SQUARELY APPLY IN FAVOUR OF THE ASSESSEE. 13. ON CONSIDERATION OF THE FACTS AND MATERIAL ON R ECORD, WE FIND THAT THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY JUDGEMENTS IN THE CASE OF PEOPLE INTERA CTIVE (I) PVT.LTD., YAHOO INDIA PVT. LTD. AND DECISION IN THE CASE OF DELL INTERNATIONAL SERVICES (INDIA) PVT. LTD. (SUPR A). NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS) HAVE BEEN POINTED OUT. THE DECISIONS CITED BY LD. DR WOULD N OT SUPPORT THE CASE OF THE REVENUE. IN THE CASE OF AS IA 19 SATELLITE TELECOMMUNICATIONS CO. LTD. (SUPRA), THE ISSUE HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND IN OTHER DECISIONS, ISSUE IS CLEARLY DIFFERENT AND DISTINGUI SHABLE ON FACTS. THEREFORE, NONE OF THE DECISIONS CITED B Y THE LD. DR WOULD APPLY TO THE FACTS AND CIRCUMSTANCES O F THIS CASE. IN VIEW OF THIS MATTER, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS) IN DELETING THE ADDITION. WE CONFIRM T HE FINDINGS OF THE LD. CIT(APPEALS) AND DISMISS THE AP PEAL OF THE REVENUE. 14. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ITA 770, 771 & 772/2013 (A.YS. 2008-09 TO 2010-11) 15. IN THESE DEPARTMENTAL APPEALS, REVENUE HAS RAIS ED SIMILAR GROUNDS AS HAVE BEEN RAISED IN ITA 769/2013 . FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2007-08 ABO VE, WE DISMISS THESE REMAINING APPEALS OF THE REVENUE A S WELL. 16. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( RANO JAIN) (BHAVNE SH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH APRIL, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD