Income Tax Appellate Tribunal - Ahmedabad
The Dcit, Circle-1,, Ahmedabad vs M/S. Cliantha Research Ltd. ( Formerly ... on 11 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH
(BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
& SHRI MAHAVIR PRASAD, JUDICIAL MEMBER)
ITA. No: 2170/AHD/2015
(Assessment Year: 2011-12)
DCIT, Circle-1(1)(2), V/S M/s. Cliantha Research
Ahmedabad Ltd. (formerly known as
M/s. BA Research India
Ltd.) BA Research House,
Opp. Pushparaj Towers,
Nr. Judges Bunglows,
Ahmedabad-380015
(Appellant) (Respondent)
PAN: AACCB 4535A
Appellant by : Smt. Vasundra Upmanyu, CIT/DR
Respondent by : Shri Jigar Patel, A.R.
(आदे श)/ORDER
Date of hearing : 03 -01-2018
Date of Pronouncement : 11-01-2018
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. This appeal by the Revenue is directed against the order of the Ld. CIT(A)-6, Ahmedabad dated 07.05.2015 pertaining to A.Y. 2011-12.
2 ITA No. 2170/Ahd/2015. A.Y. 2011-12
2. The substantive grievance of the revenue reads as under:-
1. The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.26,06,19,390/- made u/s 80IB of the Act and in not appreciating that the assessee company is not a company engaged exclusively in scientific and industrial research for development and transfer of technology as envisaged in section 80IB(8A)(ii) of the Act and Rule 18DA(l)(e) of the Rules.
2. The ld. CIT(A) has erred in law and on facts in deleting the addition of disallowance made u/s 40(a)(i) of the Act and in not appreciating that the services rendered by the non-resident are in the nature of technical services and the payment made for the said services are covered by the definition of the 'fees for technical services' as defined in Explanation (2) to section 9(l)(vii) of Section 9(l)(vii) of the Act.
3. Insofar as ground no. 1 is concerned, at the very outset, the ld. counsel for the assessee stated that an identical issue was decided by the Tribunal in assessee's own case in A.Y. 2010-11 vide order dated 20.06.2017 in ITA No. 160/Ahd/2015. The ld. D.R. fairly conceded to this.
4. We have given a careful consideration to the orders of the authorities below qua the issue. A perusal of the order of the Co-ordinate Bench in ITA No. 160/Ahd/2015 was seized with an identical ground and has decided the issue in favour of the assessee and against the revenue. The relevant findings of the Co-ordinate Bench read as under:-
8.1 We further observe that in the preceding years, i.e. AYs 2008-09 and 2009-10, the issue of assessee's claim under Section 80IB(8A) of the Act travelled up to the Hon'ble jurisdictional High Court and the Revenue's appeals were dismissed by the Hon'ble Court by observing as under:- "15. It can thus be seen that detailed provisions have been made under rule 18D and Rule 18DA of the Rules for the prescribed authority to examine the nature of research and scientific development, proposed to be or being carried out by the company who seeks approval or extension of approval. For example, under sub-
rule (2), approval once granted has validity for a period of three years and no more. It could be extended only upon satisfactory performance of the company 3 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 which would be judged on periodic review by the prescribed authority. While granting approval in addition to information prescribed under sub-rule (5) of Rule 18DA, the prescribed authority is empowered to call for such other information or documents, which may be found necessary for consideration of the application for grant of approval. Even during the currency of the approval granted by the prescribed authority, in terms of sub-rule (2) of rule 18DA, the company has to satisfy several conditions including, as noted above, to sell its prototype or output, only with the permission of the prescribed authority and intimate any change in its memorandum of association and articles of association. This later condition would enable the prescribed authority to examine whether in view of any change in memorandum of association and articles of association relating to the main objects of the company, the fundamental requirement i.e. the company's main object of scientific and industrial research and development has been maintained.
16. As noted, if at any stage, the prescribed authority finds either that the approval granted to the company was to avoid payment of taxes by its group companies or companies related to its directors or majority of its shareholders or that there has been breach of any of the provisions of the Act or the Rules, the prescribed authority would be empowered to withdraw the approval.
17. Thus the statutory scheme envisages the prescribed authority as a body which can minutely examine all these highly technical and scientific requirements in case of a company. We may recall that the prescribed authority is the Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. It has experts at its command in the field of scientific research to advise it on various extremely complex scientific issues which may arise while granting, extending or recalling the approval. In this context, the requirements contained in clauses (c) to (e) of sub-rule (1) of rule 18DA would also have to be necessarily examined by the said authority. When these clauses refer to requirement of adequate infrastructure such as laboratory facilities, well formulated research and development programme and engagement of the company exclusively in scientific research and development activities, the same would be within the realm of the said prescribed authority.
18. Under the circumstances, once such authority grants approval and such approval holds the field, it would not be open for the Assessing Officer or any other revenue authority to go behind such approval certificate and re-examine for himself, the fulfilment of the conditions contained in sub-rule (1) of rule 18DA. These conditions are prescribed in terms of clause No.(iv) of sub-section (8A) of section 80-IB of the Act. The Commissioner was therefore, completely in error in observing that even though the assessee company had valid approval issued by the prescribed authority, the Assessing Officer still had to examine whether such company had fulfilled the conditions referred to in clause (iv), as 4 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 such other conditions as may be prescribed, reference to which we find in rule 18DA. Any other view would create conflict of decision making process. Even counsel for the Revenue could not dispute that many of these requirements prescribed under rule 18DA are to be examined by the prescribed authority. If once the prescribed authority examines such conditions and upon being satisfied that the conditions are fulfilled, grants approval, can the Assessing Officer take a different view? The answer obviously has to be in the negative. First and foremost, the prescribed authority is a specialised body having expertise in the field of scientific research and development. The requirements are extremely complex scientific requirements and have therefore, been rightly placed in the hands of an expert body to judge. Secondly, there is no reason why once an authority which is prescribed under the Rules for a specific purpose has been invested with statutory functions, the Assessing Officer should be allowed to overrule the decision of the said body. Thirdly, there are multiple indications within the Rules themselves. We may recall, under sub-rule (2) of rule 18D, extension of approval once granted is subject to satisfactory performance of the company, to be judged on periodic review. Further, sub-rule (3) of Rule 18DA gives wide powers to the prescribed authority to withdraw the approval if it is found that the same was to avoid payment of taxes by its group companies or companies related to its directors or majority of its shareholders or that any provisions of the Act or the Rules have been violated. Thus once again the task of judging whether the provisions of the Act or the Rules have been violated or not, has entrusted to the prescribed authority with matching powers for withdrawal of the approval, if the authority is satisfied about such breach.
19. The word 'may' used while empowering the prescribed authority, according to the counsel for the Revenue, would be of some significance. He contended that even if there has been a violation of the Acts and the Rules, the prescribed authority is not duty-bound to withdraw the approval since the legislature has used the word 'may' and not 'shall'. According to him therefore, it would be open to the Assessing Officer to disallow the deduction on the ground of breach of the provisions of the Act and the Rules even if the prescribed authority has not withdrawn the approval on that basis. To our mind, this is not the correct position. Sub-rule (3) is an enabling power empowering the prescribed authority to withdraw the approval, if it finds violation of provisions of the Act or the Rules. However, the Act and the Rules make various provisions, breach of many of them may be purely technical. It is not necessary therefore, in every such breach, irrespective of the nature of the breach, the prescribed authority must withdraw the approval, the moment it is pointed out that there has been a violation of any other provisions of the Act or the Rules. It is possibly therefore, that the legislature has while clothing the prescribed authority with sufficient powers to withdraw the approval, used the word 'may' rather than 'shall' giving discretion in appropriate cases to the authority not to withdraw the approval. This however, would not mean that the Assessing Officer would have any role in 5 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 the context of verifying requirements relatable to grant, extend or withdraw the approval. These issues solely rest within the jurisdiction of the prescribed authority.
20. Judged from such angle, in our opinion, once the approval is granted by the prescribed authority and such approval is valid, it would no longer be open for the Assessing Officer to verify the satisfaction of the conditions prescribed under rule 18DA in order to refuse deduction under sub-section (8A) of section 80-IB of the Act. This however, does not mean that other issues relevant to the claim of deduction by the assessee would be taken away from the jurisdiction of the Assessing Officer. We do not share the anxiety of the counsel for the Revenue that interpretation that we have adopted would divest the Assessing Officer from examining any claim of deduction under the said provisions and grant deduction mechanically without verifying the claim. For example, in this very case, the Assessing Officer had doubt about the sample storage income being part of the income from eligible business. After hearing the assessee, he disallowed the deduction holding that the same does not form part of the income of the assessee's business of scientific research and development.
21. Before closing, we may refer to the decision cited by Shri Bhatt for the Revenue. In case of Southern Technologies Ltd.(supra), the issue was regarding the taxability of income ignoring the provisions contained in the Companies Act concerning non banking financial company which permitted adjustment of a provision for possible diminution of value of assets of the company allowing the company to show only the net figure in the balance sheet.
22. In the result, while answering the question in favour of the assessee, we clarify that the power of the Assessing Officer to verify the claim of deduction is not taken away. He can certainly verify the accounts and refuse deduction which does not form part of section 80-IB(8A) and the income which does not arise out of the eligible business."
8.2 From going through the above judgment of Hon'ble jurisdictional High Court, it is established beyond doubt that the assessee's activities of scientific and industrial research and development are covered under Section 80IB(8A) of the Act and the profits and gains from these activities are eligible for deduction @ 100%. To this extent, we find no error in the order of ld. CIT(A).
5. Respectfully following the aforementioned findings of the Co-ordinate Bench which is based upon the findings of the Hon'ble Jurisdictional High Court, we 6 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 decline to interfere with the findings of the ld. CIT(A). Ground no. 1 is dismissed.
6. Coming to the grievance raised vide ground no. 2, facts show that during the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has debited Rs. 30.47 lakhs on account of clinical and analytical expenses in the profit and loss account. The assessee was asked to furnish the TDS details. On verification of the same, the A.O. noticed that the assessee has not deducted tax at source on the following foreign payment.
(i) Celecrion Inc. Rs. 14,39,798/-
(ii) Minimax Consulting LLC Rs. 1,55,448.
7. The A.O. was of the opinion that the payments made to foreign parties were on account of technical services and accordingly the assessee ought to have deducted tax at source. The assessee was asked to justify the payments without TDS. In its reply, the assessee stated that under the agreement, the overseas service providers have performed their services "out of India" and they have not visited India for performance of the services in India. Relying upon the provisions of Section 9 of the Act in the light of Article 12 of DTAA with USA, the assessee claimed that it was not liable to deduct tax at source. The A.O. discarded the contention of the assessee holding that technical services were provided and the payment for technical services are deemed to accrue or arise in India, therefore, provisions of Section 195 are applicable. The A.O. accordingly disallowed Rs. 15,95,246/- u/s 40(a)(i) of the Act.
7 ITA No. 2170/Ahd/2015. A.Y. 2011-12
8. Proceeding further, the A.O. found that the assessee has not deducted tax at source on the following foreign payment for consultancy expenses and technical expenses.:-
'Sr. No. Name of party Nature of payment Amount on which TDS not deducted Consultancy Fees 1 Harper & Associates Consultancy/ Rs.11,18,771/-
Technical fees 2 Maibach Consultancy/ Rs.10,84,440/-
Technical fees 3 Biostudy Solutions Consultancy/ Rs. 85,4817- Technical fees 4 Shannon Walaker Consultancy/ Rs. 2,32,589/-
Technical fees
Personnel Employment Expenses
1 Arthuman Direccionannd Consultancy/ Rs.22,000/- +
Talentos, S.C. Technical fees Rs.3,50,465/-
Professional Fees
1 Gaia Tech Inc. Consultancy/ Rs.2,02,726/-
Technical fees
2 KPMG Cardenas Dosal Consultancy/ Rs.2,05,645/-
Technical fees
3 MPMG Ltd. Consultancy/ Rs.57,39,775/-
Technical fees
4 Mercer US Inc. Consultancy/ Rs.7 ,54,631 /-
Technical fees
5 Pepper Hemilton LLP Consultancy/ Rs.10,93,248/-
Technical fees
Training Expenses
8 ITA No. 2170/Ahd/2015
. A.Y. 2011-12
1 LC - MS Pharmaceutica Consultancy/ Rs.84,964/-
Development Inc. Technical fees
2 Satyam Rathod, EMP Consultancy/ Rs.44,280/-
Technical fees
Total Rs.1,10,19,015/-
9. The assessee was asked to explain why the aforementioned expenses should not be disallowed. Assessee filed a detailed reply along with Certificate in Form 15CB. It was contended that the services has been rendered outside India and the same are not taxable in India. Therefore, there is no liability for deducting tax at source. The contention of the assessee did not find any favour with the A.O. who was of the firm belief that as the income accrues and arises in India as per the provisions of Section 9(1)(vii) of the Act, the provisions of Section 195 are fully applicable. As the assessee has not deducted tax at source, the A.O. disallowed Rs. 1,10,19,015/- u/s 40(a)(i) of the Act.
10. Assessee carried the matter before the ld. CIT(A) and reiterated its contention.
11. After considering the facts and the submissions, the ld. CIT(A) found that an identical issue was considered in the immediately preceding assessment year 2010-11 wherein the First Appellate Authority vide order dated 03.11.2014 has held that the impugned payments are not subject to tax u/s 9(1)(vii) of the Act and therefore there is not liability to deduct tax and the provisions of Section 40(a)(i) are not attracted. On finding parity on the facts of the impugned payments, the ld. CIT(A) deleted the entire disallowance u/s 40(a)(i) of the Act.
9 ITA No. 2170/Ahd/2015. A.Y. 2011-12
12. Before us, the ld. D.R. strongly contended that the ld. CIT(A) has not gone into the merits of the case nor he has verified the details in the light of Article 12 of the India-USA DTAA. It is the say of the ld. D.R. that the First Appellate Authority has simply followed the order of his predecessor. Per contra, the ld. counsel for the assessee vehemently stated that the order of the ld. CIT(A) has been confirmed by the Tribunal in ITA No. 160/Ahd/2015. It is the say of the ld. counsel that since the facts are identical, therefore, the view already taken by the Co-ordinate Bench should be followed.
13. We have given a thoughtful consideration to the orders of the authorities below and have carefully perused the order of the Co-ordinate Bench in ITA No. 160/Ahd/2015. The following payments are under dispute.
Sr. Name of Party & Amount (in Rs.) Nature of Payment Gist of Reasons for Non-deduction
.No. Country of Tax
1 Celerion Inc. USA 14,39,798 Clinical Trials & Testing Not FTS as 'Ma«;e available'
Charges exception under Article 12 of
India-USA DTAA applies
2 Minimax 1, 55,448 Clinical Trials & Testing Not FTS as 'Ma-e available'
Consulting LLC Charges exception under Article 12 of India-
USA USA DTAA applies
3 Harper & 11,18,771 Consullancy Fees Beneficial language under Article 15
Associates USA - Independent Personal Services of
India-US DTAA applies
4 Shannon Walaker 2,2.2,589 Consultancy Fees Beneficial language under Article 1 5
USA - Independent Personal Services of
India-US DTAA applies
5 KPMG LJP USA 57,39,775 Professional Fees for Du« Not FTS as 'Ma<.e available'
Diligence exception under Article 12 of India-
USA DTAA applies
6 Maibach USA 10,54,440 Consullancy Fees Not FTS as 'Ma-.e available'
exception under Article 12 of India-
USA DTAA applies
10 ITA No. 2170/Ahd/2015
. A.Y. 2011-12
7 Bio Study 85,481 Consullancy Fees Not FTS as 'Ma-e available'
Solutions USA exception under Article 12 of India-
USA DTAA applies
8 Gaia Tech Inc. 2,02,726 Professional Fees Not FTS as 'Ma<;e available'
USA exception under Article 12 of India-
USA DTAA applies
9 Mercer US Inc. 7,54,631 Consulting Fees for Due Not FTS as 'Ma»;e available'
USA Diligence exception under Article 12 of India-
USA DTAA applies
10 Art Human 3,72,465 Consullancy Fees for Payment not subject to tax u/s.
Direccionando Services Rendered in 9(t)(vii) of l.T. Act as falls within the
S.C. Mexico Mexico exception under clause (b) to Sec.
9(1)(vii)
11 KPMG Cardenas 2,05,645 Professional Fees Payment not subject to tax u/s.
Dosal Mexico 9(1)(vii) of l.T. Act as falls within the
exception under clause (b) to Sec.
9(1)(vii)
Pepper Hamilton 10,93,248/- Professional Fees Beneficial language under Article-
12 LLP USA 15-Independent Personal Services of
India -US DTAA applies
13 LC-MS 84,964/- Workhsop Registration Payment is in the nature of Business
Pharmaceutical Charges profits and since non-resident does
Development Inc. not have PE in India, no liability to
Canada deduct TDS
14 Satyam Rathod 44,280 Reimbursement of Payment made to its Employee is in
India Training Workshop Fees the nature of reimbursement
made to Employees expenses actually incurred by the
Employee and there is no element of
income involved in the same.
Total 1,26,261
14. The Co-ordinate Bench while considering an identical issue has held as under:-
We have heard the rival contentions and perused the record placed before us. The issue raised by the Revenue is regarding deletion of disallowance made by the Assessing Officer under Section 40(a)(i) of the Act of Rs.1,64,42,023/- towards non-deduction of TDS on clinical and analytical charges paid to parties outside India without deduction of tax u/s 195 of the Act. We observe that the assessee incurred certain expenditure towards clinical and analytical study expenses at Rs.1,54,55,000/- paid through foreign agents to parties based at USA and Canada. We further observe that the issue as to whether tax was deductible on such payments u/s 195 of the Act or not has already been dealt 11 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 with by the Co-ordinate Bench in ITA No. 3106/Ahd/2011 in assessee's own case for the very same assessment year when the Revenue came in appeal before the Tribunal against the order of ld. CIT(A) deleting the demand raised by the Assessing Officer in the order passed by the Assessing Officer u/s 201(1) and 201(1A) r.w.s. 195 of the Act. We observe that the Co-ordinate Bench dismissed the Revenue's appeal and confirmed the findings of the ld. CIT(A) by observing as follows:-
5. I have gone through the order of the AO and the submissions of the assessee. The ground of appeal against demand raised u/s.201(l) requires consideration of the following 3 issues:
(a) Whether the payments made to the non residents are income deemed to accrue or arise in India under the provisions of section 9(2)(vii) as being 'fees for technical services'.
(b) Whether the income even if deemed to accrue or arise in India under section 9(2)(vii) is of the nature which is exempt from taxation in India under the DTA Agreements with the USA and Canada respectively.
(c) Whether the tax has to be deducted u/s.195 even when the income in the hand of non-resident is not taxable.
The undisputed facts of the case are that the assessee has made payments to concerns to (i) B.A. Research International (USA), (ii) Allied Research International Inc. (Canada) and (iii) MDS Pharma Services Inc. (USA), who are residents of USA and Canada for providing analytical services and testing charges. The non-resident companies had no PE in India. These services were undisputedly provided outside India, but were utilized for earning income from source in India which is manufacturing of drugs in India and subsequent sales.
Now, coming to the first issue, i.e. whether the payments made to the non residents are income deemed to accrue or arise in India under the provisions of section 9(2)(vii) as being 'fees for technical services'. The services are definitely of the nature of technical services and as the services are utilized for earning income from source in India, these are not exempted u/s.9(2)(vii)(b). The appellant has pleaded that even after the introduction of the Explanation to Sec. 9(2) inserted by the Finance Act 2007 w.e.f. 1.6.1976, the ratio of the Supreme Court decision in the case of 'Ishikawajima-Harima Heavy Industries Ltd. v. DIT, 158 Taxman 259 (SC)' is applicable. The appellant had placed reliance on the decision of "Jindal Thermal Power Company 12 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 Limited v. DOT[2009] 225 CTR 220", wherein it has been clearly held "that the criteria of rendering service in India and the utilization of service in India laid down by the Supreme Court in Ishikawajima's case (supra) to attract tax liability u/s. 9(l)(vii) remains untouched and unaffected by Explanation to Sec. 9(2).
It is seen that the appellant has not noted the fact that the explanation to section 9 has been again substituted by the Finance Act, 2010 with retrospective effect from 1/6/1976. Now, the income is to be included in the total income of the non-resident, whether or not the non-resident has rendered services in India. The decision in the case of 'Jindal Thermal Power Company Limited v. DOT[2009] 225 CTR 220', on the issue therefore is no longer good law. After the amendment with retrospective effect, the payments made by the appellant are definitely falling under the definition of fees for technical services' and the income is deemed to accrue or arise in India under the provisions of section 9(2)(vii).
The next issue to be decided is whether the income which has been decided to be deemed to accrue or arise in India under section 9(2)(vii) is of the nature which is exempt from taxation in India under the DTA Agreements with the USA and Canada respectively. As there is no PE in India it would have to be seen whether, in which country and how the 'fees for technical services' are taxable as per the DTA agreements. The appellant's contention is that Article 12(4)(b) of the DTAA between India and USA/Canada is not applicable since the non-resident parties did not 'make available' any technical knowledge, experience, skill, know-how or processes. In this case the concerns in USA and Canada were conducting tests on the drugs which were already researched and after analyzing the drugs on the required parameters final reports were submitted to the assessee. I have perused the submissions made by the Appellant as well as the order passed by the AO. On perusal of the decisions cited by the Appellant it can be concluded that service, which is technical in nature can be said to be "fees for included services" only when it "make available" technical knowledge or skills to the recipient of services ie only when recipient of services can apply the same on his own. In this connection observations made by the Authority for Advance Ruling (AAR) as laid down in the case of Anapharm Inc. (2008) 305 JTR 394 squarely applies to the facts of the appellant's case, since it related to rendering of Bio-Analytical services by the non-resident applicant and under the framework of the same language of Article 12(4)(b) of the Canada-India DTAA, which is pari-materia with the U.S.- India DTAA as well:
"Payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied. In the present case, the 13 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 applicant renders Bio-analytical services which, no doubt, are very sophisticated in nature, but the applicant does not reveal to its clients as to how it conducts those tests or the inputs that have gone into it, so as to enable them to carry out those tests themselves in future. A broad description or indication of the type of test carried out to reach this conclusion does not enable the applicant's client to derive requisite knowledge to conduct the tests or to develop the technique by itself."
Therefore, the services provided to the appellant by the non-resident parties of USA and Canada did not fall within the purview of 'included services' under Article 12(4)(b) and hence there was no liability on the appellant to deduct TDS u/s. 195 of the I.T. Act, while making payment for such bio-analytical services rendered to it.
Further the ratio Mumbai ITAT decision in the case of Wockhardt Ltd. v. ACIT (2010) 10 taxmann.com 208 (Mum.), also squarely applies to the facts of the appellant's case.
The same view has been followed in various decisions including decision of Mumbai Special Bench in the case of Mahindra & Mahindra Limited (313 UR
263). In view of the provisions of Article 12 of DTAA read with above referred judicial precedents, I am inclined to agree with the submissions that services cannot be categorised as "fees for included services" under the DTA Agreements with USA and Canada and therefore are not taxable in India as the more favourable DTA A provisions are to be applied. Therefore, it is held that the income of the non-resident concern in the facts and circumstances of the case are not taxable in India.
The next issue to be decided is whether the tax has to be deducted u/s. 195 even when the income in the hand of non-resident is not taxable. As the remittance made is not chargeable to tax in India, I am of the view that, in the given case provisions of Section 195 are also not applicable.
The Hon'ble Supreme Court has decided the very issue in GE Technology Centre P. Ltd.327 ITR 456. It has held that u/s. s 195 payer is bound to deduct tax only if the sum payable is assessable to tax in India. Further, as provisions of Section 195 of the Act are not applicable there is no question of recovery of tax in accordance with provisions of Section 201 of the Act. Reliance placed by the AO on the decision of Transmission Corporation of India 239 ITR 587 is misplaced. Therefore, the appellant succeeds on the issue of chargeability of tax under the provisions of sec. 201(l).
6. Next ground is against the charging of interest u/s. 201(1A). This ground is consequential to the raising of demand u/s. 201(1) and is decided accordingly.' 14 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 4.1 From the above, it is evident that the ld. CIT (A) have given a finding on fact that the service which is technical in nature can be said to be "fees for included services" only when it has "made available" technical knowledge or skills to the recipient of services, i.e. recipient of services can apply the same on his own. We are in full agreement of the above view of the ld. CIT (A). In the present case, the assessee had sent samples to the experts outside India and those experts submitted their report. There is nothing on record suggesting that the services rendered to the assessee were made available to the assessee and also the assessee was able to apply the same of his own. In the absence of the same, such service would not false within the ambit of the included service in the light of decision of the Authority for Advance Rulings (Income-tax), New Delhi in the case of Anapharm Inc., Inre (supra), the decision of the Coordinate Bench in the case of Wockhardt Ltd. v. ACIT (supra) and the decision of Hon'ble High Court of Karnataka in the case of De Bers India Minerals (P.) Ltd. (supra). The Revenue has not placed any material on record to rebut the findings of the ld. CIT (A) that the services were actually made available to the assessee and would be taxable. Under these facts, we do not see any reason to interfere with the findings of the ld. CIT (A), same is hereby upheld. Thus, ground raised by the Revenue is rejected."
15. We, therefore, respectfully following the decision of the Co-ordinate Bench (supra), are of the view that assessee was not required to deduct TDS on the expenses relating to clinical and analytical study expenses incurred during the year and therefore, no disallowance was called for under Section 40(a)(i) of the Act.
15. As regards, the request of the ld. D.R. for setting aside the issue for re- verification in the light of Article 12/15 of the India-USA DTAA, we do not find any merit in this contention of the ld. D.R. as the assessee had furnished the details before the Assessing Officer explaining why the impugned payments are not liable for deduction of tax at source as the First Appellate Authority after verification was convinced with the non applicability of TDS provision and as the Co-ordinate Bench has decided the issue in favour of the assessee and against the revenue, respectfully following the same, we do not 15 ITA No. 2170/Ahd/2015 . A.Y. 2011-12 find any reason to interfere with the findings of the ld.CIT(A). Ground no. 2 is also dismissed.
16. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in Open Court on 11- 01- 2018
Sd/- Sd/-
(MAHAVIR PRASAD) (N. K. BILLAIYA)
JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER
Ahmedabad: Dated 11/01/2018
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad