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In this respect we submitted that as per the provisions of Section 9(l)(vii) of the Income Tax Act, 1961 and as discussed in the ITAT, Mumbai Bench 'D' in the case of "Pacific Internet (India) Pvt. Ltd. Vs. ITO", the Technical Services contemplates rendering of a service to the payer of the fee. Mere collection of a fee for use of a standard facility provided to all those willing to pay for it does not amount to the fee having been reached for technical services. Further, in the case of "Commissioner of Income Tax, Delhi Vs. M/s Estel Communications Pvt. Ltd.", the Income Tax Appellate Tribunal, Delhi Bench 'G' held that the use of internet facility may require sophisticated equipment, but that does not mean that technical services were rendered by Teleglobe to the assesses. It was a simple case of purchase of Internet bandwidth by the assessee from Teleglobe. Further, in the case of Dell International Services (India) Pvt. Ltd., the Authority for Advance Ruling decided that :

Dell India has no rights over any equipment of BTA that BTA utilizes for providing the bandwidth The same fiber link cables and other equipment are used by BTA for all customers, including Dell India. The telecom bandwidth is provided through a huge network of optical fibre cables laid under the ocean across several countries. BTA is using the South East Asia-Middle East-West Europe cable network, which is owned by a consortium of 16 international telecommunications companies (including VSNL and two other companies from India). BTA uses only a small fraction of this network and the space in the cable network is not dedicated to Dell India alone, but also is used by hundreds of BTA's customers in and outside India.The transaction is essentially one of providing bandwidth services for the two-way transmission of voice and data. BTA renders such services by means of a point-to-point dedicated circuit that it owns. The provision of services where a service provider uses its own equipment does not fall with in the definition of "royalty" under Indian law. The consideration stipulated is only for delivery of a package of services, Dell India being the recipient of such services. Possesion and control of the leased circuit and related equipment is in the hands of BTA and not with Dell India. BTA has to maintain and monitor the network and infrastructure for the purpose of rendering services to Dell India. The equipment, if any, placed at Dell India's premises cannot be changed or tempered with by Dell India and such placement is only for the rendering of services by BTA, not to facilitate its use by Dell India.Based on the above, Dell India argued that the payments it made could not be characterized as royalties or fees for technical services. The AAR determined that "service" is an unbroken thread running through the entire fabric of the agreement between the parties. There is no doubt that the entire network (consisting of undersea cables, domestic access lines and BTA equipment), regardless of what is kept at the connecting point, is for providing a service to facilitate the transmission of voice and data across the globe. One of the many circuits forming part of the network is devoted and earmarked to Dell India. From that, it does not follows that all of the components and equipments constituting the network are rented out to Dell India or that the consideration in the form of monthly charges is intended for the use of equipment owned and installed by BTA. The AAR noted that, if an advantage is obtained from sophisticated equipment installed and. provided by another, it is difficult to say that the recipient/ customer uses the equipment as such. The customer merely makes use of the facility, ever though it does not use the equipment itself. Further, by availing itself of the facility BTA provided through the network/ circuits, there is no use of equipment by Dell India except in a very loose sense, such as, the AAR analogized, using a road bridge or a telephone connection. The use of equipment connoted that the grantee has possession and control over the equipment and the equipment is at his disposal. Dell India is not concerned with the infrastructure or the access line installed by BTA or its agent or the embedded ' components. Responsibility for the operation, control and maintenance of the equipment rests entirely with BTA or its agent(being the domestic provider). Dell India does not possess nor has access to the equipment belonging to BTA. Hence, the payment could not be characterized as a "royalty", nor could it be characterized as "fees for included services" under the India-U.S. treaty because no technical knowledge, experience, skill, etc., was being "made available" to Dell India. On. the basis of the above facts, it is very much clear that as the company is not in possession of the equipments nor it is using the equipment solely for its own purposes, hence the payment cannot be treated as "Royalty" or "payment for technical services" and as such in the absence of Permanent Establishment of the Foreign Company in India the provisions of TDS under section 195 of the Income Tax Act, 1 961 does not apply to the assessee company.

The reliance is placed on authority for advance ruling judgment in case of ISRO Satellite Centre (ISAC), 307 ITR 59, which relied upon its earlier judgment in case of Dell International Service (P) Ltd., In re (2008) 218 CTR (AAR) 209 and held that payment made by applicant to IGL, a UK company for use of IGL's navigation transponder capacity by taking on lease the space segment capacity navigation transponder of its satellite is neither in the nature of royalty nor fees for technical services either under the Act or under DTAA between India and UK, hence not taxable.

4. Decision of Authority f or Advance Rulings in t h e c a s e o f I S R O S a t e l l i t e C e n t r e I N R E 3 0 7 IT R 5 9 i n wh i c h i t wa s h e l d a s u n d e r :

Payment made by applicant to IGL, a UK company for use of IGL's navigation transponder capacity by taking on lease the space segment capacity navigation transponder of its satellite is neither in the nature of royalty nor fees for technical services either under the Act or under DTAA between India and UK, hence not taxable.