Manthan System Inc, Bangalore V. Deputy Commissioner Of Income Tax, International Taxation, Circle-1(2), Bangalore

ITITA 723/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2717 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 22-09-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 21-09-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 21-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Double taxation relief; Permanent establishment; Reason to believe; TDS
• Section: 147; 148; 2; 201; 144C; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “C”, BANGALORE Before Shri George George K, JM & Ms.Padmavathy S, AM IT(IT)A No.723/Bang/2022 : Asst.Year 2012-2013 M/s.Manthan System Inc C/o.Algonomy Software Pvt.Ltd. No.40/4, Lavelle Road Bangalore – 560 001. PAN : AALCM9278N. v. The Deputy Commissioner of Income-tax (International Taxation), Circle 1(2) Bangalore. (Appellant) (Respondent) Appellant by : Sri.Narendra Kumar Jain, ADvocate Respondent by : Sri.Gopinath CHV, CIT-DR Date of Hearing : 22.09.2022 Date of Pronouncement : 23.09.2022 O R D E R Per George George K, JM : This appeal at the instance of the assessee is directed against final assessment order dated 18.07.2022 passed u/s 147 r.w.s. 144C of the I.T.Act. The relevant assessment year is 2012-2013. 2. The brief facts of the case are as follows: The assessee, Manthan Systems Inc (hereinafter referred as "MSI") is a company incorporated in the United states of America. The assessee is the wholly owned subsidiary of Algonomy Software Private Limited (erstwhile known as Manthan Software Services Private Limited, herein after referred as 'MSSPL' for brevity). The assessee provides sales and marketing services to MSSPL for sale of its product/services in the territory of North American, South American and the Caribbean markets. MSSPL had entered IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 2 into Sales & Marketing agreement with the assessee. For the assessment year 2012-2013, an amount of Rs 3,47,83,552/- has been received by the assessee as sales commission. The assessee did not file the return of income on the premise that commission income is not taxable in India. 3. There was a survey in the case of MSSPL and proceedings u/s 201 of the I.T.Act was completed. Consequently, proceedings were initiated U/S 147 of the Act in the case of the assessee by issue of Notice U/S 148(1) dated 29.03.2019. The assessee filed a return of income on 13.06.2019, wherein it declared 'Nil' income. The learned AO vide Notice dated 18.06.2019 furnished the reasons for reopening the assessment. It was stated that services provided by the assessee are taxable as FTS both as per the Act and DTAA and as return of income has not been filed, the above income has escaped assessment. 4. Against the reasons, the assessee filed objections before the AO on 01.07.2019. The assessee made detailed submissions as to why sale commission received from MSSPL is not taxable. It is stated that the above objections have not been disposed by the AO. During the course of assessment proceedings, the matter was referred to the TPO. The TPO vide order dated 17.11.2020 concluded that the sales commission is at arm's length. Subsequently, the AO passed the draft assessment order u/s 147 r.w.s 144C of the Act on 29.09.2021. The AO has rejected the submissions of IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 3 the assessee and made an addition of Rs.3,47,83,552/- on the ground that the sales commission received by the assessee partakes the character of FTS both as per the Act and DTAA. 5. Aggrieved by the Draft Assessment order, the assessee filed objections before the DRP on 21.10.2021. The DRP vide directions dated 29.06.2022 rejected the submissions of the assessee and upheld the order of AO. Pursuant to the DRP’s directions the AO passed the impugned final assessment order on 18.07.2022. Aggrieved by the final assessment order, the assessee has filed the present appeal before the ITAT, raising the following grounds:- “General Ground: 1. The orders passed by learned Deputy Commissioner of Income Tax, Circle 1(2), Bangalore (hereinafter referred as “AO” for brevity) and the Honourable DRP-2, Bengaluru (“AO” and DRP collectively referred as “lower authorities” for brevity) are bad in law and liable to be quashed. Grounds relating to Reassessment: 2. The lower authorities have erred in : (i) Issuing notice under section 148 and passing the assessment order in the absence of `reason to believe’ as contemplated u/s 147. The notice u/s 148 issued and the order so passed on mere suspicion, conjecture or surmise without any `reason to believe’ that income has escaped assessment and solely with a view to make further investigation is invalid, bad in law and liable to be quashed. (ii) Without prejudice, there being no `live link’ between the material relied on and the formation of belief that income has escaped assessment, the requirements of `reason to believe’ are not satisfied and consequently the assessment order passed is bad in law and liable to be quashed. IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 4 (iii) Issuing notice under section 148 and making reassessment merely on the basis of assessment conducted in the case of ASPL without any `reason to believe’ as to how the said information has resulted in income escaping assessment, the impugned order passed by the learned assessing officer is thus bad in law and liable to be quashed. 3. The lower authorities have erred in passing the assessment order under section 147 read with section 144C without disposing off the appellant’s objections to reasons stated for reopening recorded by passing a speaking order as contemplated by the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19. The final assessment order passed in violation of the decision of the Supreme Court is bad in law and liable to be quashed. Taxability of Sales Commission: 4. The lower authorities have erred in : (i) Not appreciating that sales commission received from ASPL is not taxable in India as per the provisions of Income Tax Act, 1961 (`Act’); (ii) Not appreciating that services provided by appellant does not qualify as FTS as per Act and does not satisfy the test of `Make Available’ as envisaged in India-USA DTAA and therefore does not qualify as fees for included services under DTAA. 5. The lower authorities have erred in placing reliance on the judicial decisions which are distinguishable both on facts of the case and provisions of law. 6. Without prejudice to the above, the learned AO/DRP has erred in not granting credit for TDS remitted by ASPL in response to order u/s 201 of the Act. Recovery from both ASPL and the appellant would lead to double recovery of same tax. Other grounds: 7. The lower authorities have erred in levying interest of Rs.36,87,057 u/s 234A. On facts and circumstances of the case, interest under section 234A of the Act is not leviable. The appellant denies its liability to pay interest under section 234A of the Act. IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 5 The appellant submits that each of the above grounds / sub- grounds are independent and without prejudice to one another. The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time of hearing of the appeal, so as to enable the Income-tax Appellate Tribunal to decide the appeal according to law. The appellant prays accordingly.” 6. The learned AR has filed two sets of paper book, one enclosing the case laws relied on and the other therein enclosing communications between the AO and the assessee, submissions made before the AO, the details of the commission payments, copy of the sale and marketing agreement, copy of the submissions filed before the DRP, etc. The learned AR submitted that the assessee is not providing any technical / managerial or consultancy services. It was contended that on the other hand, the assessee is only marketing and promoting the products or services of MSSPL outside India. It was submitted that the commission paid by the assessee to the foreign agent for arranging export sales and recovery of payments cannot be regarded as fees for technical services u/s 9(1)(vii) of the I.T.Act. In this context, the learned AR relied on the following judicial pronouncements:- (i) DIT (International Taxation) v. Panalfa Autoelectik Ltd. (2014) 49 taxamnn.com 412 (Delhi) (ii) CIT v. Toshoku Ltd. (1980) 125 ITR 525 (SC) (iii) Exotic Fruits (P.) Ltd. (2013) 40 taxmann.com 348 (Bangalore – Trib.) (iv) CIT v. Faizan Shoes (P.) Ltd. (2014) 48 taxman.com 48 (Madras) IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 6 (v) iRunway India (P) Ltd. v. DCIT (2022) 138 taxmann.com 188 (Bangalore-Trib.) (vi) Deccan Creations (P.) Ltd. v. DCIT (2022) 134 taxmann.com 144 (Bangalore-Trib.) (vii) PCIT vs Puma Sports India (P.) Ltd {2021J 127 taxmann.com 169 (Kamataka) (viii) SLP dismissed by Supreme Court - (2022) 134 taxmann.com 60 (SC); (ix) Bengal Tea & Fabrics Ltd.. v DCIT (2018) 91 taxmann.com 38 (Kolkata - Trib.); (x) DCIT v Divi's Laboratories Ltd (2011) 12 taxmann.com 103 (Hyd.); (xi) CITvs. Model Exims, (2014) 42 taxmann.com 446 (ALL) (xii) Brakes India Ltd. v DCIT (2013) 33 taxmann.com 501 (Chennai - Trib.); (xiii) Sri Subbaraman Subramanian v Asst CIT (2013) 30 taxmann.com 236 {Bangalore - Trib.); (xiv) ACIT v India Shoes Exports (P.) Ltd (2015) 57 taxmann.com 303 (Chennai-Trib.); (xv) ACITv Evergreen International Ltd (2018) 91 taxmann.com l11(Delhi -Trib.); (xvi) CIT v Orient Express (2015) 56 taxmann.com 331 (Madras); (xvii) Divya Creation v ACIT (2017) 86 taxmann.com 276 (Delhi-Trib.); and (xviii)Khimji Visram & Sons v ACIT (2014) 52 taxmann.com 485 (Mumbai- Trib.). (xviii) GVK Industries Ltd. v. ITO (2015) 54 taxmann.com 347 (SC). (xix) Foster Wheeler France SA (IT-62-ITAT-2016 CHNY). 7. The learned AR also took us through the decisions relied on by the AO and distinguished the same. It contended that in the case laws relied on by the A.O., the services rendered were engineering and IT services, which were purely technical IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 7 in nature, whereas in the instant case the assessee was rendering only marketing services. Without prejudice to the contention that the assessee was only rendering marketing and support services and not technical services, the learned AR submitted that the assessee being a tax resident in USA, is eligible to claim benefits under India-USA DTAA. It was submitted tht the commission receipts will not qualify as “fee for included services” under the India-USA DTAA. It is also contended that even if it is assumed without admitting that marketing services is technical or consultancy in nature, the assessee did not make available any technical knowledge, experience, know-how, process to MSSPL. In this context, the learned AR relied on the following judicial pronouncements:- (i) CIT v. De Beers India Minerals (P.) Ltd. 21 taxamnn.com 214 (Karnataka) (ii) DIT v. Guy Carpenter & Co. Ltd. (2012) 346 ITR 504 (Del.) (iii) Onprocess Technology India (P.) Ltd. v. DCIT (2018) 96 taxmann.com 428 (Kolkata-Trib.) (iv) Rajinder Kumar Aggarwal (HUF) v. DCIT (2021) 131 taxmann.com 252 (Delhi-Trib.) 8. The learned Departmental Representative relied on the orders passed by the AO and the DRP. 9. We have heard rival submissions and perused the material on record. The AO has referred to the services rendered by the assessee at para 6.1 of his order. The AO has contended that services rendered by the assessee are project management services and thereby fall within the ambit of FTS IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 8 as per Explanation 2 to section 9(1)(vii) of the Act. The AO has concluded that services are in the nature of technical or consultancy services (Para 6.7 of the order). Finally at Para 10.2, it is concluded that services are technical in nature. The DRP has confirmed the finding of AO (Page 4 of the DRP order). The DRP has also observed that services of assessee assist MSSPL in making managerial/business decision. In the instant case, the assessee acted as intermediary and facilitates sale of software products/services outside India. On perusal of copy of sale and marketing agreement dated 11.02.2009 entered between the assessee and MSSPL, it is seen that the assessee rendered the following services.  Promoting the software product/services on behalf of the Appellant;  Co-Ordination between the customers in North American, South American and Caribbean market and MSSPL;  Following up with the customers in North American, South American and Caribbean market for collection of amount. 10. In the instant case, the assessee is not providing any technical, managerial or consultancy services rather has been engaged to act as authorized business partner to market and promote the products or services of MSSPL outside India In fact, the AO/DRP have not even concluded as to what is the nature of services rendered by the assessee. The decision regarding what are the products/services that are to be IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 9 developed or provided, the price to be charged to the customer etc. are solely taken by MSSPL. The assessee does not play any role in the decision-making process. Further, once the assessee procures the orders, it is at the discretion of MSSPL whether to sell the product or render services to identified customers. The Hon’ble Delhi High Court in case of DIT (International Taxation) vs Panalfa Autoelectrik Ltd (2014) 49 taxmann.com 412 (Delhi) held that commission paid by the assessee to its foreign Agent for arranging export sales and recovery of payments could not be regarded as fee for technical services under section 9(l)(vii) of the I.T.Act. The High Court held that the skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. The relevant finding of the Hon’ble High Court reads as follows:- “22. In the present, case commission paid for arranging of export sales and recovery of payments cannot be regarded as consultancy service rendered by the non-resident. The non-resident had not rendered any consultation or advice to the respondent-assessee. The non-resident no doubt had acquired skill and expertise in the field of marketing and sale of automobile products, but in the facts, as notice by the Tribunal and the Commissioner of Income Tax (Appeals), the non-resident did not act as a consultant, who advised or rendered any counselling services. The skill, business acumen and knowledge acquired by the non-resident were for his own benefit and use. The non-resident procured orders on the basis of the said knowledge, information and expertise to secure "their" commission. It is a case of self-use and benefit, and not giving advice or consultation to the respondent- assessee on any field, including how to procure export orders, how to market their products, procure payments etc. The respondent-assessee upon receipt of export orders, manufactured the required articles/goods and then the goods produced were exported. There was no element of consultation or advise rendered by the non-resident to the respondent- assessee. IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 10 .................... 25. Thus, the technical services consists of services of technical nature, when special skills or knowledge relating to technical field are required for their provision, managerial services are rendered for performing management functions and consultancy services relate to provision of advice by someone having special qualification that allow him to do so. In the present case, the aforesaid requisites and required necessities are not satisfied. Indeed, technical, managerial and consultancy services may overlap and it would not be proper to view them in watertight compartments, but in the present case this issue or differentiation is again not relevant.” 11. The Hon'ble Supreme Court in the case of CIT v Toshoku Ltd (1980) 125 ITR 525 (SC) held that the sales commission paid to the commission agents outside India was not taxable in India. The Apex Court observed that the sales commission earned by the non-resident agents cannot be deemed to accrue or arise in India. 12. The Hon’ble Madras High Court in the case of CIT vs Faizan Shoes (P.) Ltd (2014) 48 taxmann.com 48 (Madras) had held that Assessee was not liable to deduct tax at source when non-resident agent provides services outside India on payment of commission. 13. In the case of Exotic Fruits (P.) Ltd reported in (2013) 40 taxmann.com 348 (Bangalore- Trib.), the Bangalore Bench of the Tribunal held that payment made to the non-resident agents does not fall within the meaning of managerial services as mentioned under section 9(l)(vii) of the I.T.Act and not IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 11 required to deduct TDS under section 195. Further, it has been held that in the absence of permanent establishment(s) of such agents in India, the export commission income of the agents was not liable to be taxed in India and thus, the assessee was not obliged to effect any deduction of tax on the commission payments made to the agents who were positioned overseas. 14. The ITAT in the case of iRunway India (P) Ltd vs DCIT (2022) 138 taxmann.com 188 (Bangalore-Trib.) had held that where assessee has obtained certain sales consulting services from USA and commission is based on fixed percentage of sales, then merely because the service provider is technically qualified, sales commission paid for enabling sale could not become payment for rendering technical services and therefore, TDS is not applicable. 15. Similarly, the Bangalore tribunal in the case of Deccan Creations (P.) Ltd vs DCIT (2022) 134 taxmann.com 144 (Bangalore-Trib.) had held that services of foreign agents in the form of providing the data related to market trends and requirements of customers does not constitute as managerial services, as these services are usually provided by any agent. Thus, sales commission paid to foreign agents on the value of sales affected through them cannot be treated as technical services and therefore, not taxable in India The following judicial pronouncements have also taken an identical view:- IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 12 * PCIT vs Puma Sports India (P.) Ltd (2021) 127 taxmann.com 169 (Kamataka} SLP dismissed by Supreme Court - (2022) 134 taxmann.com 60 (SC); * Bengal Tea & Fabrics Ltd.. v DCIT (2018) 91 taxmann.com 38 (Kolkata - Trib.); * DCIT v Divi's Laboratories Ltd (2011) 12 taxmann.com 103 (Hyd.); * CITvs. Model Exims, (2014) 42 taxmann.com 446 (ALL) * Brakes India Ltd. v DCIT (2013) 33 taxmann.com 501 (Chennai - Trib.); * Sri Subbaraman Subramanian v Asst CIT (2013) 30 taxmann.com 236 (Bangalore - Trib.); * ACIT v India Shoes Exports (P.) Ltd (2015) 57 taxmann.com 303 (Cliennai-Trib.); * ACIT v Evergreen International Ltd (2018) 91 taxmann.com l11(Delhi-Trib.); * CIT v Orient Express (2015) 56 taxmann.com 331 (Madras); * Divya Creation v ACIT (2017) 86 taxmann.com 276 (Delhi- Trib.); and * Khimji Visram & Sons v ACIT (2014) 52 taxmann.com 485 (Mumbai- Trib.). 16. In light of the above judicial pronouncements, the income received towards sales commission does not satisfy the definition of "FTS" under the Act as it is not in the nature of Managerial, Technical or Consultancy Services. IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 13 17. The AO has relied on the judgment of Hon’ble Supreme Court in case of GVK Industries Ltd vs ITO (2015) 54 taxmann.com 347 (SC) where in it was held that services provided by Switzerland based company for raising required finance from international organisations on most competitive terms, payment made to swiss company for rendering such consultancy services amounted to 'fee for technical service' liable to tax in India. The above judgment of Hon'ble Apex Court is not applicable to facts of the present case. In the above judgment Hon'ble Supreme Court observed that the non-resident entity provided various services like advising the assessee on various aspects like financial structure, and security package to be offered to the lender, study of various lending alternatives for the local and foreign borrowings, making assessment of expert credit agencies worldwide and obtaining commercial bank support on the most competitive terms, assisting the assessee-company in loan negotiations and documentations with the lenders, structuring, negotiating and closing financing for the project in a co- ordinated and expeditious manner. The above services are clearly in the nature of consultancy services as they assist in decision making. However, in the instant case, the assessee has rendered sales and marketing services to MSSPL. No consultancy services are rendered and in fact even the AO has concluded that assessee has rendered technical services. Therefore, the above decision of Hon'ble Supreme Court in GVK Industries is not applicable to the facts of the present IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 14 case. Further, the decision does not deal with the taxability under the treaty. 18. The AO has also relied on the order of Chennai Tribunal in the case of Foster Wheeler France SA [TS-62-ITAT- 2016CHNY]. In this regard, we are of the view that the said case law is not applicable to the facts of the assessee. In the said case, the service provider was rendering engineering and IT services which are purely technical in nature whereas in the instant case the assessee has rendered only marketing services. 19. Now, we shall deal with taxability as per DTAA: The assessee is admittedly a tax resident of USA and hence it is eligible to claim benefits under India-USA DTAA. The payment received by the assessee will not qualify as "fees for Included services" under the India-USA DTAA. The definition "fees for Included services" under Article 12 to India-USA DTAA is as follows: "fee 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 ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 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." IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 15 20. The payments towards sales and marketing services provide by the assessee is not covered under sub clause (a) to Article 12(4) of India-USA DTAA as it is not ancillary to application or enjoyment of any right. Further, clause (b) to Article 12(4) of India-USA DTAA is only applicable if the services are in the nature of technical or consultancy services, which make available knowledge, experience, skill, know-how, or processes or consist of the development and transfer of a technical plan or technical design. The sales and marketing services rendered by assessee is not in the nature of technical or consultancy services. The AO has submitted that services are in the nature of project management of services and the same has been confirmed by the DRP. The project management services does not constitute technical or consultancy services and therefore are outside the ambit of "FIS" as defined in India-USA DTAA. Even if it is assumed without admitting that marketing services is technical or consultancy in nature, it did not make available any technical knowledge, experience, know-how, process to MSSPL. The term "make available" under the treaty law postulates a concept wherein the recipient of the services is not only benefited by the services but there is also a transfer of the technology, processes, skill etc., to the recipient in a manner which will enable the latter to apply the technology, processes, skill etc., in future without recourse to the service provider. The term "make available" encompasses some sort of durability and stability with reference to the transfer of technology, processes and skill etc., so that the same is not IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 16 regarded as transient or ephemeral. 21. As per Memorandum of Understanding ("MOU") on Article 12 of the Treaty, entered into by the Government of India and the Government of USA on May 15, 1989, the technology is 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 technical 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. In this context, we rely on the judgment of the Hon’ble jurisdictional High Court in the case of CIT v De Beers India Minerals (P.) Ltd. 21 taxmann.com 214 (Kar.), wherein the Honourable High Court dealt with 'make available' clause. The High Court held that for attracting the liability to pay tax, not only the services should be of technical in nature, but it should be made available to the person receiving the technical services. The technology will be considered 'made available' when the person who received service is enabled to apply the technology. The Hon’ble High Court, held that test is whether the recipient of the service is equipped to carry on his business without reference to the service provider. If he is able to carry 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. The relevant finding of the Hon’ble High Court reads as follows:- IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 17 “14. Therefore the Clause in Singapore agreement which explicitly makes it clear the meaning of the word 'make available', the said clause has to be applied, and to be read into this agreement also. Therefore, it follows that for attracting the liability to pay tax not only the services should be of technical in nature, but it should be made available to the person receiving the technical services. The technology will be considered 'made available' when the person who received service is enabled to apply the technology. The service provider in order to render technical services uses technical knowledge, experience, skill, know how or processes. To attract the tax liability, that technical knowledge, experience, skill, know how or process which is used by service provider to render technical service should also be made available to the recipient of the services, so that the recipient also acquires technical knowledge, experience, skill, know how or processes so as to render such technical Services. Once all such technology is made available it is open to the recipient of the service to make use of the said technology. The tax is not dependent on the use of the technology by the recipient. The recipient after receiving of technology may use or may not use the technology. It has no bearing on the taxability aspect is concerned. When technical service is provided, that technical service is to be made use of by the recipient of the service in further conduct of his business. Merely because his business is dependent on the technical service which he receives from the service provider, it does not follow that he is making use of the technology which the service provider utilises for rendering technical services. The crux of the matter is after rendering of such technical services by the service provider, whether the recipient is enabled to use the technology which the service provider had used. Therefore, unless the service provider makes available his technical knowledge, experience, skill, know how or process to the recipient of the technical service, in view of the Clauses in the DTAA. the liability, to tax is not attracted. .................... 22. What is the meaning of "make available". The technical or consultancy service rendered should be of such a nature that it "makes available" to the recipient technical knowledge, know-how and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology "making available", the technical IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 18 knowledge, skill?, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology 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 the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other word, payment of consideration would be regarded as "fee for technical / included services" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.” 22. Reliance is also placed on the judgment of Delhi High Court in the case of DIT v. Guy Carpenter & Co. Ltd. [2012] 346 ITR 504 (Del.) 23. The Kolkata Tribunal decision in the case of On process Technology India (P.) Ltd v DCIT (2018) 96 taxmann.com 428 (Kolkata-Trib.) is squarely applicable to the facts of the present case. In the aforesaid case, the Tribunal rendered decision in the context of India-USA DTAA. The Tribunal held that the act of securing orders and soliciting business by the foreign marketing companies does not make available any technical knowledge or technical service and the same is not taxable either u/s 9(l)(vii) or under India-USA DTAA. Reliance is also placed on the decision of Delhi Tribunal in the case Rajinder Kumar Aggarwal (HUF) vs DCIT [2021] 131 IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 19 taxmann.com 252 (Delhi-Trib.) 24. The AO has stated that marketing services rendered by the assessee are technical in nature and which are used by MSSPL for development of business, which results in enduring benefit. Accordingly, the A.O. has concluded that make available is satisfied as there is transfer of skill and knowledge which falls within the ambit of technical services. The DRP has also confirmed the view of the A.O. The AO and DRP has erred in not appreciating that what should be made available is technical knowledge, experience, skill etc. Making available service does not make available knowledge, experience, skill etc. MSSPL has to approach the assessee every time to get new customers and maintain relationship with existing customers. The test of make available as envisaged in the DTAA is therefore not satisfied in the instant case. 25. In light of the aforesaid reasoning, we hold that the sales and marketing services rendered by the assessee to MSSPL would not fall within the ambit of FTS as defined under section 9(1)(vii) or under Article 12 of DTAA. It is ordered accordingly. 26. Though the assessee has raised grounds with regard to validity of reopening of assessment, no arguments were raised regarding the same. With reference to other grounds also, no arguments were raised. IT(IT)A No.723/Bang/2022. M/s.Manthan System Inc . 20 27. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on this 23 rd day of September, 2022. Sd/- (Padmavathy S) Sd/- (George George K) ACCOUNTANT MEMBER JUDICIAL MEMBER Bangalore; Dated : 23 rd September, 2022. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The DRP-2, Bangalore 4. The Pr.CIT, Bengaluru. 5. The DR, ITAT, Bengaluru. 6. Guard File. Asst.Registrar/ITAT, Bangalore