Cameron (Singapore) Pte Ltd, Coimbatore V. DCIT, International Taxation, circle-1(2)(1), New Delhi

ITA 7960/DEL/2018

AI Insights

The case involves M/s. Cameron (Singapore) Pte. Ltd., a non-resident corporate entity, which appealed against the assessment orders for the assessment years 2013-14, 2014-15, and 2015-16. The primary issue was the classification of receipts from services provided to Cairn Energy India Pty. Ltd. and Oil and Natural Gas Corporation (ONGC) as either business profits under section 44BB of the Income-tax Act or as Fees for Technical Services (FTS) under section 9(1)(vii) and section 44DA. The Tribunal examined the nature of the contracts and services provided, and after detailed analysis, concluded that the receipts should be taxed under section 44BB.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300542 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 25-12-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 13-12-2018
• Other Referred Cases: CIT Vs. ONGC, ONGC Vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief
• Section: 28; 2; 44BB; 115A; 44DA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.1/JPR/2017 Assessment Year: 2013-14 M/s. Cameron (Singapore) Pte. Ltd., C/o- Schlumberger Asia Services Limited, Khasra No.2481/838, Village Murtala Gala, NH-15, Ahmedabad Road, Barmer, Rajasthan -344001 Vs. Deputy Commissioner of Income Tax, International Taxation, Room No. 313, NCR Building, Bhagwan Das Road, Jaipur PAN :AADCC5259P (Appellant) (Respondent) With ITA No.6/JPR/2017 Assessment Year: 2014-15 M/s. Cameron (Singapore) Pte. Ltd., C/o-Cameron Manufacturing India Pvt. Ltd., IIIrd Floor, Tidel Park, Vilankurichi Road, Civil Aerodrome Post, Coimbatore, Tamilnadu -641014 Vs. Deputy Commissioner of Income Tax, International Taxation, Room No. 313, NCR Building, Bhagwan Das Road, Jaipur PAN :AADCC5259P (Appellant) (Respondent) With ITA No.7960/Del/2018 Assessment Year: 2015-16 M/s. Cameron (Singapore) Pte. Ltd., C/o-Cameron Manufacturing India Pvt. Ltd., IIIrd Floor, Vs. Deputy Commissioner of Income Tax, International Taxation, Circle-1(2)(1), ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 2 | P a g e Tidel Park, Vilankurichi Road, Civil Aerodrome Post, Coimbatore, Tamilnadu -641014 New Delhi PAN :AADCC5259P (Appellant) (Respondent) ORDER PER SAKTIJIT DEY, JM: Captioned appeals by the assessee assail the final assessment orders passed for assessment years 2013-14, 2014- 15 and 2015-16 in pursuance to the directions of learned Dispute Resolution Panel (DRP). Since, the appeals relate to the same assessee and involve common issues, they have been clubbed together and disposed of in a common order, for the sake of convenience. ITA No.1/JPR/2017 AY: 2013-14 2. Ground no. 1 of the revised ground, being a general ground, does not require adjudication. Assessee by Sh. Salil Kapoor, Advocate Sh. Vibhu Jain, Advocate Department by Sh. Sanjay Kumar, Sr. DR Date of hearing 26.12.2022 Date of pronouncement 24.03.2023 ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 3 | P a g e 3. In ground no. 2, the assessee has challenged the decisions of the departmental authorities in holding that receipts from services relating to Progressive Cavity Pump system (PCP) and rental of tools/equipments to Cairn Energy India Pty. Ltd. (in short ‘Cairn India’) and Oil and Natural Gas Corporation (ONGC) is not in the nature of business profits to be taxed under section 44BB of the Income-tax Act, 1961 (in shoft ‘the Act’) but is Fee for Technical Services (FTS). 3.1 Briefly the facts relating to this issue are, the assessee is a non-resident corporate entity incorporated under the laws of Singapore and a tax resident of Singapore. As stated, the assessee is engaged in the business of providing services or facilities of drilling and production systems, valves and measurements, compression system in connection with oil and gas exploration activities to various onshore and offshore drilling contractors/oil and gas producers across the globe. As stated by the Assessing Officer, the assessee is a leading international manufacturer of pressure control equipments for oil and gas drilling and production of onshore, offshore and subsea equipment. The assessee had entered into a contract with Cairn India for installation and commissioning of PCP pump systems. Besides ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 4 | P a g e above, the assessee has also given certain tools/equipments on lease/hire basis to ONGC, which are used by the ONGC in connection with exploration of mineral oils in India. Thus, in the year under consideration, as per the version of the assessee, it had taxable income from the aforesaid two sources. The assessee filed its return of income on 13.09.2013, declaring total income of Rs.18,91,75,740/-. Subsequently, the assessee filed a revised return of income 13.09.2014 declaring income of Rs.1,80,56,100/-. In the return of income, the assessee offered the receipts from services provided to Cairn India in relation to PCP and rental of tools/equipments to Cairn India and ONGC by applying the provisions of section 44BB of the Act. In course of the assessment proceeding, the Assessing Officer called for the necessary details, including the contracts executed with Cairn India and ONGC. The Assessing Officer observed that as per the contract with Cairn India, the scope of work includes providing equipment and personnel to perform work of PCP. Further, as per the scope of work, the assessee shall supply the complete PCP pumps comprising services of various components. The scope of work further requires that the safety and risk management shall be a primary and is top priority in the project execution and ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 5 | P a g e industry proven practices and equipment shall be utilized throughout all phases of the execution to promote protection of the environment and to reduce risk to the lowest possible. The equipment to be supplied by the assessee shall be designed to ensure safety of personnel during installation, operation and maintenance activities. 3.2 Insofar as the contract with ONGC is concerned, as per the scope of work the assessee is required to give on hire/lease tools for drilling operations along the provision of service. After examining the nature and scope of contracts, the Assessing Officer was of the view that the services rendered are of technical nature, hence, the receipts from such services has to be treated as FTS under section 9(1)(vii) of the Act. Hence, assessee’s claim that it is business profits to be taxed under section 44BB of the Act is unacceptable. Accordingly, he issued a show-cause notice to the assessee in similar line. In response to the show-cause notice, the assessee submitted that since the receipts are from provision of services or facilities and from lease/hire of plant and machinery to be used in prospecting for, or extraction, or production of mineral oils, they will be covered under section 44BB of the Act. Further, he submitted that since the assessee is ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 6 | P a g e a non-resident and the work is rendered through the project office in India, provision of section 44BB would apply. The Assessing Officer, however, did not accept the claim of the assessee. Referring to the definition of FTS under section 9(1)(vii) of the Act, he concluded that the receipts are in the nature of FTS. Further, since, the assessee had a PE in India, the Assessing Officer held that the receipts would be taxable as FTS under section 44DA of the Act. While doing so, he relied upon a decision of the Hon’ble Uttarakhand High Court in case of CIT Vs. ONGC, 299 ITR 438 and ultimately applying the provisions of section 44DA of the Act, he determined the profit at the rate of 25% on gross basis. Accordingly, he proposed the draft assessment order. Against the draft assessment order, the assessee raised objections before learned DRP. However, the decision of the Assessing Officer was upheld. 3.3 Before us, learned counsel appearing for the assessee drew our attention to the relevant contracts with Cairn India and ONGC and submitted that the services relating to installation and commissioning of PCP is in connection with extraction or exploration of mineral oil. He submitted, this factual position has not been controverted by the departmental authorities. Further, ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 7 | P a g e he submitted, the leasing/hiring of tools/equipments to ONGC is also in connection with extraction/exploration of mineral oil, as, such tools and equipments are used or to be used for such purpose. Thus, he submitted, the receipts have to be taxed under section 44BB of the Act as it is a special provision and cannot be treated as FTS. Further, referring to the definition of FTS in Explanation 2 to section 9(1)(vii) of the Act, he submitted, the receipts from any construction, assembly or like project is specifically excluded from being treated as FTS. He submitted, this aspect has been further clarified by the CBDT in Instruction No. 1862, dated 22.10.1990 by explanation the term ‘mining or like project’ to mean drilling and exploration of mineral oils. Thus, he submitted, the receipts are to be taxed under section 44BB of the Act. Further, he submitted, the decision of the Hon’ble Uttarakhand High court in case of CIT Vs. ONGC (supra) relied upon by the Assessing Officer, subsequently has been reversed by the Hon’ble Supreme Court in case of ONGC Vs. CIT, 376 ITR 306. Finally, he submitted, in assessee’s own case in assessment year 2019-20, the Assessing Officer himself has brought identical receipts to tax under section 44BB of the Act. Therefore, he submitted, assesse’s claim should be accepted. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 8 | P a g e 3.4 Learned Departmental Representative, strongly relying upon the observations of the Assessing Officer and learned DRP, submitted that the scope of work undertaken by the assessee under the relevant contracts do not suggest that the services rendered by the assessee are in connection with exploration, or extraction, or production of mineral oils. On the contrary, the services are of highly technical nature. Hence, the receipts being in the nature of FTS has to be taxed under section 44DA of the Act. 3.5 We have considered rival submissions in the light of decisions relied upon and perused the materials on record. The issue in dispute lies within a narrow compass as to whether the receipts in dispute are in the nature of business profit assessable under section 44BB of the Act or are in the nature of FTS as defined under section 9(1)(vii) of the Act, hence, to be taxed under section 44DA read with section 115A of the Act. As discussed earlier, the assessee specializes in providing services or facilities for drilling and production systems, valves and measurements, compression systems required in connection with exploration of mineral oils and gas. The receipts in question were received in pursuance to contracts executed with Cairn India and ONGC. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 9 | P a g e From the discussions made by the Assessing Officer, it is observed that Cairn India was entrusted with the work of operation of oil blocks in northern fields and southern fields in the state of Rajasthan. As per the contract with Cairn India, the assessee is required to provide equipments and personnel to perform the work in connection with the drilling and exploration of mineral oils. Further, the assessee is required to provide services of PCP system which is a system for extracting mineral oils from oil wells. Additionally, the assessee also supplies tools/equipments, both to Cairn Indian and ONGC to be used in the activity or prospecting, exploration and production of mineral oils. Undisputedly, both the contractees are engaged in the activity of prospecting, exploration and production of mineral oils. Since, the scope of work under the contracts has been elaborately discussed by the Assessing Officer, there is no need to discuss them any further in this order. Suffice to say, the terms of contracts coupled with other materials on record do suggest that the activities of the assessee under the contracts are in connection with prospecting, exploration and extraction of mineral oils. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 10 | P a g e 3.6 Section 44BB of the Act, which is a special provision for computing profits and gains in connection with business of exploration of mineral oils etc. begins with a non-obstante clause and overrides anything contrary contained in sections 28 to 41, 43 and 43A of the Act. The said provision provides that any consideration received by a non-resident from providing services or facilities in connection with or supplying plant and machinery on hire use, or ought to be used in the prospecting for, or extraction, or production of mineral oils, has to be taxed under the said provision on a presumptive basis at 10% of the gross receipts and shall be chargeable to tax under the head ‘profits and gains from business or profession’. However, the proviso to sub-section (1) to section 44BB makes an exception by providing that the provision of sub-section (1) of section 44BB shall not apply in a case where the provisions of section 42 or section 44D or section 44DA or section 115A or section 293A are applicable. Thus, keeping in perspective the specific language of section 44BB, we have to examine the nature and character of the receipts. It is a fact on record that the Assessing Officer has treated the receipts as FTS under section 9(1)(vii) of the Act. Explanation 2 to section 9(1)(vii) defines FTS as under: ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 11 | P a g e “Explanation 2.—For the purposes of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries";” 3.7 A careful reading of Explanation 2 to section 9(1)(vii) of the Act makes it clear that any consideration from rendering of any managerial, technical and consultancy services would fall within the ambit of FTS. However, an exception has been provided to the definition of FTS by saying that the consideration for any construction, assembly, mining or like project shall not be regarded as FTS. The CBDT while explaining/clarifying the expression ‘mining or like projects’ used in Explanation 2 to section 9(1)(vii) of the Act has observed that prospecting for, extraction or production of mineral oils would come within the expression ‘mining or like project’. Thus, once the services related to prospecting, exploration, extraction or production of mineral oils is treated as in the nature of mining or like projects, automatically it will fall out of the ambit of FTS as defined in Explanation 2 to section 9(1)(vii) of the Act, hence, cannot be treated as FTS. It is further relevant to observe, the language used ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 12 | P a g e in section 44BB of the Act makes its scope very wide and encompasses not only the services or facilities in connection with prospecting for, or extraction, or production of mineral oils but also supply of plant and machinery on hire to use or ought to be used for the said purpose. In the facts of the present case, undisputedly, the service provided by the assessee to Cairn India is in connection with activity of prospecting for, or extraction, or production of mineral oils. Even, the hiring/leasing of tools/equipments to both Cairn India and ONGC is in connection with the same activity. The materials on record clearly establish such position. The perusal of respective orders of the departmental authorities would demonstrate that no substantive evidence has been brought on record by them to establish the fact that the services/facilities and hiring/leasing of tools and equipments are not in connection with the activities for prospecting for, extraction, or production of mineral oils. Merely because the services provided are of technical nature, that by itself, would not make the receipts FTS when there is special provision in the shape of section 44BB of the Act engrafted in the Statute to bring such kind of receipts for the purpose of taxation in India under the head ‘profits and gains from business or ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 13 | P a g e profession’. It is relevant to observe, the Assessing Officer, while concluding that the receipts are in the nature of FTS, has heavily relied upon a decision of the Uttarakhand High Court in case of CIT Vs. ONGC (supra). However, we are surprised to note that, while doing so, he has completely ignored the decision of the Hon’ble Supreme Court in case of ONGC Vs. CIT (supra) wherein the very same decision of the Hon’ble Uttarakhand High Court was reversed. A careful reading of the aforesaid judgment of the Hon’ble Supreme Court would reveal that after taking note of the entire gamut of services/work undertaking by non-resident entities and the provisions contained under section 44BB of the Act, the Hon’ble Supreme Court has held that if the work/services in terms of a particular agreement is directly associated or inextricably linked with prospecting, extraction or production of mineral oil, then the receipts have to be taxed as business profits under section 44BB of the Act. Thus, in our view, the scope and ambit of section 44BB of the Act is wide enough to include the receipts of the assessee from Cairn India and ONGC. At this stage, it is relevant to observe, in assessee’s own case for assessment year 2019-20, the Assessing Officer, while ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 14 | P a g e considering similar nature of receipts from ONGC, has accepted assessee’s claim under section 44BB of the Act. 3.8 In view of the aforesaid, we cannot sustain the decision of the Assessing Officer to treat the receipt as FTS. Accordingly, we direct the Assessing Officer to compute assessee’s income under section 44BB of the Act. This ground is allowed. 4. In ground no. 3 and its sub-grounds, the assessee has challenged the taxability of the receipts from repair services stated to have been rendered directly from head office to Cairn India and ONGC. In the year under consideration, the assessee had the follow additional receipts: (i) Rs.2,31,45,285/- receipt from Cairn India towards provision of services directly from head office, Singapore. (ii) Rs.78,81,832/- receipt towards tools/repair services from ONGC. 4.1 The aforesaid receipts were not offered to tax by the assessee pleading that such services have been rendered from head office at Singapore without involvement of the project office. Hence, such receipts cannot be linked to the PE, therefore, not taxable in India. The Assessing Officer, however, was not convinced with the submission of the assessee. He was of the view that the services ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 15 | P a g e rendered are of the nature of technical service, hence, would fall within definition of FTS under section 9(1)(vii) of the Act as well as treaty. Accordingly, he issued show-cause notice to the assessee. In reply, the assessee took the position that the repair services having been rendered from the head office in Singapore without any involvement of the project office, the receipts are not taxable in India. It was further submitted that the receipts cannot be treated as FTS under Article 12(4)(6) of the Tax Treaty as while rendering such services to Cairn India and ONGC, the assessee has not made available any technical knowledge, experience, skill, knowhow or process either to Cairn India and ONGC. The assessee’s submission, however, did not find favour with the Assessing officer and learned DRP. They held that major portion of services include training of personnel of ONGC and Cairn India, which means that the make available condition of Article 12(4)(b) is satisfied. Therefore, the receipts are in the nature of FTS. 4.2 Before us, learned counsel appearing for the assessee reiterated the stand taken before the departmental authorities. However, he submitted, since the receipts are intrinsically connected to the activity of exploration and extraction of mineral oil, they can be taxed under section 44BB of the Act. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 16 | P a g e 4.3 Learned Departmental Representative relied upon the observation of the Assessing Officer and learned DRP. 4.4 We have considered rival submissions and perused the materials on record. Though, before the departmental authorities, the assessee has taken a stand that the receipts are not taxable in India, as, the services were rendered from head office in Singapore without the involvement of the project office and further the make available condition under section 12(4)(b) of India – Singapore DTAA is not satisfied, however, before us, learned counsel appearing for the assessee has made an alternative claim by pleading that the receipts should be taxed under section 44BB of the Act. From the facts and materials on record, it is observed that the receipts in dispute are from repair of tools and equipments used by Cairn India and ONGC for extraction or exploration of mineral oil. In case of ONGC Vs. CIT (supra), the Hon’ble Supreme Court, while interpreting the provisions contained under section 44BB of the Act in the context of scope of work covered under the contract, has considered the entire gamut of work executed under the contract, including repair, training of personnel etc. and held that the pith and substance of each of the contracts is inextricably connected with ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 17 | P a g e prospecting, extraction or production of mineral oil. Thus, applying the ratio laid down in the aforesaid decision, we hold that the receipts from repair work is inextricably connected with prospecting, extraction or production of mineral oil, hence, such receipt has to be taxed under section 44BB of the Act. We order accordingly. This ground is partly allowed. 5. In ground no. 4, the assessee has challenged the decision of the departmental authorities in treating the receipts from Cameron Manufacturing India (P.) Ltd. (in short ‘Cameron India’) amounting to Rs.21,01,464/- towards business support services as FTS. 5.1 Briefly the facts relating to this issue are, the assessee had entered into an agreement with Cameron India for providing support and management services in the area of international purchasing, international marketing and sales, obtaining international quotations and tenders, coordinating sales, coordinating pricing policies, coordinating marketing strategies, sales administration, support in the area of accounting and finance, complying with standard statements of generally accepted accounting practice, other accounting activities, support in the area of planning, support in the area of tax and legal ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 18 | P a g e services, reviewing legal contracts, resolving local disputes and litigation, support in the area of information technology, providing assistance with the purchase or lease of new hardware and software, support and management in the area of human resources etc. The assessee did not offer the receipts from the aforesaid activities pleading that, firstly, such services were provided from outside India and secondly, while providing such services the assessee has not made available any technical knowledge, knowhow, skill etc. to make it FTS. The Assessing Officer, however, did not accept assessee’s claim and held that they are in the nature of FTS as the services rendered are of managerial and consultancy nature and secondly while rendering such services, the assessee has made available technical knowledge, skill etc. Learned DRP also upheld the decision of the Assessing Officer. 5.2 Before us, learned counsel appearing for the assessee submitted that the services were rendered directly from the head office without any involvement of the PE in India. He further submitted, even if, some of the services rendered may be in the nature of managerial services, however, the receipts cannot be treated as FTS as the assessee had not made available any ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 19 | P a g e technical knowledge, skill etc. Thus, he submitted, due to non- fulfillment of the make available condition of Article 12(4)(b) of the treaty receipts cannot be treated as FTS. In support of such contentions, he relied upon the following decisions: 1. Inter Continental Hotels Group (Asia Pacific) (Pte.) Ltd. Vs. ACIT, [2021] 133 taxmann.com 99 (Delhi-Trib.) 2. Magotteaux International SA Vs. DCIT [2022] 141 taxmann.com 8 (Delhi – Trib.) 5.3 We have considered rival submissions and perused the materials on record. As could be seen from the facts on record, business support services were provided to a completely different entity in India through a separate agreement. It has no connection with the activity of the project office, which was set up only for the purpose of the contracts with Cairn India and ONGC. Therefore, we are convinced with the submissions of the assessee that the receipts from business support services have no link with PE, hence, its taxability has to be examined separately. In terms with the agreement with Camaron India the assessee is required to provide the following services: S. No. Particulars Description of service Remarks 1. International Assists in Management fees would ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 20 | P a g e purchasing procurement of goods in International market. This includes reference to the vendors not make available technical knowledge, experience, skill, know- how or process to service receiver (CMI) 2. International marketing and sales Assists the group companies to identify potential business opportunities and customers for the products and services Management fees would not make available technical knowledge, experience, skill, know- how or process to service receiver (CMI) 3. Accounting and finance Assistance in providing support in the field of accounting and finance and reporting requirements of CMI Management fees would not make available technical knowledge, experience, skill, know- how or process to service receiver (CMI) 4. Tax and legal services Assistance in providing support in the field of tax and legal services and reporting requirements of CMI Management fees would not make available technical knowledge, experience, skill, know- how or process to services receiver (CMI) 5. Support and management in the area of information technology Assists in SAP implementation activities, SAP support services, SAP development activities, Web service activities and Help Desk activities Management fees would not make available technical knowledge, experience, skill, know- how, or process to service receiver (CMI) 6. Human resources Assistance in providing support in the field of human resources and reporting requirements of CMI Management fees would not make available technical knowledge, experience, skill, know- how or process to service receiver (CMI). 5.4 As could be seen from the nature of services, broadly it is managerial and to some extent it may be consultancy. However, it needs examination whether they fulfill the test of FTS under Article 12(4) of India – Singapore DTAA. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 21 | P a g e 5.5 On a reading of Article 12(4) as a whole, we are convinced that the nature of services rendered do not fall either under Article 12(4)(a) or 12(4)(c) of the treaty. Thus, the only article where it can fit in is Article 12(4)(b). However, Article 12(4)(b) puts the condition that any consideration from services of managerial, technical or consultancy nature can be treated as FTS, if they make available technical knowledge, experience, skill, know-how or process, which enables the person acquiring the services to apply the technology contained therein. Though, the departmental authorities have made broad allegations that while rendering services the assessee has made available technical knowledge, experience etc., however, no material has been brought on record to establish such fact. The expression ‘make available’ if read in conjunction with, which enables the person acquiring the services to apply the technology contained therein’, would mean that the recipient of service will be in a position to acquire the technical knowledge, experience, skill etc so that it equips the recipient to apply such technical knowledge, experience, skill etc. by himself independently without the aid and assistance of the service provider. In the facts of the present appeal, the departmental authorities have failed to prove this fact through any cogent ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 22 | P a g e material brought on record. The nature of services enumerated earlier would make it clear that these are routine managerial and partly consultancy services to provide business support to the subsidiary. There is nothing on record to suggest that while rendering services, the assessee has made available any technical knowledge, know-how, skill etc. enabling the recipient of service to apply them independently. That being the case, in our considered opinion, the conditions of section 12(4)(b) are not satisfied. Therefore, we hold that the receipts are not in the nature of FTS. This ground is allowed. 6. In view of our decisions in ground nos. 2, 3 and 4, ground nos. 5, 6 and 7 have become consequential or academic, hence, do not require adjudication. ITA No.6/JPR/2017 AY: 2014-15 7. Ground no. 1, being general in nature, does not require adjudication. 8. The issues raised in ground nos. 2, 3.1,4.1, 4.2 and 4.3 are identical to ground no. 2 of ITA No. 1/Jpr./2017 decided by us in the earlier part of the order. Thus, following our decision therein ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 23 | P a g e we direct the Assessing Officer to compute the income under section 44BB of the Act. Accordingly, these grounds are allowed. 9. The issues raised in ground nos. 3.2, 3.3, 3.3.1 are identical to ground no. 3, 3.1 and 3.2 of ITA No. 1/Jpr./2017. Thus, following our decision therein, we direct the Assessing Officer to tax the receipts by applying the provisions of section 44BB of the Act. These grounds are partly allowed. 10. The issue raised in ground nos. 5.1, 5.2 and 5.3 is identical to ground no. 4 of ITA No. 1/Jpr./2017. Thus, following our decision therein, we delete the addition. These grounds are allowed. 11. In ground nos. 5.4 and 5.5, the assessee has challenged the addition of Rs. 7,53,42,991/- to the income by treating the reimbursement of expenses as FTS. 11.1 Briefly the facts are, in course of assessment proceeding, the Assessing Officer noticing that the assessee has reduced an amount of Rs.7,53,42,991/- from the receipts from Cameron India, called upon the assessee to explain the reason for doing so. In response to the show-cause notice issue by the Assessing Officer, the assessee submitted that out of Rs.7,53,42,991/- an amount of Rs.32,10,271/- is the expenditure incurred by the ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 24 | P a g e assessee, on which service tax was paid under the reverse charge mechanism. He submitted, this amount is not in the nature of reimbursement. Thus, he submitted, the expenditure incurred cannot be treated as income of the assessee. As regards the balance amount of Rs.7,21,32,720/-, the assessee submitted that these are expenses incurred on behalf of Cameron India and claimed as reimbursement on cost to cost basis without any markup. He submitted, after incurring the expenditure, the assessee has cross charged them to Cameron India. Thus, the assessee submitted, the amount cannot be brought to tax as it has no profit element. The Assessing Officer, however, did not accept the claim of the assessee. Alleging that the assessee failed to furnish the relevant contract invoices and other details called for, the Assessing Officer ultimately concluded that the disputed receipts are in the nature of FTS and accordingly brought them to tax. 11.2 The assessee objected to such addition before learned DRP. After considering the submissions of the assessee, in the context of facts and materials on record, learned DRP directed the Assessing Officer to consider assessee’s submission and decide ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 25 | P a g e the issue. However, in the final assessment order, the Assessing Officer again made the addition. 11.3 We have considered rival submissions and perused the materials on record. As could be seen from the materials placed before us, the disputed addition of Rs.7,53,42,991/- comprises of two amounts. An amount of Rs.32,10,271/-, on which, the assessee has paid service tax on reverse charge mechanism is actually expenditure incurred by the assessee itself on its own behalf and not in the nature of reimbursement. As it appears, the Assessing Officer has treated this amount as income under factual misconception. Therefore, we are inclined to delete the addition of Rs.32,10,271/- made as FTS. 11.4 Insofar as the balance amount of Rs.7,21,32,720/- is concerned, it is the claim of the assessee that these are reimbursements from Cameron Indian on cost to cost basis without any markup. The assessee has explained before the Assessing Office that the assessee was expecting to enter into new contracts with Cairn India but Cairn India awarded the contract to Cameron India. The assessee submitted that since the assessee had incurred certain expenses in relation to ongoing work, they were cross charged to Cameron India without any markup on ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 26 | P a g e pure cost to cost basis. In principle, we accept assessee’s contention that reimbursement of expenses on cost to cost basis without any markup does not have any profit element. However, it is observed, at the stage of draft assessment, the Assessing Officer has called upon the assessee to furnish the contract between Cairn Indian and Cameron India, copy of invoices, full particulars of expenses, basis of allocation etc. As alleged by the assessing Officer, the assessee did not furnish copy of invoices and other details. It is further observed, in course of proceeding before learned DRP, the assessee has furnished additional evidences including sample copy of invoices. However, the assessee had submitted that it is in the process of collating the invoices amounting to Rs.7,21,32,720/- to substantiate that the amount represents reimbursement of expenditure on cost to cost basis without any markup. However, in the final assessment order, the Assessing Officer while confirming the addition, has again reiterated that the assessee failed to produce copy of contract between Cairn India and Cameron India. He has also alleged that the assessee has not furnished the cross charged invoices. The allegations of the Assessing Officer in this regard are as under: ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 27 | P a g e “1. The assessee has failed to produce the copy of contract between Indian entity (CMI) and Cairn India Pty. Ltd. explaining the expenses claimed by CMI. 2. There is no accountant’s certificate to the effect that he has audited all the expenses & allocation thereof and that the same have been allocated among the beneficiaries on the basis of the pre-determined allocation keys on a fair, equitable and consistent basis. 3. The assessee has also not provided the agreements and documentation clearly outlining the nature of arrangement. 4. The assessee has not properly explained with documentary evidences the basis of allocation the basis of allocation of aforesaid expenses and the details of allocation amongst the group entities. 5. The assessee has not completely explained with documentary evidences the full particulars of the expenses (including date, invoice, name of the payee, nature of expenses and mode of payment). 6. The assessee has not provided the cross charge invoices in his submission.” 11.5 It is observed, before the Assessing Officer and learned DRP, the assessee did make submission to the effect that given sufficient time, he will be in a position to submit the agreement between Cairn India and Cameron India. The assessee has also submitted that complete set of invoices relating to reimbursement of expenses from Cameron India would also be furnished. However, it appears form the observations of the Assessing officer in the final assessment order, the assessee had not furnished complete set of evidences. 11.6 Keeping in view the aforesaid factual position, we restore this issue to the Assessing Officer with a direction to examine ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 28 | P a g e assessee’s claim afresh with reference to evidences already available on record or which the assessee may file in course of proceeding. If the assessee can establish through proper documentary evidences that the amount in dispute represents reimbursement of expenses on cost to cost basis without any markup, then no addition can be made. 11.7 With the aforesaid observations, the ground relating to reimbursement of expenses from Cameron India is restored back to the Assessing Officer. Grounds are partly allowed. 12. Ground no. 6, 6.1 and 7 have become consequential in view of our decision in ground nos. 2, 3, 4 and 5. Accordingly, these grounds are dismissed. 13. In ground no. 8, the assessee has raised the issue or double addition of an amount of Rs.6,58,19,210/-. 13.1 We have considered rival submissions and perused the materials on record. It is observed, pointing out computational errors, the assessee has preferred a rectification application, which is pending before the Assessing Officer. In view of the aforesaid, we direct the Assessing Officer to verify assessee’s claim and decide the issue accordingly after providing an opportunity of being heard to the assessee. ITA Nos.1/JPR/2017; 6/JPR/2017 & 7960/Del/2018 29 | P a g e ITA No.7960/Del/2018 AY: 2015-16 14. Ground nos. 1 and 2, being general, they are not required adjudication. 15. Ground nos. 3 and 4 are identical to ground nos. 2 of ITA No. 1/Jpr./2017, following our decision therein, we direct the Assessing Officer to compute assessee’s income under section 44BB of the Act. This ground is allowed. 16. In view of our decisions in ground nos. 3 and 4, ground nos. 5, 6 and 7 have become consequential, hence, do not require adjudication. 17. Ground nos. 8 and 9, being premature, are dismissed. 18. In the result, all the appeals are partly allowed. Order pronounced in the open court on 24 th March, 2023 Sd/- Sd/- (G.S. PANNU) (SAKTIJIT DEY) PRESIDENT JUDICIAL MEMBER Dated: 24 th March, 2023. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi