Rendered Anytechnical Services To Them; M/S.alkor Petroo Limited Obtained Technical Data From v. Sri B.narasimha Sarma, Learned Senior Standing Counsel For The Income-Tax Department, Would Reiterate The Very Same Submissions Urged On Behalf Of Therevenue Be

THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN AND THE HON’BLE SRI JUSTICE S. RAVI KUMAR I.T.T.A.No.382 of 2015 JUDGMENT: (per Hon’ble Sri Justice Ramesh Ranganathan) This appeal, under Section 260-A of the Income Tax Act, is preferred againstthe order passed by the Income Tax Appellate Tribunal, Hyderabad inI.T.A.No.1342/Hyd/2013 dated 04.06.2014 for the assessment year 2008-2009. Twoappeals, preferred by the assessee in I.T.A.No.1342/Hyd/2013 andI.T.A.No.1343/Hyd/2013 for the assessment years 2008-2009 and 2009-2010respectively, were decided by the Tribunal by way of a common order. Facts, as noted in the order of the Tribunal, are that the petitioner’s parentcompany-M/s.Alkor Petroo Limited took a loan from U.T.I. Bank in the year 2004 forRs.4,37,43,512/-; and, utilizing the said loan amount, purchased technical data fromM/s.Hardi Exploration and Production (Hardi UK). This technical data was given byM/s.Alkor Petroo Limited to its subsidiary (the assessee), and the account of theassessee was debited with this amount in the books of accounts of M/s.Alkor PetrooLimited. This amount was recovered, in the subsequent year, from the assesseecompany by its parent company M/s.Alkor Petroo Limited treating the amount ofRs.4,40,60,426/- (as against the actual amount, as per account, of Rs.4,37,43,512/-)paid by the assessee to its parent company on 31.03.2008 as the cost of technicaldata received from it. The assessing officer passed an order, under Section 201(1A) of the Act,treating this amount as liable for TDS under Section 194-J of the Income Tax Act.The assessing officer demanded TDS of Rs.49,92,046/- under Section 201(1) andinterest of Rs.17,97,136/- under Section 201(1A) of the Act. The assessee’s appealwas rejected by the Commissioner of Income Tax Appeals, though the assesseecontended that their parent company M/s.Alkor Petroo Limited had not rendered anytechnical services to them; M/s.Alkor Petroo Limited obtained technical data from M/s.Hardi Exploration and Production (Hardi UK) in the year 2004; for the technicalservices rendered by the latter to the former, payment was made outside India by theparent company to M/s.Hardi UK; the parent company M/s.Alkor Petroo Limited hadmerely passed on such technical data to the assessee company; and they neverrendered any technical services which attracted the provisions of Sections 194-J ofthe Act. M/s.Hardi Exploration and Production (Hardi UK) in the year 2004; for the technicalservices rendered by the latter to the former, payment was made outside India by theparent company to M/s.Hardi UK; the parent company M/s.Alkor Petroo Limited hadmerely passed on such technical data to the assessee company; and they neverrendered any technical services which attracted the provisions of Sections 194-J ofthe Act. Aggrieved by the order of the Commissioner, the assessee carried the matterin appeal. In the order under appeal, the Tribunal observed that the payment madeby M/s.Alkor Petroo Limited to Hardi UK was credited in its books in the financialyear 2004-2005; the assessee was merely supplied with ready study data, and noservices were rendered by M/s.Alkor Petroo Limited to the assessee; the ready studydata, acquired by M/s.Alkor Petroo Limited, was purchased by the assessee;payment made on such purchases did not attract TDS; no services of any sort wererendered by M/s.Alkor Petroo Limited to the assessee, to be construed as technicalservices rendered to a resident under Section 194-J of the Act; the assessing officerhad wrongly levied tax under Section 201 of the Act, and interest thereon; renderingtechnical services is essential in terms of Section 194-J of the Act r/w.Explanation-2to Section 9(1)(vii) of the Act; as held by the Supreme Court, in G.E. IndiaTechnology Centre P. Ltd. v. Commissioner of Income Tax, the obligation todeduct tax arises only when the sum paid is ‘chargeable to tax under the Act’; in thepresent case, the amount credited to the account of M/s.Alkor Petroo Limited wasmerely reimbursement of payment made by M/s.Alkor Petroo Limited to Hardi UK inthe year 2004; and the order of the assessing officer was erroneous. After perusingcopies of the ledger accounts of the assessee, in the books of M/s.Alkor PetrooLimited, as well as the ledger account of Hardi U.K in the books of M/s.Alkor PetrooLimited, the Tribunal held that it was clearly established that it was merelyreimbursement of the amounts paid by M/s.Alkor Petroo Limited to the Hardi U.K,and the same was reflected as a loan; it was neither reflected as expenditure or asincome in the books of accounts of M/s.Alkor Petroo Limited; and there was noliability of making any TDS when payment was made by way of reimbursement ofexpenses. Sri B.Narasimha Sarma, Learned Senior Standing Counsel for the Income-Tax Department, would reiterate the very same submissions urged on behalf of theRevenue before the Tribunal. From a perusal of the order under appeal, it is clear that the ready study data,purchased by M/s.Alkor Petroo Limited from M/s.Hardi Exploration and Production(Hardi UK), was supplied by them to their subsidiary i.e., the assessee; and theamount paid by M/s.Alkor Petroo Limited to Hardi UK was reimbursed by theassessee four years thereafter in the year 2008. It is evident, therefore, that noservices were rendered by the parent company (M/s.Alkor Petroo Limited) to itssubsidiary (i.e., the assessee) so as to be construed as technical services renderedto a resident under Section 194-J of the Act. Sri B.Narasimha Sarma, Learned Senior Standing Counsel for Income TaxDepartment, has also not been able to show how procurement of ready study databy the parent company, from another foreign company, and supplying it to theassessee amounts to services rendered to a resident attracting Section 194-J of theAct. The Tribunal is the final court of facts and, as the finding recorded by it is on thebasis of the material on record, the order under appeal cannot be said to beperverse. The said order does not also give rise to any substantial question of lawnecessitating interference in appeal under Section 260-A of the Act. The appeal fails and is, accordingly, dismissed. Miscellaneous petitionspending, if any, shall also stand dismissed. No costs. ______________________________ RAMESH RANGANATHAN, J Date:07.12.2015. ___________________ S.RAVI KUMAR, J cs