Asst. DIT, (Intl Taxn)-I, Hyd, Hyderabad v. BHEL-GE Gas Turbine Services (P) Ltd.,, Hyderabad

ITA 977/HYD/2011 | 2002-2003
Pronouncement Date: 31-07-2012 | Result: Dismissed

Appeal Details

RSA Number 97722514 RSA 2011
Assessee PAN AAACB5126H
Bench Hyderabad
Appeal Number ITA 977/HYD/2011
Duration Of Justice 1 year(s) 2 month(s) 11 day(s)
Appellant Asst. DIT, (Intl Taxn)-I, Hyd, Hyderabad
Respondent BHEL-GE Gas Turbine Services (P) Ltd.,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-07-2012
Assessment Year 2002-2003
Appeal Filed On 20-05-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI D.KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY JUDICIAL MEMBER ITA NO.976/HYD/2011 : ASSESSMENT YEAR 2001-0 2 ITA NO.977/HYD/2011 : ASSESSMENT YEAR 2002-0 3 ITA NO.978/HYD/2011 : ASSESSMENT YEAR 2003-0 4 ITA NO.979/HYD/2011 : ASSESSMENT YEAR 2004-0 5 ITA NO.980/HYD/2011 : ASSESSMENT YEAR 2005-0 6 ITA NO.981/HYD/2011 : ASSESSMENT YEAR 2006-0 7 ADDITIONAL DIRECTOR OF INCOME- TAX (INTERNATIONAL TAXATION)-I HYDERABAD V/S M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD ( PAN - AAACB 5126 H ) (APPELLANT) (RESPONDENT) C.O. NO. 41/HYD/2011 (IN ITA NO.976/HYD/2011) : ASSESSMENT YEAR 200 1-02 M/S. BHEL - GE - GAS TURBINE SERVICING (P)LTD. HYDERABAD ( PAN - AAACB 5126 H ) V/S ADDITIONAL DIRECTOR OF INCOME - TAX (INTERNATIONAL TAXATION)-I HYDERABAD (CROSS-OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI V.SRINIVAS DEPARTMENT BY : SHRI ARVIND V. SONDE DATE OF HEARING 16.7.2012 DATE OF PRONOUNCEMENT 31.7.2012 O R D E R PER D.KARUNAKARA RAO ACCOUNTANT MEMBER: THERE ARE SIX APPEALS BY THE REVENUE IN THIS BUNC H WHICH ARE DIRECTED AGAINST SEPARATE ORDERS OF THE COMMISSIONE R OF INCOME- TAX(APPEALS) V HYDERABAD ALL DATED 14.3.2011 IN THE CONTEXT OF THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER S.201( 1A) OF THE ACT FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08. ASSESSEE HAS ALSO FILED CROSS- OBJECTION IN THE APPEAL OF THE REVENUE FOR THE ASSE SSMENT YEAR 2001-02. ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 2 SINCE COMMON ISSUES ARE INVOLVED THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. EFFECTIVE GROUNDS OF THE REVENUE COMMON IN ALL ITS APPEALS READ AS FOLLOWS- 2. THE LEARNED CIT(A) HAS IGNORED THE EXPLANATION IN PARA 8 OF THE AO ORDER WHERE IN THE ASSESSING OFFICER CLEARL Y EXPLAINED THAT IT IS NOT MERE REPAIR WORK BUT SPECI FIC AND TECHNICAL EXPERTISE ARE REQUIRED TO PERFORM THE WOR K ORDER. 3. THE LEARNED. CIT(A) HAS ERRED WHERE HE HAS TREAT ED THE SERVICES RENDERED BY THE ASSESSEE AS NON TECHNICAL SERVICES IN VIEW OF THE SECTION 9(1)(VII) OF THE INCOME-TAX ACT. HOWEVER TECHNICAL PERSONNEL IS INCLUDED IN THE DEF INITION OF TECHNICAL SERVICES AND AS PER SECTION 9(1)(VII) OF THE INCOME-TAX AFT. THEREFORE IT WILL BE TREATED AS T ECHNICAL SERVICES AS DEFINED IN THE I.T. ACT. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE COMM ON IN ALL THESE CASES EXCEPTING FOR THE AMOUNTS INVOLVED AS TAKEN FROM THE APPEAL FOR ASSESSMENT YEAR 2001-02 ARE THAT THE ASSESSEE IS A JOINT VENTURE COMPANY INVOLVING BHARAT HEAVY ELECTRICAL LIMITED ( BHEL) AND GE PACIFIC (MAURITIUS) LIMITED. TDS SURVEY TOOK PLACE IN THE P REMISES OF THE ASSESSEE. DURING THE SURVEY ACTION UNDER S.133A OF THE ACT IT WAS NOTICED THAT IN THE FINANCIAL YEAR 2001-02 BHEL-G E HAS PAID TO/CREDITED THE ACCOUNTS OF MIDDLE EAST ENGINEERING COMPANY LTD SAUDI ARABIA WITH RS.4 89 39 5335; AND M/S. WATT & ACKKERMANS PTE. LT D. OF SINGAPORE WITH RS.61 06 400/- FOR REPAIRING AND REFURBISHMENT ETC. AND THE ASSESSEE MADE THE ABOVE REFERRED PAYMENTS TO THE S AID COMPANIES ABROAD WITHOUT MAKING TDS. ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE SAID AMOUNTS CONSTITUTE FEE FOR TECHNICAL SERVICES AS DEFINED IN S.9(VII) OF THE ACT OF THE INCOME-TAX ACT. THE ASSE SSEE OBJECTED TO THE SAID PROPOSAL ON THE GROUND THAT THE WORKS IN QUEST ION ARE THE WORKS DONE BY THE FOREIGN COMPANIES ABROAD AND THE PAYME NT IS MADE FOR CARRYING OUT THE WORK AND NOT FOR PERFORMING ANY TE CHNICAL SERVICE SINCE NO INTELLECTUAL ASPECT IS INVOLVED IN THE REPAIRS A ND REFURBISHMENT ACTIVITY ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 3 CARRIED OUT BY THOSE FOREIGN COMPANIES. OTHER REAS ONS PUT FORTH BY THE ASSESSEE OPPOSING THE PROPOSAL OF THE ASSESSING OFF ICER ARE NARRATED BY THE ASSESSING OFFICER IN PARA 4 OF THE IMPUGNED ORD ER PASSED BY THE ASSESSING OFFICER UNDER S.201(1A) OF THE ACT. AF TER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE ASSESSING OFFICER ANALYSED THE PROVISIONS OF S.9(1) OF THE ACT IN GENERAL AND CLAUSE (VII) O F THE SAID SUBSECTION RELATING TO FEE FOR TECHNICAL SERVICES IN PARTICULAR. FURTHER THE ASSESSING OFFICER PERUSED THE SCOPE OF THE WORKS CARRIED ON B Y THE NON-RESIDENT COMPANIES VIDE CLAUSES (A) TO (S) ENLISTED IN PARA 8 OF THE IMPUGNED ORDER AND CAME TO THE CONCLUSION THAT THESE ITEMS O F WORK DONE BY THE FOREIGN AGENCIES CANNOT BE SAID TO BE CONSISTING MA INLY OF PHYSICAL INVOLVEMENT SINCE THOSE WOKS WOULD DEFINITELY INVO LVE TECHNICAL INPUTS OF HIGH ORDER BY THE QUALIFIED ENGINEERS AND TRAINED T ECHNICAL PERSONNEL. ACCORDINGLY HE DECIDED THAT THE PAYMENTS IN QUESTI ON WOULD FALL WITHIN THE SCOPE OF FEE FOR TECHNICAL SERVICES (FTS) AS DEFINED IN SEC.9(1)(VII) OF THE ACT. FURTHER THE ASSESSING OFFICER ALSO EX AMINED THE APPLICABILITY OF THE PROVISIONS OF DOUBLE TAXATION AVOIDANCE AGRE EMENT(DTAA) BETWEEN INDIA - SAUDI ARABIA AND INDIA - SINGAPORE AND CAME TO THE CONCLUSION THAT KNOWLEDGE AND SKILL ARE MADE AVAILA BLE IN THIS CASE WHILE REPAIRING AND REFURBISHMENT OF THE ITEMS SENT BROAD AND THEREFORE HE HELD THAT THE PROVISIONS OF S.195 OF THE INCOME-TAX ACT ARE APPLICABLE AND THE PROVISIONS OF DOUBLE TAXATION AVOIDANCE ACT SHA LL NOT COME TO THE AID OF THE ASSESSEE. FOR BOTH THE REASONS THE ASSESSIN G OFFICER INVOKED THE PROVISIONS OF S.195(1) OF THE ACT AND PASSED THE I MPUGNED ORDERS UNDER S.201(1A) OF THE ACT DATED 30 TH MARCH 2007. 4. AGGRIEVED BY THE ABOVE THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND RAISED TEN GROUNDS WHICH ARE EXTRAC TED IN PARA 3 OF THE IMPUGNED ORDER OF THE CIT(A). AS CAN BE SEEN FRO M THE DISCUSSION AT 5.3 TO 5.6 OF THE IMPUGNED ORDER THE CIT(A) ANALY SED THE SCOPE OF S.5(2) OF THE ACT AND S.9(1)(VII) OF THE ACT AND IN TERPRETED THE SAME BY ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 4 STATING THAT IT IS ONLY WHERE ANY APPLICATION OF AN Y TECHNICAL KNOWLEDGE IS INVOLVED IT AMOUNTS TO PROVIDING TECHNICAL SERVICE S AND OTHERWISE NOT. HE ANALYSED THE LIST OF ITEMS AND THE SCHEMES OF WO RKS LISTED IN (A) TO (S) OF THE IMPUGNED ORDER OF THE ASSESSING OFFICER ALS O EXTRACTED BY HIM AND CONCLUDED THAT THEY DO NOT INVOLVE PROVIDING OF ANY KNOWLEDGE. IN PARA 5.4.2 THE CIT(A) REFERRED TO CERTAIN CONTROVERSIAL LIST OF ITEMS BEFORE CONCLUDING THAT ANY EVALUATION AND TESTING OF A REP AIR WORK DONE BY THE REPAIRER CANNOT BE TERMED AS TECHNICAL SERVICE. IN THE PROCESS THE CIT(A) ALSO EXAMINED THE APPLICABILITY OF THE DELHI TRIBUNAL DECISION IN THE CASE OF LUFTHANSA CARGO INDIA PRIVATE LIMITED V/S. DY. CIT(274 ITR (AT) 20)- DEL WHICH IN TURN CONSIDERED VARIOUS OTHER DE CISIONS FOR THE PROPOSITION THAT EVERY REPAIR AND MAINTENANCE OF T HE COMPONENTS OF AIR- CRAFTS WHICH DOES NOT INVOLVE ANY INTER-ACTION OF THE TECHNICIANS AND ASSESSEES PERSONNEL DOES NOT AMOUNT TO FEE FOR T ECHNICAL SERVICES. FURTHER HE RELIED ON THE DECISION OF THE KOLKATA B ENCH OF THE TRIBUNAL IN THE CASE OF CESC LTD. V/S. DCIT(87 ITD 653) FOR ID ENTICAL PROPOSITION. FINALLY THE CIT(A) CONCLUDED BY STATING THAT THE PAYMENTS MADE TO BOTH THE PARTIES IN SAUDI ARABIA AND SINGAPORE DO NOT FA LL WITHIN THE DEFINITION OF FEE FOR TECHNICAL SERVICES AND THEREFORE NO T DS WAS REQUIRED TO BE EFFECTED ON THE SAME. HE ACCORDINGLY GRANTED RELIE FS TO THE ASSESSEE. IN OTHER WORDS THE ABOVE DECISIONS HOLDS THAT THE IMP ARTING OF TECHNICAL KNOWLEDGE TO THE ASSESSEE OR ITS EMPLOYEES OR ITS N OMINEES ATTRACTS THE FTS COLOUR. 5. AGGRIEVED BY THE ORDER OF THE CIT(A) ON THE ABO VE LINES FOR ALL THESE YEARS REVENUE PREFERRED THE PRESENT APPEALS BEFORE US. 6. ASSESSEE FILED CROSS-OBJECTION RELEVANT TO ASSE SSMENT YEAR 2001-02 STATING THE ORDER PASSED BY THE ASSESSING OFFICER FOR THAT YEAR IS REQUIRED TO BE QUASHED ALSO FOR THE REASON THAT THE SAME WAS PASSED BEYOND THE LIMITATION AND THEREFORE IT IS TIME-BAR RED. ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 5 7. DURING THE PROCEEDINGS BEFORE US THE LEARNED D EPARTMENTAL REPRESENTATIVE FOR THE REVENUE MADE VARIOUS SUBMISS IONS/ARGUMENTS WHICH INCLUDE THAT THE ASSESSEE MADE PAYMENTS TO MI DDLE EAST ENGINEERING COMPANY LTD SAUDI ARABIA AND M/S. WATT & ACKKERMANS PTE. LTD. OF SINGAPORE AND THESE AMOUNTS WERE PAID FOR R EPAIRING AND REFURBISHMENT OF GAS TURBINES. AS PER THE ASSESSING OFFICER SUCH SERVICES CONSTITUTE SERVICE CHARGES AND THEREFORE THE SAME CONSTITUTE FEE FOR TECHNICAL SERVICES. THE LEARNED DEPARTMENTAL REPRE SENTATIVE REFERRED TO THE PROVISIONS OF S.9(1) OF THE ACT AND MENTIONED T HAT HE IS OF THE OPINION THAT THE EXPRESSION RENDERING USED IN TH E EXPLANATION OF DEFINING THE EXPRESSION FTS SHOULD BE UNDERSTOOD IN COMMON SENSE PARLANCE WHICH SHOULD INCLUDE ALL KINDS OF SERVICE S. IN THAT CASE THE IMPUGNED SERVICES SHALL CONSTITUTE FTS. REFERRING TO THE VIEWS OF THE CIT(A) ON WHETHER THE IMPUGNED SERVICES ARE FTS OR NOT LEARNED DEPARTMENTAL REPRESENTATIVE IS OF THE VIEW THAT CIT (A) IS NOT AN EXPERT ON THE ISSUE OF THIS KIND AND WHEN HE HIMSELF IS NO T AN EXPERT THAT VIEW IS AGAINST THE SPIRIT OF THE JUDGMENT IN THE CASE OF BHARATHI CELLULAR LTD (330 ITR 299) AND MENTIONED THAT THE SAID JUDGMENT WAS RENDERED IN THE CONTEXT OF THE PROVISIONS OF S.9(1)(VII) OF THE ACT . THE EXPRESSION MAKE AVAILABLE IS A LANGUAGE OF THE PROVISIONS OF DTAA AND THE SHOULD NOT BE EXTENDED TO DEFINE THE EXPRESSION RENDERING USED IN EXPLANATION 2 TO CLAUSE (VII) OF SECTION 9(1) OF THE ACT. WHEN TH E EXPRESSION RENDERING IS UNDERSTOOD IN NORMAL COMMON SENSE PARLANCE ANY PAYMENT FOR THE RENDERING OF SERVICES GETS COVERED BY THE MEANING OF FTS USED IN S.9(1)(VII). IT IS THE FACT THAT ONCE THE PAYMENT IN QUESTION CONSTITUTES FEE FOR TECHNICAL SERVICES THE SAME MUST BE SUB JECTED TO TDS AS PER THE PROVISIONS OF S.195 OF THE ACT. THE LEARNED DEP ARTMENTAL REPRESENTATIVE ALSO RELIED ON THE DECISIONS OF THE DELHI BENCH OF THE TRIBUNAL IN SAHARA AIRLINES LTD. V/S. DY.CIT(83 ITD 11) AND HYDERABAD BENCH IN THE CASE OF MANNESMANN DEMAG L KAUCHHAMMER V/S. CIT(1988) 26 ITD 198(HYD) FOR THE PROPOSITION THAT WHEN THE SERVICES ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 6 ARE RENDERED AND THE PAYMENTS INVOLVED IT SHOULD ORDINARILY MUST CONSTITUTE FEE FOR TECHNICAL SERVICES. THE LEARNE D DEPARTMENTAL REPRESENTATIVE ALSO ARGUED STATING THAT WHEN THE PA YMENTS ARE RECEIVED ABROAD FOR THE ITEMS RELATABLE TO THE ASSETS LOCATE D IN INDIA SUCH PAYMENTS SHOULD BE SUBJECT TO TAX. FOR THIS PURPOS E RELIANCE IS PLACED ON THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN NHK-JAPAN BROADCASTING CORPORATION V/S. DY. CIT(101 TTJ 292). THUS THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ATTEMP TED TO MAKE OUT A CASE BY STATING THAT THE PAYMENTS TO MIDDLE EAST EN GINEERING COMPANY LTD SAUDI ARABIA; AND TO M/S. WATT & ACKKERMANS P TE. LTD. OF SINGAPORE FOR REPAIRING AND REFURBISHMENT ETC. MADE BY THE A SSESSEE CONSTITUTE FEE FOR TECHNICAL SERVICES AND THE SAME ARE CHARGE ABLE TO TAX IN INDIA AND CONSEQUENTLY THE PROVISIONS OF S.201(1A) ARE A TTRACTED IN RESPECT OF SUCH PAYMENTS. 8. PER CONTRA THE LEARNED COUNSEL FOR THE ASSESS EE SHRI SONDE EXPLAINED THE FACTS OF THE CASE AND RELIED HEAVILY ON THE ORDERS OF THE CIT(A). EXPLAINING THE SAME HE MENTIONED THAT NORM ALLY THE ASSESSEE TAKES UP THE WORKS OF THIRD PARTIES AND SEND THEM T O PARTIES ABROAD SAY MIDDLE EAST ENGINEERING COMPANY LTD SAUDI ARABIA AND M/S. WATT & ACKKERMANS PTE. LTD. OF SINGAPORE FOR REPAIRING AND REFURBISHMENT ETC. THE SAID NON-RESIDENT COMPANIES UNDERTAKE THE REPAI R AND REFURBISHMENT WORKS AS MAY BE REQUIRED FOR USE AND RETURN THE R EFURBISHED /REPAIRED ARTICLES BY RAISING INVOICES AGAINST WHICH THE ASS ESSEE MAKES THE PAYMENTS. IN THIS REGARD THE LEARNED COUNSEL TOOK US THROUGH VARIOUS PAGES SAY PAGES 335 TO 341 WHICH RELATES TO THE CASE OF SUPPLYING WORKS FOR ESSAR AND DEMONSTRATED THAT IT IS A CASE OF RECEIVING WORKS FOR REFURBISHMENT OF GE COMPONENTS BY SENDING THE M TO SINGAPORE FOR ITS REFURBISHMENT ASSEMBLY AND RETURNING THE SAME WITH THE INVOICES RAISED BY THE SINGAPORE COMPANY AGAINST WHICH THE A SSESSEE MADE THE PAYMENT OF $ 136000 US. IN THIS REGARD HE MENTION ED THAT THE ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 7 EMPLOYEES OF THE COMPANY NEVER ACCOMPANIED THE TURB INE PARTS TO BE REFURBISHED ABROAD. THEREFORE THERE IS NO INTERACT ION OR IMPORTING OF TECHNICAL SKILL OR KNOWLEDGE BY THE NON-RESIDENT CO MPANY. THUS IT IS STRAIGHT CASE OF REPAIRING MAINTENANCE AND REFURBI SHMENT. EXPLAINING THE PROVISIONS OF S.9(1)(VII) OF THE ACT IN GENERAL AND ITS EXPLANATION 2 IN PARTICULAR LEARNED COUNSEL FOR THE ASSESSEE MENTI ONED THAT THE ISSUE OF RENDERING SERVICE ARISES ONLY AFTER THE EVENT OF PR OVIDING SERVICES WHICH IS THE CASE OF THE ASSESSEE AND THEREFORE THE ACT OF PROVIDING REFURBISHING SERVICE COMES OUTSIDE THE SCOPE OF THE PROVISIONS OF S.9(1)(VII) OF THE ACT. FURTHER HE MENTIONED THA T MAKING AVAILABLE OF THE SERVICES WOULD ARISE ONLY IF IT INVOLVES TRANSF ER OF KNOWLEDGE AND SKILL TO THE EMPLOYEES OF THE ASSESSEE DIRECTLY OR INDIRE CTLY. THEREFORE THE CASE OF THE ASSESSEE FALLS IN STAGE PRIOR TO THE RE NDERING OF SERVICES. REFERRING TO THE CASE-LAWS RELIED UPON BY THE LEARN ED DEPARTMENTAL REPRESENTATIVE LEARNED COUNSEL FOR THE ASSESSEE M ENTIONED THAT THE DECISION IN THE CASE OF LUFTHANSA CARGO INDIA (P)LT D. (SUPRA) WAS RENDERED ONLY AFTER DISTINGUISHING THE DECISION OF THE MADRAS BENCH OF THE TRIBUNAL IN THE CASE OF RAYMOND LTD. (86 ITD 79). HE RELIED ON THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF MANNESMANN DEMAG L KAUCHHAMMER V/S. CIT(1988) 26 IT D 198(HYD) AND SAHARA AIRLINES (83ITD 11) BUT SUBMITTED THAT THE RATIO OF THE DECISION IN THE CASE OF LUFTHANSA CARGO INDIA LTD. (SUPRA) IS RELEVANT FOR THE PROPOSITION THAT THE PROVISIONS OF S.9(1)(VII) ARE NOT APPLICABLE TO THE PAYMENTS MADE TO THE FOREIGN COMPANIES FOR EXECUTI ON OF NORMAL MAINTENANCE AND REPAIRS WITHOUT ANY INVOLVEMENT OR CONSULTATION WITH THE ASSESSEES OR THEIR EMPLOYEES AND SUCH PAYMENT DOES NOT TANTAMOUNT TO FEE FOR TECHNICAL SERVICES . 9. WITHOUT PREJUDICE TO THE ABOVE LEARNED COUNSE L MENTIONED THAT THE CONTRACTS IN QUESTION ARE PREDOMINANTLY WO RKS ORIENTED CONTRACTS AND NOT SERVICE ORIENTED CONTRACTS IN WH ICH CASE THE PROVISIONS ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 8 OF S.195 HAS NO APPLICATION. HE FURTHER MENTIONED THAT ONLY FEE FOR TECHNICAL SERVICES INVOLVING NON-RESIDENTS ARE COVE RED BY THE PROVISIONS OF S.195. FURTHER WITHOUT PREJUDICE TO THE ABOVE LEARNED COUNSEL MENTIONED THAT THE CASE OF THE ASSESSEE INVOLVES FA ILURE TO DEDUCT TAX AND CERTAINLY NOT THE ONE COVERED UNDER S.201 OF TH E ACT. REFERRING TO THE PRE-AMENDED PROVISIONS OF S.201 THE LEARNED CO UNSEL MENTIONED THAT SUB-SECTION (1) ONLY DEALS WITH DEFAULTS UNDER S.20 0 AND ALSO 194 OF THE ACT. THESE CASES ARE THE ONE WHERE THE ASSESSEES H AVE FAILED TO DEDUCT TDS. THE CASES LIKE THAT OF THE ASSESSEE ARE OUTSI DE THE PROVISIONS OF THE ERSTWHILE S.201 OF THE ACT. IN THIS REGARD LEARNE D COUNSEL DREW OUR ATTENTION TO THE NOTES TO RETROSPECTIVE AMENDMENT T O S.201 AND MENTIONED THAT THE AMENDED PROVISIONS TOOK CARE OF THE CASES IN WHICH THE ASSESSEE FAIL TO DEDUCT TDS BUT THE RETROSPECT IVE AMENDMENT DOES NO APPLY ONLY TO THE ASSESSMENT YEAR 2001-02 AND 20 02-03. ON THIS COUNT ALSO THE ORDERS PASSED BY THE ASSESSING OFFIC ER UNDER S.201(1A) FOR ASSESSMENT YEARS 2001-02 AND 2002-03 HAVE TO BE QU ASHED. 10. THE LEARNED COUNSEL READ OUT THE COPY OF THE NOTES AND CLAUSE 43 TO THE ABOVE AMENDMENT TO SUPPORT THE ABOVE INTE RPRETATION OF THE ASSESSEE. REFERRING TO THE CROSS-OBJECTION FILED B Y THE ASSESSEE ABOUT THE LIMITATION LEARNED COUNSEL FAIRLY MENTIONED THAT T HE SAID ISSUE IS NOW COVERED AGAINST THE ASSESSEE BY THE SPECIAL BENCH D ECISION IN THE CASE OF MAHINDRA AND MAHINDRA V/S. DCIT (30 SOT 374)(SB) F OR THE PROPOSITION THAT THE ORDERS UNDER S.201(1A) COULD BE PASSED WIT HIN A PERIOD OF SIX YEARS SPECIFIED FOR INITIATING AND COMPLETING THE R E-ASSESSMENT S AND THE SAID PERIOD CONSTITUTES REASONABLE PERIOD FOR TAKIN G ACTION UNDER S.201 AND 201(1A) OF THE ACT. 11. DURING THE REBUTTAL TIME THE LEARNED DEPARTME NTAL REPRESENTATIVE PRIMARILY REITERATED THE ARGUMENTS MADE BY HIM EARLIER ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 9 AND PLEADED THAT THE IMPUGNED ORDERS OF THE CIT(A) REQUIRES TO BE REVERSED. 12. WE HEARD BOTH THE SIDES. ACTUALLY THIS IS A CASE WHERE THE ASSESSEE OBTAINED WORKS ORDERS FROM THIRD PARTI ES SUCH AS ESSAR AND THE ITEMS SUCH AS TURBINES ARE REQUIRED TO BE REPAIRED OR REFURBISHED AND FOR THIS THESE ITEMS ARE SENT ABROAD TO SAUDI ARABIA AND SINGAPORE FOR REPAIRS AND REFURBISHMENT BY THE NON RESIDENT C OMPANIES ABROAD. IT IS A FACT THAT THE ASSESSEE PERSONNEL DO NOT ACCOMPANY THESE ITEMS AND THEREFORE THERE IS NO INVOLVEMENT OF ASSESSEES PE RSONNEL IN GETTING THE ITEMS REPAIRED OR REFURBISHED. AS PER THE INVOICES RAISED BY THE SAID NONRESIDENT COMPANIES THE ASSESSEE MAKES THE PAYME NT. IN THESE FACTUAL CIRCUMSTANCES WE ARE TO DECIDE WHETHER THE SAID PAYMENT MADE BY THE ASSESSEE TO THE NONRESIDENT COMPANIES WOULD CONSTITUTE FEE FOR TECHNICAL SERVICES AS DEFINED IN THE EXPLANATION 2 TO SECTION 9(1)(VII) OF THE ACT. 13. THE CASE OF THE REVENUE IS THAT IN VIEW OF THE LANGUAGE OF EXPLANATION 2 TO CLAUSE (VII) TO SUB-SECTION (1) OF SECTION 9 OF THE ACT I.E. RENDERING OF TECHNICAL SERVICES THE EXPRESSION RENDERING IF INTERPRETED IN ITS COMMON PARLANCE THE PAYMENTS MADE BY THE AS SESSEE WOULD AMOUNT TO FEE FOR TECHNICAL SERVICES. THE SAID EX PRESSION RENDERING DOES NOT INVOLVE PROVIDING FOR OR TRANSFER OF ANY T ECHNICAL KNOWLEDGE TO THE ASSESSEE OR ITS ACCOMPANYING PERSONNEL. THEREFO RE THE FACT NO PERSONNEL OF THE COMPANY IS SENT ABROAD ALONG WITH THE ITEMS TO BE REPAIRED IS NOT RELEVANT FACTOR FOR DECIDING THE N ATURE OF THE SERVICES. LD DR RELIED ON THE HYDERABAD BENCH DECISION IN THE CA SE OF MANNESMANN DEMAG L KAUCHHAMMER V/S. CIT (SUPRA) IN SUPPORT OF THE ABOVE. FURTHER LD DR ALSO RELIED ON THE JUDGMENT IN THE CASE OF BH ARATI CELLULAR LTD. (SUPRA) FOR THE PROPOSITION THAT THE CIT(A) SHOULD HAVE SOUGHT THE EXPERT OPINION AS HE HIMSELF IS NOT AN EXPERT IN THE FIEL D. ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 10 14. ON THE OTHER HAND THE CASE OF THE ASSESSEE I S THAT THE SCOPE OF WORKS INCLUDE ASSEMBLY DISASSEMBLY INSPECTION EVALUATION ETC AND NONE OF THESE WORKS FALL WITHIN THE SCOPE OF SERVIC ES WITHIN THE MEANING OF FEE FOR TECHNICAL SERVICES. THESE ARE THE REPA IRS ORIENTED WORK AND ARE OUTSIDE THE SCOPE OF SERVICES OF FTS NATURE AND THE SAME ARE OUTSIDE THE SCOPE OF S.195. RELIANCE IS PLACED HEAVILY ON THE D ELHI BENCH DECISION IN THE CASE OF LUFTHANSA CARGO INDIA LTD. (SUPRA) WHI CH WAS DECIDED AFTER CONSIDERING THE HYDERABAD BENCH DECISION FOR THE PR OPOSITION THAT THE REPAIRS OF ROUTINE AND RECURRING NATURE DO NOT CONS TITUTES FTS AND THEREFORE SUCH PAYMENTS DO NOT CONSTITUTE INCOME U/ S 9 OF THE ACT. THE EXPRESSION RENDERING USED IN THE EXPLANATION 2 TO CLAUSE (VII) TO SECTION 9(1) FALL IN THE STAGE PRIOR TO THE STAGE OF PROVID ING TECHNICAL SERVICES OR MAKING AVAILABLE OF THE TECHNICAL SERVICES. THESE S TAGES ALONE ATTRACT THE FTS PROVISIONS AND NOT MERE CASES OF RENDERING OF TECHNICAL SERVICES. MERE REPAIRS AND REFURBISHING OF THE DAMAGED TURBIN ES DO NOT CONSTITUTE SERVICES. THEREFORE THE PAYMENT MADE BY THE ASSESS EE IS NOT FOR RENDERING OF THE TECHNICAL SERVICES AND THEREFORE SUCH CONSIDERATION IS NOT FOR FTS. FOR FALLING WITH THE BASKET OF FTS TH ERE MUST BE TRANSFER OF THE TECHNICAL KNOWLEDGE OR SKILL TO THE ASSESSEE OR ITS PERSONAL. THE CASE OF DECISION OF THE HYDERABAD BENCH INVOLVES TRANSFE R OF SUCH KNOWLEDGE TO THE ACCOMPANYING PERSONNEL OF THE ASSESSEE AND T HEREFORE THE SAID CASE IS DISTINGUISHABLE ON FACTS. 15. WE HAVE PERUSED THE SAID PRINCIPLES IN THE LIGHT OF THE DETAILED SCOPE OF WORK DONE IN THE CASE OF THE ASSE SSEE WHICH AS NOTED BY THE CIT(A) IN THE IMPUGNED APPELLATE ORDER FOR A SSESSMENT YEAR 2001- 02 FROM THE ORDER OF THE ASSESSING OFFICER IN PARA 5.4 THEREOF THE IMPUGNED ORDER WHICH READS AS UNDER- A) RECEIVE AND UN-BOX FUEL NOZZLE ASSEMBLIES. B) PERFORM INCOMING CONDITIONAL EVALUATION OF FUEL NOZZLE ASSEMBLY. ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 11 C) REMOVAL OF PREMIX GAS FLEXIBLE MANIFOLDS. D) PERFORM INCOMING FLOW TEST OF FUEL NOZZLE ASSEMB LY. E) DISASSEMBLE FUEL NOZZLE ASSEMBLIES USING GE APPR OVED METHOD F) CLEAN {CHEMICAL ULTRASONIC GRIT BLAST} BOLTS T UBING GAS SWOZZLES OIL/WATER CARTRIDGES END COVERS AND W ATER MANIFOLD TO REMOVE DIRT RUST FOREIGN MATERIAL AND PAINT. G) DISASSEMBLE CLEAN REBUILT AND PRESSURE TEST THE DISTRIBUTOR VALUE. H) PERFORM NON-DESTRUCTIVE EVALUATION OF FUEL NOZZL E COMPONENTS. I) PERFORM BOROSCOPE INSPECTION ON END COVER GAS PA SSAGE J) INDIVIDUALLY FLOW TEST FUEL NOZZLE COMPONENTS AC CORDING TO GE FACTORY STANDARDS. K) COMPLETE EVALUATION OF COMPONENTS AND TEST RESUL TS (GE ENGINEERING) L) UTILIZE PIECE PART FLOW DATA TO BEST MATCH FUEL NOZZLE TIPS AND OIL/WATER CARTRIDGES TO THE END COVERS. M) RE-ASSEMBLE ALL FUEL NOZZLE COMPONENTS WITH NEW SEALS AND LOCK PLATES. N) PERFORM FINAL FLOW CHECK AND LEAK CHECK OF ASSEM BLY TO VERIFY WORK. O) REASSEMBLED ALL FUEL NOZZLE COMPONENTS WITH NEW SEALS AND LOCK PLATES. P) COMPLETE FINAL QUALITY ASSURANCE INSPECTION (GE ENGINEERING) Q) SHIP PARTS TO CUSTOMER WITH A COPY OF THE FLOW T EST RESULTS R) PROVIDE REPAIR REPORT. S) SHIP PARTS TO THE CUSTOMER WITH A COPY OF THE FL OW TEST RESULTS. 16. THE ABOVE ACTIVITIES INVOLVE ASSEMBLY DISASS EMBLY INSPECTION REPORTING AND EVALUATION. CIT(A) EXAMIN ED EVERY ACTIVITY ENLISTED ABOVE AND CAME TO THE CONCLUSION THAT NON E OF THE ABOVE WORKS INVOLVE SERVICES OF TECHNICAL NATURE. THE DISCUSSIO N GIVEN BY THE CIT(A) IN PARA 5.4.2 IS RELEVANT. WE AGREE WITH THE SAME CON SIDERING THE SETTLED LEGAL POSITION THAT ROUTINE MAINTENANCE REPAIRS ARE NOT FTS AS HELD BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF LUFTHANS A AIR CARGO (SUPRA). FOR THE PURPOSE OF COMPLETENESS OF THIS ORDER WE R EPRODUCE BELOW THE RELEVANT PRARAGRAPH OF THE SAID DECISION IN THE CON TEXT OF THE QUESTIONS RAISED IN THE SAID DECISION- ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 12 IN CONCLUSION TECHNIK CARRIED OUT THE REPAIR WORK IN THE NORMAL COURSE OF ITS BUSINESS IN GERMANY WITHOUT ANY INVOLVEMENT OR PARTICIPATION OF THE ASSESSEES PERSONNEL. THE OVERHAUL REPAIRS INVO LVED WERE ROUTINE MAINTENANCE REPAIRS. IT CANNOT THEREFORE BE SAID THAT TECHNIK RENDERED ANY MANAGERIAL TECHNICAL OR CONSULTANCY S ERVICE TO THE ASSESSEE. IN THIS VIEW OF THE MATTER WE HOLD THAT THE PAYM ENTS MADE BY THE ASSESSEE TO NON-RESIDENTS WORKSHOPS OUTSIDE INDIA DO NOT CONSTITUTE PAYMENT OF FEES FOR MANAGERIAL CONSULTA NCY OR TECHNICAL SERVICES AS DEFINED IN EXPLANATION 2 TO SECTION 9(1 )(VII). THE ASSESSEE SUCCEEDS ON THIS GROUND. REGARDING THE DECISION OF THE HYDERABAD IN THE CASE OF MANNESMANN DEMAG L KAUCHHAMMER V/S. CIT (SUPRA) WHICH INVOLVES DEPUTING OF TECHNICIANS TO INDIA FOR SUPERVISION OF REPAIRS TO BE CARRIED OUT AT THE PLANT AND MACHINERY PURCHASED BY THE NMDC WE FIND THAT THE SAID DECISION IS DISTINGUISHABLE ON FACTS. SUCH DEPUTAT ION WHETHER DEPUTATION OR SUPERVISION IS ABSENT IN BOTH INSTANT CASES AS WELL AS THE CASE BEFORE IT AS OBSERVED BY THE DELHI BENCH OF THE TRIBUNAL IN THE CITED CASE. THE RELEVANT PARA OF THE ORDER OF THE TRIBUNAL IN THAT CASE READS AS FOLLOWS- WE FIND THAT IN DEMAG'S CASE THE FOREIGN COMPANY RENDERED 'TECHNICAL CONSULTANCY' BY WAY DEPUTING A TECHNICIAN TO INDIA FOR SUPERVISING REPAIRS TO BE CARRIED OUT ON THE PLANT AND MACHINER Y PURCHASED BY NATIONAL MINERAL DEVELOPMENT CORPORATION. IT IS NOT THE REPAIR WORK PER SE WHICH HAS BEEN HELD TO BE TECHNICAL SERVICES BUT IT IS THE PROVISION OF THE CONSULTANT TECHNICIAN DEPUTED TO INDIA FOR S UPERVISING THE REPAIRS WHICH HAS BEEN TREATED AS CONSULTANCY SERVICES. THE FOREIGN TECHNICIAN STAYED ON IN INDIA FOR 44 DAYS TO ADVISE AND SUPERV ISE REPAIR WORK WHICH WAS OBVIOUSLY CARRIED OUT BY THE ENGINEERS AN D WORKERS OF THE INDIAN COMPANY. THUS THE NATURE OF SERVICES RENDER ED BY THE FOREIGN COMPANY WAS CONSULTANCY OF TECHNICAL NATURE THROUGH THE PROVISION OF ITS TECHNICIAN DEPUTED TO INDIA. OUR CONCLUSION IS SUPPORTED BY THE DECISION OF ANDHRA PRADESH HIGH COURT IN THE SAME C ASE REPORTED IN 238 ITR 861 WHEREIN HON'BLE HIGH COURT AFFIRMING THE A FORESAID DECISION OF THE TRIBUNAL HELD THAT THE EXPLANATION 2 HAS EXPAND ED THE SCOPE OF SECTION 9(1)(VII)(B) BY PROVIDING THAT THE SERVICES OF TECHNICAL OR OTHER PERSONNEL WOULD BE TAXABLE. IT HAS BEEN REPEATEDLY STATED BY THE ASSESSEE THAT NO FOREIGN TECHNICIAN WAS EVER DEPUTE D OF INDIA. THE LOWER AUTHORITIES AND THE DR HAVE NOT POINTED OUT A NY INSTANCE OF A TECHNICIAN HAVING BEEN ASSIGNED OF INDIA. THIS DECI SION THEREFORE IS OF NO ASSISTANCE TO THE REVENUE. ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 13 THUS THE ABOVE DECISIONS OF THE TRIBUNAL ARE RELEV ANT FOR THE PROPOSITION THAT THE ROUTINE REPAIRS DO NOT CONSTITUTE FTS AS THEY ARE MERELY REPAIR WORKS AND NOT TECHNICAL SERVICES. TECHNICAL REPAIRS ARE DIFFERENT FROM TECHNICAL SERVICES. THUS THE PAYMENTS MADE FOR TECHNICAL SERVICES ALONE ATTRACT THE PROVISIONS OF S.9(1)(VII) AND ITS EXPLANATION 2. FURTHER IT IS ALSO A SETTLED ISSUE AT THE LEVEL OF THE TRIBUNA L THAT EVERY CONSIDERATION MADE FOR RENDERING OF SERVICES DO NOT CONSTITUTE IN COME WITHIN THE MEANING OF S.9(1)(VIII) OF THE ACT AND FOR CONSIDER ING THE SAME FIRST OF ALL THE SAID CONSIDERATION IS FOR THE FTS. THEREFORE C ONSIDERING THE ABOVE DECISION OF DELHI BENCH OF THE TRIBUNAL WHICH EXPL AINED THE SCOPE OF THE PROVISIONS WE ARE OF THE VIEW THAT THE IMPUGNED OR DERS OF THE CIT(A) FOR THE YEARS UNDER CONSIDERATION ON THIS ASPECT OF TH E MATTER DO NOT CALL FOR INTERFERENCE. ACCORDINGLY THE GROUNDS RAISED IN THESE APPEALS OF THE REVENUE ARE DISMISSED . 17. WITHOUT PREJUDICE THE ASSESSEE RAISED THE ISS UE OF NON- APPLICABILITY OF THE PROVISIONS OF S.201 TO THE ASS ESSMENT YEARS 2001-02 AND 2002-03 AND THE SAID ARGUMENT WAS NEVER RAISED OR DISCUSSED BY THE LOWER AUTHORITIES. SINCE THE IMPUGNED ORDER OF THE ASSESSING OFFICER WAS PASSED PRIOR TO THE AMENDMENT TO THE PROVISIONS OF S.201 BY THE FINANCE ACT 2008 WITH RETROSPECTIVE EFFECT FROM 1.4.2003 TO BE FAIR THE REVENUE NORMALLY DESERVES FRESH OPPORTUNITY TO BE HEARD ON THIS ISSUE. INSTEAD OF SETTING ASIDE THIS ISSUE TO THE FILES OF THE LOWER AUTHORITIES CONSIDERING THE ALTERNATIVE NATURE OF THE ARGUMENT AND ALSO CO NSIDERING THE FACT WE HAVE ALREADY GRANTED RELIEF TO THE ASSESSEE AS PER DISCUSSION IN THE PRECEDING PARAGRAPHS OF THIS ORDER ON MERITS WE DI SMISS THE ALTERNATE ARGUMENT OF LD COUNSEL HOLDING THE ADJUDICATION OF THIS ISSUE BECOMES AN ACADEMIC EXERCISE. THEREFORE THE SAME ARE DISMISSE D AS ACADEMIC. 18. IN THE RESULT ALL THE APPEALS OF THE REVENUE ARE DISMISSED . ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 14 ASSESSEE S CROSS OBJECTION: 19. EFFECTIVE GROUNDS OF THE ASSESSEE IN ITS CROS S-OBJECTION FOR THE ASSESSMENT YEAR 2001-02 READS AS FOLLOWS- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS ) ERRED IN NOT HOLDING THAT THE ORDER PASSED UNDER SE CTION 201 AND 201(1A) OF THE ACT BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX -15(1) WERE BAD IN LAW AND THEREBY CONSEQUENTLY ERRED IN NOT QUASHING THE SAME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD COMMISSIONER OF INCOME-TAX(APPEALS) ERR ED IN HOLDING THAT THE ORDER PASSED UNDER SECTION 201 AND 201(1A) OF THE ACT BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX -15(1) WAS NOT BARRED BY LIMITATION. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE ISSUE INVOLVED IS SQUARELY COVER ED IN FAVOUR OF THE REVENUE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF MAHINDRA AND MAHINDRA LTD. (SUPRA) AND HENCE DID NOT PRESS THE SAME. CONSEQUENTLY THE CROSS-OBJECTION OF THE ASSESSEE FOR ASSESSMENT YEAR 2001-02 IS DISMISSED AS NOT PRESSED. 20. TO SUM UP IN THE RESULT ALL THE SIX APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTION OF THE ASSESS EE IS DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN THE COURT ON 31.7.2012 . SD/- SD/- (SAKTIJIT DEY) (D.KARUNAKARA RAO) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 31 ST JULY 2012 ITA NO.976 TO 981/HYD/2011 & CO 41/HYD/2011 M/S. BHEL-GE-GAS TURBINE SERVICING (P)LTD. HYDERABAD 15 COPY FORWARDED TO: 1. M/S. BH EL - GE - GAS TURBINE SERVICING (P)LTD. GUMIDELLI TOWERS 6 TH FLOOR 1-10-39 TO 44 BEGUMPET AIRPORT ROAD HYDERABAD 2. ADDITIONAL COMMISSIONER OF INCOME - TAX (INTL. TAXATION) - I HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V HYDERABAD 4. COMMISSIONER OF INCOME - TAX IV HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE HYDERABAD B.V.S.