SARGENT & LUNDY LLC,USA, MUMBAI V. ADDL DIT (IT) RG 2, MUMBAI

ITA 8986/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4006 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Double taxation relief; Advance ruling
• Section: 143(3); 234B

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES L, MUMBAI .. , ! ' , # !, $ BEFORE SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM ITA NO.8986/MUM/2010 : ASST. YEAR 2007-2008 SARGENT & LUNDY, LLC, USA, C/O.S.R. BATLIBOI & CO. CAS. 18 TH FLOOR, EXPRESS TOWER, NARIMAN POINT, MUMBAI-400021, PAN-AACCS2088P % % % % / VS. ADCIT (IT) RANGE-2, SCINDIA HOUSE, BALLARD ESTATE, MUMBAI-400021 ( '( / // / APPELLANT) ( )*'( / RESPONDENT) '( + ++ + , , , , / ASSESSEE BY : SHRI M.P. LOHIA )*'( + , + , + , + , / REVENUE BY : MS. NEERAJA PRADHAN % + - / / / / DATE OF HEARING : 15.07.2013 ./0 + - / DATE OF PRONOUNCEMENT : 24.07.2013 !1 !1 !1 !1 / / / / O R D E R PER R.S.SYAL ( AM) : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE ASSESSING OFFICER ON 18.10.2010 U/S 144C(13) READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HE REINAFTER ALSO CALLED `THE ACT) IN RELATION TO THE A.Y. 2007 -08. 2. FIRST GROUND OF THE APPEAL READS AS UNDER :- THE LEARNED AO HAS ERRED IN LAW AND IN FACT, IN HOLDING THAT THE SERVICES RENDERED BY THE APPELLANT TO LARSEN AND TOUBRO LIMITED FOR REVIEW OF DESIGNS AND DOCUMENTS FALL WITHIN THE SCOPE OF `FEES FOR INCLUDED SERVICES UNDER ARTICLE 12 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA. ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THA T THE ASSESSEE WAS INCORPORATED IN AND IS TAX RESIDENT OF USA. I T IS A CONSULTING FIRM ENGAGED IN PROVIDING SERVICES TO TH E POWER INDUSTRY BY PROVIDING DIVERSE SERVICES SUCH AS OPER ATING POWER PLANTS, DECOMMISSIONING CONSULTING, PROJECT S OLUTIONS AND OTHER ENGINEERING BASED SERVICES. IN THE PREVI OUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THE ASSESSEE RECEIVED A SUM OF RS.2,22,16,154/- FROM L &T LIMITED FOR RENDERING CONSULTING AND ENGINEERING SE RVICES IN RELATION TO ULTRA MEGA POWER PROJECTS IN MUNDRA AN D SESAN. THE ASSESSEE APPENDED THE FOLLOWING NOTE IN THE COM PUTATION OF TOTAL INCOME, FILED ALONG WITH ITS RETURN OF INC OME: FEES FOR CONSULTING AND ENGINEERING SERVICES OF USD 499,106.66: DURING THE YEAR, S& L HAS ALSO RECEIVED USD 499,106 .66 AS FEES FOR CONSULTING AND ENGINEERING SERVICES FROM L ARSEN & TOUBRO LTD. THE SAME IS NOT TAXABLE AS THE SERVICES DO N OT MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL OR KNOW HOW WITHIN THE MEANING OF FIS AS PER ARTICLE 12(4) OF THE DTAA BET WEEN INDIA & USA. FURTHER, SINCE THE S& L DOES NOT HAVE A PE IN INDIA, THE SAID SUM IF NOT TAXABLE AS BUSINESS INCOME IN INDIA. 4. THE ASSESSEE WAS CALLED UPON TO EXPLAIN AS TO WH Y THE AMOUNT RECEIVED FROM L&T SHOULD NOT BE TREATED AS ` FEES FOR TECHNICAL SERVICES AND TAXED ACCORDINGLY. THE ASSE SSEE SUBMITTED THAT THE SAME DID NOT FALL WITHIN THE SCO PE OF FEES FOR INCLUDED SERVICE UNDER ARTICLE 12 OF THE DOUBL E TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND U.S.A ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 3 (HEREINAFTER ALSO CALLED DTAA). THE ASSESSING OFFICER, VIDE THE DRAFT OF ASSESSMENT ORDER U/S 144C(1) DATE D 22.12.2009, TAKING INTO CONSIDERATION THE SUBMISSIO NS ADVANCED ON BEHALF THE ASSESSEE AND THE FACTS NECES SARY FOR THE DETERMINATION OF THE ISSUE, HELD THAT THE SERV ICES RENDERED WERE IN THE NATURE OF `CONSULTING AND ENGINEERING S ERVICES IN PREPARATION OF THE TECHNICAL DESIGNS BASIS IN THE F ORM OF REVIEW OF DESIGNS FOR ULTRA MEGA POWER PROJECTS AT MUNDRA, SASAN AND KRISHNAPATNAM IN INDIA TO L&T. HE, THER EFORE, HELD THE AMOUNT AS COVERED U/S 9(I)(VII) OF THE AC T. HE ALSO TOOK UP THE ASSESSEES CONTENTION ABOUT THE NON-TAX ABILITY OF THE AMOUNT UNDER THE DTAA AND FINALLY TOOK THE VIEW THAT THE SAME WAS INCLUDIBLE IN THE SCOPE OF FEES FOR INCLU DED SERVICES UNDER ARTICLE 12 OF THE DTAA. 5. THE ASSESSEE APPROACHED THE DISPUTE RESOLUTION P ANEL (DRP), WHO VIDE ITS ORDER DATED 28.09.2010 ECHOED T HE ACTION OF THE ASSESSING OFFICER. IN THE FINAL ORDER PASSE D U/S 144C(13) OF THE ACT, THE ASSESSING OFFICER INCLUDED THE SUM OF RS.2.22 CRORE IN THE TOTAL INCOME OF THE ASSESSE E AS A FEES FOR TECHNICAL SERVICES. THE ASSESSEE IS IN APPEAL IN THE TERMS AS SET OUT IN THE GROUND ABOVE. ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSED T HE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE WAN T TO MAKE IT CLEAR THAT THE ASSESSING OFFICER HELD THE AMOUNT AS TAXABLE U/S 9(I)(VII) OF THE ACT AS `FEES FOR TECHNICAL SERVICE S AS WELL AS FALLING WITHIN THE SCOPE OF FEES FOR INCLUDED SERV ICES UNDER ARTICLE 12 OF THE DTAA. FROM THE VERY FACT THAT TH E ASSESSEE HAS CHALLENGED THE FINDING OF THE ASSESSING OFFICER ONLY UNDER ARTICLE 12 OF THE DTAA, IT IS MANIFEST THAT T HE FINDING OF THE AO AS REGARDS THE NATURE OF SERVICES RENDERE D BY THE ASSESSEE AS TECHNICAL SERVICES WITHIN THE MEANING O F SECTION 9(I)(VII) OF THE ACT HAS BEEN ACCEPTED. THE LD. AR ALSO FOCUSED HIS ATTENTION ON ARTICLE 12 OF THE DTAA BY ARGUING THAT THE SERVICES RENDERED BY THE ASSESSEE DID NOT MAKE AVAILABLE ANY TECHNICAL KNOWLEDGE TO L&T. AS SUC H WE ARE RESTRICTING OURSELVES ONLY IN EXAMINING AS TO WHETH ER THE TECHNICAL SERVICES SO PROVIDED BY THE ASSESSEE RESU LTED IN MAKING AVAILABLE ANY TECHNICAL OR CONSULTANCY SER VICES TO L&T. 7. BEFORE PROCEEDING FURTHER IT WOULD BE RELEVANT T O EXAMINE THE AGREEMENTS ENTERED INTO BETWEEN THE ASS ESSEE AND L&T. TWO AGREEMENTS WITH SIMILAR TERMS AND CON DITIONS WERE ENTERED INTO IN RESPECT OF TWO DIFFERENT PROJE CTS. AS ADMITTEDLY THE TERMS AND CONDITIONS OF BOTH THE AGR EEMENTS ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 5 ARE SIMILAR, WE ARE, THEREFORE, TAKING UP THE AGREE MENT DATED 07.08.2006 (HEREINAFTER CALLED `THE AGREEMENT). T HE PREAMBLE OF THIS AGREEMENT IS AS UNDER:- SARGENT & LUNDY, L.L.C. (AN ILLINOIS LIMITED COMPANY HEREINAFTER S&L), PROPOSES TO PROVIDE CONSULTING AND ENGINEERING SERVICES REQUIRED BY LAR SEN & TOUBRO, LIMITED (HEREINAFTER L &T) IN THE PREPARATION OF TECHNICAL DESIGN BASES FOR THE TWO O F THE ULTRA MEGA POWER PROJECTS KNOWN AS MUNDRA AND SASAN. THESE SERVICES WILL BE PROVIDED IN CONJUNCT ION WITH SERVICES PROVIDED TO UNDER A SEPARATE AGREEMEN T BY LARSON & TOUBRO SARGENT & LUNDY (L&T-S&L). 8. FROM THE ABOVE PREAMBLE IT IS APPARENT THAT THE ASS ESSEE AGREED TO PROVIDE CONSULTING AND ENGINEERING SERVICES REQUIRED BY L&T IN THE PREPARATION OF TECHNICAL DESIGNS FOR ULTRA MEGA POWER PROJECTS. IT IS TRUE THAT THE MERE NOMENCLATURE OF ` CONSULTING AND ENGINEERING SERVICES CANNOT BE DETERMINATIVE OF THE REAL CHARACTER OF THE SERVI CES. THE TRUE NATURE OF SERVICES CAN BE CULLED OUT ONLY FROM THE EXAMINATION OF THE DUTIES ASSIGNED TO AND DONE BY T HE ASSESSEE. THE SCOPE OF THE SERVICES IS PROVIDED IN PARA 1 OF THE AGREEMENT, WHICH READS AS UNDER :- THE SCOPE OF SERVICES SHALL INCLUDE CONSULTING AND ENGINEERING SERVICES, EXCLUDING CONSTRUCTION MANAGEMENT OR THE ASSIGNMENT OF PERSONNEL IN THE FIELD, IN THE PREPARATION OF TECHNICAL DESIGN BASIS ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 6 FOR TWO ULTRA MEGA POWER PROJECTS IN INDIA EACH HAVING APPROXIMATELY 4000 MW CAPACITY AS DESCRIBED IN THE DRAFT POWER PURCHASE AGREEMENTS (PPAS) AND REQUESTS FOR PROPOSAL (RFPS). 9. IT TRANSPIRES FROM A CURSORY LOOK AT THE ABOVE T HAT THE SCOPE OF THE SERVICES PROVIDED BY THE ASSESSEE CONS ISTED OF CONSULTING AND ENGINEERING SERVICES IN THE PREPAR ATION OF THE TECHNICAL DESIGN BASES FOR THE ULTRA MEGA POWER PRO JECTS IN INDIA. L&T WAS TO BID FOR SETTING UP POWER PROJECTS AT MUNDRA, SASAN AND KRISHAPATNAM. IT ENGAGED THE SERV ICES OF THE ASSESSEE AND LTSL (A JOINT VENTURE OF THE ASSES SEE AND L&T) FOR TECHNICAL EVALUATION AND PREPARATION OF N ECESSARY DESIGNS AND DOCUMENTS. EXHIBIT I OF THE AGREEMENT REVEALS `DIVISION OF RESPONSIBILITY. A PERUSAL OF SUCH EXH IBIT DIVULGES THAT APART FROM THE GENERAL REVIEW OF PROJ ECT DOCUMENTS AND SCOPE DETERMINATION, THE ASSESSEE WAS ASSIGNED THE JOB OF EVALUATION OF SEVERAL ASPECTS I NCLUDING BOILER AND AUXILIARIES, DETERMINE PLANT CONFIGURATI ON, DESIGN CRITERIA FOR CIMNEY WITH REFERENCE SPECIFICATION, ELECTRICAL SINGLE LINE DIAGRAM, DESIGN PARAMETERS AND DATA SH EETS FOR MAJOR OUTDOOR ELECTRICAL EQUIPMENTS, SO ON AND SO FORTH. ALL THE ABOVE ACTIVITIES, WITHOUT ANY HESITATION, ARE I N THE REALM OF TECHNICAL SERVICES FOR SETTING UP POWER PROJECT. IT IS WORTH MENTIONING THAT SEVERAL THOUSAND MAN HOURS WERE SPE NT BY SEVERAL TECHNICAL PEOPLE OF THE ASSESSEE IN DOING T HE JOB ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 7 ASSIGNED, WHICH TRANSLATED INTO PAYMENT AMOUNTING T O RS.2.22 CRORE AND ODD. HAVING DETERMINED THE NATURE OF SERV ICES, NOW WE NEED TO DECIDE AS TO WHETHER THE CONSIDERATION F OR SUCH SERVICES CAN BE CONSTRUED AS FEES FOR TECHNICAL SER VICES? 10. WE HAVE EARLIER NOTICED THAT THE INCLUS ION OF SERVICES IN THE FEES FOR TECHNICAL SERVICES U/S 9(1)(VII) OF THE ACT IS RIGHTLY NOT UNDER CHALLENGE BEFORE US. THE ONLY CON TROVERSY IS AS TO WHETHER SUCH TECHNICAL SERVICES CAN FALL WITH IN THE SCOPE OF THE DTAA. ARTICLE 12 OF THE DTAA, INTER ALIA, DEALS WITH `FEES FOR INCLUDED SERVICES. PARA 4 OF THE ARTICL E DEFINES THIS EXPRESSION AS : .PAYMENTS OF ANY KIND TO ANY P ERSON IN CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THROUGH THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONNEL) IF SUCH S ERVICES: . B. MAKE AVAILABLE TECHNICAL KNOWLEDGE , EXPERIENCE, SKILL, KNOW-HOW, OR PROCESSES, OR CONSIST OF THE DE VELOPMENT AND TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIG N. IT IS NOT THE CASE OF THE ASSESSEE THAT THE PAYMENT IS COVERE D BY PARA 5 OF THE ARTICLE 12, WHICH STATES THAT 'FEES FOR INC LUDED SERVICES' DOES NOT INCLUDE AMOUNTS PAID IN RESPECT OF CERTAIN ITEMS ENUMERATED THEREIN. A BRIEF RESUME OF THE SER VICES PROVIDED BY THE ASSESSEE TO L&T AS NOTICED ABOVE MA KES IT ABUNDANTLY CLEAR THAT THESE ARE IN THE NATURE OF ` TECHNICAL OR ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 8 CONSULTANCY SERVICES AS PER THE MAIN PART OF PARA 4 OF THE DTAA. TO THIS EXTENT THE DEFINITION OF `FEES FOR IN CLUDED SERVICES GIVEN UNDER THE DTAA MATCHES WITH THAT GI VEN IN EXPLANATION TO SECTION 9(1)(VII), WHICH PROVIDES TH AT : 'FEES FOR TECHNICAL SERVICES' MEANS ANY CONSIDERATION (IN CLUDING ANY LUMP SUM CONSIDERATION) FOR THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSONN EL) BUT DOES NOT INCLUDE ... AT THE COST OF REPETITION, WE MEN TION THAT THAT THE ASSESSEE HAS NOT ASSAILED THE FINDING OF T HE AO IN TREATING THE AMOUNT AS COVERED UNDER `FEES FOR TECH NICAL SERVICES AS PER SECTION 9(1)(VII) OF THE ACT. THE ARGUMENTS MADE BEFORE US REVOLVE AROUND THE DEFINITION OF `FE ES FOR INCLUDED SERVICES AS PER ARTICLE 12 OF THE DTAA. I N NUTSHELL, THERE ARE TWO ASPECTS OF THE DEFINITION OF `FEES FO R INCLUDED SERVICES FOR OUR PURPOSE, VIZ., FIRST THAT THERE S HOULD BE RENDERING OF `TECHNICAL OR CONSULTANCY SERVICES A ND SECOND THAT SUCH SERVICES SHOULD BE `MADE AVAILABLE TO TH E PAYER OF SUCH SERVICES. ON PERUSAL OF THE DETAILS OF THE NAT URE OF WORK DONE BY THE ASSESSEE FOR L&T, WE HAVE HELD ABOVE TH AT THE CONSIDERATION IS FOR THE RENDITION OF `TECHNICAL OR CONSULTANCY SERVICES. THE CASE OF THE ASSESSEE LARGELY HINGES ON THE SECOND ASPECT OF THE DEFINITION, BEING `MAKING AVAI LABLE SUCH TECHNICAL OR CONSULTANCY SERVICES. THE LD. AR ARGUE D THAT THE ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 9 ACTIVITIES DONE BY THE ASSESSEE DID NOT RESULT INTO MAKING AVAILABLE SUCH TECHNICAL OR CONSULTANCY SERVICES T O L&T. 11. IN ORDER TO FORTIFY HIS VIEW THAT THE AMO UNT IN QUESTION CANNOT BE CONSIDERED AS FEES FOR INCLUDED SERVICES AS PER ARTICLE 12 OF THE DTAA, THE LD. AR RELIED ON A DECI SION DATED 23.04.2009 OF THE AUTHORITY FOR ADVANCE RULING IN W ORLY PARESONS SERVICES PRIVAT -LTD. IN WHICH IT HAS BEEN HELD THAT SUCH TECHNICAL SERVICES CANNOT BE INCLUDED WITHIN T HE SCOPE OF ARTICLE 12 AS NOTHING IS MADE AVAILABLE. IN THE OPP OSITION, THE LD. DR RELIED ON A LATER DECISION OF THE AUTHORITY FOR ADVANCE RULING IN PERFETTI VAN MELLE HOLDING B.V. SUFFICE TO SAY BOTH THE DECISIONS ARE BASED ON THEIR OWN FACTS. SOMETIM ES EVEN A MINOR SIGNIFICANT FACTUAL VARIATION MAKES ONE CASE DISTINGUISHABLE FROM THE OTHER, THOUGH BOTH PRIMA FACIE APPEAR TO BE SIMILAR. THE ABOVE DECISIONS RENDERED BY THE AUTHORITY FOR ADVANCING RULING ARE CONFINED TO THEI R OWN FACTS AND HAVE NO PRECEDENT VALUE IN OTHER CASES. AS SU CH, WE WILL EXAMINE THE FACTS OF THE PRESENT CASE FOR ASCERTAIN ING AS TO WHETHER THE TECHNICAL SERVICES WERE MADE AVAILABLE BY THE ASSESSEE TO L&T. 12. THE EXPRESSION MAKE AVAILABLE IN THE CO NTEXT OF FEES FOR TECHNICAL SERVICES CONTEMPLATES THAT THE SERVICES ARE ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 10 OF SUCH A NATURE THAT THE PAYER OF THE SERVICES COM E TO POSSESS THE TECHNICAL KNOWLEDGE SO PROVIDED WHICH ENABLES I T TO UTILIZE THE SAME IN FUTURE. RECENTLY, THE HONBLE KARNATKA HIGH COURT IN THE CASE OF CIT & ORS. VS. DE BEERS INDIA MINERALS PVT. LTD. [2012 (346 ITR 467) (KARN)] DEALT WITH THE CONCEPT OF MAKE AVAILABLE IN THE CONTEXT OF FEES FOR TECHNICAL SERVICES. IT HAS BEEN HELD THAT : 'THE E XPRESSION 'MAKE AVAILABLE' ONLY MEANS THAT THE RECIPIENT OF THE SERVICE SHOULD BE IN A POSITION TO DERIVE AN ENDURING BENEF IT AND BE IN A POSITION TO UTILISE THE KNOWLEDGE OR KNOW-HOW IN FUTURE ON HIS OWN. BY MAKING AVAILABLE THE TECHNICAL SKILLS OR KNOW- HOW, THE RECIPIENT OF THE SAME WILL GET EQUIPPED W ITH THAT KNOWLEDGE OR EXPERTISE AND BE ABLE TO MAKE USE OF I T IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER .. 13. FROM THE ABOVE ENUNCIATION OF LAW BY THE HONBLE AP HIGH COURT, IT IS PALPABLE THAT THE TECHNICAL KNOWL EDGE WILL BE CONSIDERED AS `MADE AVAILABLE WHEN THE PERSON ACQU IRING SUCH KNOWLEDGE IS POSSESSED OF THE SAME ENABLING HI M TO APPLY IT IN FUTURE AT HIS OWN. IF THE PAYEE USES ALL THE TECHNICAL SERVICES AT HIS 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 TECH NICAL SERVICES TO THE RECIPIENT. THE SPECIAL BENCH OF TH E TRIBUNAL IN ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 11 MAHINDRA & MAHINDRA LTD. VS. DCIT (2009) 122 TTJ (MUM)(SB) 577 HAS DISCUSSED THE CONCEPT OF `MAKE AVAILABLE. IN THAT CASE, THE LEAD MANAGERS HAD REN DERED TECHNICAL, MANAGERIAL OR CONSULTANCY SERVICES IN TH E GDR ISSUE, WHICH SERVICES WERE NOT MADE AVAILABLE TO TH E ASSESSEE INASMUCH AS THE PAYER ONLY DERIVED THE BENEFIT FROM THE TECHNICAL SERVICES PROVIDED BY THE LEAD MANAGERS WI THOUT GETTING ANY TECHNICAL KNOWLEDGE, EXPERIENCE OR SKIL L IN ITS POSSESSION FOR USE IN FUTURE. IN THAT VIEW OF THE MATER, IT WAS HELD THAT THE `MANAGEMENT AND SELLING COMMISSION C ANNOT BE TAXED IN INDIA AS PER THE DTAA BECAUSE NOTHING WAS MADE AVAILABLE TO THE PAYER. IT FOLLOWS THAT IN ORDER T O BE COVERED WITHIN THE EXPRESSION MAKE AVAILABLE WHAT IS NECE SSARY IS THAT THE SERVICE PROVIDER SHOULD TRANSMIT THE TECHN ICAL KNOWLEDGE ETC. TO THE PAYER SO THAT THE PAYER MAY U SE SUCH TECHNICAL KNOWLEDGE IN FUTURE WITHOUT INVOLVEMENT O F THE SERVICES PROVIDER. 14. ADVERTING TO THE FACTS OF THE EXTANT CASE WE FI ND THAT THE TECHNICAL SERVICES PROVIDED BY THE ASSESSEE IN THE SHAPE OF TECHNICAL PLANS, DESIGNS, PROJECTS, ETC. ARE NOTHIN G BUT BLUEPRINTS OF THE TECHNICAL SIDE OF MEGA POWER PROJ ECTS. ADMITTEDLY SUCH SERVICES ARE RENDERED AT A PRE-BID STAGE. IT IS QUITE NATURAL THAT SUCH TECHNICAL PLANS ETC. ARE ME ANT FOR USE IN ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 12 FUTURE ALONE IF AND WHEN L&T TAKES UP THE BID FOR T HE INSTALLATION OF THE POWER PROJECT. WHEN THE OTHERW ISE TECHNICAL SERVICES PROVIDED BY THE ASSESSEE ARE OF SUCH A NATURE WHICH ARE CAPABLE OF USE IN FUTURE ALONE, W E 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 TECHN ICAL SERVICES WITHIN THE MEANING OF ARTICLE 12 OF THE DT AA. THIS GROUND IS NOT ALLOWED. 15. SECOND GROUND IS ABOUT THE LEVY OF INTEREST OF RS.9,10,458/- U/S 234B OF THE ACT. WE HAVE NOTICE D ABOVE THAT THE ASSESSEE IS TAX RESIDENT OF USA. ITS ENTI RE INCOME IS LIABLE FOR DEDUCTION OF TAX AT SOURCE IN INDIA. IN THAT VIEW OF THE MATTER, IT IS OBVIOUS THAT THERE CAN BE NO CHAR GEABILITY OF INTEREST U/S 234B OF THE ACT. THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF D.I (INTERNATIONAL TAXATION) VS. NGC NETWORK ASIA LTD. (2009) 222 CT R 86 (BOM) IS AUTHORITY FOR THE PROPOSITION OF NON-CHARGING OF INTEREST U/S 234B IN CASE OF NON-RESIDENTS. THIS GR OUND IS, THEREFORE, ALLOWED. ITA NO.8986/MUM/2010. SARGENT & LUNDY LLC . 13 16. LAST GROUND ABOUT THE INITIATION OF PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE ACT, IS PREMATURE AND HENCE DO ES NOT REQUIRE ANY ADJUDICATION. 17. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 24 TH DAY OF JULY, 2013. !1 + ./0 2!%3 24 TH JULY, 2013 + 4 SD/- SD/- (VIVEK VARMA) (R.S.SYAL) # ! # ! # ! # ! / JUDICIAL MEMBER ! ! ! ! / ACCOUNTANT MEMBER / MUMBAI : 2!%/ DATED : 24 TH JULY, 2013. SHEKHAR !1 + )#-5' 6'0- !1 + )#-5' 6'0- !1 + )#-5' 6'0- !1 + )#-5' 6'0-/ COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. 7 ( ) / THE CIT- , MUMBAI. 4. 7 / CIT(A)- , MUMBAI 5. ':4 )#-#% , , / DR, ITAT, MUMBAI 6. 4; < / GUARD FILE. !1% !1% !1% !1% / BY ORDER, *'- )#- //TRUE COPY// = == =/ // /> ? > ? > ? > ? ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI