D.D.I.T. (I.T.) 2(1), MUMBAI V. SIEMENS LTD., MUMBAI

ITA 8368/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1157 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Department
• Bench Allotted: L
• Next Hearing Date: 16-02-2017
• Assessment Year: misc
• Appeal Filed On: 09-12-2011
• Court: TRIBUNAL
• Department Lawyers: K L KANAK
• Keywords: Business income; Double taxation relief; Deemed to accrue or arise in india; Permanent establishment; Advance ruling; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL L , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 8368 / MUM/20 1 1 & 8367/MUM/2011 ( ASSESSMENT YEAR: 2011 - 12 ) DDIT (I.T)2(1), MUMBAI - 400038 VS. M/S.SIEMENS LTD., 130, PANDURANG BUD HKAR MARG, WORLI, MUMBAI - 400018 PAN/GIR NO. AA ACSO764L APPELLANT ) .. RESPONDENT ) CO.247/MUM/2012 ( ASSESSMENT YEAR: 2011 - 12 ) M/S.SIEMENS LTD., 130, PANDURANG BUDHKAR MARG, WORLI, MUMBAI - 400018 VS. DDIT (I.T)2(1), MUMBAI - 400038 PAN/GIR NO. A ACSO764L APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI K.L.KANAK ASSESSEE BY SHRI NITESH JOSHI DATE OF HEARING 23 / 02 /201 7 DATE OF PRONOUNCEME NT 27 / 04 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE TH E APPEALS FILED BY REVENUE AND CROSS OBJECTION BY ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE A.Y.2011 - 12 , IN THE MATTER OF ORDER PASSED U/S.195 (2) OF THE IT ACT. 2. IN THE APPEALS FILED BY REVENUE, REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) HOLDING THA T THE NON - RESIDENT (NETHERLANDS) HAS NOT 'MADE AVAILABLE ANY TECHNICAL EXPERIENCE, KNOWLEDGE OR SKILL TO THE ASSESSEE IN ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 2 INDIA, AND THEREFORE, FEES PAID TO THE NETHERLANDS COMPANY FOR TESTING OF THE TRANSFORMER HAS NOT RENDERED ANY TECHNICAL SERVICES WITHI N THE SCOPE CLAUSE 5 OF ARTICLE 12 OF THE DTAA BETWEEN INDIA AND NETHERLANDS. 3. REVENUE IS ALSO AGGRIEVED BY THE ACTION OF CIT(A) FOR NOT APPRECIATING THAT TYPE TEST SERVICES PROVIDED BY THE NON - RESIDENT IS A SERVICE UNDOUBTEDLY OF A HIGHLY TECHNICAL IN N ATURE AND HENCE, PAYMENTS FOR THE SAME WOULD COVERED BY SECTION 9(1 )(VII) OF THE I.T. ACT AS WELL, AS PER DTAA BETWEEN INDIA AND NETHERLANDS. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 5. FACTS IN BRIEF ARE THAT THE ASSESSEE IS M ANUFACTURER OF TRANSFORM ERS IN INDIA. TRANSFORMERS SO MANUFACTURED ARE TO BE TESTED. THE ASSESSEE SUBMITS A BID FOR SUPPLY OF TRANSFORMERS TO VARIOUS CUSTOMERS VIZ. .M / S. POWER GRID CORPORATION INDIA LTD. ETC. ONE OF THE REQUIREMENTS OF POWER GRID IS THAT THE TRANSFO RMERS SHOULD BE TYPE TESTED IN A LAB' OF AN INTERNATIONAL STANDARD. KEMA TESTING LABORATORY NETHERLANDS 'IS 'A COMPANY OF INTERNATIONAL REPUTE SITUATED IN NETHERLANDS AND IS ONE'SUCH TESTING LAB. KEMA WAS REQUIRED TO CARRY OUT SHORT CIRCUIT TESTS AND CERTI FY THE TRANSFORMERS. FOR PURE LOGISTIC CONVENIENCE THESE TRANSFORMERS' WERE PHYSICALLY SENT FROM INDIA TO NETHERLANDS IN CKD CONDITION AND REASSEMBLED ON A QUAY IN NETHERLANDS.. THEREAFTER, KEMA CARRIES OUT THE TESTS AND GIVES THE REQUIRED CERTIFICATE BASE D ON WHICH SIEMENS SELLS THE TRANSFORMERS TO POWER GRID. 4. ASSESSEE FILED APPLICATION U/S.195(2) FOR MAKING REMITTANCE TO KEMA TESTING LABORATORY. THE AO HELD THAT THE PAYMENTS TO BE MADE BY THE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 3 APPLICANT WOULD QUALIFY AS 'FEES FOR TECHNICAL SERVICES' AS PER SECTION 9( 1) (VII) OF THE I.T.ACT, 1961 AS WELL AS, PER DTAA BETWEEN INDIA AND NETHERLANDS. HENCE, AO DIRECTED TO DEDUCT TAX @ 1 0% ON THE GROSS AMOUNT OF PAYMENTS TO BE MADE TO KEMA TESTING LABORATORY. 5. BY THE IMPUGNED ORDER CIT(A) HELD THAT F EES PAID BY ASSESSEE TO NETHERLAND S COMPANY IS NOT TAXABLE IN INDIA. IN SO FAR AS NETHERLAND S COMPANY HAS NOT RENDERED ANY TECHNICAL SERVICES WITHIN THE SCOPE OF ARTICLE 12(5) OF THE TREATY. 3.2. I HAVE CONSIDERED THE ARGUMENTS AND SUBMISSIONS OF THE LD. A.R. AS PER CLAUSE 5 OF THE DTAA BETWEEN INDIA AND NETHERLANDS, FEES FOR TECHNICAL SERVICES IS DEFINED AS UNDER: '5. FOR PURPOSES OF THIS ARTICLE, FEES FOR TECHNICAL SERVICES' MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISION OF SERVICES OF TECHNICAL OR OTHER 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 4 OF THIS ARTICLE IS RECEIVED; OR (B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. ' 3.3 . AS PER SECTION 9 (1 )(VII) OF THE I T. ACT READ WITH EXPLANATION (2) BELOW THE CLAUSE AND ALSO R.W.S. BELOW SUB - SECTION 2 OF SECTION 9 READ WITH MEMORANDUM TO THE FINANCE BILL, 2007/2010, ANY SERVICES I.E. UTILIZED BY THE RESIDENT ASSESSEE FOR ITS BUSINESS IN INDIA IS TAXABLE UNDER CLAUSE 9(1)(VII) OF THE LT. ACT AS 'FEES FOR TECHNICAL SERVICES' OF THE SERVICES UTILIZED ARE WITHIN THE DEFINITION SO PROVIDED. THERE IS NO DOUBT THAT THE ASSESSEE HAS AVAILED THE TECHNICAL SERVICES ,FROM KEMA OF NETHERLANDS FOR THE PURPOSE OF IT BU SINESS IN INDIA AND THESE SERVICES ARE UTILIZED FOR THE BUSINESS OF THE APPELLANT IN INDIA: THEREFORE, THE PAYMENT MADE BY THE ASSESSEE TO KEMA IS COVERED WITHIN THE SCOPE OF SECTION 9 (1)(VII) OF THE IT. ACT. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 4 3.4 . HOWEVER, AS PER DTAA BETWEEN INDIA AND N ETHERLANDS FOR A TECHNICAL SERVICES TO BE TAXABLE IN INDIA 'MAKE AVAILABLE' CLAUSE IS TO BE SATISFIED. THE LD. A.R. HAS RELIED UPON THE JUDGMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF DIAMOND SERVICES INTERNATIONAL PVT. LTD. 304 ITR 20 AND HAS SUBMITT ED THAT BY PROVIDING THE TYPE TEST CERTIFICATE IN NETHERLANDS, AFTER TESTING THE TRANSFORMER IN NETHERLANDS, USING THE EQUIPMENT INSTALLED IN NETHERLANDS, KEMA HAS NOT MADE AVAILABLE ANY TECHNICAL KNOWLEDGE OR EXPERTISE OR SKILL TO THE' APPELLANT. LD. A.R. HAS ALSO RELIED UPON THE DECISION OF AAR IN THE CASE OF JOINT ACCREDITATION S YSTEM OF AUSTRA LIA AND NEW ZEALAND 326 ITR 487 (AAR) AND IN THE CASE LNTERTEK TESTI NG 307ITR418. 3.5 . BASED ON THE ABOVE JUDGMENTS, I AGREE THAT THE NETHERLANDS COMPANY HAS NOT ' MADE AVAILABLE' ANY TECHNICAL EXPERIENCE, KNOWLEDGE OR SKILL TO THE ASSESSEE IN INDIA. THEREFORE, FEES PAID T O THE NETHERLANDS COMPANY FOR TESTING OF THE TRANSFORMER OF THE ASSESSEE COMPANY HAS NOT RENDERED ANY TECHN ICAL SERVICES WITHIN THE SCOPE OF ARTICL E 12(5) OF THE TREATY. HENCE, FEES PAID TO THE NETHERLANDS COMPANY IS NOT TAXABLE IN INDIA. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 4 . GROUND NO. 4: I HAVE GRANTED RELIEF TO THE ASSESSEE IN ABOVE GROUNDS AND THERE IS NO MATERIAL ON RECORD THAT THE ASSES SEE HAS A PERMANENT ESTABLISHM ENT IN INDIA OR THAT THE ASSESSEE DOES NOT HAVE A P.E. IN INDIA. IN VIEW OF DECISION ON EARLIER GROUND, THIS GROUND IS MERELY ACADEMIC. HENCE, IT IS DISMISSED AS INFRUCTUOUS. 5 . IN THE RESU LT, THE APPEAL IS PARTLY ALLOWED. 6 . SIMILARLY, FOR TESTING THE TRANSFORMER, THE ASSESSEE HAS TAKEN ON RENT OIL WITH EQUIPMENTS FROM SMIT TRANSFORMATOREN BV AND MADE A PAYMENT OF EUR 135112.60. AS PER THE INVOICE DATED 18 - 05 - 2010, SMIT HAS ALSO PROVIDED A CRANE AND MAN LIFT ON RENTAL BASIS. AS PER LETTER DATED 20 - 08 - 2010 BEFORE THE A.O., THE ASSESSEE IN PARA 2 HAS STATED AS UNDER: 'SMIT IS A RESIDENT OF NETHERLANDS AND IS ENTITLED TO THE BENEFITS OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND NETHERLANDS (THE TREATY). THE FAC ILITY PROVIDED BY SMIT IS PROVIDING OIL ON RENTAL BASIS AND INCLUDE SUPPLY AND INJECTION OF DRY AIR, OIL TESTING, VACUUM PULLING, OIL FILLING AND OIL CIRCULATION. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 5 THIS OIL WILL BE TAKEN BACK BY SMIT AFTER TESTING IS OVER. SMIT WILL ALSO PROVIDE A CRANE AND A MAN LIFT ON RENTAL BASIS. ' 7. THE APPLICATION FILED BY ASSESSEE U/S.195(2) WAS DECIDED BY AO AS UNDER: - RENTING OF OIL ALONGWITH EQUIPMENT FOR OIL TREAT MENT BY THE PAYEE IS CONSIDERATION FOR THE USE OF OR THE RIGHT TO USE ANY PLAN, SECRET FORMULA OR PROCESS AND IS ALSO FOR INFORM A TION CONCERNING INDUSTRIAL, COMMERCIAL AND SCIENTIFIC EXPERIENCE AND HENCE, IS IN THE NATURE OF ROYALTY AND HENCE, PAYMENTS FOR THE SAME WOULD BE COVERED BY SECTION 9(1)(VI) OF THE ACT. IN T HE BACKDROP OF THE AFORESAID, IT IS HELD THAT TILE PAYMENTS TO BE MADE BY THE APPLICANT WOULD QUALIFY AS 'ROYALTY' AS PER SECTION 9(1)(VII) OF THE I.T. ACT, 1961 AS WELL AS PER DT4A BETWEEN INDIA AND NETHERLANDS. HENCE, YOU ARE DIRECTED TO DEDUCT TAX @ 10% ON THE GROSS AMOUNT OF PAYMEN TS TO BE MADE TO SMIT TRANSFORMATOREN BV. 8. BY THE IMPUGNED ORDER CIT(A) HELD THAT EQUIPMENT ROYALTY IS NOT PROVIDED IN THE TREATY BETWEEN INDIA AND NETHERLAND. AS PER TAXABILITY OF SAME UNDER CLAUSE 5 OF ARTICLE 12 OF THE TREATY IS CONCERNED CIT(A) OBS ERVED THAT BY HIRING OIL AND OTHER EQUIPMENT ON RENTAL BASIS FOR THE PURPOSE OF TESTING OF TRANSFORMER NO TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE. THUS THIS INCOME WAS ALSO HELD TO BE NOT TAXABLE EVEN UNDER CLAUSE 5 OF THE ARTICLE 12 OF THE TREATY. P RECISE OBSERVATION OF CIT(A) WAS AS UNDER: - 3.1. THE FACTS OF THE CASE HAVE BEEN CONSIDERED. THERE IS NO DOUBT THAT THE SERVICES TO THE ASSESSEE IN NETHERLANDS ARE USED FOR THE PURPOSE OF ITS BUSINESS IN INDIA AND SERVICES RECEIVED ARE RENTAL OF OIL INCLUD ING SUPPLY AND INJECTION OF DRY AIR, OIL TESTING, VACUUM PULLING, OIL FILLING, OIL CIRCULATION AND ALSO A CRANE AND A MAN LIFT. THESE ARE ALL EQUIPMENTS AND THE MONEY HAS BEEN PAID FOR HIRING THE EQUIPMENTS FOR USE IN BUSINESS IN INDIA. NO DOUBT THAT EQUIP MENT WAS HIRED IN NETHERLANDS STILL IT WILL BE ROYALTY COVERED U/S. 9(1)(VI) OF THE ACT R.W. EXPLANATION 2, CLAUSE (IVA) AND EXPLANATION BELOW SUB - ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 6 SECTION 2 OF SECTION 9 AND THE MEMORANDUM EXPLAINING THE AMENDMENT BROUGHT IN FINANCE BILL, 2010/2007. 3.2 AS PER THE DTAA BETWEEN INDIA AND NETHERLANDS, ROYALTY IS DEFINED IN CLAUSE 4 OF ARTICLE 12 THAT READS AS UNDER: 'THE TERM 'ROYALTIES' AS USED IN THIS ARTICLE MEANS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, AN Y COPYRIGHT OF LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS, ANY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE. ' 3.3 FROM THE AB OVE DEFINITION OF ROYALTY IN DTAA BETWEEN INDIA AND NETHERLANDS, IT IS FOUND THAT EQU IPMENT ROYALTY AS IN CLAUSE 9(1)(VI) R.W. CLAUSE (IVA) OF EXPLANATION 2 IS NOT PROVIDED IN THE TREATY. THEREFORE, AS PER TREATY, EQUIPMENT ROYALTY IS NOT TAXABLE. 3.4 AS FAR AS TAXABILITY OF THE SAME UNDER CLAUSE 5 OF THE ARTICLE 12 OF THE TREATY IS CONCERNED, IT IS SEEN THAT BY HIRING THE OIL AND OTHER EQUIPMENT ON RENTAL BASIS FOR THE PURPOSE OF TESTING OF TRANSFORMER, NO TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE. T HEREFORE, THIS INCOME WOULD NOT BE TAXABLE EVEN UNDER CLAUSE 5 OF ARTICLE 12 OF THE TREATY. HENCE, GROUND NOS.1,2 AND 3 ARE ALLOWED. GROUND NO. 4: I HAVE GRANTED RELIEF TO THE ASSESSEE IN ABOVE GROUNDS AND THERE IS NO MATERIAL ON RECORD THAT THE ASSESSEE HAS A PERMANENT ESTABLISHMENT IN INDIA OR THAT THE ASSESSEE DOES NOT HAVE A P .E. IN INDIA. IN VIEW OF DECISION ON EARLIER. GROUND, THIS GROUND IS MERELY ACADEMIC. HENCE, IT IS DISMISSED AS INFRUCTUOUS. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED . 9. AG AINST THE ABOVE ORDER OF CIT(A), REVENUE IS IN APPEAL BEFORE US. ASSESSEE HAD ALSO FILED CROSS OBJECTION ALLEGING THAT CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT PAYMENT MADE TO KEMA IS IN THE NATURE OF FEES FOR TECHNICAL SERVICES COVERED BY SEC.9(1)(VII) OF THE IT ACT, 1961. 10 . LEARNED DR SHRI K.L. KANAK APPEARING ON BEHALF OF THE REVENUE CONTENDED THAT POWER TRANSFORMERS ARE ONE OF THE MOST VALUABLE ASSETS OF ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 7 AN ELECTRICAL GENERATION AND TRANSMISSION SYSTEM. MANUFACTURING A POWER TRANSFORMER AND TRANSPORTI NG IT TO THE SITE INVOLVES SUBSTANTIAL COSTS. HOWEVER, THE DAMAGE CAUSED BY A TRANSFORMER FAIL URE AND THE SUBSEQUENT LOSS OF PRODUCTION M AY END UP C OSTING FAR MORE. UTILITY COMPANIES, LIKE POWER GRID, THEREFORE TRY TO KEE P TH EI R TRANSFORMERS IN OPERATION F OR AS LONG AS POSSIBLE. DURING ELECTRICAL OPERATION, POWER TRANSFORMERS ARE SUBJECTED TO ELECTRICAL, MECHANICAL, THERMAL AND ENVIRONMENTAL STRESSES. POWER TRANSFORMERS ARE EXPOSED TO MECHANICAL STRESSES DURING TRANSPORTATION, DURING RELOCATION, DURING EART HQUAKE OR DURING EXTERNAL SHORT CIRCUITS. TRANSFORMERS HAVE TO WITHSTAND STRESS OF OPERATING VOLTAGES AS WELL AS PULSE VOLTAGES LIKE LIGHTENING OR SWITCHING PULSES. THE INNER LOSSES, TERMINALLY CAUSED BY LOAD CURRENT MUST BE DISSIPATED. HIGH TEMPERATURE CA USED BY DETERIORATION OF TRANSFORMER INSULATION MATERIAL. TRANSFORMER FAILURE CAUSED BY THESE STRESSES CAN LEAD TO EXPLOSIONS, SUBSEQUENT FIRE AND COSTLY AFTER - EFFECTS SUCH AS CLEAN - UP AND PLANT REPAIR AS WELL AS LONG DURATION OF TRANSFORMER REPLACEMENT. T HEREFORE, UTILITIES AND SERVICE PROVIDERS TEST POWER TRANSFORMERS IN ORDER TO ASSESS THEIR CONDITIONS, SCHEDUL E MAINTENANCE AND PLAN THEIR REP LACEMENT . 1 1 . LEARNED DR FURTHER CONTENDED THAT FOR CONFIRMING THE SPECIFICATIONS AND PERFORMANCES OF AN ELECTRICA L POWER TRANSFORMER IT HAS TO GO THROUGH NUMBERS OF TESTING PROCEDURES. SOME TESTS ARE DONE AT MANUFACTURER PREMISES BEFORE DELIVERING THE TRANSFORMER. MAINLY TWO TYPES OF TRANSFORMER TESTING ARE DONE AT MANUFACTURER PREMISES - TYPE TEST OF TRANSFORMER AND ROUTINE TEST OF TRANSFORMER. IN ADDITION TO THAT SOME TRANSFORMER TESTS ARE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 8 ALSO CARRIED OUT AT THE CONSUMER SITE BEFORE COMMISSIONING AND ALSO PERIODICALLY IN REGULAR & EMERGENCY BASIS THROUGHOUT ITS SERVICE LIF E. 12 . FURTHER LEARNED SENIOR DR EXPLAINED T HE TYPE OF TRANSFORMER TESTING WHICH WERE NOT LISTED TO BE AS UNDER: - TESTS DONE AT FACTORY (I) TYPE TESTS (II) ROUTINE TESTS (III) SPECIAL TESTS TESTS DONE AT SITE (I) PRE - COMMISSIONING TESTS (II) PERIODIC/CONDITION MONITORING TESTS (III) EMERGEN CY TESTS 13 . IT WAS FURTHER EXPLAINED THAT SOME TRANSFORMER TESTS ARE CARRIED OUT FOR CONFIRMING THE BASIC DESIGN EXPECTATION OF THAT TRANSFORMER. TYPE TEST OF TRANSFORMER CONFIRMS MAIN AND BASIC DESIGN CRITERIA OF A POWER TRANSFORMER. ROUTINE TESTS OF TR ANSFORMER ARE MAINLY FOR CONFIRMING OPERATIONAL PERFORMANCE OF INDIVIDUAL UNIT IN A PRODUCTION LOT. ROUTINE TESTS ARE CARRIED OUT ON EVERY UNIT MANUFACTURED. 14 . SPECIAL TESTS OF TRANSFORMER ARE DONE AS PER CUSTOMER REQUIREMENT TO OBTAIN INFORMATION USEFU L TO THE USER DURING OPERATION OR MAINTENANCE OF THE T RANSFORMER. TYPE TESTS OF TRANSFORMER INCLUDES (I) TRANSFORMER WINDING RESISTANCE MEASUREMENT (II) TRANSFORMER RATIO TEST. (III) TRANSFORMER VECTOR GROUP TEST. (IV) MEASUREMENT OF IMPEDANCE VOLTAGE /SHORT CIRCUIT IMPEDANCE (PRINCIPAL ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 9 TAP) AND LOAD LOSS (SHORT CIRCUIT TEST). (V) MEASUREMENT OF NO LOAD LOSS AND CURRENT (OPEN CIRCUIT TEST). (VI) MEASUREMENT OF INSULATION RESISTANCE. (VII) DIELECTRIC TESTS OF TRANSFORMER. (VIII) TEMPERATURE RISE TES T OF TRANSFORMER. (IX) TESTS ON ON - LOAD TAP - CHANGER. (X) VACUUM TESTS ON TANK AND RADIATORS. ROUTINE TESTS OF TRANSFORMER INCLUDE (I) TRANSFORMER WINDING RESISTANCE MEASUREMENT. ( II) TRANSFORMER RATIO TEST. (III) TRANSFORMER VECTOR GROUP TEST. (IV) MEASUREMENT OF IMPEDANCE VOLTAGE/SHORT CIRCUIT IMPEDANCE (PRINCIPAL TAP) AND LOAD LOSS (SHORT CIRCUIT TEST). (V) MEASUREMENT OF NO LOAD LOSS AND CURRENT (OPEN CIRCUIT TEST) (VI) MEASUREMENT OF INSULATION RESISTANCE. (VII) DIELECTRIC TESTS OF TRANSFORME R. (VIII) TESTS ON ON - LOAD TAP - CHANGER. (IX) OIL PRESSURE TEST ON TRANSFORMER TO CHECK AGAINST LEAKAGES PAST JOINTS AND GASKETS. 15 . THAT MEANS ROUTINE TESTS OF TRANSFORMER INCLUDE ALL THE TYPE TESTS EXCEPT TEMPERATURE RISE AND VACUUM TESTS. THE OIL PR ESSURE TEST ON TRANSFORMER TO CHE CK AGAINS T LEAKAGES PAST JOINTS AND GASKETS IS INCLUDED. SPECIAL TESTS OF TRANSFORMER INCUDE (I) DIELECTRIC TESTS. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 10 (II) MEASUREMENT OF ZERO - SEQUENCE IMPEDANCE OF THRE - PHASE TRANSFORMERS (III) SHORT - CIRCUIT TEST. (IV) MEAS UREMENT OF ACOUSTIC NOISE LEVEL. (V) MEASUREMENT OF THE HARMONICS OF THE NO - LOAD CURRENT. (VI) MEASUREMENT OF THE POWER TAKEN BY THE FANS AND OIL PUMPS. (VII) TESTS ON BOUGHT OUT COMPONENTS / ACCESSORIES SUCH AS BUCHHLOZ R ELAY, TEMPERATURE INDICATORS, P RESSURE RELIEF DEVICES, OIL PRESERVATION SYSTEM ETC. 16 . AS PER LEARNED DR, THE PERUSAL OF THE DOCUMENTS SUBMITTED BY THE ASSESSEE BEFORE THE HON'BLE ITAT ON 06.01.2017, IT IS SEEN THAT THE POWER TRANSFORMERS MANUFACTURED BY THE ASSESSEE WERE REQUIRED TO CONFORM TO THE SPECIFICATIONS IS - 2026 AND IEC - 60076 (PART 1 TO PART 5). (PLEASE REFER TO PAGE 55 OF THE SUBMISSION DATED 06.01.2017, WHICH WERE SUBMITTED BEFORE THE CIT(A)). FURTHER, PAGES 87 TO 88B ENUMERATE THE 'TYPE TESTS' PRESCRIBED BY POWERGRID TO SIE MENS, TO BE CONDUCTED ON EVERY POWER TRANSFORMER. THE ORDER OF THE LD. CIT(A) ALSO GIVES A BRIEF IDEA OF THE TESTS WHICH ARE REQUIRED TO BE CARRIED OUT ON EACH TRANSFORMER. IT MAY BE SEEN THAT POWER GRID HAD MANDATED THAT - (A) THE TRANSFORMERS SHALL BE D ESIGNED, MANUFACTURED AND TESTED IN ACCORDANCE WITH THE BEST INTERNATIONAL PRACTICES UNDER STRICT QUALITY CONTROL. (B) THE TRANSFORMERS SHOULD BE CAPABLE OF WITHSTANDING ADEQUATE THERMAL, MECHANICAL, DIELECTRIC AND ELECTRICAL STRESS DURING ITS LIFETIME OF 30 YEARS. (C) DESIGN REVIEW SHALL BE CONDUCTED BY POWER GRID AT DIFFERENT STAGES OF DESIGN, SELECTION OF RAW MATERIAL AND MANUFACTURING PROCESS. (THE SCOPE OF SUCH DESIGN REVIEW IS DESCRIBED ON PAGE 6 OF THE APPELLATE ORDER). ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 11 (D) THE REVIEW SHALL BE CO NDUCTED AS PER THE IEC AND CIGRE SC 12 GUIDELINES. (E) THE SHORT CIRCUIT WITHSTAND TEST OF THE TRANSFORMERS SHALL BE EVALUATED AS PER IEC 60076 - 5 GUIDELINES. (F) THE TYPE TESTS REQUIRED TO BE CARRIED OUT HAS BEEN MENTIONED IN CLAUSE 5.2.3 OF THE TECHNIC AL SPECIFICATION - AUTO TRANSFORMER (C/ENGG/SPEC/TRF REV NO. 04). (HOWEVER, THE SAME IS NOT AVAILABLE IN THE CASE RECORD OF THE ITAT). 17 . IN THE INSTANT CASE, THE 'TYPE TESTS' AND 'ADDITIONAL TYPE TESTS' (PLEASE REFER PAGE 40 OF THE SUBMISSION DATED 06.01. 2017) WERE CARRIED OUT BY THE KEMA LABORATORIES. AS SUBMITTED BY THE ASSESSEE, THE TRANSFORMERS SO MANUFACTURED BY SIEMENS LTD., WERE TRANSPORTED TO NETHERLANDS IN CK D (COMPLETELY KNOCKED DOWN) CONDITION. THE TRANSFORMERS WERE REASSEMBLED IN THE NETHERLAND S AND TYPE TESTS AND ADDITIONAL TYPE TESTS WERE CARRIED OUT ON SUCH TRANSFORMERS. THE TRANSFORMERS WERE SENT BACK TO INDIA (PROBABLY IN CKD CONDITION) WHERE POWERGRID CARRIED OUT THE SAME TYPE TESTS AND ADDITIONAL TYPE TESTS AGAIN ON THESE TRANSFORMERS BEF ORE ACCEPTING THE SAME FROM THE ASSESSEE (PLEASE REFER PARA 9.3, PAGE 40 OF THE SUBMISSION DATED 06.01.2017). 18 . THE ASSESSEE HAS CONTENDED THAT KEMA HAD PROVIDED ONLY A 'STANDARD FACILITY' AND THE 'TYPE TESTS' WERE CARRIED OUT AUTOMATICALLY BY MACHINES AND WITHOUT HUMAN INTERVENTION. IT IS OUR HUMBLE SUBMISSION THAT THIS IS NOT ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 12 POSSIBLE TECHNICALLY. THE 'TYPE TESTS' ON A POWER TRANSFORMER CANNOT BE CARRIED OUT WITHOUT ANY HUMAN INTERVENTION. (A) FIRST OF ALL, IT IS NOT UNDERSTOOD WHAT IS MEANT BY A 'ST ANDARD FACILITY'. IF THE ASSESSEE INTENDS TO MEAN THAT KEMA PROVIDED SOME KIND OF FIXED EQUIPMENTS AND/OR PLATFORM WHERE A POWER TRANSFORMER IS PLACED, SOME TEST PROBES ARE CONNECTED AND THE MACHINE AUTOMATICALLY CARRIED OUT ALL THE DIFFERENT KIND OF TEST S WITHOUT ANY INVOLVEMENT OF A HUMAN BEING AND GIVES A 'PASS/NOT - PASS' RESULT, THEN IT IS GROSSLY MISTAKEN. (B) IT MUST BE UNDERSTOOD THAT THE 'TYPE TESTS' ARE A SERIES OF TESTS, OFTEN CARRIED OUT IN A PARTICULAR ORDER. THESE TESTS ARE CARRIED OUT ON THE DIFFERENT COMPONENTS OF A TRANSFORMER, INCLUDING ITS AUXILIARY SYSTEMS. DIFFERENT TYPES OF LNSTRUMENTS / EQU I PMENTS ARE EMPLOYED FOR CARRYING OUT DIFFERENT TESTS. THESE LNSTRUMENTS / EQUI PMENTS ARE REQUIRED TO BE PHYSICALLY PLUGGED/UNPLUGGED OR ATTACHED/DE TACHED AFTER EVERY TEST. THE TESTS ARE FOLLOWED UP BY MANDATORY PHYSICAL INSPECTION BY EXPERT TECHNICIANS AND ENGINEERS. HUMAN EXPERTISE IS REQUIRED TO DETECT ANY PHYSICAL DAMAGE, DETERIORATION OR SMELL/ODOUR CAUSED OR PRODUCED, IF ANY, BY A PARTICULAR TES T. PHYSICAL MOVEMENT OR OPERATION OF A COMPONENT, SUCH AS TAP - CHANGER, FAN, PUMP, RADIATOR, RELAY OR SUCH OTHER PROTECTIVE DEVICE IS OBSERVED DURING AND AFTER EVERY TEST. ANY DETERIORATION IN INSULATION/DIELECTRIC IS PHYSICALLY EXAMINED. ANY MECHANICAL VIB RATION OR NOISE IS DULY RECORDED WHICH HAVE IMPORTANT BEARING ON THE TEST RESULTS. THUS, IT REQUIRES INVOLVEMENT OF EXPERT AND EXPERIENCED TECHNICIANS AND ENGINEERS AND IT WOULD BE A TRAVESTY TO CONTEND THAT ALL SUCH FUNCTIONS ARE CARRIED OUT BY MACHINE AL ONE. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 13 (C) IT IS TRUE THAT THESE TESTS ARE CARRIED OUT BY SOPHISTICATED INSTRUMENTS A ND EQUIPMENTS. HOWEVER, IT MUST BE APPRECIATED THAT AN ELECTRICAL EQUIPMENT, WHICH IS DESIGNED TO OPERATE AT 132KV AND ABOVE IS REQUIRED TO BE TESTED AT VERY HIGH VOLTAGE A ND CURRENT LEVELS, SOMETIMES IN MANY MULTIPLES OF 132KV FOR AN EXTREMELY SHORT PERIOD (RANGING IN MICRO OR MILLISECONDS). PRODUCTION OF SUCH HIGH CURRENT OR VOLTAGE FOR TESTING 'OFF - THE SHELF' ITEM, MANUFACTURED ON AN ASSEMBLY LINE. EACH TRANSFORMER IS DES IGNED FOR ITS UNIQUE NEEDS AND CONFIGURATIONS. THERE ARE NUMEROUS PARAMETERS WHICH HAVE TO BE CONSIDERED WHILE DESIGNING A TRANSFORMER. ACCORDINGLY, THE TESTING PARAMETERS ALSO VARY FOR EACH UNIT OF TRANSFORMER. THESE PARAMETERS ARE TO BE DECIDED BY THE EX PERTS AND ENGINEERS SEPARATELY FOR EACH TRANSFORMER WITHIN THE GUIDELINES OF IEC/CIGRE. THE MACHINE CANNOT AUTOMATICALLY DECIDE THESE TESTING PARAMETERS. IT IS, THEREFORE, NOT CORRECT TO SAY THAT THE TESTS ARE CARRIED OUT AUTOMATICALLY WITHOUT HUMAN INTERV ENTION. (D) THE METHOD OF TESTING DONE BY KEMA IS NOT KNOWN IN THE INSTANT CASE. EVEN IN THE SUBMISSION DATED 06.01.2017 THE ASSESSEE HAS NOT PROVIDED DETAILS OF THE ACTUAL TESTS CARRIED OUT BY KEMA LABORATORIES. IN THE INVOICE DATED 08.03.2010, KEMA HAS INDICATED THE TESTS TO BE CARRIED OUT ON THE TRANSFORMERS AND AND HAS IDENTIFIED THEM AS 'PROGRAM A1 & A2', 'PROGRAM B' AND 'PROGRAM C'. BUT NO FURTHER DETAILS REGARDING THE TESTS ACTUALLY CARRIED OUT ON THE POWER TRANSFORMER HAS BEEN PROVIDED. HOWEVER, N UMEROUS LITERATURE IS AVAILABLE IN THE OPEN MEDIA ABOUT TESTING OF A POWER TRANSFORMER. ONE SUCH LITERATURE, TITLED AS 'DIAGNOSTIC TESTING SOLUTION FOR POWER TRANSFORMERS' BY OMICRON IS ATTACHED HEREWITH (AS ANNEXURE - ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 14 A). IT IS REASONABLE TO SAY THAT ANY TE STING LABORATORY WOULD EMPLOY SAME OR SIMILAR TECHNIQUE FOR CARRYING OUT THE DIFFERENT TESTS ON A POWER TRANSFORMER. THE ATTACHED LITERATURE GIVES A 'PHYSICAL IDEA' OF CARRYING OUT VARIOUS TESTS ON A POWER TRANSFORMER. THE SAME GIVES A FAIR IDEA OF THE 'TY PE TESTS' GENERALLY CARRIED OUT ON A POWER TRANSFORMER. FOR INSTANCE: (I) CAPACITANCE AND POWER F ACTOR/DISSIPATION FACTOR(PDF/DF) MEASUREMENT PG. 8 - 11 PG. 8 - A DIELECTRIC STRESS TEST, PG. 9 - HOW THIS TEST IS CARRIED OUT PG - 10 - INSTRUMENT USED TO CARRY OUT THIS TEST (II) TRANSFORMER RATIO TEST PG. 12 - 13 PG.12 - INSTRUMENT USED TO CARRY OUT THIS TEST. PG .13 - HOW THIS TEST IS CARRIED OUT. (III) WINDING RESISTANCE TEST PG. 14 - 17 PG.15 - HOW THIS TEST IS CARRIED OUT. PG.16 - 17 - INS TRUMENTS USED TO CARRY OUT THIS TEST. (IV) SHORT CIRCUIT IMPEDANCE TEST PG. 18 - 19 PG - 18 - INSTRUMENTS USED TO CARRY OUT THIS TEST. PG - 19 - HOW THIS TEST IS CARRIED OUT (V) DIELECTRIC RESPONSE ANALYSIS PG. 22 - 23 PG. 22 - 23 - INSTRUMENTS USED TO C ARRY OUT THIS TEST. 19 . THESE EXAMPLES ARE ONLY ILLUSTRATIVE. IT MAY BE SEEN THAT FOR CARRYING OUT EACH OF THE ABOVE TESTS, SEPARATE INSTRUMENTS/EQUIPMENTS ARE REQUIRED. THESE I N STRUMENTS / EQU I PMENTS HAVE TO BE CONNECTED TO THE DIFFERENT PARTS OF THE TR ANSFORMER. DIFFERENT KIND OF CURRENTS (AC/DC) HAVE TO BE INJECTED, AT DIFFERENT VOLTAGES, FOR DIFFERENT TIME - PERIODS AND OF DIFFERENT FREQUENCIES. THE RESULTS OF THESE TESTS HAVE TO BE EXAMINED FOR ACCEPTANCE WITHIN THE MARGINS OF ERROR STIPULATED BY INTER NATIONAL BODIES. THE ANALYSIS OF THE VARIOUS TEST RESULTS IS CARRIED OUT BY EXPERTS AND ENGINEERS CONSIDERING THE UNIQUE NEEDS AND CONFIGURATION OF EACH TRANSFORMER. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 15 20 . THE IEC STANDARD 60076 - 5 : SHORT CIRCUIT WITHSTAND EVALUATION OF A POWER TRANSFORMER IS ALSO ATTACHED HEREWITH FOR READY REFERENCE. THIS STANDARD IDENTIFIES THE REQUIREMENTS FOR POWER TRANSFORMERS TO SUSTAIN WITHOUT DAMAGE THE EFFECTS OF OVERCURRENTS ORIGINATED BY EXTERNAL SHORT CIRCUITS. IT DESCRIBES THE CALCULATION PROCEDURES USED TO DEM ONSTRATE THE THERMAL ABILITY OF A POWER TRANSFORMER TO WITHSTAND SUCH OVERCURRENTS AND BOTH THE SPECIAL TEST AND THE CALCULATION METHOD USED TO DEMONSTRATE ITS ABILITY TO WITHSTAND THE RELEVANT DYNAMIC EFFECTS. THIS IS ONE OF THE IMPORTANT TESTS PRESCRIBED BY POWER GRID TO SIEMENS. A COPY OF THE IEC STANDARD 60076 - 5 IS ATTACHED HEREWITH AS ANNEXURE - B. IT MAY BE SEEN THAT THE STANDARD PRESCRIBES THAT: (I) '4.2.2.2 PRIOR TO THE SHORT - CIRCUIT TESTS, THE TRANSFORMER SHALL BE SUBJECTED TO THE ROUTINE TESTS WHIC H ARE SPECIFIED IN LEC 60076 - 1. HOWEVER, THE LIGHTNING IMPULSE TEST IS NOT REQUIRED AT THIS STAGE. ' (II) '4.2.2.3 AT THE BEGINNING OF SHORT - CIRCUIT TESTS, THE AVERAGE TEMPERATURE OF THE WINDING SHALL PREFERABLY BE BETWEEN 10 QC AND 40 QC (SEE 10.1 OF LE C 60076 - 1). DURING THE TESTS, WINDING TEMPERATURE MAY INCREASE OWING TO THE CIRCULATION OF THE SHORT CIRCUIT CURRENT. THIS ASPECT SHALL BE TAKEN INTO CONSIDERATION WHEN ARRANGING THE TEST CIRCUIT FOR TRANSFORMERS OF CATEGORY I ' (III) '4.2.6 SPECIAL TEST ING CIRCUITS ARE OFTEN NECESSARY IN ORDER TO REPRODUCE SOME OF THE FAULT EVENTS BY MEANS OF TESTS. THE CHOICE OF THE TEST DUTIES TO BE PERFORMED SHOULD BE MADE, AS A RULE, ON THE BASIS OF THE ANALYSIS OF THE RESULTS OF CALCULATIONS OF ELECTRODYNAMIC FORCES OCCURRING IN ALL POSSIBLE FAULT CASES. ' (IV) '4.2. 7. 2 DURING EACH TEST (INCLUDING PRELIMINARY TESTS), OSCILLOGRAPHIC RECORDINGS SHALL BE TAKEN OF THE APPLIED VO LTAGES. - THE CURRENT (SEE 4.2.5 .2). FURTHERMORE, THE OUTSIDE OF THE TRANSFORMER UNDER TEST SHALL BE OBSERVED VISUALLY AND CONTINUOUSLY VIDEO RECORDED. (V) 4.2.7.3. AFTER EACH TEST, THE OSCILLOGRAMS TAKEN DURING THE TEST SHALL BE CHECKED, THE GAS - AND OIL - ACTUATED RELAY INSPECTED AND THE SHORT - CIRCUIT MEASURED. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 16 (VI) '4.2.7.4 AFTER COMPLETION OF TH E TESTS, THE OUTSIDE OF THE TRANSFORMER AND THE GAS - AND - OIL ACTUATED RELAY, IF ANY, SHALL BE INSPECTED. THE RESULTS OF THE SHORT - CIRCUIT REACTANCE MEASUREMENTS AND THE OSCILLOGRAMS TAKEN DURING THE DIFFERENT STAGES OF THE TESTS SHALL BE EXAMINED FOR ANY I NDICATION OF POSSIBLE ANOMALIES DURING THE TESTS, ESPECIALLY ANY INDICATIONS OF CHANGE IN THE SHORT - CIRCUIT REACTANCE. ' 2 1 . A PLAIN READING OF THE PROCEDURE LAID DOWN FOR SHORT CIRCUIT WITHSTAND TEST BY IEC MAKES IT EVIDENT THAT THIS TEST CANNOT BE CARR IED OUT BY THE MACHINE ALONE, AUTOMATICALLY AND WITHOUT HUMAN INTERVENTION. THESE EXAMPLES ARE ONLY ILLUSTRATIVE AND NOT EXHAUSTIVE. HOWEVER, IT ESTABLISHES BEYOND DOUBT THAT THESE TESTS REQUIRE DEFINITE HUMAN EXPERTISE AND INTERFACE AND CANNOT BE CARRIED OUT IN A MECHANICAL MANNER. THOUGH CARRIED OUT BY SOPHISTICATED EQUIPMENTS, WITHOUT THE INVOLVEMENT OF TECHNICIANS A ND ENGINEERS, NEITHER CAN IT BE CARRIED OUT NOR CAN BE UNDERSTOOD. THUS THE ARGUMENTS OF THE ASSESSEE IN THIS REGARD IS LIABLE TO BE REJECTE D IN TOTO. 22 . AS PER LEARNED DR THIS ISSUE IS NOT COVERED BY THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN ITA NO.4356/MUM/2010 IN SO FAR AS THE SAID JUDGMENT WAS DELIVERED IN A DIFFERENT SET OF FACTS. FOLLOWING ARE THE DISTINGUISHING FEATURES OF THE A BOVE CASE: (I) IN THE ABOVE CASE, THE ASSESSEE HAD MADE PAYMENTS OF 'PEHLA TESTING LABORATORY, GERMANY', FOR CARRYING OUT, INCIDENTALLY, 'TYPE TESTS' ON CIRCUIT BREAKERS. THE ASSESSEE CLAIMED THAT THIS IS A 'STANDARD SERVICE PROVIDED BY THE LABORATORY, W HICH IS DONE AUTOMATICALLY BY THE MACHINES'. THE HON'BLE ITAT SUMMED UP THE ISSUE BY OBSERVING THAT 'THE MAIN CONTENTION IN THIS REGARD WAS THAT IT IS NOT A FTS BUT THE PAYMENT WAS PURELY FOR STANDARD FACILITY PROVIDED BY THE LABORATORY WHICH IS DONE AUTOM ATICALLY BY THE MACHINES WITHOUT ANY HUMAN INTERVENTION'. THE ASSESSEE IN THAT CASE MADE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 17 EXTENSIVE RELIANCE ON THE JUDGMENTS OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. BHARATI CELLULAR LIMITED [319 ITR 258] AND THAT THE HON'BLE MADRAS HIGH COURT IN CASE OF SKYCELL COMMUNICATIONS LTD. VS. DCIT (2001) 251 ITR 53 (MAD). TO CONTEND THAT TECHNICAL SERVICES INVOLVE A HUMAN ELEMENT, WHEREAS IN THE CASE OF THE ASSESSEE, THERE IS NO INVOLVEMENT OF HUMAN INTERFACE. II) THE HON'BLE ITAT SUMMED UP ITS OBSERVAT IONS IN THE FOLLOWING MANNER: 'THUS IF A STANDARD FACILITY IS PROVIDED THROUGH A USAGE OF MACHINE OR TECHNOLOGY, IT CANNOT BE TERMED AS RENDERING OF TECHNICAL SERVICES. ONCE IN THIS CASE IT HAS NOT BEEN DISPUTED THAT THERE IS NOT MUCH OF THE HUMAN INVOLVEM ENT FOR CARRYING OUT THE TESTS OF CIRCUIT BREAKERS IN THE LABORATORY AND IT IS MOSTLY DONE BY MACHINES AND IS A STANDARD FACILITY, IT CANNOT BE HELD THAT PEHLA TESTING LABORATORY IS RENDERING ANY KIND OF TECHNICAL SERVICES TO ASSESSEE. ' 2 3 . THE HON'BLE TRIBUNAL FURTHER OBSERVED AS UNDER: 'IF ANY PERSON DELIVERS ANY TECHNICAL SKILL OR SERVICES OR MAKES AVAILABLE ANY SUCH SERVICES THROUGH AID OF ANY MACHINE, EQUIPMENT OR ANY KIND OF TECHNOLOGY, THEN SUCH A RENDERING OF SERVICE CAN BE INFERRED AS 'TECHNICA L SERVICES'. IN SUCH A SITUATION, THERE IS A CONSTANT HUMAN ENDEAVOUR AND THE INVOLVEMENT OF THE HUMAN INTERFACE. ON THE CONTRARY, IF ANY TECHNOLOGY OR MACHINE DEVELOPED BY HUMAN AND PUT TO OPERATION AUTOMATICALLY, WHEREIN IT OPERATES WITHOUT ANY MUCH OF H UMAN INTERFACE OR INTERVENTION, THEN USAGE OF SUCH TECHNOLOGY CANNOT PER SE BE HELD AS RENDERING' TECHNICAL SERVICES' BY HUMAN SKILLS. IT IS OBVIOUS THAT IN SUCH A SITUATION SOME HUMAN INVOLVEMENT COULD BE THERE BUT IT IS NOT A CONSTANT ENDEAVOUR OF THE HU MAN IN THE PROCESS. MERELY BECAUSE CERTIFICATES HAVE BEEN PROVIDED BY THE HUMANS AFTER A TEST IS CARRIED OUT IN A LABORATORY AUTOMATICALLY BY THE MACHINES, IT CANNOT BE HELD THAT SERVICES HAVE BEEN PROVIDED THROUGH THE HUMAN SKILLS. ' (III) AT THE OUTSET IT IS SUBMITTED THAT THE 'TYPE TESTS' OF CIRCUIT BREAKERS ARE DIFFERENT FROM 'TYPE TESTS' OF TRANSFORMERS. IN CASE OF THE FORMER, TESTS ARE CARRIED OUT ON A SAMPLE BASIS, AND ARE OF THE NATURE OF 'DESTRUCTIVE TESTING'. THAT IS TO SAY, THE SAMPLES SENT FO R TESTING ARE DESTROYED AFTER THE TEST RESULTS AND ARE NOT RETURNED BACK TO THE MANUFACTURER. THE RESULTS ARE ALSO OF 'PASS/FAIL' TYPE. ON THE OTHER HAND, IN THE CASE OF POWER TRANSFORMERS', TESTS ARE CARRIED OUT ON EACH UNIT OF THE PRODUCT (I.E., THE POW ER TRANSFORMERS) AND ARE OF THE NATURE OF 'NON - DESTRUCTIVE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 18 TESTING'. THE TRANSFORMERS ARE NOT DESTROYED OR DISCARDED AFTER CARRYING OUT THE TESTS. THE RESULTS ARE ALSO EXPRESSED IN TERMS OF MARGIN OF ERROR WHICH SERVE AS INPUTS FOR THE MANUFACTURERS TO RED ESIGN, REASSEMBLE OR REMANUFACTURE THE PRODUCT, OR REPLACE THE AUXILIARY SYSTEMS AS THE CASE MAY BE. HENCE, THERE ARE QUALITATIVE DIFFERENCE BETWEEN THE 'TYPE TESTS' OF A CIRCUIT BREAKER AND THAT OF A POWER TRANSFORMER. (IV) KIND REFERENCE IS INVITED TO P ARAS 3.8 TO 3.10 ABOVE, WHEREIN IT IS DEMONSTRATED THAT THE TYPE TESTS CARRIED OUT BY KEMA LABORATORY IN THE INSTANT CASE IS NOT, AND CANNOT BE, DONE AUTOMATICALLY BY THE USE OF 'STANDARD FACILITIES', WITHOUT 'HUMAN INTERVENTION'. THE PROCESS INVOLVED IN 'TYPE TESTING' OF A POWER TRANSFORMER HAS BEEN ILLUSTRATED IN THE ABOVE PARAGRAPHS. THE PROCEDURE LAID DOWN BY THE IEC HAS ALSO BEEN SUBMITTED, WHICH DEMONSTRATE THAT THE TESTS REQUIRE CONSTANT HUMAN ENDEAVOUR. THE TESTS, IN FACT, CANNOT BE CARRIED OUT BY THE MACHINES ALONE, HOWSOEVER SOPHISTICATED. IT REQUIRES HUMAN INVOLVEMENT BY WAY OF (A) DEVISING THE TEST PLAN TO THE MUTUAL SATISFACTION AND AGREEMENT OF THE PARTIES CONCERNED AS WELL AS WITHIN THE GUIDELINES LAID DOWN BY IEC/CIGRE, (B) SETTING UP THE T ESTING EQUIPMENTS FOR EACH INDIVIDUAL TESTS LISTED UNDER THE BROAD HEAD OF 'TYPE TESTS', (C) CONNECTION OF THE INPUT/OUTPUT TERMINALS OF THE TRANSFORMER WITH APPROPRIATE CURRENT/VOLTAGE GENERATING SET, (D) SETTING OF APPROPRIATE CURRENT, VOLTAGE WHICH ARE 'INJECTED' INTO THE TRANSFORMER AT DIFFERENT FREQUENCIES, (E) PHYSICAL OBSERVATION OF THE OPERATION/PERFORMANCE OF THE TRANSFORMER AND ITS VARIOUS COMPONENTS DURING AND AFTER THE SPECIFIC TESTS, (F) EXAMINATION OF THE INTERIOR/EXTERIOR OF THE TRANSFORMER, WINDINGS, CORE, TRANSFORMER OIL, AUXILIARY UNITS AND RELAYS AND PROTECTIVE DEVICES AND ANALYSIS OF THE SAME VIS - A - VIS OTHER TEST RESULTS, AND FINALLY (G) PREPARATION OF THE TEST RESULTS INDICATING THE QUALITATIVE AS WELL AS QUANTITATIVE RESULTS OF THE VARI OUS TESTS. IT IS, THEREFORE, NOT A CASE WHERE THE TRANSFORMERS ARE PUT ON A TEST BED, CONNECTED WITH SOME SOPHISTICATED EQUIPMENTS AND THE REST IS DONE AUTOMATICALLY BY SOME COMPUTER OR OTHER AUTOMATED DEVICES, THE RESULT OF WHICH IS A TEST REPORT ON WHICH SOMEONE PUTS HIS OR HER SIGNATURE MECHANICALLY. IT MAY BE APPRECIATED THAT THERE IS A CONTINUOUS HUMAN INVOLVEMENT. AT EACH STAGE, THE EXPERTISE OF THE TECHNICIANS/ENGINEERS IS REQUIRED. FOR EXAMPLE, THERE MAY BE INSTANCES WHERE THE TRANSFORMERS FAIL THE FIRST FEW TESTS AND FURTHER TESTS ARE NOT CARRIED OUT IN ORDER TO PREVENT DAMAGES, AND THE TRANSFORMERS ARE SENT BACK OR DISMANTLED FOR ADDRESSING SOME VITAL PROBLEM WHICH ARE RECTIFIED AND PUT BACK FOR TESTING. THUS THE 'TYPE TESTING' OF A POWER TRANSFOR MER REQUIRES CONSTANT HUMAN ENDEAVOUR, AND, IN FACT, SATISFIES THE CRITERIA LAID DOWN BY THIS HON'BLE TRIBUNAL IN ASSESSEE'S OWN CASE (ITA NO. 4356/MUM/2010), FOR QUALIFYING A SERVICE AS A TECHNICAL SERVICE. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 19 2 4 . AS PER LEARNED D.R. I T IS ALSO RESPECTFU LLY SUBMITTED THAT IT IS NOT A CASE OF THE USE OF A STANDARD FACILITY. FIRST OF ALL, THE TERM 'STANDARD FACILITY' IS NOT DEFINED ANYWHERE. ITS MEANING HAS TO BE DERIVED FROM ITS GENERIC USE AND UNDERSTANDING. THE HON'BLE MADRAS HIGH COURT ALSO DID NOT D EFINE THE TERM IN THE CASE OF SKYCELL COMMUNICATIONS LTD. [251 ITR 5 3 (MADRAS)], RELIED UPON BY THE ASSESSEE. HOWEVER, A NUMBER OF SITUATIONS HAVE BEEN L ISTED IN THE SAID JUDGEMENT TO ILLUSTRATE WHAT MAY BE TERMED AS A 'STANDARD FACILITY'. T HE ILLUSTRATION S ARE PAYMENTS FOR USE OF TELEPHONE, CABLE TV, INTERNET, AUTOMOBILE, RAILWAY, THE AEROPLANE, CONSUMPTION OF ELECTRICAL ENERGY ETC. (PARA 13). IN ALL THESE SITUATIONS, THE RECIPIENT OF SERVICE IS MERELY GIVEN ACCESS TO A 'BLACK BOX' WHICH PERFORMS A SERVICE WITHOUT INVOLVEMENT OF THE PERSON PROVIDING THIS 'BLACK BOX'. THE 'BLACK BOX' IS FIXED, OR NEARLY FIXED, IN TIME, CONFIGURATION, OR PERFORMANCE OUTPUT. HOWEVER, IN CASE OF THE ASSESSEE, THE 'BLACK BOX' IN THE FORM OF TESTING PROGRAMS (PROGRAM AI, A2, B & C, AS INDICATED IN THE INVOICE OF KEMA LABORATORIES), WHICH IS A DYNAMIC ENTITY. IT IS NOT 'STATIC' IN TIME, CONFIGURATION OR PERFORMANCE. UNLIKE THE ILLUSTRATIONS IN SKYCELL, IN THE INSTANT CASE, THE SERVICE PROVIDER IS ACTIVELY INVESTED IN THE FUNCTIONS , ATTRIBUTES OR OUTPUTS OF THE 'BLACK BOX'. THE ASSESSEE IS ALSO ACTIVELY INVOLVED IN A MANNER WHICH HELPS IT CHANGE, MODIFY OR IMPROVE THE DESIGN, FUNCTIONS, ATTRIBUTES, CAPACITIES OR PERFORMANCE OF THE TEST OBJECTS, ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 20 THAT IS THE TRANSFORMERS. THUS, THE FA CTS OF THE INSTANT CASE ARE VASTLY AND STARKLY DIFFERENT FROM THE ILLUSTRATIONS GIVEN IN SKYCELL. 2 5 . EVEN THE ASSESSEE HAS NOT EXPLAINED IN WHAT MANNER DOES THE ENTIRE LABORATORY OF KEMA QUALIFIES FOR A 'STANDARD FACILITY'. IN A GENERAL UNDERSTANDING, A 'STANDARD FACILITY' IS SOMETHING WHICH PERFORMS PRE - DEFINED TASKS FOR CERTAIN SPECIFIED INPUTS OR OBJECTS. IT MAY ALSO BE UNDERSTOOD TO BE SOMETHING WHICH PERFORMS 'STANDARD SERVICE' FOR A GIVEN SUBJECT. IN THE PARLANCE OF INCOME TAX, THE W ORD HAS BEEN USE D BY WAY OF ILLUSTRATION, SUCH AS A TRANSPONDER OF A SATELLITE FOR UPLINKING/DOWNLINKING, MOBILE COMMUNICATION SYSTEM INCLUDING MOBILE TOWERS (BTSS/MTSS) FOR PROVIDING ROAMING SERVICES TO OTHER MOBILE NETWORK SUBSCRIBERS, FIBRE OPTIC CABLES ETC. AND THE LI KES. IT MAY BE SEEN THAT SUCH 'STANDARD FACILITIES' DOES NOT REQUIRE ANY HUMAN INTERVENTION FOR PERFORMING OUT THE PRE - DESIGNED SERVICES. THERE IS NO HUMAN INVOLVEMENT ONCE THE SYSTEMS, HARDWARES OR SOFTWARES ARE 'PROGRAMMED' FOR PERFORMING A PARTICULAR SE RVICE OR SERVICES. THE QUALITY OR QUAN TITY OF THE OUTPUT OR SERVICES CANNOT BE INFLUENCED OR ALTERED IN ANY WAY BY HUM AN B EINGS OPPOSED TO THAT, THE 'TYPE TESTING' OF POWER TRANSFORMERS, AS EXPLAINED IN THE PRECEDING PARAGRAPHS, REQUIRES CONTINUOUS INVOLVE MENT OF AND MONITORING BY HUMAN BEINGS. PHYSICAL OBSERVATION IS A CRUCIAL PART OF THE TYPE TESTING OF TRANSFORMERS. IT IS BUT NATURAL THAT SOPHISTICATED INSTRUMENTS / EQUIPMENTS ARE REQUIRED FOR PERFORMING THE TESTS, FOR HOW ELSE A HIGH VOLTAGE / CURRENT B E GENERATED FOR INJECTING INTO THE TRANSFORMERS. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 21 HOWEVER, THERE INSTRUMENTS/ EQUIPMENTS ARE BY NO MEANS 'STANDARD FACILITIES'. STANDARD FACILITIES CAN BE USED ONLY FOR AND ON STANDARD OBJECTS. A POWER TRANSFORMER IS NOT A 'STANDARD OBJECT'. EACH TRANSFORM ER IS UNIQUE, HAVING DIFFERENT SPECIFICATIONS AND DESIGNED FOR DIFFERENT PHYSICAL, ELECTRICAL, MECHANICAL, GEOLOGICAL AND ENVIRONMENTAL SITUATIONS AND CAPABLE OF HANDLING/WITHSTANDING DIFFERENT LEVEL OF MECHANICAL, THERMAL, ELECTRICAL OR DIELECTRIC STRESS. A POWER TRANSFORMER IS, THEREFORE, NOT A 'STANDARD PRODUCT' AND CANNOT BE TESTED BY AND ON SOME 'STANDARD FACILITY'. THE TESTING LABORATORY OF KEMA, THEREFORE, CANNOT BE REGARDED AS A 'STANDARD FAC ILITY '. 26 . TO SUM UP, THE 'TYPE TESTS' ON POWER TRANSFO RMERS OF SIEMENS HAVE NOT BEEN CARRIED OUT ON SOME 'STANDARD FACILITY' BY MACHINES AUTOMATICALLY WITHOUT HUMAN INTERVENTION. ON THE CONTRARY, THERE IS A CONSTANT HUMAN ENDEAVOUR INVOLVED IN TESTING OF A POWER TRANSFORMER. THEREFORE, THE INSTANT CASE OF THE A SSESSEE IS NOT COVERED BY THE JUDGMENT OF THIS HON'BLE TRIBUNAL IN ITA NO. 4356/MUM/2010. RATHER, THE OBSERVATIONS OF THE HON'BLE TRIBUNAL IN THE ABOVE C ASE SUPPORT THE ARGUMENT OF THE REVENUE WHERE IT HAS BEEN DEMONSTRATED IN THE FACTS OF THE CASE AS WE LL AS WITH THE HELP OF TECHNICAL LITERATURE AVAILABLE IN OPEN MEDIA THAT 'TECHNICAL SERVICES' HAVE INDEED BEEN RENDERED BY KEMA TO SIEMENS AS THE VERY NATURE OF THE TYPE TESTING OF POWER TRANSFORMER REQUIRES. THE ARGUMENTS OF THE ASSESSEE IN THIS REGARD AR E, THEREFORE, LIABLE TO BE REJECTED. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 22 27 . IN REGARDS THE ARGUMENT OF THE ASSESSED THAT THE PAYMENTS TO KEMA SHALL NOT BE TAXABLE IN INDIA AS THE SERVICES HAVE BEEN PERFORMED OUTSIDE INDIA AS WELL AS THE PAYMENTS HAVE ALSO BEEN MADE OUTSIDE INDIA, IT IS SUF FICIENT TO SAY THAT AFTER THE AMENDMENTS IN EXPLANATION 2 TO SECTION 9( L)(VII) THE LAW IS FAIRLY SETTLED IN THIS ASPECT. 28 . AS PER LEARNED AR KEMA HAVE MADE AVAILABLE SERVICES TO THE ASSESSEE FOR THIS PURPOSE REFERENCE WAS MADE TO ARTICLE 12 OF TREATY WHICH IS REPRODUCED BELOW: - 5. FOR PURPOSES OF THIS ARTICLE, FEES FOR TECHNICAL SERVICES MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISION OF SERVICES OF T ECHNICAL OR OTHER 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 4 OF THIS ARTICLE IS RECEIVED; OR (B) MAKE AVAILABLE TECHNI CAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW OR PROCESSES, OR C ONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. 6. NOTWITHSTANDING PARAGRAPH 5, FEES FOR TECHNICAL SERVICES DOES NOT INCLUDE AMOUNTS PAID: (A) FOR SERVICES THA T ARE ANCILLARY AND SUBSIDIARY, AS WELL AS INEXTRICABLY AND ESSENTIALLY LINKED, TO THE SALE OF PROPERTY; (B) FOR SERVICES THAT ARE ANCILLARY AND SUBSIDIARY TO THE RENTAL OF SHIPS, AIRCRAFT, CONTAINERS OR OTHER EQUIPMENT USED IN CONNECTION WITH THE OPERATI ON OF SHIPS OR AIRCRAFT IN INTERNATIONAL TRAFFIC; (C) FOR TEACHING IN OR BY EDUCATIONAL INSTITUTIONS; (D) FOR SERVICES FOR THE PERSONAL USE OF THE INDIVIDUAL OR INDIVIDUALS, MAKING THE PAYMENT; OR (E) TO AN EMPLOYEE OF THE PERSON MAKING THE PAYMENTS OR TO ANY INDIVIDUAL OR PARTNERSHIP FOR PROFESSIONAL SERVICES AS DEFINED IN ARTICLE 14 (INDEPENDENT PERSONAL SERVICES) OF THIS CONVENTION. 7. THE PROVISIONS OF PARAGRAPHS 1 AND 2 SHALL NOT APPLY IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL S ERVICES, BEING A RESIDENT OF ONE OF THE STATES, CARRIES ON BUSINESS IN THE OTHER STATE, IN WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 23 ARISE, THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORMS IN THAT OTHER STATE INDEPENDENT PERSONAL SE RVICES FROM A FIXED BASE SITUATED THEREIN, AND THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISHMENT OR FIXED BASE. IN SUCH CASE, THE PROVISIONS OF ARTICLE 7 OR ARTICLE 14, AS THE CASE MAY BE, SHALL APPLY. 8. ROYALTIES OR FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN ONE OF THE STATES WHEN THE PAYER IS THAT STATE ITSELF, A POLITICAL SUB - DIVISION, A LOCAL AUTHORITY OR A RESIDENT OF THAT STATE. WHERE, HOWEVER, THE PERSON PAYING THE ROYALTIES OR FEE S FOR TECHNICAL SERVICES, WHETHER HE IS A RESIDENT OF ONE OF THE STATES OR NOT, HAS IN ONE OF THE STATES A PERMANENT ESTABLISHMENT OR A FIXED BASE IN CONNECTION WITH WHICH THE CONTRACT UNDER WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID WAS C ONCLUDED, AND SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE BORNE BY SUCH PERMANENT ESTABLISHMENT OR FIXED BASE, THEN SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN THE STATE IN WHICH THE PERMANENT ESTABLISHMENT OR FIXED BASE IS SITUATED. 9. WHERE, BY REASON OF A SPECIAL RELATIONSHIP BETWEEN THE PAYER AND THE BENEFICIAL OWNER OR BETWEEN BOTH OF THEM AND SOME OTHER PERSON, THE AMOUNT OF ROYALTIES OR FEES FOR TECHNICAL SERVICES HA VING REGARD TO THE ROY ALTIES FEES FOR TECHNICAL SERVICES FOR WHICH THEY ARE PAID, EXCEEDS THE AMOUNT W HICH WOULD HA VE BEEN AGREED UPON B THE PAP ER AND THE BENEFICIAL OWNER IN THE LAWS OF EACH STATE, DUE REGARD BEING HAD TO THE OTHER PROVISIONS OF THIS CONVENTION. 29 . THE TERM 'MAKE AVAILABLE' HAS NOT BEEN DEFINED IN THE INDIA - NETHERLANDS DTAA. IT, HOWEVER, HAS BEEN EXPLAINED IN THE MOU OF INDIA - USA DTAA, THE RELEVANT PORTIONS OF WHICH ARE REPRODUCED BELOW: ARTICLE 12 ROYALTIES AND FEES FOR INCLUDED SERVICES - 1. ... 4. FOR PURPOSES OF THIS ARTICLE , FEES FOR INCLUDED SERVICES MEANS PAYMENTS OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) IF SUCH SERVICES: (A) ARE ANCIL LARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3 IS RECEIVED; OR ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 24 (B) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW, OR PROCESSES, OR CONSIST OF THE DEV ELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN . 30 . AS PER LEARNED DR, ARTICLE 12 INCLUDES; ONLY CERTAIN TECHNICAL AND CONSULTANCY SERVICES. BUT TECHNICAL SERVICES, WE MEAN IN THIS CONTEXT SERVICES REQUIRING EXPERTISE IN A TECHNOLOGY. BY CO NSULTANCY SERVICES, WE MEAN IN THIS CONTEXT ADVISORY SERVICES. THE CATEGORIES OF TECHNICAL AND CONSULTANCY SERVICES ARE TO SOME EXTENT OVERLAPPING BECAUSE A CONSULTANCY SERVICE COULD ALSO BE A TECHNICAL SERVICE. HOWEVER, THE CATEGORY OF CONSULTANCY SERVIC ES ALSO INCLUDES AN ADVISORY SERVICE, WHETHER OR NOT EXPERTISE IN A TECHNOLOGY IS REQUIRED TO PERFORM IT. 3 1 . UNDER PARAGRAPH 4, TECHNICAL AND CONSULTANCY SERVICES ARE CONSIDERED INCLUDED SERVICES ONLY TO THE FOLLOWING EXTENT: (1) AS DESCRIBED IN PARAGRAP H 4(A), IF THEY ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF A RIGHT, PROPERTY OR INFORMATION FOR WHICH ARE ROYALTY PAYMENT IS MADE; OR (2) AS DESCRIBED IN PARAGRAPH 4(B), IF THEY MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL KNO W - HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. THUS , UNDER PARAGRAPH 4(B ) . CONSULTANCY SERVICE WHICH ARE NO T OF T ECHNICAL NATURE CANNO T BE INCLUDED SERVICES. PARAGRAPH 4(B) OF ARTICLE 12 REFERS TO TE CHNICAL OR CONSULTANCY SERVICES THAT MAKE AVAILABLE TO THE PERSON ACQUIRING THE SERVICES, TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW - HOW, OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AND TRANSFER OF A TECHNICAL PLANT OR TECHNICAL DESIGN TO SUCH PERSON. (F OR THIS PURPOSE, THE PERSON ACQUIRING THE SERVICE SHALL BE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 25 DEEMED TO INCLUDE AN AGENT, NOMINEE, OR TRANSFEREE OF SUCH PERSON). THIS CATEGORY IS NARROWER THAN THE CATEGORY DESCRIBED IN PARAGRAPH 4(A ) BECAUSE IT EXCLUDES ANY SERVICE THAT DOES NOT MAKE TECHN OLOGY AVAILABLE TO THE PERSON ACQUIRING THE SERVICE. GENERALLY SPEAKING, TECHNOLOGY WILL BE CONSIDERED 'MADE AVAILABLE' WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY THE TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE MAY REQUIRE TECHNIC AL INPUT BY THE PERSON PROVIDING THE SERVICE DOES NOT PER SE MEAN THAT TECHNICAL KNOWLEDGE, SKILLS, ETC., ARE MADE AVAILABLE TO THE PERSON PURCHASING THE SERVICE, WITHIN THE MEANING OF PARAGRAPH 4(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLO GY SHALL NOT PER SE BE CONSIDERED TO MAKE THE TECHNOLOGY AVAILABLE. THE FOLLOWING EXAMPLES INDICATE THE SCOPE OF THE CONDITIONS IN PARAGRAPH 4( B) : EXAMPLE 3 FACTS: A US. MANUFACTURER HAS EXPERIENCE IN THE USE OF A PROCESS FOR MANUFACTURING WALLBOARD FOR INTERIOR WALLS OF HOUSES WHICH IS MORE DURABLE THAN THE STANDARD PRODUCTS OF ITS TYPE. AN INDIAN BUILDER WISHES TO PRODUCE THIS PRODUCT FOR ITS OWN USE. IT RENTS A PLANT AND CONTRACTS WITH THE V.S. COMPANY TO SEND EXPERTS TO INDIA TO SHOW ENGINEERS IN THE INDIAN COMPANY HOW TO PRODUCE THE EXTRA - STRONG WALLBOARD. THE V.S. CONTRACTORS WORK WITH THE TECHNICIANS IN THE INDIAN FIRM FOR A FEW MONTHS. ARE THE PAYMENTS TO THE US. FIRM CONSIDERED TO BE PAYMENTS FOR 'INCLUDED SERVICES' ? ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 26 ANALYSIS: THE PAYMENTS WOULD BE FEES FOR INCLUDED SERVICES. THE SERVICES ARE OF A TECHNICAL OR CONSULTANCY NATURE; IN THE EXAMPLE, THEY HAVE ELEMENTS OF BOTH TYPES OF SERVICES. THE SERVICES MAKE AVAILABLE TO THE INDIAN COMPANY TECHNICAL KNOWLEDGE, SKILL AND PROCESSES. EXAMPLE 4 FACTS: A US. MANUFACTURER OPERATES A WALLBOARD FABRICATION PLANT OUTSIDE INDIA. AN INDIAN BUILDER HIRES THE V.S. COMPANY TO PRODUCE WALLBOARD AT THAT PLANT FOR A FEE. THE INDIAN COMPANY PROVIDES THE RAW MATERIALS, AND THE V.S. MANUFACTURER FABRICATES T HE WALLBOARD IN ITS PLANT, USING ADVANCED TECHNOLOGY. ARE THE FEES IN THIS EXAMPLE PAYMENTS FOR INCLUDED SERVICES? ANALYSIS: THE FEES W OULD NOT BE FOR INCLUDED SERVICES. ALTHOUGH THE U.S. COMPANY IS CLEARLY PERFORMING A TECHNICAL SERVICE, NO TECHNICAL K NOWLEDGE, S KILL. ETC ARE MADE A V AILABLE TO THE INDIAN COMPANY, NOR IS THERE ANY DEVELOPMENT AND TRANSFER OF A TECHNICAL PLANT OR DESIGN. THE US COMPANY IS MERELY PERFORMING A CONTRACT MANUFACTURING SERVICE. 32 . IN VIEW OF THE ABOVE, IT WAS ARGUED BY LEAR NED DR MR. K.L.KANAK THAT IF WE ARE TO IMPORT THE MEANING OF MAKE AVAILABLE FROM THE INDIA - US DTAA, IT WOULD MEAN THAT A TECHNOLOGY IS 'MADE AVAILABLE' IF THE PERSON ACQUIRING THE SERVICES IS ENABLED TO APPLY THE TECHNOLOGY. VARIOUS COURTS HAVE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 27 EXPLAINE D THE WORDS 'MAKE AVAILABLE' AS UNDER: ' ... A MERE RENDERING OF SERVICES IS NOT ROPED IN UNLESS THE PERSON UTILISING THE SERVICES IS ABLE TO MAKE USE OF THE TECHNICAL KNOWLEDGE, ETC. BY HIMSELF IN HIS BUSINESS OR FOR HIS OWN BENEFIT AND WITHOUT RECOURSE TO THE PERFORMER OF THE SERVICES IN FUTURE. THE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, ETC. MUST REMAIN WITH THE PERSON UTILISING THE SERVICES EVEN AFTER THE RENDERING OF THE SERVICES HAS COME TO AN END. A TRANSMISSION OF THE TECHNICAL KNOWLEDGE, EXPERIEN CE, SKILLS, ETC. FROM THE PERSON RENDERING THE SERVICES TO THE PERSON UTILISING THE SAME IS CONTEMPLATED BY THE ARTICLE. SOME SORT OF DURABILITY OR PERMANENCY OF THE RESULT OF THE 'RENDERING OF SERVICES' IS ENVISAGED WHICH WILL REMAIN AT THE DISPOSAL OF TH E PERSON UTILISING THE SERVICES. THE FRUITS OF THE SERVICES SHOULD REMAIN AVAILABLE TO THE PERSON UTILISING THE SERVICES IN SOME CONCRETE SHAPE SUCH AS TECHNICAL KNOWLEDGE, EXPERIENCE, SKILLS, ETC. [PARA 92] RAYMOND LTD. VS. DCIT, IT AT MUMBAI [(2003) 86 ITD 791] 'MAKE AVAILABLE MEANS TO PROVIDE SOMETHING TO ONE, WHICH IS CAPABLE OF USE BY THE OTHER. SUCH USE MAY BE FOR ONCE ONLY OR ON A CONTINUOUS BASIS. IN OUR CONTEXT TO MAKE AVAILABLE THE TECHNICAL SERVICES MEANS THAT SUCH TECHNICAL INFORMATION OR ADV ICE IS TRANSMITTED BY THE NON - RESIDENT TO THE ASSESSEE, WHICH REMAINS AT ITS DISPOSAL FOR TAKING THE BENEFIT THEREFROM BY USE. EVEN THE USE OF SUCH TECHNICAL SERVICES BY THE RECIPIENT FOR ONCE ONLY WILL SATISFY THE TEST OF MAKING AVAILABLE THE TECHNICAL SE RVICES TO THE ASSESSEE. IF THE NON - RESIDENT USES ALL THE TECHNICAL SERVICES AT ITS OWN END, ALBEIT THE BENEFIT OF THAT DIRECTLY AND SOLELY FLOWS TO THE PAYER OF THE SERVICES, THAT CANNOT BE CHARACTERIZED AS THE MAKING AVAILABLE OF THE TECHNICAL SERVICES T O THE RECIPIENT. ' MAHINDRA & MAHINDRA LTD. V. DY. CIT [2009] ' ... THE RECIPIENT OF THE SERVICE SHOULD BE IN A POSITION TO DERIVE AN ENDURING BENEFIT AND BE IN A POSITION TO UTILISE THE KNOWLEDGE OR KNOW - HOW IN FUTURE ON HIS OWN.' PERFETTI VAN MELLE H OLDING B.V (A.A.R. NO.869 OF2010) DECIDED ON 9TH DECEMBER, 2011 'THE TEST IS WHETHER THE RECIPIENT OF THE SERVICE IS EQUIPPED TO CARRY ON HIS BUSINESS WITHOUT REFERENCE TO THE SERVICE PRO V IDER IF HE IS ABLE TO CARR Y ON HIS BUSINESS IN FUTURE WITHOUT THE TECHNICAL SERVICE OF THE SERVICE PROVIDER IN RESPECT OF SERVICES RENDERED THEN, IT WOULD BE SAID THAT TECHNICAL KNOWLEDGE IS MADE AVAILABLE. CIT & ITO VS. DE BEERS INDIA MINERALS (P) LTD., (2012) 72 DTR (KAR) 82) ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 28 33 . IT IS, THEREFORE, IMPERATIVE TO FIND O UT WHETHER KEMA HAS MADE AVAILABLE ANY T ECHNICAL SERVICE TO THE ASSESSEE WHICH PROVIDE AN ENDURING BENEFIT TO THE ASSESSEE AND THE ASSESSEE IS IN A POSITION UTILIZE THE KNOWLEDGE OR KNOWHOW IN FUTURE AS WELL; WHETHER THE TECHNICAL EXPERIENCE, KNOWLEDGE OR SKILL REMAIN WITH THE ASSESSEE REMAINS WITH THE ASSESSEE EVEN AFTER THE RENDERING OF SERVICES HAVE COME TO AN END; OR, WHETHER THE TECHNICAL INFORMATION OR ADVICE GIVEN BY KEMA REMAINS AT THE DISPOSAL OF THE ASSESSEE FOR TAKING THE BENEFIT THEREFROM BY USE . 3 4 . IT HAS BEEN HELD BY THE LD. KARNATAKA HIGH COURT IN CASE OF DE BEERS (SUPRA) THAT 'THE QUESTION WHETHER ALONG WITH RENDERING TECHNICAL SERVICES, WHETHER THE TECHNICAL KNOWLEDGE WITH WHICH THE SERVICES WERE RENDERED WAS ALSO MADE AVAILABLE TO THE A SS ESSEES/CUSTOMERS IS PURELY A QUESTION OF FACT WHICH IS TO BE GATHERED FROM THE TERMS OF THE CONTRACT, THE NATURE OF SERVICES UNDERTAKEN AND WHAT IS TRANSMITTED IN THE END AFTER R ENDERING TECHNICAL SERVICES. 35 . AS PER LEARNED DR I N THE INSTANT CASE, THE A SSESSEE, SIEMENS; IS IN THE BUSINESS OF MANUFACTURING POWER TRANSFORMERS WHICH IT INTENDS TO SELL TO POWER GRID CORPORATION. SIEMENS IS IN THE BUSINESS OF MANUFACTURING OF POWER TRANSFORMERS FOR A NUMBER OF YEARS. POWER TRANSFORMERS ARE ONE OF THE MOST VAL UABLE ASSETS OF AND ELECTRICAL GENERATION AND TRANSMISSION SYSTEM. MANUFACTURING A POWER TRANSFORMER INVOLVES SUBSTANTIAL COSTS. THESE EQUIPMENTS ARE REQUIRED TO PERFORM IN A MANNER MEETING A VERY HIGH STANDARD OF RELIABILITY AND STURDINESS AND ABLE TO WIT HSTAND SEVERE 'SHOCKS'. HOWEVER, POWER TRANSFORMERS ARE NOT 'ASSEMBLY - LINE' PRODUCTS. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 29 EACH TRANSFORMER IS DESIGNED AND BUILT FOR THE SPECIFIC CUSTOMER'S SPECIFICATIONS TO SUIT UNIQUE PHYSICAL, GEOLOGICAL AND ENVIRONMENTAL NEEDS OF ITS PLACE OF USE. ACCORDI NGLY, EACH TRANSFORMER IS DESIGNED FOR THE SPECIFIC NEEDS OF THE CUSTOMERS. OVER THE YEARS, THE SIZE, CAPACITY, POWER RATINGS, DURABILITY AND PERFORMANCE HAVE ALSO IMPROVED DUE TO TECHNOLOGICAL ADVANCEMENTS. 3 6 FROM THE PERSPECTIVE OF MANUFACTURING, POWER TRANSFORMERS ALSO GO THROUGH THE CYCLE OF CONCEIVE SPECIFICATION CONCEPT DESIGN DESIGN DETAILED DESIGN VALIDATION AND ANALYSIS (SIMULATION) TOOL DESIGN REALIZE PLAN MANUFACTURING M ANUFACTURE BUILD/ASSEMBLE TEST ( QUALITY CONTROL) AT THE END OF THE CYCLE, THE RESULTS OF THE TESTS ARE FED BACK TO THE CONCEPT DESIGN/DESIGN STAGE AND A FRESH CYCLE STARTS. DEVELOPMENTS IN THE FIELD OF SCIENCE OF TECHNOLOGY INVARIABLY TAKE THIS ROUTE AND THE POWER ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 30 TRANSFORMERS HAVE ALSO EVOLVED OVER A PERIOD OF TIME F OLLOWING THIS PROCESS ONL Y. 3 7 . IN CASE OF THE ASSESSEE, THIS IS PRECISELY WHAT TAKES PLACE. FOR SIEMENS, MANUFACTURING OF POWER TRANSFORMERS IS A CONTINUOUS PROCESS, EVEN THOUGH EACH TRANSFORMER IS TO BE DESIGNED NEW FOR THE SPECIFIC NEEDS OF THE CUSTOM ERS. EACH CUSTOMER NATURALLY, AND INVARIABLY, REQUIRES THAT THE TRANSFORMERS MEET THE LATEST TECHNICAL STANDARDS PRESCRIBED BY THE WORLD BODIES LIKE IEC/IEEE/CIGRE ETC. EACH MANUFACTURER ALSO KEEPS PACE WITH THE DEVELOPMENTS IN THE FIELD OF ELECTRICAL- MEC HANICAL ENGINEERING, MATERIAL SCIENCE, INSTRUMENTATION ETC. EACH MANUFACTURER IS ALSO IN CONTINUOUS ENDEAVOUR TO ENSURE MAXIMUM EFFICIENCY AND BEST PERFORMANCE FOR ITS PRODUCTS. IN THIS BACKDROP, TESTING OF TRANSFORMERS AND I TS AUXILIARY SYSTEMS INCLUDING PROTECTIVE DEVICES, PLAY AND CRUCIAL ROLE IN THE PRODUCT DEVELOPMENT CYCLE OF A TRANSFORMER. IT IS THE TEST RESULTS, WHICH INDICATE THE PERFORMANCE OF THE TRANSFORMERS. A SATISFACTORY TEST RESULT VALIDATES THE TECHNOLOGY, PROCESSES OR MATERIALS USED IN THE MANUFACTURING OF THE TRANSFORMER. AN UNSATISFACTORY TEST RESULT OR A FAILURE COMPEL THE MANUFACTURER TO 'GO BACK TO THE DRAWING BOARD' AND NECESSITATE OR PRECIPITATE A 'DESIGN REVIEW'. A TEST RESULT WITHIN THE MARGINS OF ACCEPTANCE PROVIDES AN INPUT TO TH E MANUFACTURER TO CALIBRATE AND STANDARDIZE ITS DESIGN AND PROCESSES, WHEREAS RESULTS OUTSIDE THE LIMITS OF ACCEPTANCE INITIATE A REVIEW OF THE RESEARCH AND DEVELOPMENT (R&D). IN EITHER CASE, THE TEST RESULTS GIVE ENDURING BENEFITS TO THE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 31 ASSESSEE WHICH GO ES A LONG WAY IN IMPROVEMENT OF ITS MANUFACTURING SYSTEM. THESE BENEFITS GO MUCH BEYOND THE IMMEDIATE NEED OF THE CUSTOMER AS THE INSIGHT THAT THE TEST RESULTS PROVIDE HAS UNIVERSAL AND FUTURISTIC APPLICATION. 3 8 . THE RESULTS OF THE 'TYPE TESTS' CARRIED O UT BY KEMA ON A PARTICULAR PIECE OF TRANSFORMER ARE, THEREFORE, NOT SERVICES THE EFFECT OF WHICH ARE LOCALIZED FOR THAT PARTICULAR PIECE. AS A RESULT OF THE TYPE TESTS THE ASSESSEE EXACTLY KNOWS THE KIND OF AMENDMENT, INNOVATION OR IMPROVISATION THAT IT IS REQUIRED TO CARRY OUT FOR ALL FUTURE MANU FAC TURING OF TRANSFORMERS. SOME TESTS MAY INDICATE THE A C CEPTABILITY OF A NEW MATERIAL (FOR EXAMPLE, THOSE USED FOR TRANSFORMER CORES, TANKS, CASINGS ETC., OR, TRANSFORMER OIL). SOME OTHER TESTS MAY POINT TO DESI GN FLAWS WHICH WILL MAKE THE TRANSFORMER SUSCEPTIB LE TO VARIOUS KINDS OF ELECTRO- MECHANICAL STRESS. NEVERTHELESS, EACH TEST (RESULT) SERVES A PURPOSE OF EITHER VALIDATING A DESIGN/PROCESS/SYSTEM OR THE NEED FOR IMPROVEMENT IN SOME PARAMETERS. BY MEANS OF THESE TEST RESULTS, THE SERVICE PROVIDER (KEMA) MAKES AVAILABLE ITS TECHNICAL EXPERIENCE, KNOWLEDGE OR SKILL WHICH GO A LONG WAY IN DESIGNING, DEVELOPING, CALIBRATING, STANDARDIZING OR EVEN DISCARDING A COMPONENT, PROCESS, MATERIAL OR (IN - HOUSE) TESTING EQ UIPMENTS/SY STE M S OF THE ASSESSEE. SUCH EXPERIENCE, KNOWLEDGE OR SKILL HELP THE ASSESSEE ELIMINATE THE POSSIBILITY OF COMMITTING AN ERROR IN FUTURE. THUS THE TEST RESULTS, WHICH ARE NOTHING BUT PHYSICAL MANIFESTATION OF THE SERVICES PROVIDED BY KEMA ON THE TRANSFORMERS, PROVIDE THE TECHNICAL EXPERTISE, KNOWLEDGE, SKILL OR EXPERIENCE OF KEMA TO THE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 32 ASSESSEE WHICH REMAIN AT THE DISPOSAL OF THE LATTER MUCH AFTER THE SERVICES HAVE BEEN RENDERED. THE ASSESSEE CAN UTILIZE THIS KNOWLEDGE OR KNOWHOW IN ITS FUTURE OP ERATIONS AND THUS THE TESTING SERVICES OF KEMA PROVIDE AN ENDURING BENEFIT TO THE ASSESSEE. IT IS, THEREFORE, SUBMITTED THAT KEMA CARRIED OUT TECHNICAL SERVICES WHICH ARE 'MADE AVAILABLE' TO SIEMENS LTD. AND, ACCORDINGLY, THE PAYMENTS THEREOF ARE FTS WITHI N THE MEANING OF ARTICLE 12(5) OF THE DTAA BETWEEN INDIA AND THE NETHERLANDS. 3 9 . THE DEPARTMENT PLACES ITS RELIANCE ON THE JUDGMENT OF THE HON'BLE CHENNAI ITAT IN CASE OF FOSTER WHEELER FRANCE S.A. VS. DDIT [ITA NOS. 774/MDS/2014 AND 641/MDS/2015, JUDGME NT DELIVERED ON 05.02.2016] (A) THE ASSESSEE - COMPANY WAS ENGAGED IN THE BUSINESS OF ENGINEERING AND CONSTRUCTION CONTRACT, ENGINEERING EQUIPMENT AND POWER EQUIPMENT SUPPLIER. IN THIS CASE, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH RELIANCE PETROLEUM LIM ITED FOR PROVIDING TECHNICAL AND ENGINEERING SERVICES WITH REGARD TO DELAYED COKER UNIT OF RELIANCE PETROLEUM LIMITED. THE ENTIRE SERVICES RENDERED AT THE PREMISES OF RELIANCE PETROLEUM LIMITED. FOR PROVIDING TECHNICAL AND ENGINEERING SERVICES TO RELIANCE PETROLEUM LIMITED, THE ASSESSEE IN TURN ENTERED INTO ANOTHER AGREEMENT WITH FOSTER WHEELER USA TO MONITOR AND REVIEW THE WORK DONE BY THE ASSESSEE'S EMPLOYEES ON AN AGREED CONSIDERATION. THE ASSESSEE RECEIVED BEST PRACTICES IN DIFFERENT ENGINEERING SPECIFI CATIONS AS WELL AS ENGINEERING DETAILS TO BE ADOPTED IN EXECUTION OF THE DIFFERENT PHASES OF THE PROJECT. THE ENGINEERING SPECIFICA T IONS, SERVICES, WERE BEI N G PROVIDED TO TH E ASSESSEE BY ITS USA ASSOCIATE. WHEN THE ASSESSEE - COMPANY ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 33 COMPLETED PROJECTS WITH RELIANCE PETROLEUM LIMITED, THE ASSESSEE WOULD BE WELL EQUIPPED AND CAPABLE OF EXECUTING IDENTICAL PROJECT IN ENGINEERING IN RESPECT OF THE DETAILS AND SKILL, EXPERTISE AND INFORMATION PROVIDED BY USA ASSOCIATE. (B) THE HON'BLE CHENNAI TRIBUNAL DISCUSSED THE CASES OF DE BEERS (KARNATAKA HC) (SUPRA), RAYMOND LTD. (MUMBAI ITAT), SANDVIK AUSTRALIA PTY LTD. (PUNE ITAT) AS WELL AS INTERTEK TESTING SERVICES INDIA PVT. LTD. (AAR). THE HON'BLE TRIBUNAL HELD AS UNDER: 'ON THE BASIS OF THE TECHNICAL KNOWLEDGE, INF ORMATION PROVIDED BY FOSTER WHEELER USA, THE ASSESSEE - COMPANY CAN IMPLEMENT THE SAME IN THE PROJECT WHILE EXECUTING THE PROJECT WITH RELIANCE PETROLEUM LIMITED. UNLESS THE ASSESSEE - COMPANY ACQUIRES THE KNOWLEDGE, EXPERTISE, TECHNICAL STANDARDS, QUALITY MAN AGEMENT, ETC. PROVIDED BY FOSTER WHEELER USA, THE SAME CANNOT BE ADOPTED OR IMPLEMENTED WHILE EXECUTING THE PROJECT WITH RELIANCE PETROLEUM LIMITED WHEN THE ASSESSEE - COMPANY ABSORBS THE TECHNICAL KNOWLEDGE, EXPERTISE, QUALITY MANAGEMENT, ETC. FOR THE PURPO SE OF IMPLEMENTING PROJECT WITH RELIANCE PETROLEUM LIMITED, SUCH KNOWLEDGE IS VERY MUCH AVAILABLE WITH THE ASSESSEE AND THE SAME CAN BE IMPLEMENTED WITH OTHER PROJECTS WITH OTHER CLIENTS. IT IS TO BE REMEMBERED THAT THE ASSESSEE IS NOT A LAYMAN. THE ASSESS EE COMPANY IS EXPERT IN PROVIDING TECHNICAL AND ENGINEERING SERVICE. THEREFORE, THE ASSESSEE IS CAPABLE OF OBSERVING THE OPINION / ADVICE GIVEN BY USA ASSOCIATE AND IMPLEMENT THE SAME VIDE THEIR FUTURE PROJECT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE TECHNICAL KNOWLEDGE, EXPERTISE, KNOWHOW WERE MADE AVAILABLE TO THE ASSESSEE. ' 40 . WHILE DECIDING THE CASE OF FOSTER WHEELER FRANCE, THE HON'BLE CHENNAI BENCH OF ITAT RELIED EXTENSIVELY OF THE JUDGMENT OF THE HON'BLE COCHIN BENCH OF ITA T IN US TECHNOLOGY RESOURCES PVT. LTD. VS. ITAT [ITA NO. 222/COCH/2013, JUDGMENT DATED 27.09.2013] (ATTACHED HEREWITH AS ANNEXURE - D). IN THIS JUDGEMENT, THE HON'BLE COCHIN TRIBUNAL ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 34 DISCUSSED ALL THE ABOVE CASES AND IN ADDITION, THE JUDGMENTS OF HON'BLE AND HRA PRADESH HIGH COURT IN CASE OF GVK INDUSTRIES LTD. VS. ITO [(1997) 228 ITR S64 (AP)] AND THAT OF ITAT MUMBAI IN WOCKHARDT LTD. VS. ACIT [(2011) 10 TAXMANN.COM 208 (MUM)]. BEFORE THE HON'BLE TRIBUNAL THE AIR OF THE ASSESSEE ALSO RELIED ON THE JUDGMENTS O F ITAT MUMBAI IN THE CASES OF DCIT VS. BOSTON CONSULTING GROUP PTE LTD. [(200S) 94 ITD 31 (MUM)], MAHINDRA & MAHINDRA LTD. VS DCIT [(2009) 30 SOT 374 (MUM) (SB)] AND DDIT VS SCIENTIFIC ATLANTA INC [2009 - TIOL - 585 - ITAT - MUML DISTINGUISHING ALL THE ABOVE JUDG MENTS ON FACTS, THE HON'BLE ITAT COCHIN HELD THAT 'THE INFORMATION, EXPERTISE AND TRAINING PROVIDED BY THE USA COMPANY WAS ABSORBED BY THE ASSESSEE - COMPANY IN THEIR DECISION MAKING PROCESS AND IT WAS UTILIZED FOR THE PURPOSE OF BUSINESS. THE USA COMPANY M A DE AVAILABLE ALL THE TECHNICAL DATA, INFORMATION, EXPERTISE TO THE ASSESSEE- C OMPANY WHICH WAS ABSORBED AND MADE USE OF BY THE ASSESSEE - COMPANY IN THEIR MANAGERIAL AND FINANCIAL DECISION MAKING PROCESS AND OTHER DECISIONS IN THE DEVELOPMENT OF THE BUSINESS. THEREFORE, THE EXPERTISE AND TECHNOLOGY WHICH WAS MADE AVAILABLE BY THE USA COMPANY IS A TECHNICAL SERVICE WITHIN THE MEANING OF ARTICLE 12(4)(B) OF THE DTAA BETWEEN INDIA AND USA. 11 41 . RELIANCE WAS PLACED BY LEARNED D.R. ON THE JUDGMENT OF THIS HON'BL E ITAT IN THE CASE OF SARGENT & LUNDY VS ACIT [ITA NO. 8986/MUM/2010, JUDGMENT DATED 24.07.2013] (ATTACHED HEREWITH AS ANNEXURE - E). IN THIS CASE, THE ASSESSEE WAS INCORPORATED IN AND WAS TAX RESIDENT OF USA. IT WAS A CONSULTING FIRM ENGAGED IN PROVIDING SE RVICES TO THE POWER INDUSTRY ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 35 BY PROVIDING DIVERSE SERVICES SUCH AS OPERATING POWER PLANTS, DECOMMISSIONING CONSULTING, PROJECT SOLUTIONS AND OTHER ENGINEERING BASED SERVICES. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASS ESSEE RECEIVED A SUM OF RS.2,22,16,154/ - FROM L&T LIMITED FOR RENDERING CONSULTING AND ENGINEERING SERVICES IN RELATION TO ULTRA MEGA POWER PROJECTS IN MUNDRA AND SESAN. THE HON'BLE TRIBUNAL HELD AS UNDER: '14. ADVERTING TO THE FACTS OF THE EXTANT CASE W E FIND THAT THE TECHNICAL SERVICES PROVIDED BY THE ASSESSEE IN THE SHAPE OF TECHNICAL PLANS, DESIGNS, PROJECTS, ETC. ARE NOTHING BUT BLUEPRINTS OF THE TECHNICAL SIDE OF MEGA POWER PROJECTS. ADMITTEDLY SUCH SERVICES ARE RENDERED AT A PRE - BID STAGE. IT IS QU ITE NATURAL THAT SUCH TECHNICAL PLANS ETC. ARE MEANT FOR USE IN FUTURE ALONE IF AND WHEN L&T TAKES UP THE BID FOR THE INSTALLATION OF THE POWER PROJECT. WHEN THE OTHERWISE TECHNICAL SERVICES PROVIDED BY THE ASSESSEE ARE OF SUCH A NATURE WHICH ARE CAPABLE O F USE IN FUTURE ALONE, WE FAIL TO COMPREHEND AS TO HOW THE SAME CAN BE CONSIDERED AS NOT MADE AVAILABLE TO L&T. IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE IMPUGNED ORDER HOLDING THAT THE ASSESSEE RECEIVED CONSIDERATION FOR 'MAKING AVAILABLE' TECHNICAL SERVICES WITHIN THE MEANING OF ARTICLE 12 OF THE DTAA. THIS GROUND IS NOT ALLOWED . 42 . IN VIEW OF THE ABOVE SUBMISSION, LEARNED DR CONCLUDED THAT IN THE FACTS OF THE CASE, KEMA HAS 'MADE AVAILABLE' ITS TECHNICAL EXPERIENCE, KNOWLEDGE OR SKILL W HILE CARRYING OUT THE 'TYPE TESTS' ON THE TRANSFORMERS BY WAY OF THE TEST RESULTS. IT NEEDS TO BE APPRECIATED THAT THESE TEST RESULTS ARE NOT GENERATED AS A RESULT OF SOME AUTOMATIC OPERATION OF MACHINES. THE SAME REQUIRES CONSTANT HUMAN ENDEAVOUR AND PHYS ICAL INVOLVEMENT OF EXPERTS AND ENGINEERS. THERE ARE A NUMBER OF TESTS CARRIED OUT IN A PHASED AND SEQUENTIAL MANNER, EACH UNDER EXPERT ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 36 SUPERVISION. THE DIFFERENT TESTS HAVE NOT ONLY MADE USE OF SOPHISTICATED MACHINES BUT ALSO THE EXPERTISE AND ANALYSIS OF THE MEN OPERATING THESE MACHINES. THESE RESULTS PROVIDE VALUABLE FEEDBACK AND ARE IMPORTANT ART OF THE PRODUCT DEVELOPMENT CYCLE OF A POWER TRANSFORMER. THEY SERVE AS ESSENTIAL INPUTS FOR VALIDATION, IMPROVISATION, MODIFICATION, CALIBRATION OR EVEN OUTRIG HT REJECTION OF THE DESIGNS, PROCESSES, MANUFACTURING PRACTICES, MATERIALS USED, INSTRUMENTATIONS EMPLOYED OR SYSTEMS AND SERVICES EMPLOYED BY THE ASSESSEE, WHICH DELIVER ENDURING BENEFITS TO IT. THE KNOWLEDGE OR INSIGHT PROVIDED BY KEMA REMAIN WITH TH E AS SESSEE EVEN AFTER THE (TESTING) SERVICES HAVE BEEN RENDERED (ON A PARTICULAR TRANSFORMER). THEY ARE USED BY THE ASSESSEE IN THE FUTURE DESIGN, DEVELOPMENT AND MANUFACTURING OF POWER TRANSFORMERS. THESE INPUTS ARE EVEN APPLICABLE FOR OTHER TYPE OF EQUIPMENT S WHICH UTILIZE THE SAME MATERIAL, PROCESSES OR SYSTEMS AS THOSE OF THE POWER TRANSFORMER. THUS, THE UTILITY OF THE TEST RESULTS ARE EVEN BEYOND THE TRANSFORMERS. IN THESE FACTS, THE TECHNICAL SERVICES OF KEMA PROVIDE ENDURING BENEFITS TO THE ASSESSEE AND, ACCORDINGLY, TECHNICAL SERVICES HAVE BEEN 'MADE AVAILABLE' TO THE ASSESSEE. HENCE, THE PAYMENTS THEREOF ARE TAXABLE AS FTS UNDER THE INDIA - NETHERLANDS DTAA . 43. ON THE OTHER HAND, LEARNED AR CONTENDED THAT AS PER DTAA BETWEEN INDIA AND NETHERLAND ALL TECH NICAL SERVICES TO BE TAXABLE IN INDIA MAKE AVAILABLE CLAUSE IS TO BE SATISFIED. IN TERMS OF THE DECISION OF BOMBAY HIGH COURT IN CASE OF DIAMOND SERVICES INTERNATIONAL PVT. LTD. 304 ITR 20 BY PROVIDING THE TYPE TEST CERTIFICATE IN NETHERLANDS, AFTER TEST ING THE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 37 TRANSFORMER IN NETHERLANDS, USING THE EQUIPMENT INSTALLED IN NETHERLANDS, KEMA HAS NOT MADE AVAILABLE ANY TECHNICAL KNOWLEDGE OR EXPERTISE OR SKILL TO THE' A SSESSEE . FURTHER RELYING ON THE DECISION OF AUTHORITY OF ADVANCE RULING REPORTED AT 326 ITR 487, HE ARGUED THAT NETHERLAND COMPANY HAS NOT MADE AVAILABLE ANY TECHNICAL EXPERTISE, KNOWLEDGE OR SKILL IN INDIA, THEREFORE, FEES PAID TO THE NETHERLANDS COMPANY FOR TESTING THE TRANSFORMER OF THE ASSESSEE - COMPANY HAS NOT RENDERED ANY TECHNICAL SERVIC ES WITHIN THE SCOPE OF ARTICLE 12(5) OF THE TREATY. HENCE , FEES PAID TO THE NETHERLANDS C OMPANY IS NOT TAXABLE IN INDIA. FURTHER RELIANCE WAS PLACED ON THE DECISION OF ITAT SPECIAL BENCH IN CASE OF MAHINDRA & MAHINDRA 313 ITR 263. FURTHER RELIANCE WAS PLAC ED ON THE DECISION OF ITAT IN ASSESSEES OWN CASE IN ITA NO.4356/MUM/2010 DATED 12/02/2013 WHEREIN SIMILAR PAYMENT MADE FOR STANDARD FACILITY PROVIDED BY LABORATORY USING THE SOPHISTICATED EQUIPMENT FOR CARRYING OUT TEST WAS HELD TO BE NOT LIABLE FOR DEDUC TION OF TAX AT SOURCE. 44. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY LOWER AUTHORITIES IN THEIR RESPECTIVE ORDERS AS WELL AS CITED BY LEARNED AR AND DR DURING THE COURSE OF HEARING BEFORE US. FROM THE RECORD, WE FOUND THAT ASSESSEE IS A MANUFACTURER OF TRANSFORMERS IN INDIA WHICH ARE REQUIRED TO BE DESIGNED AS PER THE REQUIREMENT OF POWER GRID CORPORATION OF INDIA TO WHOM THESE TRANS FORMERS ARE SUPPLIED. THESE TRANSFORMERS ARE REQUIRED TO BE TYPE TESTED IN L AB OF AN INTERNATIONAL STANDARD, A CCORDINGLY ASSESSEE ENTERED ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 38 INTO AGREEMENT WITH KEMA TESTING LABORATORY, NETHERLAND S TO CARRYOUT SHORT CIRCUIT TEST AND CERTIFY THE TRANSFORMERS. ASSESSEE FILED APPLICATION U/S.195(2) FOR MAKING REMITTANCE TO KEMA, HOWEVER, AO DIRECTED TO DEDUCT TAX AT 10% ON THE GROSS AMOUNT PAYABLE TO KEMA TESTING LABORATORY. 45. S IMILARLY FOR TESTING THE TRANSFORMER, ASSESSEE HAS TAKEN ON RENT OIL WITH EQUIPMENT FROM SMIT T RANSFORMATOREN BV. SMIT HAS PROVIDED CRANE AND MAN LIFT ON RENTAL BASIS. ON THE AMOUNT SO PAID THE AO DIRECTED TO DEDUCT TAX AT 10% ON THE GROSS PAYMENT. 46. BY THE IMPUGNED ORDER, CIT(A) HELD THAT NETHERLAND S COMPANY HAS NOT MADE AVAILABLE A NY TECHNICAL EXPERTISE, KNOWLEDGE OR SKILL TO THE ASSESSEE IN INDIA. THEREFORE FEES PAID TO NETHERLAND COMPANY FOR TESTING OF T RANSFORMER OF ASSESSEE COMPANY W AS NOT FOR RENDERING ANY TECHNICAL SERVICES WITHIN THE SCOPE OF ARTICLE 12(5) OF THE TREATY. HENC E, FEE S PAID TO THE NETHERLAND S COMPANY IS NOT TAXABLE IN INDIA. SIMILAR ISSUE HAS BEEN DEALT BY THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 12/02/2013, WHEREIN FOR STANDARD FACILITY PROVIDED BY LABORATORY BY USING HIGHLY SOPHISTICATED EQUIPMENT F OR CARRYING OUT TEST WAS HELD TO BE NOT LIABLE TO TAX IN INDIA IN THE FORM OF FEE FOR TECHNICAL SERVICES. THE PRECISE OBSERVATION OF TRIBUNAL WAS AS UNDER: - 12. WE HAVE GIVEN OUR ANXIOUS CONSIDERATION TO THE RIVAL CONTENTION, ORDERS PASSED BY THE CIT (A) A S WELL AS AO AND THE DECISIONS RELIED UPON BY THE PARTIES. ONE OF THE MAIN ISSUE FOR OUR ADJUDICATION WHICH ALSO GOES TO THE CORE OF THE ISSUE IS, WHETHER THE PAYMENT MADE TO PEHLA TESTING LABORATORIES IN GERMANY, FOR CARRYING OUT CERTAIN TESTS ON CIRCUIT BREAKERS MANUFACTURED BY ASSESSEE FOR THE PURPOSE OF CERTIFICATION, SO AS TO MEET THE INTERNATIONAL STANDARD, FALLS WITHIN THE ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 39 MEANING OF FEES FOR TECHNICAL SERVICES AND IS TAXABLE WITHIN THE MEANING OF SECTION 9(1)(VII) . ASSESSEE IN PURSUANCE OF ITS TENDER FORMALITIES WITH THE GUJARAT ENERGY TRANSMISSION CORPORATION LTD AND MAHARASHTRA STATE ELECTRICITY TRANSMISSION COMPANY LTD. WAS REQUIRED TO OBTAIN TYPE TESTING CERTIFICATE OF THE CIRCUIT BREAKERS MAN UFACTURED BY IT. FOR THIS PURPOSE IT HAS SENT THE CIRCUIT BREAKERS TO BE TESTED IN THE LABORATORY OF PTL, WHEREIN THE CIRCUIT BREAKERS UNDERGO DESTRUCTIVE IN THE LABORATORIES. ONCE IT PASSES THROUGH THE TEST IN THE LABORATORIES, CERTIFICATE IS GIVEN BY THE PTL FOR THE QUALITY OF THE PRODUCT MANUFACTURED BY ASSESSEE. WHETHER SUCH A PAYMENT FOR THIS KIND OF TESTING FALLS WITHIN THE REALM OF FEES FOR 'TECHNICAL SERVICES'. SECTION 9(1)(VII) PROVIDES THAT INC OME BY WAY OF FEE FOR TECHNICAL SERVICES SHALL DEEMED TO ACCRUE OR ARISE IN INDIA. EXPLANATION 2 DEFINES THE 'FEES FOR TECHNICAL SERVICES' AS UNDER: SECTION 9(1)(VII) '(VII) INCOME BY WAY OF FEES FOR TE CHNICAL SERVICES PAYABLE BY -- (A) THE GOVERNMENT ; OR (B) A PERSON WHO IS A RESIDENT, EXCEPT WHERE THE FEES ARE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON OUTSIDE INDIA OR FOR THE PURPOSES OF MAKING OR EAR NING ANY INCOME FROM ANY SOURCE OUTSIDE INDIA ; OR (C) A PERSON WHO IS A NON - RESIDENT, WHERE THE FEES ARE PAYABLE IN RESPECT OF SERVICES UTILIZED IN A BUSINESS OR PROFESSION CARRIED ON BY SUCH PERSON IN INDIA OR FOR THE PURPOSES OF MAKING OR EARNING ANY IN COME FROM ANY SOURCE IN INDIA : [PROVIDED THAT NOTHING CONTAINED IN THIS CLAUSE SHALL APPLY IN RELATION TO ANY INCOME BY WAY OF FEES FOR TECHNICAL SERVICES PAYABLE IN PURSUANCE OF AN AGREEMENT MADE BEFORE THE 1ST DAY OF APRIL, 1976, AND APPROVED BY THE CEN TRAL GOVERNMENT.] [EXPLANATION 1. -- FOR THE PURPOSES OF THE FOREGOING PROVISO, AN AGREEMENT MADE ON OR AFTER THE 1ST DAY OF APRIL, 1976, SHALL BE DEEMED TO HAVE BEEN MADE BEFORE THAT DATE IF THE AGREEMENT IS MADE IN ACCORDANCE WITH PROPOSALS APPROVED BY THE CENTRAL GOVERNMENT BEFORE THAT DATE.] 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 (I NCLUDING 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 UND ER THE HEAD 'SALARIES'.] [EXPLANATION. -- FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT FOR THE PURPOSES OF THIS SECTION, INCOME OF A NON - RESIDENT SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER CLAUSE (V) OR CLAUSE (VI) OR CLAUSE (VII) OF SUB - SEC TION (1) AND SHALL BE INCLUDED IN THE TOTAL INCOME OF THE NON - RESIDENT, WHETHER OR NOT, -- ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 40 (I) THE NON - RESIDENT HAS A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA; OR (II) THE NON - RESIDENT H AS RENDERED SERVICES IN INDIA'. 13. FROM THE ABOV E, IT IS SEEN THAT THE EXPRESSION 'FEES FOR TECHNICAL SERVICES' HAS BEEN GIVEN AS CONSIDERATION FOR RENDERING MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES. NO OTHER DEFINITION AS SUCH OF THE TERM TECHNICAL SERVICES IN THE ACT HAS BEEN GIVEN. THE WORD 'TEC HNICAL' AS APPEARING IN EXPLANATION 2 IS PRECEDED BY THE WORD 'MANAGERIAL' AND SUCCEEDED BY THE WORD 'CONSULTANCY'. IT CANNOT BE READ IN ISOLATION AS IT TAKES COLOUR FROM THE WORD 'MANAGERIAL AND CONSULTANCY' BETWEEN WHICH IT IS SANDWICHED. THE COURTS HAVE HELD THAT IN SUCH A CASE PRINCIPLE OF NOSCITUR A SOCIIS GETS ATTRACTED, WHICH MEANS THAT THE MEANING OF THE WORD OR EXPRESSION IS TO BE GATHERED FROM THE SURROUNDING WORD I.E. FROM THE CONTEXT. COUPLING OF THE WORDS TOGETHER SHOWS THAT THEY ARE TO BE UNDE RSTOOD IN THE SAME SENSE. THE WORD 'MANAGERIAL AND CONSULTANCY' IS A DEFINITE INDICATIVE OF THE INVOLVEMENT OF A HUMAN ELEMENT. MANAGERIAL SERVICES AND CONSULTANCY SERVICES HAS TO BE GIVEN BY HUMAN ONLY AND NOT BY ANY MEANS OR EQUIPMENT. THEREFORE, THE WOR D 'TECHNICAL' HAS TO BE CONSTRUED IN THE SAME SENSE INVOLVING DIRECT HUMAN INVOLVEMENT WITHOUT THAT, TECHNICAL SERVICES CANNOT BE HELD TO BE MADE AVAILABLE. WHERE SIMPLY AN EQUIPMENT OR SOPHISTICATED MACHINE OR STANDARD FACILITY IS PROVIDED ALBEIT DEVELOP ED OR MANUFACTURED WITH THE USAGE OF TECHNOLOGY, SUCH A USER CANNOT BE CHARACTERIZED AS PROVIDING TECHNICAL SERVICES. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. BHARATI CELLULAR LTD (SUPRA) IN T HIS REGARD HAS OBSERVED AND HELD AS UNDER: '13....... 'IN THE SAID EXPLANATION THE EXPRESSION ' FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION FOR RENDERING OF ANY ' MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES' . THE WORD ' TECHNICAL' IS PRECEDED B Y THE WORD ' MANAGERIAL' AND SUCCEEDED BY THE WORD ' CONSULTANCY' . SINCE THE EXPRESSION ' TECHNICAL SERVICES' IS IN DOUBT AND IS UNCLEAR, THE RULE OF NOSCITUR A SOCIIS IS CLEARLY APPLICABLE. THE SAID RULE IS EXPLAINED IN MAXWE LL ON THE INTERPRETATION OF STATUTES (TWEL FTH EDITION) IN THE FOLLOWING WORDS (PAGE 289) : ' WHERE TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE OF ANALOGOUS MEANING ARE COUPLED TOGETHER, NOSICUTUR A SOCIIS, THEY ARE UNDERSTOOD TO BE USED IN THEIR COGNATE SENSE. THEY TAKE, AS IT WER E, THEIR COLOUR FROM EACH OTHER, THE MEANING OF THE MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF THE LESS GENERAL.' THIS WOULD MEAN THAT THE WORD ' TECHNICAL' WOULD TAKE COLOUR FROM THE WORDS ' MANAGERIAL' AND ' CONSULTANCY' , BETWEEN WHI CH IT IS SANDWICHED. THE WORD ' MANAGERIAL' HAS BEEN DEFINED IN THE SHORTER OXFORD ENGLISH DICTIONARY, FIFTH EDITION AS : ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 41 ' OF PERTAINING TO, OR CHARACTERISTIC OF A MANAGER, ESP. A PROFESSIONAL MANAGER OF OR WITHIN AN ORGANIZATION, BUSINESS, ESTABLISHMENT, ETC.' THE WORD 'MANAGER' HAS BEEN DEFINED, INTER ALIA, AS : ' A PERSON WHOSE OFFICE IT IS TO MANAGE AN ORGANIZATION, BUSINESS ESTABLISHMENT, OR PUBLIC INSTITUTION, OR PART OF ONE ;A PERSON WITH THE PRIMARILY EXECUTIVE OR SUPERVISORY FUNCTION WITHIN AN ORG ANIZATION, ETC., A PERSON CONTROLLING THE ACTIVITIES OF A PERSON OR TEAM IN SPORTS, ENTERTAINMENT, ETC.' IT IS, THEREFORE, CLEAR THAT A MANAGERIAL SERVICE WOULD BE ONE WHICH PERTAINS TO OR HAS THE CHARACTERISTIC OF A MANAGER. IT IS OBVIOUS THAT THE EXPRESS ION 'MANAGER'AND CONSEQUENTLY 'MANAGERIAL SERVICE' HAS A DEFINITE HUMAN ELEMENT ATTACHED TO IT. TO PUT IT BLUNTLY, A MACHINE CANNOT BE A MANAGER. 14. SIMILARLY, THE WORD 'CONSULTANCY' HAS BEEN DEFINED IN THE SAID DICTIONARY AS THE WORK OR POSITION OF A CON SULTANT; A DEPARTMENT OF CONSULTANTS. 'CONSULTANT' ITSELF HAS BEEN DEFINED, INTER ALIA, 'AS A PERSON WHO GIVES PROFESSIONAL ADVICE OR SERVICES IN A SPECIALIZED FIELD'. IT IS OBVIOUS THAT THE WORD 'CONSULTANT' IS A DERIVATIVE OF THE WORD 'CONSULT' WHICH ENT AILS DELIBERATIONS, CONSIDERATION, CONFERRING WITH SOMEONE, CONFERRING ABOUT OR UPON A MATTER. CONSULT HAS ALSO BEEN DEFINED IN THE SAID DICTIONARY AS ' ASK ADVICE FOR, SEEK COUNSEL OR A PROFESSIONAL OPINION FROM; REFER TO (A SOURCE OF INFORMATION) ; SEEK PERMISSION OR APPROVAL FROM FOR A PROPOSED ACTION' . IT IS OBVIOUS THAT THE SERVICE OF CONSULTANCY ALSO NECESSARILY ENTAILS HUMAN INTERVENTION. THE CONSULTANT, WHO PROVIDES THE CONSULTANCY SERVICE, HAS TO BE A HUMAN BEING. A MACHINE CANNOT BE REGARDED AS A CONSULTANT. 15. FROM THE ABOVE DISCUSSION, IT IS APPARENT THAT BOTH THE WORDS 'MANAGERIAL' AND 'CONSULTANCY' INVOLVE A HUMAN ELEMENT. AND, BOTH, MANAGERIAL SERVICE AND CONSULTANCY SERVICE, ARE PROVIDED BY HUMANS. CONSEQUENTLY, APPLYING THE RULE OF NOSCITU R A SOCIIS, THE WORD 'TECHNICAL' AS APPEARING IN EXPLANATION 2 TO SECTION 9(1)(VII) WOULD ALSO HAVE TO BE CONSTRUED AS INVOLVING A HUMAN ELEMENT. BUT, THE FACILITY PROVIDED BY MTNL/OTHER COMPANIES FOR I NTERCONNECTION/PORT ACCESS IS ONE WHICH IS PROVIDED AUTOMATICALLY BY MACHINES. IT IS INDEPENDENTLY PROVIDED BY THE USE OF TECHNOLOGY AND THAT TOO, SOPHISTICATED TECHNOLOGY, BUT THAT DOES NOT MEAN THAT MTNL/OTHER COMPANIES WHICH PROVIDE SUCH FACILITIES ARE RENDERING ANY TECHNICAL SERVICES AS CONTEMPLATED IN EXPLANATION 2 TO SECTION 9(1)(VII) OF THE SAID ACT. THIS IS SO BECAUSE THE EXPRESSION ' TECHNICAL SERVICES' TAKES COLOUR FROM THE EXPRESSIONS ' MANAGE RIAL SERVICES' AND ' CONSULTANCY SERVICES' WHICH NECESSARILY INVOLVE A HUMAN ELEMENT OR, WHAT IS NOW A DAYS FASHIONABLY CALLED, HUMAN INTERFACE' THIS PRINCIPLE HAS BEEN REITERATED SEVERAL TIMES BY VARIOUS COURTS AND THE TRIBUNALS AS HAVE BEEN HIGHLIGHTED B Y THE LEARNED COUNSEL DURING THE COURSE OF HEARING. THUS, ONE HAS TO SEE WHETHER ANY KIND OF HUMAN INTERFACE OR HUMAN INVOLVEMENT IS THERE FOR PROVIDING TECHNICAL SERVICES BY THE PTL IN THIS CASE. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 42 14. NOW COMING TO THE FACTS OF THE PRESENT CASE, WHETHER ST ANDARD SERVICE PROVIDED AT THE LABORATORY OF PTL FOR THE PURPOSE OF TESTING THE EQUIPMENTS IS DONE AUTOMATICALLY BY THE MACHINES OR PURELY BY HUMAN INTERVENTION. ASSESSEE BEFORE THE AO AFTER DRAWING HIS ATTENTION TO THE FLYER RECEIVED FROM THE PTL HAD CATE GORICALLY POINTED OUT THAT THE STANDARD SERVICE PROVIDED BY THE PTL IS WITHOUT ANY HUMAN INTERVENTION. THIS FACTOR HAS NOT BEEN DISPUTED BY HIM. EVEN BEFORE THE CIT (A), THIS CONTENTION HAS BEEN DEPOSED AGAIN BY THE ASSESSEE WHICH HAS BEEN NOTED BY HIM IN PARA 3.4 AND AGAIN IN HIS FINDINGS IN PARA 3.7. NONE OF THE AUTHORITIES HAVE EITHER REBUTTED THIS CONTENTION OF ASSESSEE, OR HAS GIVEN ANY ADVERSE REMARK OR FINDINGS THAT THERE WAS ANY HUMAN INTERVENTION IN THE PROCESS. THE LEARNED CIT (A) AS WELL AS AO HA VE GONE MERELY BY THE FACT THAT SUCH A TYPE TESTING SERVICES PROVIDED BY THE PTL IS HIGHLY SOPHISTICATED AND TECHNICAL, AND IT CANNOT BE CONSIDERED AS NON TECHNICAL. THEREFORE, BEING HIGHLY TECHNICAL IN NATURE, IT AMOUNTS TO RENDERING OF TECHNICAL SERVICES . FROM THE PERUSAL OF THE FLYER AS SUBMITTED BY THE LEARNED COUNSEL, IT IS SEEN THAT IT DESCRIBES VARIOUS STAGES OF TESTS WHICH HAVE TO BE CARRIED OUT FOR TESTING THE CIRCUIT BREAKERS IN VARIOUS SOPHISTICATED MACHINES. SUCH TESTS INCLUDE SWITCHING CAPACITY AND SHORT CIRCUIT CURRENT CARRYING CAPACITY, DIELECTRIC TEST, TEMPERATURE RISE TESTS, MAGNETIC TESTS, CLIMATIC TESTS AND OTHER KIND OF TESTS. THESE TESTS ARE CARRIED OUT IN A LAB BY THE AUTOMATIC MACHINES THOUGH UNDER OBSERVATIONS OF TECHNICAL EXPERTS. ON CE THESE TESTS ARE DONE SUCCESSFULLY BY THE MACHINES, A CERTIFICATE IS ISSUED BY THE AUTHORITIES OF THE PTL. THE LEARNED CIT (DR) HAD ARGUED THAT FOR OBSERVING THE PROCESS, PREPARING THE REPORT, ISSUANCE OF CERTIFICATE AND FOR MONITORING OF MACHINES, HUMA N INVOLVEMENT IS DEFINITELY THERE, THEREFORE, IT CANNOT BE HELD THAT THERE IS NO HUMAN INTERVENTION. IN OUR OPINION, THIS CANNOT BE THE CRITERIA FOR UNDERSTANDING THE TERM 'TECHNICAL SERVICES' AS CONTEMPLATED IN EXPLANATION 2 TO SECTION 9(1)(VII) . IF ANY PERSON DELIVERS ANY TECHNICAL SKILLS OR SERVICES OR MAKE AVAILABLE ANY SUCH SERVICES THROUGH AID OF ANY MACHINE, EQUIPMENT OR ANY KIND OF TECHNOLOGY, THEN SUCH A RENDERING OF SERVICES CAN BE INFERRED AS 'TECHNICAL SERVICES'. IN SUCH A SITUATION THERE IS A CONSTANT HUMAN ENDEAVOUR AND THE INVOLVEMENT OF THE HUMAN INTERFACE. ON THE CONTRARY, IF ANY TECHNOLOGY OR MACHINE DEVELOPED BY HUMAN AND PUT TO OPERATION AUTOMATICALLY, WHEREIN IT OPERATES WITHOUT ANY M UCH OF HUMAN INTERFACE OR INTERVENTION, THEN USAGE OF SUCH TECHNOLOGY CANNOT PER SE BE HELD AS RENDERING OF 'TECHNICAL SERVICES' BY HUMAN SKILLS. IT IS OBVIOUS THAT IN SUCH A SITUATION SOME HUMAN INVOLVEMENT COULD BE THERE BUT IT IS NOT A CONSTANT ENDEAVOU R OF THE HUMAN IN THE PROCESS. MERELY BECAUSE CERTIFICATES HAVE BEEN PROVIDED BY THE HUMANS AFTER A TEST IS CARRIED OUT IN A LABORATORY AUTOMATICALLY BY THE MACHINES, IT CANNOT BE HELD THAT SERVICES HAVE BEEN PROVIDED THROUGH THE HUMAN SKILLS. THEREFORE, T HE CONTENTION RAISED BY THE LEARNED CIT (DR) DOES NOT APPEAL MUCH TO US. 15. THE HON'BLE JUDGE IN THE CASE OF SKYCELLS COMMUNICATIONS LTD (SUPRA) WHILE INTERPRETING THE WORD 'FEES FOR TECHNICAL SERVICES' AS ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 43 DEFINED IN EXPLANATION 2 TO SECTION 9(1)(VII) HAS MADE A VERY IMPORTANT OBSERVATION: '5. IN THE MODERN DAY WORLD, ALMOST EVERY FACET OF ONE'S LIFE IS LINKED TO SCIENCE AND TECHNOLOGY IN AS MUCH AS NUMEROUS THINGS USED OR RELIED UPON IN EVERY DAY LIFE IS THE RESULT OF SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT. EVERY INSTRUMENT OR GADGET THAT IS USED TO MAKE LIFE EASIER IS THE RESULT OF SCIENTIFIC INVENTION OR DEVELOPMENT AND INVOLVES THE USE OF TECHNOLOGY. ON THAT SCORE, EVERY PROVIDER OF EVERY INSTRUMEN T OR FACILITY USED BY A PERSON CANNOT BE REGARDED AS PROVIDING TECHNICAL SERVICE. WHEN A PERSON HIRES A TAXI TO MOVE FROM ONE PLACE TO ANOTHER, HE USES A PRODUCT OF SCIENCE AND TECHNOLOGY, VIZ., AN AUTOMOBILE. IT CANNOT ON THAT GROUND BE SAID THAT THE TAXI DRIVER WHO CONTROLS THE VEHICLE, AND MONITORS ITS MOVEMENT IS RENDERING A TECHNICAL SERVICE TO THE PERSON WHO USES THE AUTOMOBILE. SIMILARLY, WHEN A PERSON TRAVELS BY TRAIN OR IN AN AEROPLANE, IT CANNOT BE SAID THAT THE RAILWAYS OR AIRLINES IS RENDERING A TECHNICAL SERVICE TO THE PASSENGER AND, THEREFORE, THE PASSENGER IS UNDER AN OBLIGATION TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THE RAILWAY OR THE AIRLINE FOR HAVING USED IT FOR TRAVELLING FROM ONE DESTINATION TO ANOTHER. WHEN A PERSON TRAVELS BY BUS, IT CANNOT BE SAID THAT THE UNDERTAKING WHICH OWNS THE BUS SERVICE IS RENDERING TECHNICAL SERVICE TO THE PASSENGER AND, THEREFORE, THE PASSENGER MUST DEDUCT TAX AT SOURCE ON THE PAYMENT MADE TO THE BUS SERVICE PROVIDER, FOR HAVING USED THE BUS. THE ELE CTRICITY SUPPLIED TO A CONSUMER CANNOT, ON THE GROUND THAT GENERATORS ARE USED TO GENERATE ELECTRICITY, TRANSMISSION LINES TO CARRY THE POWER, TRANSFORMERS TO REGULATE THE FLOW OF CURRENT, METERS TO MEASURE THE CONSUMPTION, BE REGARDED AS AMOUNTING TO PROV ISION OF TECHNICAL SERVICES TO THE CONSUMER RESULTING IN THE CONSUMER HAVING TO DEDUCT TAX AT SOURCE ON THE PAYMENT MADE FOR THE POWER CONSUMED AND REMIT THE SAME TO THE REVENUE. SATELLITE TELEVISION HAS BECOME UBIQUITOUS, AND IS SPREADING ITS AREA AND COV ERAGE, AND COVERS MILLIONS OF HOMES. WHEN A PERSON RECEIVES SUCH TRANSMISSION OF TELEVISION SIGNALS THROUGH THE CABLE PROVIDED BY THE CABLE OPERATOR, IT CANNOT BE SAID THAT THE HOME OWNER WHO HAS SUCH A CABLE CONNECTION IS RECEIVING A TECHNICAL SERVICE FOR WHICH HE IS REQUIRED TO DEDUCT TAX AT SOURCE ON THE PAYMENTS MADE TO THE CABLE OPERATOR. INSTALLATION AND OPERATION OF SOPHISTICATED EQUIPMENTS WITH A VIEW TO EARN INCOME BY ALLOWING CUSTOMERS TO AVAIL OF THE BENEFIT OF THE USER OF SUCH EQUIPMENT DOES NOT RESULT IN THE PROVISION OF TECHNICAL SERVICE TO THE CUSTOMER FOR A FEE. 6. WHEN A PERSON DECIDES TO SUBSCRIBE TO A CELLULAR TELEPHONE SERVICE IN ORDER TO HAVE THE FACILITY OF BEING ABLE TO COMMUNICATE WITH OTHERS, HE DOES NOT CONTRACT TO RECEIVE A TECHNIC AL SERVICE. WHAT HE DOES AGREE TO IS TO PAY FOR THE USE OF THE AIRTIME FOR WHICH HE PAYS A ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 44 CHARGE. THE FACT THAT THE TELEPHONE SERVICE PROVIDER HAS INSTALLED SOPHISTICATED TECHNICAL EQUIPMENT IN THE EXCHANGE TO ENSURE CONNECTIVITY TO ITS SUBSCRIBER, DOES NOT ON THAT SCORE, MAKE IT PROVISION OF A TECHNICAL SERVICE TO THE SUBSCRIBER. THE SUBSCRIBER IS NOT CONCERNED WITH THE COMPLEXITY OF THE EQUIPMENT INSTALLED IN THE EXCHANGE, OR THE LOCATION OF THE BASE STATION. ALL THAT HE WANTS IS THE FACILITY OF USING T HE TELEPHONE WHEN HE WISHES TO, AND BEING ABLE TO GET CONNECTED TO THE PERSON AT THE NUMBER TO WHICH HE DESIRES TO BE CONNECTED. WHAT APPLIES TO CELLULAR MOBILE TELEPHONE IS ALSO APPLICABLE IN FIXED TELEPHONE SERVICE. NEITHER SERVICE CAN BE REGARDED AS 'TE CHNICAL SER - VICE' FOR THE PURPOSE OF SECTION 194J OF THE ACT. 7. THE USE OF THE INTERNET AND THE WORLD WIDE WEB IS INCREASING BY LEAPS AND BOUNDS, AND THERE ARE HUNDREDS OF THOUSANDS, IF NOT MILLIONS, O F SUBSCRIBERS TO THAT FACILITY. THE INTERNET IS VERY MUCH A PRODUCT OF TECHNOLOGY, AND WITHOUT THE SOPHISTICATED EQUIPMENT INSTALLED BY THE INTERNET SERVICE PROVIDERS AND THE USE OF THE TELEPHONE FIXED OR MOBILE THROUGH WHICH THE CONNECTION IS ESTABLISHED, THE SERVICE CANNOT BE PROVIDED. HOWEVER, ON THAT SCORE, EVERY SUBSCRIBER OF THE INTERNET SERVICE PROVIDER CANNOT BE REGARDED AS HAVING ENTERED INTO A CONTRACT FOR AVAILING OF TECHNICAL SER - VICES FROM THE PROVIDER OF THE INTERNET SERVICE, AND SUCH SUBSCRI BER REGARDED AS BEING OBLIGED TO DEDUCT TAX AT SOURCE ON THE PAYMENT MADE TO THE INTERNET SERVICE PROVIDER. THUS IF A STANDARD FACILITY IS PROVIDED THROUGH A USAGE OF MACHINE OR TECHNOLOGY, IT CANNOT BE TERMED AS RENDERING OF TECHNICAL SERVICES. ONCE IN TH IS CASE IT HAS NOT BEEN DISPUTED THAT THERE IS NOT MUCH OF THE HUMAN INVOLVEMENT FOR CARRYING OUT THE TESTS OF CIRCUIT BREAKERS IN THE LABORATORY AND IT IS MOSTLY DONE BY MACHINES AND IS A STANDARD FACILITY, IT CANNOT BE HELD THAT PEHLA TESTING LABORATORY IS RENDERING ANY KIND OF TECHNICAL SERVICES TO ASSESSEE. IN OUR CONCLUSION, WE THUS HOLD THAT PAYMENT MADE BY ASSESSEE TO THE PTL IN GERMANY IS NOT IN CONSIDERATION FOR RENDERING OF ANY KIND OF 'TECHNICAL SERVICES' EITHER IN THE NATURE OF MANAGERIAL OR TEC HNICAL OR CONSULTANCY SERVICES. THEREFORE, IT DOES NOT FALL WITHIN THE AMBIT OF SECTION 9(1)(VII) . 16. THE LEARNED CIT (DR) HAS RELIED UPON THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF HAVELLS IN DIA LTD (SUPRA) WHEREIN THE ISSUE WAS WITH REGARD TO THE DISALLOWANCES UNDER SECTION 40(A)(IA) . IN THIS CASE IT WAS CATEGORICALLY ADMITTED BY THE LEARNED COUNSEL ON BEHALF OF ASSESSEE THAT HE HAS NOT DI SPUTED THAT THE PAYMENT MADE WAS WITHIN THE PURVIEW OF FEES FOR TECHNICAL SERVICES. THIS ASPECT OF THE MATTER WAS THUS NOT DISPUTED. THEREFORE, THE HON'BLE HIGH COURT HAS NOT DEALT WITH THIS ISSUE AT ALL. EVEN IN THE OTHER CASES AS RELIED UPON BY THE LEARN ED CIT (DR) THE ISSUE MOSTLY REVOLVED AROUND WHETHER THE INCOME WERE ACCRUING IN INDIA OR NOT. NONE OF THE JUDGMENTS RELIED UPON ARE DIRECTLY ON THE POINT WHETHER THE TECHNICAL SERVICES HAS BEEN PROVIDED THROUGH HUMAN INTERVENTION OR NOT. ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 45 17. LASTLY COMING TO THE LEARNED DR'S CONTENTIONS THAT THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF BHARATI CELLULAR LTD (SUPRA) HAS BEEN SET ASIDE BY THE HON'BLE SUPREME COURT, IT IS HOWEVER, SEEN THAT THE HON'BLE SUPREME COURT HAS SET ASIDE THE MATTER TO T HE ASSESSING OFFICER WITH REGARD TO EXAMINATION AND TO ESTABLISH WHETHER TECHNICAL SERVICES PROVIDED, INVOLVED ANY KIND OF HUMAN INTERVENTION OR NOT DURING THE PROCESS OF CALL COMMUNICATION. THE HON'BLE SUPREME COURT HAS NOT REVERSED OR ADVERSELY COMMENTED ON THE PROVISIONS OR PRINCIPLES OF LAW DISCUSSED BY THE HON'BLE DELHI HIGH COURT. IT WAS ON THE FACT OF THE CASE THAT THE MATTER WAS SET ASIDE TO EXAMINE THE NATURE OF THE TECHNICAL SERVICES AND TO EXAMINE THE INVOLVEMENT OF THE HUMAN IN THE PROCESS. 18. IN OUR FINAL CONCLUSION WE HOLD THAT THE LEARNED CIT (A) WAS NOT CORRECT IN HOLDING THAT THE PAYMENT MADE BY ASSESSEE TO PEHLA TESTING LAB WAS IN ANY MANNER IN THE NATURE OF 'FEES FOR TECHNICAL SERVICES' WITHIN THE AMBIT OF SECTION 9(1)(VII) READ WITH EXPLANATION 2 AND ACCORDINGLY THERE WAS NO REQUIREMENT IN LAW TO DEDUCT TAX AT SERVICE ON SUCH PAYMENT. IN THE RESULT THIS ISSUE IS DECIDED IN THE FAVOUR OF THE ASSESSEE. 19. NOW COMING TO THE OTHER ISSUES IN THE GROUNDS RAISED BY ASSESSEE, WE FIND THAT SAME HAVE BECOME PURELY ACADEMIC IN VIEW OF OUR FINDINGS GIVEN ABOVE. THEREFORE, THE SAME ARE TREATED AS INFRUCTUOUS. TECHNICALLY SPEAKING THE APPEAL OF ASSESSEE IS TREATED AS ALLOWED. 20. IN THE RESULT APPE AL FILED BY ASSESSEE IS AS ALLOWED. 47. AS PER TERMS OF AGREEMENT, WE FOUND THAT PAYMENT SO MADE BY THE ASSESSEE IS IN THE NATURE OF BUSINESS INCOME OF KEMA TESTING LABORATORY AND SINCE IT DOES NOT HAVE ANY PERMANENT ESTABLISHMENT IN INDIA, THE SAME IS NOT TAXABLE IN INDIA AS PER DTAA. WE ALSO FOUND THAT THE PAYMENT TO BE MADE IS FOR A STANDARD FACILITY PROVIDED BY THE LABORATORY WHICH IS RUN AUTOMATICALLY BY MACHINES WITHOUT HUMAN INTERVENTION. RELIANCE IN THIS REGARD IS PLACED ON THE DECISIONS OF DELHI HI GH COURT AND MADRAS HIGH COURT RENDERED IN THE CASE OF BHARATI CELLULAR LIMITED (220 CTR 258) AND SKYCELL COMMUNICATIONS LIMITED (251 ITR 53). ITA NO.8368 & 8367/MUM/2011 & CO 247/MUM/2012 M/S. SIEMENS LTD., 46 48. SIMILARLY EQUIPMENT ROYALTY IS NOT PROVIDED IN THE TREATY BETWEEN INDIA AND NETHERLANDS. THUS, BY HIRING OIL AND OTHER EQUIPMENT ON RENTAL BASIS FOR THE PURPOSE OF TESTING OF TRANSFORMER, NO TECHNOLOGY WAS MADE AVAILABLE TO THE ASSESSEE. 49. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). AS WE HAVE ALREADY DISMISSED THE RE VENUES APPEAL HOLDING THAT ASSESSEE WAS NOT LIABLE TO DEDUCT TAX AT SOURCE ON THE PAYMENT SO MADE, WE ARE NOT GOING TO DECIDE THE CROSS OBJECTION FILED BY THE ASSESSEE WHICH HAVE BECOME INFRUCTUOUS . 50. TAX EFFECT IN THE APPEAL FILED BY REVENUE IN ITA NO. 8367/MUM/2011 IS LESS THAN RS. 10 LAKHS, IN VIEW OF THE CBDT CIRCULAR NO. 21/2015 DATED 10.12.2015 , WE DISMISS THE APPEAL FILED BY REVENUE ON THE GROUND OF TAX EFFECT. 51. IN THE RESULT, BOTH THE APPEALS OF REVENUE AS WELL AS CROSS OBJECTION FILED BY ASSES SEE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 04 /2017 SD/ - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 27 / 04 /201 7 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//