Services doesn’t qualify as FTS as make available condition not satisfied: ITAT Ahmedabad

Shell International B.V. Vs ACIT (ITAT Ahmedabad)

ITAT Ahmedabad held that services do not qualify as Fee for Technical Services [FTS] under India-Netherlands tax treaty since department failed to demonstrate that technology was ‘make available’ to recipient of services.

Facts- The present appeal has been preferred by the assessee. The assessee submitted that the case of the assessee is covered by order passed in the case of this entity i.e. Shell International B.V. for A.Ys. 2009-10 to 2018-19 vide order dated 20.03.2024. The Counsel for the assessee submitted that out of a total 13 services rendered by the assessee during the impugned assessment year, 5 services i.e. CHR Recruitment Fees – FTS, External Information Services – FTS, Real Estate Corporate Travel Services – FTS, Health Ecotox Services – FTS and IT Services – FTS have been dealt with in the order referred to above. Therefore, the taxability regarding these services are directly covered by the aforesaid order. For the balance 8 new services, although the services are different, however, the legal contention that in the instant facts the services do not qualify as fee for technical services, since the services do not “make available” technology to the recipient of services has been upheld in favour of the assessee in the order passed by ITAT for A.Y. 2009-10 to 2018¬-19 and the assessee wishes to rely on the observations made by the ITAT qua the “make available” clause in the aforesaid order.

Conclusion- Held that in light of the observations related to these services, the above grounds raised by the assessee are allowed in favour of the assessee on the ground that since under the Tax Treaty Law, there is a specific requirement that in order to qualify as “fee for Technical Services”, the services should be rendered in a manner that “make available” technology to the recipient of services and since in the instant facts, the Department has not been able to establish that “make available” clause has been satisfied in the facts of the instant case, these services have been held not to qualify as FTS under the Income Tax Act (“Act”) read with India-Netherlands Tax Treaty.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (DRP-2), (in short “Ld. CIT”), Mumbai-1, vide order dated 27.06.2023 passed for A.Y. 2020-21.

2. The Assessee has taken the following grounds of appeal:-

“1. The learned AO has erred on the facts and circumstances of the case and in law, in issuing the final assessment order dated 25 July 2023, beyond the time limit as prescribed under section 153 of the Act. The final assessment order is, thus, time barred and liable to be quashed.

2. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in assessing the total income of the Appellant at INR 164,61,90,700 by making total amount of impugned additions amounting to INR 127,70,63,435.

3. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AD on the facts and in law in treating the aggregate cost recovery of INR 9,80,37,334 received from Shell India Markets Private Limited (SIMPL), Shell Energy India Private Limited (SEIPL), BG Exploration and Production India Limited (BGEPIL) and Shell Energy Marketing & Trading India Private Limited (SEIMTIPL) for CHR Recruitment fees as Fees for Technical Services (FIS) under Article 12 of India Netherlands Double Taxation Avoidance Agreement (DTAA or Tax Treaty).

4. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recovery of INR 17,71,40,242 received from SIMPL, SEIPL, BGEIPL, SEMIIPL and Hazira Port Private Limited (HPPL) for Internal Communication Fees as FIS under Article 12 of India Netherlands DTAA.

5. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recovery of INIR 7,36,06,027 received from SIMPL SLIPL, BGEIPL, SEMIPL and HPPL for Remuneration and Benefit fees as FTS under Article 12 of India Netherlands DTAA.

6. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recovery of INR 14,36,18,345 received from SIMPL, SLIPL, BGEIPL, SEMTIPL and HPPL for Talent and Development Fees as FTS under Article 12 of India-Netherlands DTAA.

7. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 50,33,83,787 received from SIMPL and SEIPL for Group Controller External Information Services (‘EIS’) as FTS under Article 12 of India-Netherlands DTAA.

8. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the cost recoveries of INR 18,57,70,316 received from SIMPL. for Real Estate and Corporate Travel Services as FIS under Article 12 of India-Netherlands DTAA.

9. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the cost recoveries from SIMPL of INR 1,48,50,751 received from SIMPL for Health Ecotox services as FTS under Article 12 of India-Netherlands DTAA.

10.The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 4,03,48,721 received SIMPL and SEMTIPL for IT services as FTS under Article 12 of India-Netherlands DTAA.

11. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 2,50,72,914 received SIMPL and BGEPIL for Brand advertising services as FTS under Article 12 of India-Netherlands DTAA.

12. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 24,92,547 received SIMPL and BGEPIL for Media relation services as FTS under Article 12 of India-Netherlands DTAA.

13. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 50,99,802 received SIMPL and BGEPIL for Social Performance services as FTS under Article 12 of India Netherlands DTAA.

14. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 49,60,567 received SIMPL and BGEPIL for ER Strategy and Planning services as FTS under Article 12 of India Netherlands DTAA.

15. The learned AO has erred on the facts and in law and learned DRP has further erred in confirming the action of the learned AO on the facts and in law in treating the aggregate cost recoveries of INR 26,82,080 received SIMPL and BGEPIL for Manage and Lead ER Function services as FTS under Article 12 of India Netherlands DTAA.

Without prejudice to the above, the learned AO has erred in erroneously considering the nature of UR Strategy and Planning services while evaluating the taxability of Manage and Lead E.R.

16.1 Without prejudice to the above-mentioned grounds, the learned AO has erred on the facts and in law, in disregarding the fact that, the amount received for the above mentioned cost recoveries, is a mere reimbursement/allocation of cost incurred by the Appellant without markup and hence the same is not chargeable to tax in India.

16.2 The learned DRP has erred in dismissing the objection No. 14, as not pressed, overlooking the fact that the Appellant had pressed the ground in its submission dated 14 June 2023.

16.3 The learned AO in his final assessment order dated 25 July 2023 has erred in following the aforesaid directions of the learned DRP.

17. The learned AO has erred on the facts and in law in levying 12% rate on the total income. disregarding the fact that the Appellant is eligible to be taxed as per the treaty rate of 10% as prescribed under Article 12 of the India-Netherlands DTAA

18. The learned AO has erred on the facts and in law in levying surcharge, education cess and secondary and higher education cess on the erroneous tax computed.

19. The learned AO has erred in levying interest under section 234A of the Act and incremental consequential interest under Section 234B of the Act.

20. The learned AO has erred on the facts and in circumstances of the case and in law in giving short credit of TDS to the extent of INR 1,65,120 ignoring the provisions of Section 199 of the Act read with Rule 17BA of the Income-tax Rules, 1962.

21. The learned AO has erred on facts and in law, by considering arithmetical incorrect aggregate income tax liability (before credit of TDS) as INR 28,28,09,236 instead of INR 27,73,19,576.

22. The learned AO has erred on the facts and in circumstances of the cane on the facts and in law in increasing the tax payable amount by considering INR 10,27,665 as refund already issued when no such refund has been issued to the Appellant.

23. The learned AO has erred on the facts and in law in initiating penalty proceedings under section 270A of the Act against the Appellant.

The Appellant reserves the right to add amend, alter or vary all or any of the above grounds of appeal as they or their representative may think fit.”

3. Before us, the Counsel for the assessee submitted that the case of the assessee is covered by order passed in the case of this entity i.e. Shell International B.V. for A.Ys. 2009-10 to 2018-19 vide order dated 20.03.2024. The Counsel for the assessee submitted that out of a total 13 services rendered by the assessee during the impugned assessment year, 5 services i.e. CHR Recruitment Fees – FTS, External Information Services – FTS, Real Estate Corporate Travel Services – FTS, Health Ecotox Services – FTS and IT Services – FTS have been dealt with in the order referred to above. Therefore, the taxability regarding these services are directly covered by the aforesaid order. For the balance 8 new services, although the services are different, however, the legal contention that in the instant facts the services do not qualify as fee for technical services, since the services do not “make available” technology to the recipient of services has been upheld in favour of the assessee in the order passed by ITAT for A.Y. 2009-10 to 2018­19 and the assessee wishes to rely on the observations made by the ITAT qua the “make available” clause in the aforesaid order.

4. Regarding Ground No. 1 the Counsel for the assessee submitted that the assessee is not present for the same and the same is, therefore, being dismissed as not pressed.

5. Regarding Ground No. 2 we observe that this ground is a general ground and does not require any specific adjudication.

6. We observe that Ground No. 3 (Taxability of CHR Recruitment Fees), Ground No. 7 (Taxability of External Information Services), Ground No. 8 (Taxability of Real Estate Corporate Travel Services), Ground No. 9 (Taxability of Health Ecotox Services) and Ground No. 10 (Taxability of IT Services) have been specifically dealt with in the order passed by ITAT Ahmedabad for A.Y. 2009-10 to 2018-19. Accordingly, in light of the observations related to these services, the above grounds raised by the assessee are allowed in favour of the assessee on the ground that since under the Tax Treaty Law, there is a specific requirement that in order to qualify as “fee for Technical Services”, the services should be rendered in a manner that “make available” technology to the recipient of services and since in the instant facts, the Department has not been able to establish that “make available” clause has been satisfied in the facts of the instant case, these services have been held not to qualify as FTS under the Income Tax Act (“Act”) read with India-Netherlands Tax Treaty.

7. It would be useful to reproduce the relevant extracts of the order of ITAT for A.Y. 2009-10 to 2018-19 order dated 20.03.2024 for ready reference:

“Grounds 2, 3 and 4 of assessee’s appeal: Ld. AO erred in holding that CHR Recruitment Fees, External Information Services (license for online databases) and IT Migration Support Services qualify as fee for technical services under Section 9(1)(vii) of the Act read with Article 12 of Tax Treaty

19. We shall first briefly discuss the nature of services performed by the assessee and the Assessing Officer’s position with respect to each of the respective services. Since largely common arguments have been taken by the Counsel for the assessee and DR with respect to the aforesaid services, therefore, all the three grounds of appeal raised by the assessee are taken up together.

CHR recruitment services

20. Under the CHR recruitment services, the assessee manages the global recruitment and attraction team of Shell group. This team supports the regional recruitment team in the regular recruitment process apart from group related activities such as laying path to talent acquisition and presenting Shell as an attractive place. The cost incurred by the global recruitment team is shared across various shell entities, which have availed the services of the recruitment team. The said receipts towards recruiting candidates for respective Shell entities and the cost charge out is based on the actual number of recruitments made.

21. The Assessing Officer was of the view that the services qualify as fee for technical services since under the CHR recruitment service, the expertise and experience of the global recruitment and attraction team of the assessee is being offered to its affiliates. The nature of work performed by the Shell group companies is highly technical in nature. To attract such highly technical staff, industry experience and expertise is a sine qua non. The global recruitment and attraction team has accumulated such experience and expertise in conducting recruitment of highly technical staff. This team provides consultancy and assists the regional recruitment team of the affiliates in the regular recruitment process apart from the group related activities such as laying path to talent acquisition and presenting the Shell group as an attractive place. The costs incurred by the global recruitment team are shared across various Shell entities which have availed such consultancy services of the recruitment team possessing wide experience in the field. Thus, the critical decision-making function of recruitment has been performed by the affiliates through the assistance/consultancy of the assessee. Hence clearly identifiable and highly specialized services, requiring expertise and industrial experience have been provided by the assessee.

External information services (license fees patent and subscription)

22. Under these services, the assessee subscribes to various EIS providers on behalf of Shell group and the cost for the same are pooled in by the assessee. The services provided by EIS service providers mainly consist of providing standard research reports, newsletters, market data analysis etc. The services are akin to providing access to online databases for obtaining such reports. The databases prepare and maintain standard reports, journals etc pertaining to the oil and gas sector. The group companies access the databases for the purpose of using it internally. The assessee has an arrangement with various Shell group entities for use of these EIS services. The cost incurred by assessee for EIS services is charged to Shell group entities based on their usage of EIS services.

23. The Ld. Assessing Officer was of the view that under the external information services, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of work performed by the Shell group companies is highly technical in nature. This team provides consultancy and assists the regional team of the affiliates in providing standard research reports, newsletters and market data analysis. The costs incurred by the assessee company are shared across various Shell entities which have availed such information. Thus, the critical decision-making function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence, it is established that identifiable and highly specialized services, requiring expertise and industrial experience have been provided by the assessee.

IT migration services:

24. Under these services, the assessee has set up a “shared services Centre” to provide a shared services to Shell group. The services pertaining to guidance/support provided by the assessee in setting up IT infrastructure of the shared services centers. Also, IT services in relation to migration of certain operations from other similar centers over the globe to Indian Centre have also been provided by the assessee. Based on the time spent by the assessee’s personnel assisting SIMPL in setting up its IT hardware system, the assessee has recharged the cost incurred.

25. The Ld. Assessing Officer was of the view that under the Shell inter-com charges, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of expat services work performed by the Shell group companies is highly technical in nature. This team provides consultancy and assists the regional team of the affiliates in providing services in the nature of tax administration. The costs incurred by the assessee company are shared across various Shell entities which have availed such facilities. Thus, Shell intercom function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee.

26. Further, the Ld. Assessing Officer was of the view that in all the above three services, that providing of such services would invariably lead to imparting of suitable skill sets / knowledge in the hands of the affiliates in the area in which the services are rendered with consequent improvement in experience and skill set of local employees of the affiliates. In this case, the assessee has, through its personnel, provided ‘technical’ services to assessee, especially since the DTAA definition of FTS expressly includes the provision of the services of personnel. Further as per the definition of FTS in the DTAA, when imparting of suitable experience or skill possessed by the assessee to the affiliates takes place, it amounts to making available the FIS/FTS and therefore the amounts received are taxable as per the DTAA. The services are enduring and they help in promoting the business of the affiliates. The employees of the affiliates are in a position to and actually they are expected to use the knowledge gained, in the business of the affiliates. Thus, knowledge and know-how are made available to the affiliates. Hence, on an understanding of the overall effect of the services, it has to be held that the technical knowledge, experience, and skill are made available to the affiliates. Further on perusal of the nature of services, the Ld. Assessing Officer was of the view that the service provider possesses or have access to resources, know-how and expertise required to provide the covered services to service recipient. Thus, the assessee is providing services which require resources, know how, experience, skill and expertise and the service provider has been selected since it is capable of delivering such services which require resources, knowhow and expertise. Thus, the services are highly specialized services requiring expertise and skill. According to the Ld. Assessing Officer, a perusal of the services makes it obvious that the assessee provides highly technical services which are used by the affiliates of the assessee for taking important and strategic decisions.

27. The Ld. Assessing Officer further relied on the case of GVK Industries v. ITO 54taxmann.com 347 (SC), where the assessee-company was incorporated for the purpose of setting up a 235 MW gas based power project. With the intention to utilize the expert services of qualified and experienced professionals who could prepare a scheme for raising the required finance and tie-up the required loan, assessee sought services of a consultant and eventually entered into an agreement with NRC, a Switzerland based company. The Hon’ble Supreme Court held that payment made to Swiss company for rendering such consultancy services amounted to ‘fee for technical service’ liable to tax in India. The Hon’ble SC observed that as the factual matrix in the case at hand would exposit, NRC had acted as a consultant. It had the skill, acumen and knowledge in the specialized field i.e. preparation of a scheme for required finances and to tie-up required loans. The nature of service rendered by the NRC, can be said with certainty would come within the ambit and sweep of the term ‘consultancy service’ and, therefore, it has been rightly held that the tax at source should have been deducted as the amount paid as fee could be taxable under the head ‘fee for technical service. Accordingly, the Assessing Officer relied upon the aforesaid decision to come to the conclusion that the instant services were in the nature of consultancy services, and hence in the view of the aforesaid decision rendered in the context of India-Swiss tax treaty, the services qualified as fee for technical services.

28. The assessee is in appeal before us against the aforesaid services being taxed as fee for technical services under the Act, read with India Swiss Tax Treaty. The Counsel for the assessee took before us various arguments, which can be primarily summed up as Firstly, under the India-Netherlands Tax Treaty, there is a specific clause, which provides that unless the services which were provided “make available” technology to the recipient of services, such services do not qualify as fee for technical services under the Treaty Law. In the instant facts, looking into the nature of instant services, there is nothing on record which would establish that technology was “made available” to the recipients of services, so as to fall within the ambit of fee for technical services under the India-Netherlands tax treaty. Secondly, the Counsel for the assessee argued that reliance on the GVK industries case supra is misplaced for the simple reason that the aforesaid case was rendered in the context of domestic Income Tax law provisions and the interpretation of India-Switzerland tax treaty was not under consideration before the Hon’ble Supreme Court, since the same was never pressed into arguments. Thirdly, the Counsel for the assessee submitted that the aforesaid services have been rendered on cost to cost basis and without any mark up, and hence since, there is no income element while rendering the aforesaid services, in absence of income element/profit element, the services are not liable to taxed as fee for technical services in India. Fourthly, it was argued that these services qualify as “managerial services” and since the definition of fee for technical services under the India-Netherlands tax treaty does not contain the term “managerial services”, therefore, the services fall outside the ambit/scope of fee for technical services under the India–Netherlands Tax Treaty and hence cannot be subject to tax in India.

29. In response, DR placed reliance on the observations made by the Assessing Officer/DRP in respect of the aforesaid services. The DR submitted that in the instant facts, the services are clearly technical in nature, under the Indian domestic taxation laws as well as under the tax treaty law. The DR submitted that in the instant facts, clearly, technology has been made available to the recipient of services, and since both these service provider recipients are working closely with each other over a period of time, there is a transmission of knowledge during the course of rendering the aforesaid services. Further, the argument of the Counsel for the assessee that the services qualify as managerial services is also flawed, since looking into the nature of services these are primarily technical/consultancy services and fall squarely within the definition of fee for technical services under the India-Netherlands tax treaty. Further, so far as the argument of services been rendered on a cost to cost basis is concerned, the assessee has not been able to establish that there is no profit element/income element during the course of rendering the services, even if the argument were to be accepted that in absence of any income element, the services are not taxable in India. The profit and loss account presented by the assessee is a self serving documents and nothing concrete has been placed on record to show that services have been rendered on cost to cost basis. Further, in absence of valid agreement in place for the period under consideration, the nature of services is also not clear to decide to what extent protection of “make available” clause is available to the assessee.

30. We have heard the rival contentions and perused the material on record.

31. One of the arguments which was taken before us was that the services are “managerial” in nature, and hence falling outside the scope of FTS as given under the India-Netherlands tax treaty, since the definition of FTS does not contain the term “managerial” in the India-Netherlands tax treaty. However, on going through the nature of services being rendered under consideration, we are of the considered view that the services do not qualify as “managerial services” and looking into the nature of services, these are regular technical/consultancy services being provided by the assessee towards group associate companies. The terms managerial, technical and consultancy are not defined anywhere in the Income Tax Act, 1961. In the absence of definition under Income Tax Act the common and general meaning of these terns should be taken into consideration (GVK Industries v ITO supra). The ordinary meaning of the term “management” involves the application of knowledge, skill or expertise in the control or administration of the conduct of a commercial enterprise or organization. Thus, if the management of all or a significant part of an enterprise is contracted out to persons other than the directors, officers or employees of the enterprise, payments made by the enterprise for those management services, it would fall within the definition of managerial services, within the meaning of paragraph 3 (UN-MCC). However, in the instant facts, we observe that looking into the nature of services, these services are in the nature of technical/consultancy services, and in our considered view, the same do not qualify as “managerial” services, so as to take the services away from the ambit of fee for technical services. We observe that on analysis of various services which have been provided in later assessment years, the same also, going by the nature of services, do not qualify as ‘managerial services’.

32. Secondly, with regard to the arguments that the services are not liable to be taxed in India since only costs incurred in rendering the services have been recovered and in absence of any income element, the services are not taxable in India as FTS/royalty, as discussed and analysed even during the course of arguments, we observe that it is not a case where there is a clear case of cost to cost reimbursement with respect to only costs having been recovered from the respective associated enterprises, which have been incurred by the assessee in rendering the services. In the instant case, though the assessee submitted/contended that while charging for the services rendered, the assessee has only recovered the cost incurred in rendering the aforesaid services and nothing over and above the cost which has been incurred for rendering the various services, has been recovered from it’s associated Enterprises. However, from the facts placed on record, the assessee, in our view (and as also noted by the Department for some of the Assessment Years under consideration) has not been able to establish that only the cost which has been incurred for rendering the services through its various employees etc alone has been recovered from its group companies. It is not a case where the assessee has incurred certain costs in purchasing certain third party software or obtained these services from a third party etc, which have been reimbursed/recovered on cost to cost basis from its associated Enterprises India. In this case, we observe that the employees of the assessee are engaged in providing certain services, and the assertion of the assessee is that the precise cost incurred in rendering of these services have been recovered from its various addicted enterprise, on a cost basis. However, in our considered view, the assessee has not been able to demonstrate that only the precise cost incurred for rendering services has been recovered, and therefore, there is no income element at the India level, during the course of rendering of the services. Accordingly, we are not inclined to agree with the aforesaid argument of the assessee.

33. Thirdly, we observe that the Counsel for the assessee has for few years also taken the plea that the services in question/under consideration are “non­technical” services in the first instance, and hence, they are falling outside the scope of technical services under the Act read with India-Netherlands tax treaty. However, on going to the nature of services for various Assessment Years under consideration before us, we are of the considered view that these services are clearly technical in nature, involving use of technology. The authority for advance rulings in the case of Intertek testing 175 Taxman 375 (AAR), while explaining the scope of the term “technical” has held that the expression ‘technical’ ought not to be construed in a narrow sense. It has received a wide interpretation in tune with its dictionary meaning in several cases. The AAR made the following relevant observations in this regard:

“10.6 First, we shall consider the meaning and scope of technical and consultancy services.

What is meant by the expression ‘technical’? Should it be confined only to technology relating to engineering, manufacturing or other applied sciences ? We do not think so. The expression ‘technical’ ought not to be construed in a narrow sense. It has received a wide interpretation in tune with its dictionary meaning in several cases.

In Continental Construction Ltd. v. CIT [1992] 195 ITR 81 the Supreme Court observed that “the expression ‘technical services’ has a very broad connotation and it has been used elsewhere in the Statute also so widely as to comprehend professional services : vide Section 9(1) (vii) “. The relevant meanings of the word ‘technical’ given in the New Shorter Oxford Dictionary (Thumb Index Edition) are 1. Of a person : having knowledge of or expertise in a particular art, science, or other subject. 2. pertaining to, involving, or characteristic of a particular art, science, profession, or occupation, or the applied arts and sciences generally. In CBDT v. Oberoi Hotels India (P.) Ltd. [1998] 97 Taxman 453, the Supreme Court reiterated the view that the term ‘technical services’ included professional services. In the case of Dean, Goa Medical College v. Dr. Sudhir Kumar Solanki [2001] 7 SCC 645, the question was whether the expression technical institutions’ takes within its fold the medical colleges. The Supreme Court observed that “the dictionary meaning of the word “technical” is also “professional” and is used in contradistinction with pure sciences to prepare the professionals in applied sciences”. However, we would like to observe that it is not any or every professional service that amounts to technical service. Professionalism and an element of expertise should be at the back of such services.

There is a decision of Andhra Pradesh High Court in which the ambit of expression ‘technical service’ was considered. In G.V.K. Industries Ltd. v. ITO [1997] 228 ITR 564 (AP), SSM Quadri, J. speaking for the Division Bench rejected the argument of the assessee’s Counsel ‘that the NRC did not render any technical or consultancy service to the petitioner-company and that it merely rendered advice in connection with the procurement of loans by it, which does not amount to rendering technical or consultancy service within the contemplation of the said clause and that the technical or consultancy service should relate to the core of the business of the petitioner-company’. It was observed. In our view advice given to procure loan to strengthen finances would be as much a technical or consultancy service as it would be with regard to management, generation of power or plant and machinery. From the above discussion it follows that ‘success fees’ fall in line with any other technical services within the ambit of Section 9(1) (vii) (b). ”

34. Accordingly, given the wide interpretation to the term “technical” having been taken by the Courts, and looking into the nature of services which have been rendered by the assessee, we are of the considered view that the services involve extensive use of technology, and the same are “technical” in nature.

35. However, we also observe that in the instant facts, the India-Netherlands Tax Treaty, contains a specific restriction in the form of “make available” clause, which restricts the definition of fee for technical services under the Treaty Law to only those cases where services have been rendered in a manner that the technology have been “made available” to the recipient of services, meaning thereby, the necessary information/knowledge has been imparted to the recipient of services in such manner, so that in the future, they have been enabled/ empowered to perform the services themselves, without any necessity of recourse to future services being provided by the assessee. It would be useful to reproduce the relevant extracts of the India-Netherlands tax treaty for ready reference:

“5. For purposes of this Article, “fees for technical services” means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services :

…….

(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.”

36. The scope of the term “make available” was discussed at length in the case of Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791, in the following words:

“Whereas Section 9(1)(vii ) stops with the ‘rendering’ of technical services, the DTA goes further and qualifies such rendering of services with words to the effect that the services should also make available technical knowledge, experience, skills, etc., to the person utilizing the services. The making available in DTA refers to the stage subsequent to the ‘making use of stage. The qualifying word is ‘which’- the use of this relative pronoun as a conjunction is to denote some additional function the ‘rendering of services’ must fulfil. And that is that it should also ‘make available’ technical knowledge, experience, skill, etc. Thus, the normal, plain and grammatical meaning of the language employed, is that a mere rendering of services is not roped in unless the person utilising the services is able to make use of the technical knowledge, etc., by himself in his business or for his own benefit and without recourse to the performer of the services in future. The technical knowledge, experience, skill, etc., must remain with the person utilising the services even after the rendering of the services has come to an end. A transmission of the technical knowledge, experience, skills, etc., from the person rendering the services to the person utilising the same is contemplated by the article. Some sort of durability or permanency of the result of the ‘rendering of services’ is envisaged which will remain at the disposal of the person utilising the services. The fruits of the services should remain available to the person utilising the services in some concrete shape such as technical knowledge, experience, skills, etc.”

37. The scope of the term “make available” came up for consideration recently before the Gujarat High Court in the case of Star Rays 153 com 226 (Gujarat), where the Assessee, a partnership firm, was engaged in business of cutting and polishing diamonds and export of diamonds. It had made remittances qua diamond testing service for certification of diamonds to GIA USA which set up a laboratory at Hong Kong as GIA Hong Kong and claimed that said sum was not tax deductible at source. The Assessing Officer held that assessee had made payment to GIA Hong Kong Laboratory and not GIA USA and, therefore, could not claim treaty benefit between India-USA and, that assessee was liable to deduct TDS from said remittance. Invoices for payment of fees were issued by GIA USA and accounts reflected that payment was received in offshore bank account of GIA USA. The High Court held that the assessee’s case was protected under India-USA DTAA as mere rendering of services could not be roped into FTS when person utilizing services was unable to make use of technical knowledge etc.

38. Recently, the issue of “make available” came up before the Hon’ble Supreme Court in the case of Ad2pro Media Solutions (P.) Ltd. [2024] 158 com 432 (SC). The facts were that the assessee was a private limited company engaged in business of providing graphic design solutions for advertising and marketing communications. It had remitted huge amounts to US based company for marketing services without deduction of TDS. The Assessing Officer held that assessee utilized services of US Company even in negotiations with customers and in finalizing contracts, and same could not be done without sharing technical knowledge, know-how, processes or experience, hence, payment was taxable in India as FTS. The Tribunal allowed assessee’s appeal holding that payments made could not be considered as royalty or FTS and hence, no TDS was required to be deducted. It was found that US Company did not have any permanent establishment in India. Further Tribunal in its order had noted that scope of work was to generate customer leads using/subscribing customer data base, market research, analysis, and online research data and that service provider had not made available any technical knowledge, experience, know-how, process to develop and transfer technical plan or technical design. The High Court by impugned order held that in view of admitted fact that services were utilized in USA, findings returned by Tribunal did not call for any interference. The Hon’ble Supreme Court dismissed the SLP filed by revenue against said impugned order of High Court.

39. Further, in our considered view, the decision of GVK industries supra is also not relevant to the instant facts, since in such case, the issue for consideration before the Hon’ble Supreme Court was whether the services relating to obtaining loan qualifies as managerial services. The aforesaid decision, is not applicable to the instant case for the reason that Hon’ble Supreme Court did not have the occasion to discuss the relevant Tax Treaty provisions, and the decision was rendered on the domestic Income Tax provisions. Accordingly, in our view, since the aforesaid decision does not apply to the instant facts, much credence cannot be given to the observations made in the decision.

40. Now coming to the instant facts, looking into the nature of services, there is nothing on record to establish that during the course of rendering of services, the technology was “made available” to the recipient of services, in such a manner that the recipient of services were enabled to perform the services in the future, by itself, without any requirement of recourse/further assistance from the assessee company. From the contents of the nature of services, we observe that neither has technology be made available to the recipient of services, nor there is any such intention to render services in a manner that the recipient of services is enabled to perform the services itself without recourse to the assessee. Accordingly, looking into the facts, we are of the considered view that the services have not “made available” technology to the recipient of services, so as to fall within the definition of FTS under the India-Netherlands tax treaty.

41. In the result, grounds 2, 3 and 4 of the assessee’s appeal are allowed.

Ground number 5: taxability of Real Estate And Corporate Travel Services as fees for technical services under Section 9(1)(vii) of the Act read with article 12 of Tax Treaty

59. The brief facts relating to these services are that Shell group has business facilities across various countries which is managed by a real estate team of the assessee. During the impugned year under consideration, payments have been made to the assessee for the work done by the real estate team of the assessee in managing the Group’s property portfolio, corporate travel program, office facilities and business centers. During the year under consideration, the assessee was engaged in provision of general business support services and other services, with respect to real estate operations and inter-company services to SIMPL.

60. The AO was of the view that under the Real Estate and Corporate Travel Services, the assessee provides consultancy and assists the regional team of the affiliates in managing real estate transactions and leveraging of global relationships and contract management with key suppliers and real estate information technology tool. The critical decision-making function of real estate consultancy has been performed by the affiliates through the assistance/consultancy of the assessee. As per the Ld. Assessing Officer, identifiable and highly specialized services requiring expertise and industrial experience of the global support team of the assessee have been provided by the assessee and the nature of work performed by the Shell group companies is highly technical in nature The AO thus concluded that the assessee, through its personnel, provided ‘technical services’ to assessee, especially since the DTAA definition of FTS expressly includes the provision of the services of personnel. The AO further concluded that the services performed by the assessee would invariably lead to imparting of suitable skill sets / knowledge in the hands of the affiliates with consequent improvement in experience and skill set of the local employees of the affiliates. The Ld. Assessing Officer relied on various judicial precedents in support of the above contention.

61. The assessee is in appeal before us against the aforesaid order passed by Assessing Officer holding the services as fees for technical services under the Act read with the Tax Treaty. Before us, the arguments of the Counsel for the assessee remain the same as discussed in earlier paragraphs while dealing with other services which were held to be FTS for Assessment Year 2011-12.

62. In our considered view, in view of our observations made in the preceding paragraphs, we are of the considered view that in respect of the aforesaid services, the condition of “make available” is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was “made available” to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty. Accordingly, in our considered view, the aforesaid services do not qualify as FTS under the India-Netherlands tax treaty.

63. In the result, ground number 5 of the assessee’s appeal is allowed for Assessment Year 2013-14.

Ground No. 7: taxability of Health Ecotax services as FTS under the act, read with taxability (INR 2,12,21,126/-) IT Services

81. During the year under consideration, the assessee has rendered certain IT services to SIMPL, which includes certain services in relation to the Physical Access Control System (‘PACS) being implemented at each location. In relation to these PACS related services, the fee comprises of the following components: a) Prowatch (Physical Access Control System) – a software which is being implemented at each location to read the EVI cards when any person swipe in and out of the building: b) Prowatch configuration – updating the card readers to Prowatch: c) Recovery of project management and other overhead costs – recovery of Manpower costs for the resources working on these projects.

82. In respect of these services, the Ld. Assessing Officer was of the view that the assessee accepts that the services are technical in nature and the only objection is that the same are not taxable as such services do not fall in the scope of make available clause. The assessee has rendered certain IT services to Shell India Markets Pvt. Ltd. (‘SIMPL’), a group entity, which inter alia, includes certain services in relation to the Physical Access Control System (‘PACS’) being implemented at each location. This requires experience and expertise of highly technical and trained staff. Thus, in such a scenario it cannot be said that technical knowledge, experience, skill etc has not been made available to the Indian entity. It is seen that the advice and assistance rendered by the assessee to the Indian entity are not transient in nature and are capable of being used by the Indian entity on its own.

Health Ecotox services:

83. During the year under consideration, the assessee rendered Health Ecotox services to SIMPL which pertains to “One Health IT System”. The One Health IT system is for keeping and maintaining confidential medical information of Shell employees. The system is managed by Shell Health. The cost incurred for these services has been allocated between group companies using these services based on the actual number of full time employee per entity. As per the assessee, the fee is in relation to keeping and maintaining confidential medical information of Shell employees and therefore represents commercial / management / advisory services which are not technical in nature and therefore, the same is not taxable as FTS under Article 12 of India-Netherlands Tax Treaty. Without prejudice to the above and even for sake of argument it is assumed that the above services are technical in nature, the same does not make available any technical knowledge, experience, skills, know how, etc. and also do not consist of the development and transfer of technical plan or technical design and therefore, the revenue received by the Assessee for these services do not qualify as FTS under Article 12 of the India-Netherland tax treaty and as such not taxable in India. Without prejudice to the above, the assessee submitted that the amounts received for Health Ecotox Services represents the cost allocations and no mark-up has been charged on the said cost by the Assessee. It is to be noted that allocation of costs is based on ‘actual number of full time employee’. Accordingly, the assessee submitted that receipts for Health Ecotox Services are only reimbursement of expenses and as such not chargeable to tax.

84. The Ld. Assessing Officer observed that under the Health Ecotox services, the assessee has rendered these services to SIMPL which pertains to “One Health IT system”. The One Health IT System is an add on to the Shell People system for keeping and maintaining confidential medical information of Shell employees. Here, it is seen that clearly identifiable and highly specialized services, requiring expertise and industrial experience have been provided by the assessee.

85. Further, in respect of both the above services, the Ld. Assessing Officer was of the view that it is clear that such services would invariably lead to imparting of suitable skill sets / knowledge in the hands of the affiliates in the area in which the services are rendered with consequent improvement in experience and skill set of local employees of the affiliates. In this case, the assessee have, through its personnel, undoubtedly provided ‘technical’ services to assessee, especially since the DTAA definition of FTS expressly includes the provision of the services of personnel. Further as per the definition of FTS in the DTAA, when imparting of suitable experience or skill possessed by the assessee to the affiliates takes place it amounts to making available the FIS/FTS and therefore the amounts received are taxable as per the DTAA. The services are enduring and they help in promoting the business of the affiliates. The employees of the affiliates are in a position to, actually they are expected to use the knowledge gained, in the business of the affiliates. Thus, knowledge and know-how are made available to the affiliates. Hence, on an understanding of the overall effect of the services, it has to be held that the technical knowledge, experience, and skill are made available to the affiliates.

86. The assessee is in appeal before us against the aforesaid order passed by Assessing Officer holding the services as fees for technical services under the Act read with the Tax Treaty. Before us, the arguments of the Counsel for the assessee remain the same as discussed in earlier paragraphs while dealing with other services which were held to be FTS for Assessment Year 2011-12.

87. In our considered view, in view of our observations made in the preceding paragraphs, we are of the considered view that in respect of the aforesaid services, the condition of “make available” is not satisfied and the Department has not brought anything on record to demonstrate that in the instant case, the technology was “made available” to the recipient of services, so as to fall within the ambit/definition of FTS under the India-Netherlands tax treaty.

88. Accordingly, in our considered view, the aforesaid services do not qualify as FTS under the India-Netherlands tax treaty.

89. In the result, Ground Nos. 5 and 7 of the assessee’s appeal are allowed for Assessment Year 2015-16.”

8. Now with respect to balance services which have been rendered for the first time during this year, we shall briefly reproduce the relevant extracts of the order of Ld. AO which would throw useful light on the nature of services and the assertion of the AO as to why the same qualifies as “fee for technical services” under the Act read with Treaty:

“G. Remuneration & benefit fees:- (Ground No. 5 Rs. 73,606,027/-)

Under the Remuneration & Benefits Fees, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of Remuneration & Benefits Fees by the Shell group companies is highly technical in nature. This team provides consultancy and assists the regional team of the affiliates in providing services in the nature of job evaluation system, equity plans, global employee share purchase plan, performance share plans, pay benchmarking and; individual performance review The costs incurred by the assessee company are shared across various Shell entities which have availed such facilities. Thus function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee.

H. Talent & Development fees:- (Ground No. 6 Rs. 143,618,345/-)

Under the Talent & Development Fees, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of Talent & Development Fees paid by the Shell group companies is highly technical in nature. This team provides consultancy and assists the regional team of the affiliates in providing services in the nature of co-ordinate global talent policies and processes and ensure they align with business need for a diverse, inclusive and competitive workforce – senior leader’s succession planning, diversity & inclusion, talent operations/excellence, skill pool management, career development, resourcing strategy and advice, support the execution of Talent process and policy within dedicated business HR teams, and provide leadership, direction and strategy for those teams. The purpose is to create competitive advantage through attracting talented people from diverse sources, developing them, motivating them, creating alignment to Shell Group goals and giving them the most effective organizational structures in which to deploy their skill and energy. The costs incurred by the assessee company are shared across various Shell entities which have availed such, facilities. Thus, function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee.

I. Brand advertising:- (Ground No. 11 Rs. 25,072,914/-)

At the outset it is stated that the assessee accepts that the services are technical in nature and the only objection is that the same are not taxable as such services do not fall in the scope of FTS clause. As per assessee the purpose of Brand Advertising is to ensure that the brand promotes the ongoing success of Shell businesses. External Relations use advertising as a means to maintain and improve the Shell reputation. This Brand Advertising moves from billboards to digital media such as YouTube, Snapchat and Facebook. The services provided are highly technical in nature. Thus, it is clear that this service is aimed at influencing the consumers and this function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee. In view of the above discussion these services fall under FTS.

“J. Media relation:- (Ground No. 12 Rs. 2,492,547/-)

As per assesses media relation center of excellence acts as the key messenger for Shell to the rest of the world. It helps to promote understanding of the company and its strategy among external stakeholders. Thus, function has been performed by the affiliates through the assistance/consultancy of the assessee. In absence of proper media management the affiliates cannot survive and do better business. Accordingly, it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee.

K. Social performance:- (Ground No. 13 Rs. 5,099,802/-)

The expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of Social performance Fees by the Shell group companies is highly technical in nature requires special skill to analyze. This team provides advice and support to shell entities on the matter of social performance and social investment. Thus function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and experience have been provided by the assessee.

L. ER strategy and planning:- (Ground No. 14 Rs. 4,960,567/-)

Under the ER strategy and planning Services, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of work performed by the Shell group companies is highly technical in nature being crisis management. This team provides consultancy and assists the regional team of the affiliates in providing excellence supports critical scenarios in terms of reputation management and crisis management. The ER Strategy and Planning Center of Excellence is involved in corporate reputation, annual ER planning, measurement and insights, planning and operations, coordinating the shell policy forum and crisis management. Thus the critical decision making function has been performed by the affiliates through the assisfance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and industrial experience have been provided by the assessee.

M. Manage and Lead ER function:- (Ground No. 15 Rs. 2,682,080/-)

Under the Manage and Lead ER function, the expertise and experience of the global support team of the assessee is being offered to its affiliates. The nature of this work performed by the Shell group companies is highly technical in nature being how to manage and lead team. This team provides consultancy and assists the regional team of the affiliates in providing excellence supports critical scenarios in terms of reputation management and crisis management. The ER Strategy and Planning Center of Excellence is involved in corporate reputation, annual ER planning, measurement and insights, planning and operations, coordinating the shell policy forum and crisis management. Thus the critical decision making function has been performed by the affiliates through the assistance/consultancy of the assessee. Hence it is established that clearly identifiable and highly specialized services, requiring expertise and industrial experience have been provided by the assessee.

4.5 Thus in all the above services it is clear that such services would invariably lead to imparting of suitable skill sets / knowledge in the hands of the affiliates in the area in which the services are rendered with consequent improvement in experience and skill set of local employees of the affiliates. In this case, the assessee have, through its personnel, undoubtedly provided ‘technical1 services to assessee, especially since the DTAA definition of FTS expressly includes the provision of the services of personnel. Further as per the definition of FTS in the DTAA, as discussed supra, when imparting of suitable experience or skill possessed by the assessee to the affiliates takes place it amounts to making available the FIS/FTS and therefore the amounts received are taxable as per the DTAA . The services are enduring and they help in promoting the business of the affliate. The employees of the affiliates are in a position to, actually they are expected to use the knowledge gained, in the business of the affiliates. Thus, knowledge and know-how are made available to the affiliates. Hence, on an understanding of the overall effect of the services, it has to be held that the technical knowledge, experience, and skill are made available to the affiliates.”

9. On going through the nature of services and the contentions of the AO, we concur with the view of the assessee that there is no specific reference as to how the “make available” under the India-Netherlands Tax Treaty has been satisfied while rendering the above services, so as to fall within the ambit of FTS under the India-Netherlands Tax Treaty. Accordingly, in view of our observations in the preceding paragraphs while dealing with the issue for A.Y. 2009-10 to 2018-19 vide order dated 20.03.2024, we are of the considered view that the “make available” clause has not been satisfied in the instant facts and therefore, the services mentioned above do not qualify as FTS under India-Netherlands Tax Treaty.

10. In the result, we hold that the above services did not qualify as FTS under the India-Netherlands Tax Treaty, since the “make available” clause has not been satisfied in the instant facts.

11. In the result, Ground Nos. 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 of the assessee’s appeal are allowed, since the services do not qualify as “FTS” under the India-Netherlands Tax Treaty.

12. With respect to Ground No. 16 regarding the contention that the above mentioned services are merely cost allocation / reimbursement are taxable, we observe that we have decided this issue against the assessee for previous assessment years and therefore, Ground No. 16.1 of the assessee’s appeal is dismissed. We would like to reproduce the relevant extracts of the ruling dated 20.03.2024 for ready reference:

“32. Secondly, with regard to the arguments that the services are not liable to be taxed in India since only costs incurred in rendering the services have been recovered and in absence of any income element, the services are not taxable in India as FTS/royalty, as discussed and analysed even during the course of arguments, we observe that it is not a case where there is a clear case of cost to cost reimbursement with respect to only costs having been recovered from the respective associated enterprises, which have been incurred by the assessee in rendering the services. In the instant case, though the assessee submitted/contended that while charging for the services rendered, the assessee has only recovered the cost incurred in rendering the aforesaid services and nothing over and above the cost which has been incurred for rendering the various services, has been recovered from it’s associated Enterprises. However, from the facts placed on record, the assessee, in our view (and as also noted by the Department for some of the Assessment Years under consideration) has not been able to establish that only the cost which has been incurred for rendering the services through its various employees etc alone has been recovered from its group companies. It is not a case where the assessee has incurred certain costs in purchasing certain third party software or obtained these services from a third party etc, which have been reimbursed/recovered on cost to cost basis from its associated Enterprises India. In this case, we observe that the employees of the assessee are engaged in providing certain services, and the assertion of the assessee is that the precise cost incurred in rendering of these services have been recovered from its various addicted enterprise, on a cost basis. However, in our considered view, the assessee has not been able to demonstrate that only the precise cost incurred for rendering services has been recovered, and therefore, there is no income element at the India level, during the course of rendering of the services. Accordingly, we are not inclined to agree with the aforesaid argument of the assessee.”

13. In the result, Ground No. 16.1 of the assessee’s appeal is dismissed.

14. With regard to Ground No. 17 & 18, regarding the rate of tax on total income @ 12% instead of 10%, we observe that this issue has been decided in favour of the assessee in the aforesaid order dated 20.03.2024. The relevant extracts of the ruling are reproduced for ready reference:

“Grounds 10-11 of the assessee’s appeal pertains to the issue of levy of surcharge, education cess and secondary and higher education cess on the tax levied @ 10% rate prescribed under Article 12 of the Tax Treaty

90. We are of the considered view that that levy of surcharge and cess cannot exceed the tax rate of 10% as per Article 12 of India –Netherlands tax treaty, since the Treaty provides that the tax is to be charged on royalty and FTS shall not exceed 10% of the gross amount of royalty or FTS. Further, Article 2 of the Tax Treaty defines tax in India as “income tax including any surcharge thereon”. Therefore, Article 12 read with Article 2 of the Tax Treaty makes it clear that the rate of tax at 10% would encompass surcharge and education cess as it is also in the nature of tax. Therefore, we hold that levy of surcharge and cess over and above the taxable rate of 10% on royalty and FTS is not permissible as per the Treaty provisions. While coming to such conclusion, we are well supported by the following decisions:

• • FCC Co. Ltd.145 com 649 (Delhi – Trib.)
  • CIT, International Taxation v. Marubeni Corpn. [2022] 139 taxmann.com 458 (Mum. – Trib.);
  • DIT (International Taxation) v. BOC Group Ltd. [2015] 64 taxmann.com 386/[2016] 156 ITD 402 (Kol. – Trib.);
  • JCDecaux S.A. v. ACIT/DCIT, International Taxation [2021] 123 com 221/[2020] 79 ITR (T) 222 (Delhi – Trib.);
  • DIC Asia Pacific Pte. Ltd. v. Asstt. DIT, International Taxation [2012] 22 com 310/18 ITR (T) 358/52 SOT 447 (Kol.);
  • Sunil V. Motiani v. ITO (International Taxation) [2013] 33 com 252/59 SOT 37 (Mum.);
  • Parke Davis & Company LLC v. Asstt. CIT [2014] 41 com 193/62 SOT 282 (Mum.);
  • ITO (Intl Taxn) v. M. Far Hotels Ltd. [2013] 32 com 100/58 SOT 261/156 TTJ 137 (Cochin – Trib.).91.

91. In the result, Ground No. 10 of the assessee’s appeal is allowed. Since the issue regarding levy of surcharge and the tax treaty has been decided in favour of the assessee in Ground No. 10, Ground No. 11 of the assessee’s appeal does not require any separate adjudication.”

15. Accordingly, Ground No. 17 and 18 of the assessee’s appeal are allowed.

16. Ground No. 19 of the assessee’s appeal is consequential and hence does not require any specific adjudication.

17. With regards to Ground No. 20 (Short Credit of TDS), Ground No. 21 (Arithmetical inaccuracy in calculating tax liability) and Ground No. 22 (Incorrect Adjustment of Refund), the issue is restored to the file of the Ld. AO to verify the facts, after giving due opportunity of hearing to the assessee to present the complete set of facts and thereafter pass an order, in accordance with law.

18. In the result, Ground No. 20, 21 & 22 of the assessee’s appeal are allowed for statistical purposes.

19. In combined result, the appeal of the assessee is partly allowed for statistical purposes.

This Order pronounced in Open Court on 25/11/2024