ADDL DIT (IT) RG 4, MUMBAI V. MARK & SPENCER RELIANCE INDIA P.LTD, NAVI MUMBAI

ITA 905/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70928 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 01-08-2013
• Assessment Year: 2010-2011
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Deemed to accrue or arise in india; Permanent establishment; Non-deduction of tax
• Section: 201(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, L BENCH, L BENCH, L BENCH, MUMBAI MUMBAI MUMBAI MUMBAI . , !' !' !' !' , . BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI B. RAMAKOTAIAH B. RAMAKOTAIAH B. RAMAKOTAIAH B. RAMAKOTAIAH, AM , AM , AM , AM & & & & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ./ I.T.A. I.T.A. I.T.A. I.T.A. NO NO NO NO. .. . 905/M/2012 905/M/2012 905/M/2012 905/M/2012 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR : 2010-11) ADDL. DIRECTOR OF INCOME TAX(IT) RS.-4 R.N.134, SCINDIA HOUSE, 1 ST FLOOR, BALLARD ESTATE, N.M. ROAD, MUMBAI 400 038. $ $ $ $ / VS. M/S. MARK & SPENCER RELIANCE INDIA P.LTD.C/O MR. SHREE KUMAR CHIRKAL, CABIN 07, BLDG 4C, GR FLOOR, RCP, GHANSOLI, NAVI MUMBAI & ./ '' ./ PAN/GIR NO. : AAFCM5990D ( &( / APPELLANT ) .. ( )*&( / RESPONDENT ) &( &( &( &( + + + + / APPELLANT BY : APPELLANT BY : APPELLANT BY : APPELLANT BY : SHRI NEERAJA PRADHAN )*&( )*&( )*&( )*&( , ,, , + + + + /RESPON /RESPON /RESPON /RESPONDENT DENT DENT DENT BY BYBY BY : : : : SHRI F. V. IRANI $ $ $ $ , ,, , - - - - / D DD DATE ATE ATE ATE OF HEARING : OF HEARING : OF HEARING : OF HEARING : 1 ST AUGUST 2013 .% .% .% .% ,- ,- ,- ,- / // /D DD DATE ATE ATE ATE OF OFOF OF PRONOUNCEMENT: PRONOUNCEMENT: PRONOUNCEMENT: PRONOUNCEMENT: 4 TH SEPTEMBER 2013 / / O R D E R PER : PER : PER : PER : !' , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 28.11.2011 ARISING FROM THE ORDER PASSED SECTION 20 1 OF INCOME TAX ACT OF COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASS ESSMENT YEAR 2010- 11. 2. REVENUE HAS RAISED THE ONLY GROUND IN THIS APPEAL A S UNDER; '1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT PART REIMBURSE MENT OF EXPENSES CANNOT BE HELD AS INCOME DEEMED TO ACCRUE OR ARISE IN INDIA AND TAXABLE AS INCOME BEING 'FEES F OR ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 2 TECHNICAL SERVICES WITHOUT CONSIDERATION THE FOLLOW ING FACTS: I. AS PER PARA-13(4) OF THE DTAA, FEES FOR TECHNICA L SERVICES MEANS PAYMENTS OF ANY KIND IN CONSIDERATION FOR REN DERING OF ANY TECHNICAL OR CONSULTANCY SERVICES ( INCLUDIN G PROVISIONS OF SERVICES OF A TECHNICAL OR OTHER PERS ONNEL) AND THUS, PROVISIONS OF SERVICES OF PERSONNEL IS IN CLUDED IN THE DEFINITION OF FEES FOR TECHNICAL SERVICES. II. THE SERVICES ARE COVERED UNDER ARTICLE 13(4) (A) OF INDO-UK TREATY AND THE CHARGEABILITY OF FEES FOR TE CHNICAL SERVICES IS WIDER IN SCOPE AND NATURE U/S. 9(1 )(VI I) READ WITH EXPLANATION 2 OF THE INCOME TAX ACT, 1961. III. THE 'MAKE AVAILABLE' COMPONENT IS PRESENT W ITH THE RECEIPT AS IN TERMS OF LATEST RULINGS IN PERFETTI V AN MELLE HOLDING SV. IN AAR NO. 869 OF 2010 DATED 09-12-2011 , THE EXPRESSION 'MAKE AVAILABLE' WOULD MEAN THAT THE REC IPIENT OF THE SERVICE SHOULD DERIVE AN ENDURING BENEFIT AN D WOULD BE IN A POSITION TO DERIVE BENEFIT FROM SIMILAR SER VICE INDEPENDENT OF THE PARTY RENDERING THE SERVICES. 3. THE ASSESSEE COMPANY IS A JOINT VENTURE CO. BETW EEN MARKS & SPENCER PLC AND RELIANCE RETAIL LIMITED. THE ASSESS EE ENTERED INTO AN AGREEMENT DATED 31.07.2009 WITH MARKS AND SPENCER P LC OF U.K. BASED COMPANY WHEREBY THE ASSESSEE WAS PROVIDED PERSONNEL TO CARRY OUT THE FUNCTIONS IN THE AREA OF MANAGEMENT, TO SETTING UP OF BUSINESS, PROPERTY SELECTION AND RETAIL OPERATION, PRODUCT AND MERCHAN DISE SELECTION AND TO SETTING UP MERCHANDISE TEEM. THE AO HAS NOTED IN TH E ORDER PASSED UNDER SECTION 201 THAT FOLLOWING PERSONNEL WERE PRO VIDED BY THE MARKS AND SPENCER PLC TO THE ASSESSEE: MR. MARK ASHMAN- ASSIST IN OVERALL MANAGEMENT OF SE TTING UP OF BUSINESS. MR. SPENCER SHEEN- ASSISTANCE IN PROPERTY SELECTION AND RETAIL OPERATION. MR. ADAM COLTON- TO LEAD MERCHANDISING AND PRODUCT SELECTION. ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 3 MS. EMILY IMESON- TO SET UP MERCHANDISING TEAM. 4. THE ASSESSEE HAS PAID A SUM OF RS.4,83,60,187/- TO MARKS & SPENCER PLC, LONDON ON 04.12.2009. THE AO NOTED THA T ON THIS PAYMENT THE ASSESSEE DID NOT MAKE ANY DEDUCTION OF TAX UNDE R SECTION 195. THE AO ISSUED A NOTICE UNDER SECTION 201 FOR HOLDING TH AT ASSESSEE HAS COMMITTED DEFAULT BY REMITTING THE MONEY WITHOUT DE DUCTION OF TAX AND ACCORDINGLY LIABLE TO BE HELD FOR THE LIABILITY UND ER SECTION 201. THE ASSESSEE FILED ITS REPLY AND EXPLAIN THAT THE PAYEE MARKS & SPENCER DOES NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA AND FUR THER PAYMENTS MADE BY THE ASSESSEE ARE IN NATURE OF REIMBURSEMENT AND THEREFORE THE SAME ARE NOT TAXABLE. THE ASSESSEE HAS ALSO CONTENDED TH AT AS PER ARTICLE 13(4) OF THE DTAA BETWEEN INDIA AND UK THE PAYMENT DOES N OT FALLS UNDER THE DEFINITION OF FEE FOR TECHNICAL SERVICES. THE AO DI D NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESS EE HAD COMMITTED A DEFAULT BY REMITTING THE MONEY WITHOUT DEDUCTION OF TAX WHICH WAS CHARGEABLE TO TAX AS FEE FOR TECHNICAL SERVICES (FT S), WHILE PASSING ORDER DATED 20.10.2010 UNDER SECTION 201. ON APPEAL THE L EARNED CIT(A) HAS HELD THAT THE REMITTANCE IS ONLY PART REIMBURSEMENT OF EXPENSES AND CANNOT TREATED AS INCOME DEEMED TO ACCRUE OR ARISE IN INDIA, BEING FTS AS PER INDO-UK DTAA. 6. BEFORE US, THE LEARNED DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS CLEARLY RECORDED THE FACTS THAT THE REMITTANCE OF THE MONEY IN QUESTION IS FOR THE SERVICE RENDERED BY THE PAYEE T HROUGH ITS EMPLOYEES AND THEREFORE, THE SAID PAYMENT IS IN THE NATURE OF FEE FOR TECHNICAL ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 4 SERVICES. THE SERVICES IN THE AREA OF MANAGEMENT, S ELECTION OF PROPERTY AND RETAIL OPERATIONS WHICH ARE IN THE NATURE OF BU SINESS STRATEGIES, AND ADVISORY. THUS THE GROSS REVENUE RECEIVED BY THE PA YEE BEING FTS IS LIABLE TO TAX AND EXPENSES CAN NOT BE ALLOWED AS DE DUCTION. THE LEARNED DR HAS FURTHER CONTENDED THAT ONCE THE PAYMENT IS F EE FOR TECHNICAL SERVICES THEN THE THEORY OF REIMBURSEMENT OF EXPENS ES DOES NOT APPLY. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFIC ER AND SUBMITTED THAT IN CASE OF PAYMENT TO NON-RESIDENT THE ASSESSEE CAN NOT TAKE A UNILATERAL DECISION THAT PAYMENTS ARE NOT SUM CHARGEABLE TO TA XES. THE ASSESSEE COULD HAVE OBTAINED CERTIFICATE UNDER SECTION 195(2 ) IN THIS RESPECT BEFORE MAKING THE REMITTANCE. THE EMPLOYEE ARE PROVIDED TO THE ASSESSEE WHICH WERE HAVING REQUISITE SKILLS AND EXPERIENCE TO CARR Y OUT FUNCTIONS OF BUSINESS DEVELOPMENT , PREPARING BUSINESS STRATEGIE S, SALES STRATEGIES AND ADVERTISING ON RETAIL MATTERS IN ORDER TO COMPL ETE THE PREPARATORY NECESSARY FOR THE START OF BUSINESS OF JOINT VENTU RE CO. THE NATURE OF THE SERVICES PROVIDED BY THE PAYEE THROUGH ITS EMPLOYEE IS TECHNICAL AND EXPERTS SERVICES IN THE FIELD OF MANAGEMENT AND OT HER AFFAIRS THEREFORE, THE PAYMENT AGAINST SUCH SERVICES FALLS UNDER THE D EFINITION OF FEES FOR TECHNICAL SERVICE. 7. LEARNED DR HAS FURTHER CONTENDED THAT THESE PERS ONNEL REMAINED EMPLOYEES OF THE PAYEE AND THEREFORE, THERE IS NO Q UESTION OF REIMBURSEMENT OF EXPENSES. THESE EMPLOYEES WERE PAI D BY THE UK CO. AND NOT BY THE ASSESSEE. THE ASSESSEE MADE PAYMENT ON THE BASIS OF ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 5 INVOICE RAISED BY THE UK CO. HENCE, THE ASSESSEE WA S UNDER OBLIGATION TO DEDUCT TAX AT SOURCE. 8. ON THE OTHER HAND, LEARNED AR OF THE ASSESSEE HA S SUBMITTED THAT AMOUNT PAID BY THE ASSESSEE IS NOT AN INCOME IN THE HANDS OF THE PAYEE AS IT IS ONLY REIMBURSEMENT OF COST. HE HAS REFERRE D THE DETAILS OF THE SALARY PAID BY THE MARK AND SPENCER UK CO. TO THE P ERSONNEL DEPUTED WITH THE ASSESSEE AND REIMBURSEMENT MADE BY THE ASS ESSEE AND SUBMITTED THAT THE AMOUNT REMITTED BY THE ASSESSEE IS LESS THAN THE SALARY PAID TO THE PERSONNEL. HE HAS FURTHER SUBMIT TED THAT EVEN THE AMOUNT PAID IS LESS THAN THE INVOICE RAISED BY THE UK CO. AS IT WAS REDUCED AFTER NEGOTIATION AND THEREFORE, IT WAS A C ASE OF PART REIMBURSEMENT OF THE EXPENSES. HE HAS FURTHER REFER RED THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES AND SUBMITTED THAT AS PER THE TERMS OF THE SERVICE AGREEMENT THE PARTIES AGREED TO PROVIDE EMPLOYEES TO THE ASSESSEE AND WILL BE CHARGED WITHOUT MARK UP OR THE COMPANY SHALL DIRECTLY COMPENSATE THE SECONDED OR ENGAGED EMPLOYE ES. HE HAS FURTHER SUBMITTED THAT AS IT IS PROVIDED IN THE SERVICE AGR EEMENT THE PARTIES HAVE ALSO SIGN A SECONDED AGREEMENT IN THIS RESPECT ON 3 1 ST JULY 2009. THUS, LEARNED COUNSEL HAS SUBMITTED THAT THE SECONDED AGR EEMENT WOULD NOT BE CONSIDERED AS SERVICE PROVIDED BY THE PAYEE TO T HE ASSESSEE AND THEREFORE THE PAYMENT WOULD NOT CONSTITUTE FEES FOR TECHNICAL SERVICE AS PER THE PROVISIONS OF ARTICLE 13(4) OF THE INDO UK DTAA. HE HAS FURTHER SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN CONSIDER ED AND DECIDED BY THIS TRIBUNAL IN CASE OF RAYMONDS 86 ITD 791 WHICH HAS B EEN CONSIDERED BY ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 6 THE SPECIAL BENCH OF THIS TRIBUNAL IN CASE OF MAHEN DRA & MAHENDRA LTD. 313 (AT) 263 (MUM)(SB). THUS THE ISSUE IS DIRECTLY COVERED BY THE DECISION OF THIS TRIBUNAL IN CASE OF RAYMOND AS WEL L AS SPECIAL BENCH DECISION IN CASE OF MAHENDRA AND MAHENDRA LTD. 9. THE LEARNED AR HAS EMPHASIZED THAT IN THE ABSENC E OF MAKING AVAILABLE ANY TECHNICAL KNOWLEDGE; KNOW HOW, THE PA YMENT DOES NOT FALL WITHIN THE ARTICLE 13(4) OF INDO-UK DTAA. ALTERNATI VELY, THE LEARNED AR HAS SUBMITTED THAT EVEN IN CASE THE PAYMENT ARE NOT TRE ATED AS REIMBURSEMENT THE SAME ARE NOT TAXABLE IN INDIA AS BUSINESS PROFITS IN THE ABSENCE OF P.E IN INDIA. HE HAS ALSO RELIED UPO N THE FOLLOWING DECISIONS: CIT VS DE BEERS INDIA MINERALS (P.) LTD. 346 ITR 46 7 (KAR.) CIT VS SIEMENS AKTIONGESELLSCHAFT 310 ITR 0320 UTILITY POWERTECH LTD. VS ACIT IN ITA NO. 2561/M/20 09 ACIT VS CMS (INDIA) OPERATIONS & MAINTENANCE CO. (P .) LTD. 19 TAXMAN 139(CHENNAI) BHAGYANAGAR GAS LTD. VS ACIT 29 TAXMAN 220 ABBEY BUSINESS SERVICES (INDIA) (P.) LTD. VS DCIT 2 3 TAXMAN 346 (BANG.) ITO VS ISE SECURITIES & SERVICES LTD. IN ITA NO. 63 91/M/2009 10. WE HAVE CONSIDERED THE RIVAL SUBMISSION AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE PAID RS.4,86,6187/ - TO MARKS AND SPENCER PLC TOWARDS SALARY EXPENDITURE OF 4 EMPLOYE ES DEPUTED TO THE ASSESSEE FOR PROVIDING ASSISTANT IN THE AREA OF MAN AGEMENT OF SETTING OF THE BUSINESS, RETAIL OPERATIONS, PROPERTY SELECTION & EVALUATION, ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 7 PRODUCTION MARKETING. A SERVICE AGREEMENT WAS ENTER ED INTO BETWEEN THE PARTNERS OF THE ASSESSEE JOINT VENTURE ON 6 TH OCTOBER 2008, WHEREBY MARKS & SPENCER PLC AND RELIANCE AGREED TO PROVIDE ASSISTANCE TO THE ASSESSEE JOINT VENTURE TO OPERATE THE BUSINESS. THE PARTIES HAVE SET OUT THE TERMS AND CONDITION OF THE BUSINESS OF THE JOIN T VENTURE CO. AS PER CLAUSE 3.1 OF THE AGREEMENT BETWEEN THE SHARE HOLDE RS OF THE JOINT VENTURE I.E. MARKS & SPENCER & RELIANCE WHO UNDERTO OK TO PROVIDE ASSISTANCE FROM TIME TO TIME TO THE ASSESSEE IN THE AREAS AS PROVIDE UNDER THE CLAUSE AS UNDER: SUBJECT TO CLAUSE 3.2, M&S AND RELIANCE EACH UNDER TAKE ON REQUEST TO PROVIDE ASSISTANCE FROM TIME TO TIME TO THE COMPANY IN AREAS SUCH AS; (I) HUMAN RESOURCES (II) LEGAL AND GOVERNMENTAL LIAISON; (III) TAX, FINANCE, AND ACCOUNTING; (IV) STORE DESIGN (INCLUDING CONSTRUCTION AND SHOP( FITTING); AND (V) MARKETING, STORE OPERATIONS. IT, AND THE SOURCI NG OF OFFICE SPACE(SUCH SORUCING OF OFFICE SPACE, FOR THE AVOIDA NCE OF DOUBT, BEING AS M&S OR A RELIANCE SERVICE (AS THE CASE MAY BE ) AND NOT A SPECIFIC SERVICE UNDER ANNEX.2) ( ALL PARTIES AGREEING THAT THE FORGOING LIST IS NO T INTENDED TO BE EXHAUSTIVE ON TERMS TO BE MUTUALLY AGREED BETWEEN T HE PARTIES BUT CONSISTENT WITH THE PROVISIONS OF THIS CLAUSE 3 .) 11. THE PARTNERS OF JOINT VENTURE ALSO AGREED FOR E MPLOYMENT OF SECONDED EMPLOYEES OF M&S OR RELIANCE AS PROVIDED U NDER CLAUSE 3.5 AND 3.6 OF THE AGREEMENT AS UNDER: 3.5 M&S AND RELIANCE SHALL, THROUGHOUT THE PERIOD OF THIS AGREEMENT, CO-OPERATE IN GOOD FAITH TO AGREE AND IM PLEMENT THE PROCESS AND MACHANISMS WHICH ARE MOST EFFICIENT FOR M&S, ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 8 RELIANCE AND THE COMPANY FROM TIME TO TIME FOR THE SECONDMENT TO THE COMPANY OF EMPLOYEE OF M&S OR REL IANCE (AS THE CASE MAY BE), INCLUDING CONSIDERING IN GOODS FA ITH THE PROPOSAL THAT THE COMPANY DIRECTLY ENGAGES SUCH SEC ONDED EMPLOYEES BUT THAT THE CONTINUITY OF EMPLOYMENT OF SUCH SECONDED EMPLOYEES IS RETAINED BY M&S OR RELIANCE ( AS THE CASE MAY BE). 3.6 SUBJECT TO CLAUSE 3.5 ABOVE AND FOR THE AVOIDAN CE OF DOUBT, THE SECONDMENT OR DIRECT ENGAGEMENT OF EMPLOYEES BY M&S AND RELIANCE TO THE COMPANY SHALL BE GOVERNED BY A SEPA RATE AGREEMENT AND SHALL NOT CONSTITUTE A M&S SERVICE OR A RELIANCE SERVICE. THE COST OF ANY EMPLOYEES OF M&S OR RELIAN CE (AS THE CASE MAY BE) THAT ARE SECONDED TO OR DIRECTLY ENGAG ED BY THE COMPANY WILL BE CHARGED TO THE COMPANY WITHOUT MARK UP OR THE COMPANY SHALL DIRECTLY COMPENSATE THE SECONDED OR E NGAGED EMPLOYEE, UNLESS OTHERWISE AGREED BETWEEN M&S AND R ELIANCE. 12. THUS, IT IS CLEAR FROM THE CLAUSE 3.6 OF THE AG REEMENT THAT THE PARTIES WILL SIGN A SECONDED AGREEMENT WITHOUT ANY MARK UP AND THEREFORE, THE ASSESSEE SHALL DIRECTLY COMPENSATE T HE SECONDED OR ENGAGED EMPLOYEES. THE PARTIES I.E. ASSESSEE AND M& S PLC FURTHER SIGNED A CONFIRMATION OF UNDERSTANDING AS AGREED AT THE TIME OF AGREEMENT VIDE CONFIRMATION LETTER DATED 31 ST JULY 2009 WHEREBY THESE EMPLOYEES WHICH WERE PROVIDED BY MARKS & SPENCER PL C TO THE ASSESSEE WERE RETAINED AS SECONDED EMPLOYEES. THE ASSESSEE H AS CLAIMED THAT THE AMOUNT PAID TO THE MARKS & SPENCER PLC UK IS ONLY T HE REIMBURSEMENT OF COST AND SINCE THE SAME IS NOT IN THE NATURE OF FTS IT IS NOT TAXABLE IN INDIA IN THE ABSENCE OF ANY PROFIT ELEMENT AS WELL AS PERMANENT ESTABLISHMENT OF THE PAYEE. AS FAR AS THE CLAIMED O F REIMBURSEMENT OF COST IS CONCERNED THE SAME IS RELEVANT ONLY WHEN TH E PAYMENTS ARE FOUND AS NOT IN THE NATURE OF FTS BECAUSE IN CASE OF FTS THE GROSS AMOUNT IS ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 9 TAXABLE AND NOT THE PROFIT ELEMENT. THUS, LET US, F IRST EXAMINE ISSUE OF FTS AND PARTICULARLY AS PER THE PROVISION OF INDO-UK DT AA. 13. THE CIT(A) HAS CONSIDERED THE PROVISIONS OF DTA A AND DECIDE THE SAME ISSUE BY FOLLOWING THE DECISION OF SPECIAL BEN CH INC CASE OF MAHENDRA & MAHENDRA(SUPRA) IN PARA 4.6 TO 4.11 AS U NDER: 4.6 IN CASE OF MAHENDRA AND MAHENDRA LTD 122 TTA 5 77 A SPL. BENCH ITAT WHILE DISCUSSING THE ISSUE OF TAXABILITY OF REIMBURSEMENT OF EXPENSES, FOR THE SERVICES RENDERE D BY THE COMPANIES OVERSEAS, ACTING A LEAD MANAGER FOR GDR & FCCB ISSUED BY INDIAN CO FOR RAISING THE FUNDS ABROAD HA VE HELD, THAT WHERE TECHNICAL SERVICES WERE RENDERED TO THE INDIA N PARTY, EVEN THOUGH USED BY THE NON RESIDENTS, THE AMOUNT O F MANAGEMENT AND COMMISSION FEES IS NOT TAXABLE UNDER THE INDO UK TREATY SINCE MAKE AVAILABLE CLAUSE IS NOT SATI SFIED. REGARDING REIMBURSEMENT OF EXPENSES IT HAS DECIDED THE ISSUE IN PARA 19-13 AS UNDER: 19.13 WE HAVE CONSIDERED THE NATURE OF SERVICES R ENDERED BY THE NON-RESIDENT IN AN EARLIER PART OF THIS ORDER. SUCH SERVICES COMMENCED PRIOR TO THE BRINGING OUT FCCB ISSUE; AND CONTINUED DURING THE PERIOD WHEN THE ISSUE WAS OPEN FOR SUBSC RIPTION AND CONTINUED EVEN AFTER ITS CLOSING. A METICULOUS LOOK AT THE NATURE OF SUCH SERVICES TAKEN NOTE OF ABOVE, CLEARLY REVEA LS THAT THESE ARE IN THE NATURE OF TECHNICAL, MANAGERIAL OR CONSU LTANCY SERVICES. TO BE MORE SPECFLC THE MANAGEMENT COMMIS SION PAID BY THE ASSESSEE TO THE NON-RESIDENT ALONG WITH THE SELLING COMMISSION IS APTLY BROUGHT WITHIN THE SCOPE OF F EES FOR TECHNICAL SERVICES . UNDERWRITING COMMISSION IS BASICALLY CONSIDERATION FOR ASSURING THAT F THE ISSUE IS NOT FULLY SUBSCRIBED THEN THE UNDERWRITERS SHALL TAKE UP THE UNSUBSCRIBE D BED PORTION OF THE SHARES AND IN RETURN FOR SUCH UNDERTAKING, T HE UNDERWRITING COMMISSION IS PAID AT A SPECIFIC PERCENTAGE OF THE AMOUNT OF THE TOTAL ISSUE. UNDERWRITING COMMISSION IS ONLY FOR IN CURRING THE LIABILITY OF SUBSCRIBING TO THE UNSUBSCRIBED PORTIO N LEFT OVER BY THE GENERAL PUBLIC. THE ASSURANCE SO GIVEN FOR PURCHASI NG THE UNSUBSCRIBED SHARES DOES NOT REQUIRE RENDERING OF A NY SERVICES BY THE UNDERWRITER. THUS THE UNDERWRITING COMMISSIO N IS DE HORS THE RENDERING OF ANY MANAGERIAL, TECHNICAL OR CONSU LTANCY SERVICES AND HENCE CANNOT FALL WITHIN THE DEFINITIO N OF FEES FOR TECHNICAL SERVICES UNDER S. 9(L)(VII). THE LAST ITE M IS THE REIMBURSEMENT OF EXPENSES. THE AD HAS NOT DISPUTED THAT THE SUM OF RS. 1.68 CRORES IS. IN THE NATURE OF EXPENSE S REIMBURSED BY THE ASSESSEE TO THE LEAD MANAGERS. WHEN A PARTIC ULAR AMOUNT ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 10 OF EXPENDITURE IS INCURRED AND THAT SUM IS REIMBURS ED AS SUCH, THAT CANNOT BE CONSIDERED AS HAVING ANY PART OF IT IN THE NATURE OF INCOME. ANY PAYMENT, IN ORDER TO BE BROUGHT WITH IN THE SCOPE OF INCOME BY WAY OF FEES FOR TECHNICAL SERVICES UND ER S. 9(L)(VII), SHOULD BE OR HAVE AT LEAST SOME ELEMENT OF INCOME I N IT. SUCH PAYMENT SHOULD INVOLVE SOME COMPENSATION FOR THE RE NDERING OF ANY SERVICES, WHICH CAN BE DESCRIBED AS INCOME IN T HE HANDS OF THE RECIPIENT. IN OTHER WORDS THE COMPONENT OF INCO ME MUST BE PRESENT IN THE TOTAL AMOUNT OF FEES PAID FOR TECHNI CAL SERVICES TO CONSTITUTE AS AN ITEM FALLING UNDER S. 9(L)(VII). W HERE THE EXPENDITURE INCURRED IS REIMBURSED AS SUCH WITHOUT HAVING AM ELEMENT OF INCOME IN THE HANDS OF THE RECIPIENT, IT CANNOT ASSUME THE CHARACTER OF INCOME DEEMED TO ACCRUE OR ARISE I N INDIA. WE, THEREFORE, HOLD THAT THE AMOUNT OF MANAGEMENT COMM ISSION IN RESPECT OF FCCB ISSUE AMOUNTING TO RS. 1.62 CRORES AND THE SELLING COMMISSION OF RS. 6.07 CRORES FALL WITHIN THE SCOPE OF INCOME BY WAY OF FEES FOR TECHNICAL SERVICES IN TER MS OF S. 9(L)(VII). HOWEVER, THE OTHER TWO AMOUNTS NAMELY TH E UNDERWRITING COMMISSION AT RS. 2.43 CRORES AND TH E EXPENSES REIMBURSED AT RS. 1.68 CRORES ARE NOT INCOME BY WA Y OF FEES FOR TECHNICAL SERVICES. 19.24 WE HAVE DISCUSSED ABOVE THAT WHERE DTAA HAS B EEN ENTERED INTO BY INDIA WITH ANOTHER COUNTRY OF WHICH THE NON- RESIDENT IS TAX RESIDENT, THEN IT HAS TO BE EXAMINE D AS TO WHETHER INCOME, WHICH IS OTHERWISE CHARGEABLE UNDER THE ACT IN THE HANDS OF THE NON-RESIDENT, CAN BE BROUGHT TO TAX AS PER T HE TERMS OF DTAA ALSO. IF THE INCOME IS CHARGEABLE TO TAX UNDER THE REGULAR PROVISIONS OF THE ACT THEN THE SECOND QUESTION IS T O EXAMINE THE PROVISIONS OF DTAA AND F THE SAME IS STILL TAXABLE UNDER DTAA THEN THE NON-RESIDENT IS LIABLE TO TAX IN RESPECT OF SUC H INCOME. IF HOWEVER THE DTAA IMMUNES SUCH INCOME FROM TAX NET, THEN THAT INCOME CANNOT BE TAXED NOTWITHSTANDING THE FACT THA T THE SAME IS TAXABLE UNDER THE GENERAL PROVISIONS OF THE ACT. HA VING COME TO THE CONCLUSION THAT THE MANAGEMENT COMMISSION AND S ELLING COMMISSION ARE IN THE NATURE OF INCOME BY WAY OF FE ES FOR TECHNICAL SERVICES UNDER S. 9C1)(VII) NOW IT REMAIN S TO BE SEEN WHETHER THEY CAN BE TAXED UNDER THE DTAA ALSO. 19,15 WE WILL TAKE UP THE SECOND DTAA WITH UK, WHIC H IS RELEVANT TO THE FCCB ISSUE BROUGHT IN 1996. ARTICLE 7 DEALS WITH THE BUSINESS PROFITS AND PROVIDES THAT THE PROFITS OF AN ENTERPRISE OF CONTRACTING STATE SHALL BE TAXABLE ONLY IN THAT STA TE UNLESS THE ENTERPRISE CARRIES ON BUSINESS IN THE OTHER CONTRAC TING STATE THROUGH A PE SITUATED THEREIN. ARTICLE 5(1) DEFINES PE FOR THE PURPOSE OF THIS CONVENTION TO MEAN A FIXED PLACE OF BUSINESS THROUGH WHICH BUSINESS OF AN ENTERPRISE IS WHOLLY O R PARTLY CARRIED ON. CLAUSE (2) OF ART. 5 GIVES THE MEANING OF PE IN AN INCLUSIVE MANNER. THE LEARNED AUTHORISED REPRESENTATIVE HAS C ONTENDED ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 11 THAT SINCE THE NONRESIDENTS DID NOT HAVE ANY PE IN INDIA, THE COMMISSION EARNED BY THEM FROM THE ASSESSEE WHICH I S BUSINESS PROFIT, WAS NOT LIABLE TO TAX. WE ARE NOT AGREEABL E WITH THIS ARGUMENT. THERE IS CONTROVERSY ON THE LEGAL POSITIO N THAT THE BUSINESS PROFITS UNDER ART. 7 CAN CHARGED TO TAX IN INDIA ONLY IF THE NON-RESIDENT HAS PE IN INDIA. THERE IS NO DEARTH OF THE JUDICIAL PRECEDENTS LAYING DOWN THAT IN THE ABSENCE OF ANY P E IN INDIA THE BUSINESS PROFIT OF THE NONRESIDENT CANNOT BE TAXED IN INDIA. BUT THE REAL CONTROVERSY BEFORE US IS ABOUT THE NATURE OF P AYMENT MADE BY THE ASSESSEE THE NON-RESIDENT WHICH IS IN THE NATUR E OF FEES FOR TECHNICAL SERVICES FOR WHICH SPECIAL ARTICLE HAS B EEN INCLUDED IN THE CONVENTION. CLAUSE (1) OF ART. 13 OF THIS DTAA PROVIDES THAT THE ROYALTIES AND FEES FOR TECHNICAL SERVICES ARISING I N A CONTRACTING STATE AND PAID TO RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXED IN THAT OTHER STATE. ON A GLANCE AT THIS ARTI CLE, IT TURNS OUT THAT THERE IS NO PRECONDITION FOR TAXING ROYALTIES AND FEES FOR TECHNICAL SERVICES IN INDIA ONLY TO THE EXTENT WHIC H IS ATTRIBUTABLE TO THE PE OF THE NON-RESIDENT, AS IS THERE IN RELAT ION TO ART. 7. SO EVEN IN THE ABSENCE OF ANY P.C OF THE NON-RESIDENT, ART. 13 OPERATES AND ROYALTIES OR FEES FOR TECHNICAL SERVI CES PAID TO THE RESIDENT OF ANOTHER CONTRACTING STATE MAY BE TAXED IN THAT OTHER STATE. BUSINESS PROFITS ARTICLE IS A GENERAL ARTI CLE, WHEREAS THERE ARE CERTAIN SEPARATE ARTICLES FOR TREATING SPECIFIC INCOMES INDEPENDENTLY. FOR EXAMPLE INCOME FROM AIR TRANSPOR T IS SUBJECT- MATTER OF ART. 8. SHIPPING IS COVERED UNDER ART. 9. INTEREST INCOME IS SPECIFIED UNDER ART. 12. IN THE LIKE MANNER ROY ALTIES AND FEES FOR TECHNICAL SERVICES IS A SUBJECT-MATTER OF ART. 13. 19.16 IT IS SETTLED LEGAL POSITION THAT THE SPECIFI C PROVISIONS OVERRIDE THE GENERAL PROVISION. THE LEGAL MAXIM GENERALIA S PECIALIBUS NON- DEROGANT MEANS THAT THE GENERAL THINGS DO NOT DERO GATE FROM SPECIAL. IN OTHER WORDS, IT IMPLIES THAT THE SPECIA L PROVISIONS OVERRIDE THE GENERAL PROVISION. IF THERE ARE TWO CO NFLICTING PROVISIONS IN THE SAME SECTION OR CLAUSE, THE SPECI AL PROVISION WILL PREVAIL AS THE SAME IS EXCLUDED FROM THE GENERAL PR OVISION. TO PUT IT IN SIMPLE WORDS, IF A SPECIFIC PROVISION IS MADE ON A CERTAIN SUBJECT-MATTER, THAT MATTER IS EXCLUDED FROM THE GE NERAL PROVISION. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F FORBES FORBES CAMPBELL & CO. LTD. VS. CIT (1994) 129 CTR (BORN) 3 19 : (1994) 206 ITR 495 (BORN) HAS QUOTED THE ABOVE MAXIM WITH APPR OVAL. IT HAS ALSO BEEN APPLIED BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. COPES VULCAN INC. (1986) 57 CTR (MAD) 244 : (1987) 167 ITR 884 (MAD), IN WHICH CASE IT WAS HELD THAT S. 9(1)(I ) IS GENERAL IN NATURE AND S. 9(1)(VII) REFERS TO A PARTICULAR TYPE OF INCOME AND IS A SPECIAL PROVISION DEALING WITH EVEN FOR TECHNICAL S ERVICES RENDERED BY THE FOREIGN COMPANY. AFTER CONSIDERING THE ARGUM ENTS FROM BOTH SIDES IT WAS HELD THAT S. 9(1)(VII) WOULD APPLY. RE CENTLY THE HON BLE SUPREME COURT IN THE CASE OF BRITANNIA INDUSTRIES L TD. VS. CIT (2005) 198 CTR (SC) 313 (2005) 278 ITR 546 (SC) HAS HELD THAT THE ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 12 EXPENDITURE TOWARDS RENT, REPAIRS, MAINTENANCE OF G UEST HOUSE USED IN CONNECTION WITH THE BUSINESS IS TO BE DISAL LOWED UNDER S. 3 7(4) BECAUSE THIS IS A SPECIAL PROVISION OVERRIDING THE GENERAL PROVISION. IT THEREFORE, FOLLOWS THAT IF A SPECIFIC PROVISION IS MADE THEN THAT MATTER IS EXCLUDED FROM THE GENERAL PROVI SION. COMING BACK TO THE DTAA UNDER CONSIDERATION WE FIND THAT A RT. 13 SPECIFICALLY DEALS WITH THE ROYALTY ITS AND FEES FOR TECHNICAL SERVICES. IN SUCH A SITUATION ART. 7 DEALING WITH THE BUSINESS PROFITS CANNOT BE CONSIDERED FOR APPLICATION WITH RESPECT TO THE FEES FOR TECHNICAL SERVICES WHICH IS SUBJECT-MATT ER OF ART. 13 SEPARATELY. WE WILL THUS IGNORE THE GENERAL PROVISI ON IN ART. 7 AND CONSIDER THE SPECIAL PROVISION AS CONTAINED IN ART. 13 FOR OUR PURPOSE. CLAUSE (2) OF ART. 13 PROVIDES THAT THE RO YALTIES AND FEES FOR TECHNICAL SERVICES MAY ALSO BE TAXED IN THE CON TRACTING STATE IN WHICH THEY ARISE AND ACCORDING TO LAW OF THAT STATE ; BUT F THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHN ICAL SERVICES IS THE RESIDENT OF THE OTHER CONTRACTING STATE, THE TAX SO CHARGED SHALL NOT EXCEED THE LIMITS SET OUT THEREIN. ARTICLE 13(4) DE FINES THE TERM FEES FOR TECHNICAL SERVICES TO MEAN PAYMENTS OF A NY KIND TO ANY PERSON IN CONSIDERATION FOR THE RENDERING OF ANY TE CHNICAL OR CONSUITANCY SERVICES (INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL SERVICES OR OTHER PERSONNEL);WHICH: (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A PAYMENT DESCRIBED IN PARA 3(A) OF THIS ARTICLE IS RECEIVED; OR (B) ARE ANCILLARY AND SUBSIDIARY TO THE ENJOYMENT O F THE PROPERTY FOR WHICH A PAYMENT DESCRIBED IN PARA 3(B) OF THIS ARTI CLE IS RECEIVED; OR (C) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES, OR CONSIST OF DEVELOPMENT AND TRANSFER O F A TECHNICAL PLAN OR TECHNICAL DESIGN. 19.17 THE CASE OF THE ASSESSEE BEFORE THE AO WAS TH AT IT IS COVERED BY (C) ABOVE, WHICH FACT HAS NOT BEEN DENIE D BY THE OFFICER. HENCE TO BRING ANY PAYMENT WITHIN THE PARA METERS OF FEES FOR TECHNICAL SERVICES IT IS OF PARAMOUNT IMPO RTANCE THAT THE TECHNICAL KNOWLEDGE, EXPERIENCE OR SKILL ETC. IS MA DE AVAILABLE TO IT. REFERRING TO THE ORDER PASSED BY THE TRIBUNAL I N RAYMOND LTD. (SUPRA) THE LEARNED AUTHORISED REPRESENTATIVE STATE D THAT THE MUMBAI BENCH ALSO CONSIDERED THE DTAA WITH UK AND H ELD THAT THE TECHNICAL SERVICES RENDERED BY THE LEAD MANAGER S IN CONNECTION WITH THE GDR ISSUE MUST BE MQ4. AVAILABL E SO AS TO BE COVERED UNDER ART. 13 . HE SUBMITTED THAT THE TRIBUNAL HELD THAT SINCE THE SERVICES WERE RIOT MADE AVAILABLE HE NCE THE MANAGEMENT AND SELLING COMMISSION COULD NOT BE TAXE D IN THE HANDS OF THE PAYEE. HE ARGUED THAT THE FACTS AND CI RCUMSTANCES CONSIDERED IN RAYMOND LTD. ARE IDENTICAL TO THOSE U NDER CONSIDERATION INASMUCH AS IN THAT CASE ALSO GDR ISS UE WAS ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 13 BROUGHT OUT AND LEAD MANAGERS WERE APPOINTED WHO WE RE PAID FOR SIMILAR SERVICES, IN THE SIMILAR MANNER. HE ALS O REFERRED TO CERTAIN CASES IN WHICH THE ORDER IN THE CASE OF RAY MOND LTD. (SUPRA) HAS BEEN FOLLOWED BY DIFFERENT BENCHES OF T HE TRIBUNAL TAKING THE SIMILAR VIEW. 19.18 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN T HE LIGHT OF MATERIAL PLACED BEFORE US AND PRECEDENTS RELIED UPO N. WE FIND THAT CIS. (1) AND (2) OF ART. 13 IN THE DTAA WITH U K CLEARLY PROVIDE THAT THE FEES FOR TECHNICAL SERVICES IS TAX ABLE IN INDIA. NOW WE HAVE TO CONSIDER THE MEANING OF THE TERM FE ES FOR TECHNICAL SERVICES AS EMPLOYED IN THIS ARTICLE. AS NOTED ABOVE CL. (4) OF ART. 13 DEFINES THE MEANING OF THE TERM FEES FOR TECHNICAL SERVICES. THE ENTIRE QUARREL IS ABOUT TH E APPLICABILITY OR OTHER WISE OF SUO-U. (C) OF CL, (4) OF ART. 13 A S PER WHICH FEES FOR MAKING AVAILABLE OF THE TECHNICAL KNOWLEDGE, EX PERIENCE, SKILL ETC. IS INCLUDED IN THE DEFINITION OF THIS SU B-CLAUSE. IN OTHER WORDS THE TECHNICAL KNOWLEDGE. EXPERIENCE OR SKILL ETC. MUST BE MADE AVAILABLE TO THE ASSESSEE SO AS TO BE COVERED WITHIN ITS SCOPE AND MERE PROVI4JNG OF SUCH SERVICES WITHOUT M AKING THEM AVAILABLE TO THE ASSESSEE WILL NOT SERVE THE P URPOSE AND HENCE WILL BE OUTSIDE THE AMBIT OF ARTICLE. THE ASS ESSEE HAS AB INITIO CONTENDED BEFORE THE AUTHORITIES BELOW THAT EVEN IF THE SERVICES RENDERED BY THE LEAD MANAGERS WERE HELD TO BE TECHNICAL SERVICES BUT THOSE WERE NOT MADE AVAILAB LE THE ASSESSEE. RENDERING OF ANY TECHNICAL OR CONSULTANC Y SERVICES IS FOLLOWED BY WHICH MAKE AVAILABLE TECHNICAL KNOW LEDGE, EXPERIENCE, SKILL, KNOW HOW. IN THIS CONTEXT IS BE COMES IMPERATIVE TO UNDERSTAND THE MEANING OF THE EXPRESS ION MAKE AVAILABLE USED IN THIS ARTICLE. MAKE AVAILABLE MEAN S TO PROVIDE SOMETHING TO ONE, WHICH IS CAPABLE OF USE BY THE OT HER. SUCH USE MAY BE FOR ONCE ONLY OR ON A CONTINUOUS BASIS. IN OUR CONTEXT TO MAKE AVAILABLE THE TECHNICAL SERVICES ME ANS THAT SUCH TECHNICAL INFORMATION OR ADVICE IS TRANSMITTED BY THE NON- RESIDENT TO THE ASSESSEE, WHICH REMAINS AT ITS DISP OSAL FOR TAKING THE BENEFIT THEREFROM BY USE. EVEN THE USE O F SUCH TECHNICAL SERVICES BY THE RECIPIENT FOR ONCE ONLY W ILL SATISFY THE TEST OF MAKING AVAILABLE THE TECHNICAL SERVICES TO THE ASSESSEE. IF THE NONRESIDENT USES ALL THE TECHNICAL SERVICES AT ITS OWN END, ALBEIT THE BENEFIT OF THAT DIRECTLY AND SOLELY FLOW S TO THE PAYER OF THE SERVICES, THAT CANNOT BE CHARACTERIZED AS THE M AKING AVAILABLE OF THE TECHNICAL SERVICES TO THE RECIPIEN T. 19.19 THE MEANING OF THE EXPRESSION MAKE AVAILABLE HAS BEEN APTLY CONSIDERED IN THE CASE OF INTERTEK TESTI NG SERVICES INDIA (P) LTD., IN RE (2008) 220 CTR (AAR) 540: (20 08) 307 ITR 418 (AAR) AS UNDER: NOW, WE SHALL PROCEED TO ANALYSE FURTHER CL, (C) O F ART. 13(4). RENDERING OF SERVICE AND MAKING USE OF SERVICE GO T OGETHER. ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 14 THEY ARE TWO SIDES OF THE SAME COIN. BUT CL. (C) OF ART. 13(4) DOES NOT STOP AT THAT. IT CARVES OUT A (QUALIFICATI ON THERETO BY EMPLOYING THE WORDS WHICH MAKE AVAILABLE TECHNICAL EXPERIENCE, SKILL, KNOW-HOW OR PROCESSES. RENDERIN G TECHNICAL OR CONSULTANCY SERVICE IS FOLLOWED BY A RELATIVE PR ONOUN WHICH AND IT HAS THE EFFECT OF QUALIFYING THE SERVICES. T HAT MEANS, THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NATURE THAT MAKE AVAILABLE TO THE RECIPIENT TECHN ICAL KNOWLEDGE, KNOW- HOW AND THE LIKE. THE SERVICE SHOU LD BE AIMED AT AND RESULT IN TRANSMITTING THE TECHNICAL K NOWLEDGE, ETC., SO THAT THE PAYER OF SERVICE COULD DERIVE AN ENDURING BENEFIT AND UTILIZE THE KNOWLEDGE OR KNOW-HOW IN FU TURE ON HIS OWN WITHOUT THE AID OF THE SERVICE PROVIDER. BY MAK ING AVAILABLE THE TECHNICAL SKILLS OR KNOW-HOW, THE REC IPIENT OF THE SERVICE WILL GET EQUIPPED WITH THAT KNOWLEDGE OR EX PERTISE AND BE ABLE TO MAKE USE OF IT IN FUTURE, INDEPENDENT OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO THE TERMINOLO GY MAKE AVAILABLE, THE TECHNICAL KNOWLEDGE, SKILLS, ETC., MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER T HE PARTICULAR CONTRACT COMES TO AN END. THE SERVICES OFFERED MAY BE THE PRODUCT OF INTENSE TECHNOLOGICAL EFFORT AND A LOT O F TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER WO ULD HAVE GONE INTO IT. BUT THAT IS NOT ENOUGH TO FALL WITHIN THE DESCRIPTION OF SERVICES WHICH MAKE AVAILABLE THE TECHNICAL KNOW LEDGE, ETC. THE TECHNICAL KNOWLEDGE OR SKILLS OF THE PROVIDER S HOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT TH E RECEIVER CAN DEPLOY SIMILAR TECHNOLOGY OR TECHNIQUES IN FUTU RE WITHOUT DEPENDING ON THE PROVIDER. TAKING SOME EXAMPLES, TH E TRAINING GIVEN TO A COMMERCIAL AIRCRAFT PILOT OR TRAINING TH E STAFF IN PARTICULAR SKILLS SUCH AS SOFTWARE DEVELOPMENT WOUL D FALL WITHIN THE AMBIT OF THE SAID EXPRESSION IN CL. (C). SUPPOS ING, A PRESCRIPTION AND ADVICE IS GIVEN BY THE DOCTOR AFTE R EXAMINING THE PATIENT AND GOING THROUGH THE CLINICAL REPORTS. THE SERVICE RENDERED BY THE DOCTOR CANNOT BE SAID TO HAVE MADE AVAILABLE TO THE PATIENT, THE KNOWLEDGE AND EXPERTISE POSSESS ED BY THE DOCTOR. ON THE OTHER HAND, IF THE SAME DOCTOR TEACH ES OR TRAINS STUDENTS ON THE ASPECTS OF DIAGNOSIS OR TECHNIQUES OF SURGERY, THAT WILL AMOUNT TO MAKING AVAILABLE THE TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE DOCTOR. 19.20 SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF RA YMOND LTD. (SUPRA). IT, THEREFORE, FOLLOWS THAT MAKING AVAILAB LE THE TECHNICAL SERVICES TO THE RECIPIENT IS SINE QUA NON FOR TREAT ING CONSIDERATION PAID FOR IT AS FEES FOR TECHNICAL SER VICES UNDER ART. 13 OF DTAA WITH UK. ADVERTING TO THE FACTS OF THE I NSTANT CASE WE FIND THAT THE LEAD MANAGERS HAD RENDERED TECHNIC AL, MANAGERIAL OR CONSULTANCY SERVICES IN THE GDR ISSUE , BUT SUCH SERVICES WERE NOT MADE AVAILABLE TO THE ASSESSEE IN ASMUCH AS THE ASSESSEE ONLY DERIVED THE BENEFIT FROM THE TECH NICAL ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 15 KNOWLEDGE, EXPERIENCE OR SKILL IN ITS POS.., HOLD T HAT ART. 13 OF DTAA WITH UK DOES NOT APPLY TO THE INSTANT CASE AND HENCE THE MANAGEMENT AND SELLING COMMISSION CANNOT BE TAXED IN INDIA. THE OTHER TWO ITEMS NAMELY UNDERWRITING COMMISSION AND EXPENSES REIMBURSED HAVE ALREADY BEEN HELD BY US TO BE NOT IN THE NATURE OF FEES FOR TECHNICAL SERVICES. IF THE U NDERWRITING COMMISSION DOES NOT FALL WITHIN ART. 13 OF DTAA WIT H UK, THEN THAT WILL FALL WITHIN THE SCOPE OF ART. 7, BEING TH E BUSINESS PROFIT WHICH IS A GENERAL PROVISION FOR THE INCOME EARNED. IT IS A SETTLED LEGAL POSITION AND ALSO CLEARLY BORNE OUT F ROM THE LANGUAGE OF ART. 7 THAT THE PROFITS OF AN ENTERPRIS E WHICH CARRIES ON BUSINESS IN THE OTHER STATE SHALL BE TAXED ONLY TO THE EXTENT WHICH IS ATTRIBUTABLE TO ITS PE. THE ASSESSEE ARGUE D BEFORE THE AO THAT THE NONRESIDENT HAD NO PE IN INDIA, WHICH H AS NOT BEEN CONTRADICTED BY THE AO. NOWHERE FROM THE ASSESSMENT ORDER IT COMES UP THAT THE AO HAD TREATED ANY PLACE AS PE OF THE NON- RESIDENT. IN THE ABSENCE OF ANY PE OF THE NON-RESID ENT IN INDIA, IN OUR CONSIDERED OPINION, THE BUSINESS PROFITS U NDER ART. 7 CANNOT BE CHARGED TO TAX AND HENCE UNDERWRITING COM MISSION WOULD ALSO BE OUTSIDE THE AMBIT OF TAX AS PER DTAA. THUS THE ENTIRE AMOUNT PAID BY THE ASSESSEE IN RELATION TO T HE FCCB ISSUE, VIZ., MANAGEMENT, SELLING AND UNDERWRITING C OMMISSION ALONG WITH THE REIMBURSEMENT OF EXPENSES CANNOT BE TAXED IN THE HANDS OF THE NON-RESIDENT AND RESULTANTLY THERE CAN BE NO OBLIGATION ON THE ASSESSEE TO DEDUCT TAX AT SOURCE UNDER S. 195. RESULTANTLY THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT UNDER S. 201(1) OF THE LT. ACT. 4.7 THE PRESENT CASE IS A CASE OF PART REIMBURSEMEN T OF EXPENSES AND THEREFORE THERE IS NO INCOME ELEMENT P RESENT IN PART REIMBURSEMENT. THE SERVICES RENDERED BY THE FO UR PERSONS DEPUTED TO THE APPELLANT ARE ASSISTANCE IN MANAGEME NT AND SET UP OF BUSINESS, ASSISTANCE IN PROPERTY SELECTION AN D EVALUATION AND LEADING THE RETAIL OPERATION, MERCHANDISING AND PRODUCT MATTER AND SET UP OF MERCHANDISING TEAM UNDER DIREC T CONTROL, MANAGEMENT AND SUPERVISION OF THE APPELLANT. THIS M EANS THAT THE FOUR PERSONS DEPUTED TO THE APPELLANT HAVE WORK ED AS PER THE NEEDS OF THE APPELLANT TO SET UP ITS RETAIL BUS INESS OPERATIONS. THE SERVICES NECESSARY TO SET RETAIL BU SINESS OPERATIONS CANNOT BE SAID TO BE TECHNICAL SERVICES WITHIN THE SCOPE OF TREATY BETWEEN INDIA AND U.K. AND AS EXPLA INED BY ITAT MUMBAI IN THE CASE OF RAYMONDS LTD (SUPRA). FURTHER , FROM THE ABOVE IT ALSO CANNOT BE SAID THAT THE SERVICES HAVE BEEN MADE AVAILABLE TO THE APPELLANT TO BE TAXABLE IN INDIA. 4.8 REFERENCE IN THIS REGARD IS MADE TO THE JU DGEMENT OF ITAT BANGALORE A BENCH IN CASE OF IDS SOFTWARE SOLUTIO NS (INDIA (P) LTD. 122 ITJ (BANG) 410. IN THIS CASE OF AN EMPLOYE E OF U.S. COMPANY WAS SECONDED TO THE INDIAN COMPANY UNDER AN ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 16 SECONDMENT AGREEMENT TO PROVIDE MANAGERIAL SERVICE S IN THE BUSINESS OF THE INDIAN COMPANY. THE SECONDED EMPLOY EE WAS REPORTABLE AND RESPONSIBLE TO THE INDIAN COMPANY AN D WAS REQUIRED TO DEVOTE THE WHOLE OF HIS TIME, ATTENTION AND SKILLS TO THE DUTIES REQUIRED BY THE SECONDMENT AGREEMENT. TH E INDIAN COMPANY HAD THE RIGHT TO APPROVE OR REJECT THE EMPL OYEE AND IF NECESSARY TO REQUEST THE US COMPANY TO REPLACE THE EMPLOYEE IF SUCH EMPLOYEE IS FOUND NOT QUALIFIED TO MEET THE RE QUIREMENTS OF THE SECONDED ARRANGEMENTS. THE SECONDED EMPLOYEE WA S REQUIRED TO ACT AND SERVE AS OFFICERS, AUTHORIZED SIGNATORIES, NOMINEES AND IN OTHER LAWFUL CAPACITY ON BEHALF OF THE INDIAN COMPANY ETC. ON THESE FACTS THE ITAT HAS HELD AS UN DER; THE NEXT QUESTION IS WHETHER THE AMOUNT CAN BE CON SIDERED AS FEES FOR TECHNICAL SERVICES WITHIN THE MEANING OF E XPIN. 2 BELOW S.9(1)(VII) OF THE IT.ACT. UNDER THIS EXPLANATION F EES FOR TECHNICAL SERVICES MEANS ANY CONSIDERATION INCLUDING LUMP SUM CONSIDERATION FOR THE RENDERING MANAGERIAL, TECHNIC AL OR CONSULTANCY SERVICES, INCLUDING THE PROVISION OF SE RVICES OF TECHNICAL OR OTHER PERSONNEL, BUT DOES NOT INCLUDE CONSIDERATION FOR ANY CONSTRUCTION, ASSEMBLY, MINING OR LIKE PROJ ECT UNDERTAKEN BY THE RECIPIENT OR CONSIDERATION WHICH WOULD BE INCOME OF THE RECIPIENT CHARGEABLE UNDER THE HEAD SALARIES . IT IS NOT DENIED BEFORE US ON BEHALF OF THE ASSESSEE T HAT DR.SUNDARAJAN IS A TECHNICAL PERSON. WHAT IS HOWEVE R SUBMITTED IS THAT ARTS 11 AND VI OF THE SECONDMENT AGREEMENT WOULD BE OUT OF PLACE IN A CONTRACT FOR PROVIDING TECHNICAL SERVICES. ARTICLE II AS WE HAVE ALREADY SEEN CONTAINS EIGHT CLAUSES O UTLINING THE DUTIES AND OBLIGATIONS OF THE SECONDED EMPLOYEE. AR TICLE VI PROVIDES FOR INDEMNIFICATION WHICH HAS ALSO BEEN EA RLIER NOTICED BY US. WE ARE INCLINED TO AGREE WITH THE SUBMISSION THAT THESE TWO ARTICLES ARE OUT OF PLACE IN A CONTRACT FOR PRO VIDING TECHNICAL SERVICES. FOR EXAMPLE, CLS. (A) TO (C) OF ART II MA KE THE SECONDED EMPLOYEE RESPONSIBLE AND SUBSERVIENT TO THE ASSESSE E COMPANY WHICH CANNOT BE THE CASE IF THE AGREEMENT IS FOR PR OVIDING TECHNICAL SERVICES BY IDS ACT AS OFFICER OR AUTHORI ZED SIGNATORY OR NOMINEE OR IN ANY OTHER LAWFUL PERSONAL CAPACITY FO R THE ASSESSEE COMPANY, WOULD ALSO BE OUT OF PLACE IN THE AGREEMENT FOR RENDERING TECHNICAL SERVICES AS IT CANNOT BE I MAGINED THAT A TECHNICAL PERSON WOULD ALSO BE REQUIRED TO ACT IN N ON-TECHNICAL CAPACITIES UNDER AN AGREEMENT FOR RENDERING TECHNIC AL SERVICES. CLAUSE (H) ON WHICH CONSIDERABLE RELIANCE WAS PLACE D BY THE DEPARTMENT TO CONTEND THAT THE AGREEMENT IS ONE FOR RENDERING TECHNICAL SERVICES, IS MERELY A CLAUSE ENSURING SEC RECY AND CONFIDENTIALITY OF THE INFORMATION ACCESSED BY THE SECONDED EMPLOYEE IN THE COURSE OF HIS EMPLOYMENT WITH THE A SSESSEE COMPANY. SUCH CONFIDENTIALITY EXTENDS NOT ONLY TO T ECHNICAL INFORMATION, WHICH WOULD BE THE CASE IF THE AGREEME NT IS ONE FOR RENDERING TECHNICAL SERVICES BUT ALSO TO FINANCIAL OR ACCOUNTING ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 17 INFORMATION, PRICE OR COST DATA AND ANY OTHER PROPR IETARY OR BUSINESS RELATED INFORMATION. ARTICLE VI WHICH PROV IDES FOR INDEMNITY, THAT IS TO SAY, THE LIABILITY OF THE ASS ESSEE COMPANY TO INDEMNIFY THE US COMPANY FROM ALL CLAIMS, DEMANDS, ETC., CONSEQUENT TO ANY ACTOR OMISSION BY THE SECONDED EM PLOYEE IS ALSO INCONSISTENT WITH THE CLAIM OF THE DEPARTMENT THAT THIS IS AN AGREEMENT FOR RENDERING TECHNICAL SERVICES. THE ART ICLE FURTHER PROVIDES THAT NOTHING IN THE AGREEMENT SHALL BE CON STRUED AS A WARRANTY OF THE QUALITY OF THE SECONDED EMPLOYEE. I T IS NOT USUAL TO FIND A STIPULATION IN AN AGREEMENT FOR RENDERING TECHNICAL SERVICES. 4.9 SIMILARLY IN CASE OF LOUIS BERGER INTERNATION AL INC. 40 SOT 370 (HYD) HONBLE HYDERABAD 1TAT IN A CASE OF REIMB URSEMENT OF EXPENSES FOR PROVIDING CONSULTANCY SERVICES HAS HELD THAT SUCH REIMBURSEMENT OF EXPENSES IS NOT TAXABLE UNDER INDIA USA TREATY AND ALSO UNDER THE ACT. JN CASE OF UNITED HO TELS LTD. [93 TTJ 8221, THE HONBLE ITAT, MUMBAI HAS CONSIDERED T HE SCOPE OF FEES FOR TECHNICAL SERVICES AND PAYMENT OF SALARY T O THE EMPLOYEES ON DEPUTATION FOR RENDERING VARIOUS PROFE SSIONAL SERVICES, SUCH AS ACCOUNTING, ENGINEERING ETC. AND HAS HELD THAT PAYMENT OF SALARY TO THE EMPLOYEES ON DEPUTATION IS NOT FEES FOR TECHNICAL SERVICES UNDER SECTION 9(L)(VII) OF T HE ACT. 4.10 SIMILAR VIEW HAS BEEN TAKEN BY ITAT IN OTHER CASES NAMELY: ADIT (IT) VS. BUREAU VERITAS 131 TTJ (MUMBAI) 29, A CIT VS. MODICON NETWORK (F) LTD 14 SOT 204 (DEL), D.D.I.T.( IT) VS. TATA IRON & STEEL CO. LTD.6 ITR 463; ALSO. 4.11 HENCE FOLLOWING THE JUDGEMENT OF MAHENDIA & MAHENDRA ITAT SPL. BENCH, AND OTHER DECISIONS AS ABOVE THE P ART REIMBURSEMENT OF EXPENSES CANNOT BE HAS9 INCOME DEE MED TO ACCRUE OR ARISE IN INDIA AND TAXABLE AS INCOME BEIN G FEES FOR TECHNICAL SERVICES AS PER DTAA BETWEEN INDIA AND U .K. 14. IT IS CLEAR FROM THE ORDER OF THE LEARNED CIT(A ) THAT IT HAS FOLLOWED THE DECISION OF SPECIAL BENCH OF THIS TRIBUNAL IN C ASE OF MAHENDRA & MAHENDRA AND HELD THAT THE PAYMENT ARE NOT IN THE N ATURE OF FEES FOR TECHNICAL SERVICES (FTS). THUS IN THE ABSENCE OF MA KE AVAILABLE TECHNICAL KNOWLEDGE, EXPERTISE, SKILL, KNOW-HOW OR PROCESS ET C. IT CANNOT BE HELD THAT THE PAYMENT IS FTS AS PER ARTICLE 13(4) OF IND O UK DTAA. THE TERM FEE ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 18 FOR TECHNICAL SERVICE HAS BEEN DEFINED UNDER PAR 4 OF ARTICLE 13 OF INDO-UK DTAA AS UNDER: 4. FOR THE PURPOSES OF PARAGRAPHS 2 OF THIS ARTICL E, AND SUBJECT OF PARAGRAPH 5 OF THIS ARTICLE, THE TERMS FEES FOR TECHNICAL SERVICES MEANS PAYMENT OF ANY KING OF ANY PERSON I N CONSIDERATION FOR THE RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES (INCLUDING THE PROVISION OF SERVICES OF A TECHNICAL OR OTHER PERSONNEL) WHICH; (A) ARE ANCILLARY AND SUBSIDIARY TO THE APPLICATION OF ENJOYMENT OF THE RIGHT, PROPERTY OR INFORMATION FOR WHICH A P AYMENT DESCRIBED IN PARAGRAPH 3(A) OF THIS ARTICLE IS RECE IVED ;OR (B) ARE ANCILLARY AND SUBSIDIARY TO THE ENJOYMENT O F THE PROPERTY FOR WHICH A PAYMENT DESCRIBED IN PARAGRAPH 3(B) OF THIS ARTICLE IS RECEIVED; OR (C) MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL KNOW- HOW OR PROCESSES, OR CONSIST OF THE DEVELOPMENT AN D TRANSFER OF A TECHNICAL PLAN OR TECHNICAL DESIGN. 15. AS PER CLAUSE (E) OF PARA 4 IF THE PAYMENT IS A CONSIDERATION FOR RENDERING OF ANY TECHNICAL OR CONSULTANCY SERVICES WHICH MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERIENCE, SKILL, KNOW-HOW OR PROCESS, OR CONSIST OF DEVELOPMENT AND TRANSFER OF TECHNICAL PLAN OR TECHN ICAL DESIGN SHALL BE TREATED AS FEE FOR TECHNICAL SERVICES. AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE HONBLE KARNATAKA HIGH COURT IN C ASE OF CIT VS. DE BEERS INDIA MINERALS(P.) LTD.(SUPRA) IN PAR 22 AS U NDER: 22. WHAT IS THE MEANING OF MAKE AVAILABLE. THE TECHNICAL OR CONSULTANCY SERVICE RENDERED SHOULD BE OF SUCH A NA TURE THAT IT MAKES AVAILABLE TO THE RECIPIENT TECHNICAL KNOWLED GE, KNOW- HOW, AND THE LIKE. THE SERVICE SHOULD BE AIMED AT A ND RESULT IN TRANSMITTING TECHNICAL KNOWLEDGE, ETC, SO THAT THE PRAYER OF THE SERVICE COULD DERIVE ON ENDURING BENEFIT AND UTILIZ E THE KNOWLEDGE OR KNOW-HOW ON HIS OWN IN FUTURE WITHOUT THE AID OF THE SERVICE PROVIDER. IN OTHER WORDS, TO FIT INTO T HE TERMINOLOGY MAKING AVAILABLE THE TECHNICAL KNOWLEDGE, SKILLS, ETC, MUST REMAIN WITH THE PERSON RECEIVING THE SERVICES EVEN AFTER THE ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 19 PARTICULAR CONTRACT COMES TO AN END. IT IS NOT ENOU GH THAT THE SERVICES OFFERED ARE THE PRODUCT OF INTENSE TECHNOL OGICAL EFFORT AND A LOT OF TECHNICAL KNOWLEDGE AND EXPERIENCE OF THE SERVICE PROVIDER HAVE GONE INTO IT. THE TECHNICAL KNOWLEDGE OR SKILL OF THE PROVIDER SHOULD BE IMPARTED TO AND ABSORBED BY THE RECEIVER SO THAT THE RECEIVER CAN DEPLOY SIMILAR TE CHNOLOGY OR TECHNIQUES IN THE FUTURE WITHOUT DEPENDING UPON THE PROVIDER. TECHNOLOGY WILL BE CONSIDERED MADE AVAILABLE WHEN THE PERSON ACQUIRING THE SERVICE IS ENABLED TO APPLY TH E TECHNOLOGY. THE FACT THAT THE PROVISION OF THE SERVICE THAT MAY REQUIRE TECHNICAL KNOWLEDGE, SKILLS, ETC. DOES NOT MEAN THA T TECHNOLOGY IS MADE AVAILABLE TO THE PERSON PURCHASING THE SERV ICE, WITHIN THE MEANING OF PARAGRAPH (4)(B). SIMILARLY, THE USE OF A PRODUCT WHICH EMBODIES TECHNOLOGY SHALL NOT PER SE BE CONSI DERED TO MAKE THE TECHNOLOGY AVAILABLE. IN OTHER WORDS, PAYM ENT OF CONSIDERATION WOULD BE REGARDED AS FEE FOR TECHNIC AL/INCLUDED SERVICES ONLY IF THE TWIN TEST OF RENDERING SERVIC ES AND MAKING TECHNICAL KNOWLEDGE AVAILABLE AT THE SAME TIME IS S ATISFIED. 16 . THUS, MERELY PROVIDING THE EMPLOYEES OR ASSISTING T HE ASSESSEE IN THE BUSINESS AND IN THE AREA OF CONSULTANCY, MANAGE MENT ETC. WOULD NOT CONSTITUE MAKE AVAILABLE OF THE SERVICES OF ANY TEC HNICAL OR CONSULTANCY IN NATURE. THE HONBLE HIGH COURT HAS OBSERVED IN PARA 13 THAT AS PER THE DEFINITION FOR FEE FOR TECHNICAL SERVICES MEANS PAY MENT OF ANY KIND TO ANY PERSON IN CONSIDERATION FOR SERVICE OR SERVICES OF TECHNICAL NATURE IF SUCH SERVICES MAKE AVAILABLE TECHNICAL KNOWLEDGE, EXPERI ENCE, SKILL KNOW-HOW OR PROCESS WHICH ENABLES THE PERSON ACQUIRING THE S ERVICES TO APPLY TECHNOLOGY CONTAINED THEREIN. THUS, EXPATRIATION OF EMPLOYEE UNDER SECONDED AGREEMENT WITHOUT TRANSFER OF TECHNOLOGY W OULD NOT FALL UNDER THE TERM MAKE AVAILABLE AS PER THE ARTICLE 13(4)(C) OF INDO-UK DTAA. ACCORDINGLY, IN VIEW THE DECISION OF HONBLE KARNAT AKA HIGH COURT IN CASE OF CIT VS. DE BEERS INDIA MINERALS (P.) LTD. (SUPRA ) AND SPECIAL BENCH DECISION IN CASE OF MAHENDRA AND MAHENDRA (SUPRA), WE HOLD THAT THE ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 20 PAYMENT IN QUESTION DOES NOT FALL UNDER THE TERM FE E FOR TECHNICAL SERVICES AS PER PROVISIONS OF INDO-UK DTAA. 17. HAVING HELD THAT THE PAYMENT IN QUESTION IS NOT FEES FOR TECHNICAL SERVICES THE SAME HAS TO BE EXAMINED IN THE LIGHT O F RELEVANT PROVISIONS OF THE ACT AND DTAA. EVEN, UNDER THE INCOME TAX ACT, I F THE PAYMENT IS ONLY REIMBURSEMENT OF EXPENSES THE SAME CANNOT BE REGARD ED AS INCOME IN THE HAND OF THE PAYEE/RECIPIENT. THE LEARNED AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HONBLE JURISDIC TION OF HIGH COURT IN CASE OF CIT V. SIEMENS AKTIONGESELLSCHAFT 310 ITR 320, W HEREIN THE HONBLE HIGH COURT. 18. IN THE CASE IN HAND, THERE IS NO DISPUTE THAT T HE PAYMENT FOR SALARY TO THE EMPLOYEES DEPUTED IN INDIA AND SUBSEQUENTLY ABSORBED IS LESS THAN THE ACTUAL AMOUNT OF SALARY PAID BY MARKS AND SPENC ER PLC UK TO THE PERSONNEL IN INDIA. THE DETAILS OF PAYMENT ARE GIVE N BY THE CIT(A) IN PARA 2.6 OF THE IMPUGNED ORDER AS UNDER: DURING THE COURSE OF HEARING IT WAS NOTICED THAT T DS OF RS. 62,86,149/- HAS BEEN DONE BY MARKS & SPENCER INDIA PVT LTD ON A AMOUNT OF RS.1,88,10,781/- INCLUDING PERQUISITE O F RS.42,23,855/- PAID TO MR. SPENCER SHEEN, ONE OF TH E PERSONS DEPUTED BY THE U.K. CO. TO THE APPELLANT. IN THIS R EGARD LEARNED AUTHORISED REPRESENTATIVE HAS EXPLAINED THAT MR. SP ENCER SHEEN IN ADDITION TO WORKING WITH THE JOINT VENTURE COMPANY WAS ALSO FUNCTIONING AS DIRECTOR IN BANGALORE COMPA NY. ACKNOWLEDGEMENT COPIES OF THE RETURN OF ALL THE EMP LOYEES HAVE BEEN FILED WITH THE DETAILS AS UNDER: NAME GROSS TOTAL INCOME TOTAL TAX PAID (IN RS.) (IN R S.) 1 SPENCER TIMOTHY SHEEN 1,88,10,781 62,86,149 2 EMILY CHARLOTTE IMESON 45,55,340 44,37,326 3 ADAM BENJAMIN COITON 89,03,801 29,18,767 ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 21 4 MARK PETER ASHMAN 1,94,34,48 9 64,98,148 TOTAL 5,17,04,411 1,71,40,390 THE DETAILS OF SALARIES PAID TO THE EMPLOYEES BY TH E U.K. REMITTED BY THE INDIAN JOINT VENTURE ARE AS UNDER: SUMMARY OF RECONCILIATION OF JT. EMPLOYEES CLAIMED BY FINAL AMOUNT RE-CHARGED TO MSRIPL FOR 2008-09. PARTICULARS AMOUNT CLAIMED AMOUNT WAIVED AMOUNT RECHARGED A JOINT EMPLOYER COST MARK 234971 SPENCER 135,905 ADAM 73,913 EMILY SUB-TOTAL 241,146 234971 135,905 73,913 685,935 19,179 27,181 15,485 16,834 78,679 221,967 207,790 120,420 57,079 607,256 19. THERE IS NO DISPUTE ABOUT THE FACTS AS RECORD B Y THE CIT(A) THAT THE ASSESSEE HAS MADE THE PAYMENT TOWARDS PART REIMBURS EMENT OF THE SALARY EXPENDITURE WHICH CLEARLY SHOWS THAT THERE I S NOT ELEMENT OF PROFIT IN THE SAID PAYMENT. THIS CLAIM OF THE ASSESSEE IS ALSO SUPPORTED BY THE VARIOUS CLAUSES OF THE AGREEMENT AND SECONDED AGREE MENT AS REFERRED BY US IN THE FORGOING PARAS. FURTHER THE ENTIRE AMOUNT OF SALARY RECEIVED BY THESE PERSONNEL HAS BEEN SUBJECTED TO TAX IN INDIA AT THE HIGHEST AVERAGE RATE OF TAX. THEREFORE, THERE IS NO QUESTION OF ANY DEFAULT ON THE PART OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT PAYME NT BY THE ASSESSEE IS ACTUALLY PAYMENT MADE TO THE EMPLOYEES DEPUTED IN I NDIA UNDER SECONDED AGREEMENT BUT ROUTED THROUGH MARKS AND SPE NCER PLC UK. SINCE THE SAID PAYMENT TO THE EMPLOYEES IS ALREADY SUBJECTED TO TAX IN INDIA, THEREFORE, THERE IS NO QUESTION OF TREATING THE ASSESSEE IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE. ITA NO. 905/M/2012 MARKS AND SPENCER RELIANCE INDIA 22 20. IN VIEW OF THE ABOVE DISCUSSIONS, WE DO NOT FIN D ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF CIT(A). WE FIND THAT THE DECISION RELIED UPON BY THE LEARNED DR ARE NOT APPLICABLE IN THE FA CTS CASE OF THE ASSESSEE, BECAUSE THERE IS NO AMBIGUITY ABOUT THE P AYMENT BY THE ASSESSEE AND ACTUAL SALARY EXPENDITURE BY THE MARKS AND SPENCER PLC. ACCORDINGLY, WE DO NOT FIND ANY MERITS IN THE APPEA L OF THE REVENUE. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF SEPTEMBER 2013 SD/- SD/- ( . ) ( B. RAMAKOTAIAH) ACCOUNTANT MEMBER ( !' ) # (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI: DATED: 4 TH SEPTEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI