Tungsten Automation England Limited (Formerly Known As Tungsten Network Limited v. Deputy Commissioner Of Income Tax, International Taxation, Circle 3(1)(1) New Delhi

Signature Not Verified * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on: 14.07.2025 + ITA 92/2025 and CM APPL. 22267/2025 TUNGSTEN AUTOMATION ENGLAND LIMITED (FORMERLY KNOWN AS TUNGSTEN NETWORK LIMITED) .....Appellant Versus DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 3(1)(1) NEW DELHI .....Respondent AND + ITA 93/2025 and CM APPL. 22294/2025 TUNGSTEN AUTOMATION ENGLAND LIMITED (FORMERLY KNOWN AS TUNGSTEN NETWORK LIMITED) .....Appellant Versus DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION, CIRCLE 3(1)(1), NEW DELHI .....Respondent Advocates who appeared in this case: For the Appellant : Mr Deepak Chopra and Ms Priya Tandon, Advocates. Advocates. For the Respondent : Mr Sunil Agarwal, SSC with Mr Shivansh B. : Mr Sunil Agarwal, SSC with Mr Shivansh B. Pandya, Mr Viplav Acharya, Ms Priya Sarkar and Mr Utkarsh Tiwari, Advocates. Pandya, Mr Viplav Acharya, Ms Priya Sarkar and Mr Utkarsh Tiwari, Advocates. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA JUDGMENT VIBHU BAKHRU, J 1.The appellant [Assessee] has filed the present appeals under Section 260A of the Income Tax Act, 1961 [the Act] impugning a common order dated 18.12.2024 passed by the Income Tax Appellate Tribunal [the Tribunal] in ITA Nos.2237/Del/2024 and 2238/Del/2024 captioned Tungsten Network Ltd. v. Deputy Commissioner of Income Tax in respect of the assessment years [AYs] 2016-17 and 2017-18. 2.The Assessee had preferred the said appeals before the Tribunal impugning separate assessment orders dated 12.03.2024 passed by the Assessing Officer under Section 147 read with Section 144 of the Act in respect of AYs 2016-17 and 2017-18. The final assessment orders were passed pursuant to directions issued by the Dispute Resolution Panel under Section 144C(5) of the Act by separate orders dated 22.02.2024 passed in respect of each of the relevant AYs 2016-17 and 2017-18. 3.The Assessee is a company incorporated under the laws of the United Kingdom and is a tax resident of the UK. The Assessee is a wholly owned subsidiary of Tungsten Corporation Plc, which is also a company incorporated in the UK. The Assessee had not filed its return of income for the relevant assessment years as, according to the Assessee, it did not have any income which was taxable under the Act. The AO received information to the effect that the Assessee had received certain amounts during the financial years relevant to the assessment years in question – an amount of ₹2,93,92,810/- during the previous year relevant to AY 2016-17 and a sum of ₹3,31,98,980/- during the previous year relevant to AY 2017-18 – from Genpact India Pvt. Ltd. being a company incorporated in India. According to the AO, these receipts suggested that the Assessee’s income for the relevant assessment years had escaped assessment. Accordingly, the AO issued separate notices under Section 148A of the Act, both dated 30.06.2021, in respect of AYs 2016-17 and 2017-18 respectively. 4.By virtue of the decision rendered by the Supreme Court in Union of India & Ors. v. Ashish Aggarwal[1], such notices were deemed to be notices issued under Section 148A(b) of the Act and the Assessee was afforded an opportunity to respond to the said notices. The said proceedings culminated in the AO passing two separate orders dated 26.07.2022 under Section 148A(d) of the Act holding that it was a fit case for issuance of notices under Section 148 of the Act in respect of AYs 2016-17 and 2017-18. Accordingly, the AO issued separate notices, both dated 28.07.2022, under Section 148 of the Act in respect of AYs 2016-17 and 2017-18. 4.By virtue of the decision rendered by the Supreme Court in Union of India & Ors. v. Ashish Aggarwal[1], such notices were deemed to be notices issued under Section 148A(b) of the Act and the Assessee was afforded an opportunity to respond to the said notices. The said proceedings culminated in the AO passing two separate orders dated 26.07.2022 under Section 148A(d) of the Act holding that it was a fit case for issuance of notices under Section 148 of the Act in respect of AYs 2016-17 and 2017-18. Accordingly, the AO issued separate notices, both dated 28.07.2022, under Section 148 of the Act in respect of AYs 2016-17 and 2017-18. 5.The Assessee did not file the returns of income pursuant to the notices issued under Section 148 of the Act. The AO issued notices under Section 142(1) of the Act seeking certain information from the Assessee. The Assessee submitted its response to the said notices and acknowledged that it had received amounts of ₹1,46,96,822/- and ₹1,46,95,988/- during the previous year relevant to AY 2016-17. However, part of the said amount pertained to financial year 2014-15 relevant to AY 2015-16. It claimed that it had issued invoices during the previous year relevant to AY 2016-17 amounting to 1,80,877/- GBP, which translated approximately to ₹1,45,84,438/-, computed by considering the average exchange rate of ₹80.63/-. Similarly, the Assessee also acknowledged that during the previous year relevant to AY 2017-18, the Assessee had raised invoices amounting to 2,71,314/- GBP, which translated approximately to ₹2,47,13,604/- computed at the average exchange rate of ₹91.09/-. The Assessee also acknowledged that during FY 2016-17 relevant to AY 2017-18, it had received an amount of ₹3,31,98,980/-, which included advance pertaining to FY 2017-18. 6.The Assessee also forwarded the copies of the invoices raised as well as its Tax Residency Certificate . Additionally, the Assessee provided the agreements entered into between OB10 Limited – an entity which was subsequently acquired by the Assessee – and Genpact International Inc. . GIPL is an affiliate of GIL. The Assessee claimed that the amounts received for rendering services under the said agreements were its business income and were not chargeable to tax under the Act as it did not have any permanent establishment in India. 7.The AO did not accept that the amounts received by the Assessee from GIPL were not chargeable to tax under the Act. According to the AO, the said amounts were required to be treated as “fees for technical services” within the scope of Article 13 of the India-UK DTAA[2]. 8.Accordingly, the AO issued separate draft assessment orders under Section 144C(1) of the Act dated 31.05.2023 in respect of AYs 2016-17 and 1 [2022] 444 ITR 1. 2 Convention between the Government of Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains has entered into on 26.10.1993 and as amended subsequently. Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains has entered into on 26.10.1993 and as amended subsequently. 2017-18. In terms of the said orders, the AO assessed the Assessee’s income for AY 2016-17 at ₹2,93,92,810/-, and ₹3,31,98,980/- in respect of AY 2017-18. 1 [2022] 444 ITR 1. 2 Convention between the Government of Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains has entered into on 26.10.1993 and as amended subsequently. Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains has entered into on 26.10.1993 and as amended subsequently. 2017-18. In terms of the said orders, the AO assessed the Assessee’s income for AY 2016-17 at ₹2,93,92,810/-, and ₹3,31,98,980/- in respect of AY 2017-18. 9.The Assessee filed its objections to the draft assessment orders before the DRP contesting the proposed assessments. The DRP disposed of the said objections in terms of separate orders dated 22.02.2024 upholding the AO’s view that the amounts received by the Assessee from GIPL were chargeable to tax under the Act as well as India-UK DTAA, as FTS. Pursuant to the directions of the DRP, the AO passed final assessment orders dated 12.03.2024 under Section 147 read with Section 144C(13) of the Act. As noted above, the Assessee appealed the said assessment orders before the Tribunal, which were dismissed by the impugned order 18.12.2024. QUESTIONS OF LAW 10.The present appeals were admitted by this Court by orders dated 17.04.2025 and the following questions of law were framed for consideration of this Court: Questions of law framed in ITA No.93/2025 “A. Whether the Appellant was taxable in respect of receipts of INR 2,93,92,810/- under the provisions of the Act or the India - UK DTAA? INR 2,93,92,810/- under the provisions of the Act or the India - UK DTAA? B. Whether the Tribunal erred in law in re-characterising business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India – UK DTAA?” business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India – UK DTAA?” Question of law framed in ITA No.92/2025 “A. Whether the Appellant was taxable in respect of receipts of INR 3,31,98,980/- under the provisions of the Act or the India - UK DTAA? INR 3,31,98,980/- under the provisions of the Act or the India - UK DTAA? B. Whether the Tribunal erred in law in re-characterising business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India – UK DTAA?” business receipts by the Appellant as FTS under Explanation 2 to section 9(1)(vii) of the Act and Article 13(4)(c) of the India – UK DTAA?” 11.As noticed above, the questions of law are worded, essentially, in similar terms. During the course of the hearing, the learned counsel for the parties focused their submissions on the question whether the amounts received by the Assessee – ₹2,93,92,810/- during the previous year relevant to AY 2016-17 and ₹3,31,92,980/- during the previous year relevant to AY 2017-18 – could be construed as FTS within the meaning of Article 13 of the India-UK DTAA. Concededly, if the Assessee prevailed in its case that the said receipts were not FTS within the scope of Article 13(4)(c) under India-UK DTAA, the question whether the said receipts could be construed as an FTS within the meaning of Explanation 2 to Section 9(1)(vii) of the Act would not be material. Thus, we have confined our examination, at this stage, to the following question: “Whether the amounts received by the Assessee from GIPL/Genpact India Pvt. Ltd. can be construed as an FTS under Article 13 of the India-UK DTAA”. ANALYSIS 12.At the outset, it would be relevant to examine the nature of the services rendered by the Assessee resulting in the receipts, which are held to be taxable. And, whether the said services fall within the scope of FTS under Signature Not Verified Article 13(4)(c) of the India-UK DTAA. “Whether the amounts received by the Assessee from GIPL/Genpact India Pvt. Ltd. can be construed as an FTS under Article 13 of the India-UK DTAA”. ANALYSIS 12.At the outset, it would be relevant to examine the nature of the services rendered by the Assessee resulting in the receipts, which are held to be taxable. And, whether the said services fall within the scope of FTS under Signature Not Verified Article 13(4)(c) of the India-UK DTAA. 13.The Assessee claims that it carries on the business of providing electronic invoice deliveries through its secure e-invoicing platform. It claims that the said platform enables the businesses supplying products and services to automatically generate e-invoices instead of creating and printing them manually. The Assessee has granted a non-exclusive license to GIPL for using its cloud hosted platform. During the relevant period, GIPL had used the platform to render services to GlaxoSmithKline Services Unlimited , a company which is not a tax resident in India. 14.The terms and conditions on which the license was granted to GIPL are contained in the Master Partner Agreement dated 13.01.2009 entered into between OB10 and GIL. As noted above, OB10 was acquired by the Assessee and there is no dispute that the Assessee had stepped into its shoes. 15.The recitals of the MPA are relevant and are set out below: “(A) OB10 is the operator of OB10 Services, the global e-invoicing network and wishes to make these services available to the Partner. invoicing network and wishes to make these services available to the Partner. (B) The Partner is in the business of providing software and professional service solutions to its existing or potential customers (“End Users” or “Buyer”) and desires to promote, market, offer and/or sell the OB10 Services either as a stand alone service or as part other services provided by the Partner (the “Partner Services”) to End Users.” professional service solutions to its existing or potential customers (“End Users” or “Buyer”) and desires to promote, market, offer and/or sell the OB10 Services either as a stand alone service or as part other services provided by the Partner (the “Partner Services”) to End Users.” Signature Not Verified 16.Article 2 of the MPA sets out the Scope of the Grant to GIL and the same is reproduced below: “2. Scope of Grant to the Partner 2.1 On the Effective Date and subject to the terms and conditions of this Master Partner Agreement, OB10 grants the Partner a non-exclusive, non-transferable licence for the Term to recommend market and/or sell the OB10 Services to End Users in the Territories. The End User must be an entity that OB10 can service out of its existing operations (unless otherwise agreed by OB10 in its complete discretion). The Territories in which the scope of this Master Partner Agreement may apply can be amended by mutual written agreement between the parties. Any additional requirements in relation to the scope of this Master Partner Agreement will be agreed between the parties 2.2 Subject to the terms of this Master Partner Agreement, OB10 reserves the right to market, solicit, promote or sell or otherwise transfer or distribute the OB10 Services as a stand alone service and/or as part of a third parties technology platform anywhere in the world to any organisation whether directly or indirectly. 2.3 The Partner is granted a licence of the rights itself to use the OB10 Services for itself and/or its Affiliates subject to the terms and conditions in this Master Partner Agreement and any SOW agreed between the parties. 2.4 Save under clause 7.3 below the Partner will act as principal and no obligations will be created for OB10 towards the End User. 2.2 Subject to the terms of this Master Partner Agreement, OB10 reserves the right to market, solicit, promote or sell or otherwise transfer or distribute the OB10 Services as a stand alone service and/or as part of a third parties technology platform anywhere in the world to any organisation whether directly or indirectly. 2.3 The Partner is granted a licence of the rights itself to use the OB10 Services for itself and/or its Affiliates subject to the terms and conditions in this Master Partner Agreement and any SOW agreed between the parties. 2.4 Save under clause 7.3 below the Partner will act as principal and no obligations will be created for OB10 towards the End User. 2.5 The rights granted to the Partner under this Master Partner Agreement are granted to the Partner subject to the Partner engaging with OB10 for each End User under the terms and conditions appearing in Annex B hereto (the ‘Terms and Conditions for the OB10 Services’) and for the fees stated in Annex C (Fees for the OB10 Services), unless agreed otherwise by the parties on a case by case basis. 2.6 The Partner has discretion over the price at which it resells the OB10 Services.” 17.It is apparent from the above that in terms of MPA, the Assessee (OB10) had granted a “non-exclusive, non-transferable licence for the Term to recommend market and/or sell the OB10 Services to End Users in the Territories”. Paragraph 2.3 of the MPA also expressly indicates that the license is granted to the Partner (GIL) for use of itself or its affiliates (in this case – GIPL). 18.Paragraph 2.4 of the MPA also expressly provides that the ‘Partner’ would act as a principal and no obligations will be created for OB10 towards the ‘End Users’. Paragraph 2.4 of the MPA also expressly provides that the ‘Partner’ 19.Articles 5A and 5B of the MPA set out the respective obligations of the parties to the MPA. The said Articles are set out below: “5(A) Partner Obligations 5.1 The Partner shall use all reasonable efforts to: (a) inform and collaborate with OB10 to market, promote the use of OB10 Services through co-operation with it’s sales force and OB10’s sales force and business to business channels to its existing on any potential End Users; provided that the Partner shall not be obligated to sell or promote the use OB10 Services for all of its existing or potential End Users. (b) ensure that its sales force and other personnel who promote and market the use of the OB10 Service have proper skills training to enable them to demonstrate the use of the OB10 Service in a competent and professional manner; (c) not do anything which could be materially prejudicial to the goodwill and business reputation of OB10. 5.2 The Partner warrants and undertakes to OB10 that it shall not make any representation or give any warranty or guarantee regarding the capability of the OB10 Services that is greater than the representation, warranties or guarantees that OB10 would give under its normal course of business or any additional representations, warranties or guarantees that are agreed by the parties in writing on a case by case basis. 5.3 The Partner shall fully indemnify OB10 and keep OB10 fully and effectively indemnified against all claims, demands and costs (including all reasonable legal costs), expenses and liabilities of whatsoever nature arising out of any breach of this clause 5.2. 5.4 The Partner shall be solely responsible for its sales activities to an End User to be carried out in accordance with this Agreement. If the Partner reasonably requires sales support from OB10, OB10 shall subject to adequate notice, use reasonable endeavours to attend any meetings or provide such sales support 5(B) OB10’s Obligations. give under its normal course of business or any additional representations, warranties or guarantees that are agreed by the parties in writing on a case by case basis. 5.3 The Partner shall fully indemnify OB10 and keep OB10 fully and effectively indemnified against all claims, demands and costs (including all reasonable legal costs), expenses and liabilities of whatsoever nature arising out of any breach of this clause 5.2. 5.4 The Partner shall be solely responsible for its sales activities to an End User to be carried out in accordance with this Agreement. If the Partner reasonably requires sales support from OB10, OB10 shall subject to adequate notice, use reasonable endeavours to attend any meetings or provide such sales support 5(B) OB10’s Obligations. 5.6 OB10 shall make reasonable efforts (either directly or indirectly through it’s agents, sub-contractors or partners) to provide training to full time employees of the Partner to enable them to promote and use the OB10 Services in accordance with this Master Partner Agreement. The scope and terms and conditions of this training shall be agreed between the parties. 5.7 Both parties shall agree the content and frequency of reports to be made by either party in order for either party to fulfil their obligations under this Master Partner Agreement 5.8 In respect of some of the OB10 Services, OB10 provides standard service levels and/or standard service credits Where both parties agree that such service levels and/or service credits apply for an End User, they will be incorporated in the relevant SOW. For the avoidance of doubt, Partner shall only be entitled to rely on any service levels or claim any service credits from OB10 where the same service levels or service credits have been passed onto an End User.” 20.Paragraph 7.2 of the MPA also specifically provides that the Partner would be solely responsible for entering into a direct contractual relationship with all End Users, outlining its responsibilities to the End User. It was also agreed that the parties would discuss and agree upon the specific services to be rendered as well as other terms and conditions. Paragraph 7.2 of the MPA is set out below: “7.2Re-Sale Model. (a) Subject to the terms of this Master Partner Agreement, the Partner shall be solely responsible for entering into a direct contractual relationship with all End Users outlining its responsibilities to the End User including those in any SOW between Partner and OB10. (b) The parties will discuss and agree (i) which specific OB10 Services (ii) the duration of those OB10 Services and (iii) the amount Transactions that the End User shall require and their payment profile and (iv) other terms and conditions that will apply to that End User (other than those already highlighted in Annex B (Terms and Conditions for the OB10 Services). Such provisions shall be incorporated into an SOW for that End User. A sample SOW is appended to this Master Partner Agreement as Annex D (Sample SOW).” 21. 21.It is also relevant to refer to Article 12 of the MPA, which specifically provides that the ownership of the intellectual property would vest with the respective parties. It was expressly provided that OB10 (which stands substituted by the Assessee) would “retain all right, title and interest in and to the OB10 Services (including without limitation the OB10’s proprietary source code in the OB10 Services and any Documentation)”. 22.The expression “OB10 Services” as used in MPA is defined in terms of Clause (f) of Article 1 as under: “(f) OB10 Services means the services provided by OB10 in any SOW. The OB10 Services in their entirety are described in Annex A.” Annexure ‘A’ to the MPA set out in detail the scope of OB10 Services. The Signature Not Verified ‘core service’ as set out in Annexure ‘A’ is reproduced below: “B. Core Service Set up 1. Preparation and maintenance of one (1) Partner Profile for the Partner within the parameters of the OB10 Network. 2. Supplier Enrolment 22.The expression “OB10 Services” as used in MPA is defined in terms of Clause (f) of Article 1 as under: “(f) OB10 Services means the services provided by OB10 in any SOW. The OB10 Services in their entirety are described in Annex A.” Annexure ‘A’ to the MPA set out in detail the scope of OB10 Services. The Signature Not Verified ‘core service’ as set out in Annexure ‘A’ is reproduced below: “B. Core Service Set up 1. Preparation and maintenance of one (1) Partner Profile for the Partner within the parameters of the OB10 Network. 2. Supplier Enrolment OB10’s responsibilities include. a. Website, OB10 will host and maintain a Client-specific website at no additional cost that provides a portal for all Supplier-related communications, giving them access to all Supplier communications. b. Assistance with all Internal Communications: OB10 will assist Buyer in educating Buyer personnel and has developed various tools to assist with this, such as, newsletter content, posters, desk drop materials, web and on-site seminars, where OB10 staff will present alongside Buyer to these groups. c. Analysis of Supplier Data: OB10 will analyse Supplier data provided by Buyer to identify Suppliers that are already live on the OB10 network, or those that are known and already in the enrolment process for other OB10 Clients. The balance of the Suppliers will be split into managed and direct campaigns. d. Assistance with preparing External Communications: OB10 provides assistance in the creation of communication packs for Suppliers including the first letters, follow-up letter, web seminars and where applicable presentations. The OB10 PM will provide templates of communication packs used for previous successful campaigns with other organisations. These templates are available in various European languages. The Project Manager will offer advice and guidance about the type of message required in order to obtain the maximum success of the Supplier enrolment campaign OB10 can also assist in any press release that may be issued. e. Managed campaigns. Each Supplier in a Managed Campaign is allocated an OB10 enrolment professional who is responsible Signature Not Verified for working with the Supplier to assist with any queries, to explain the options, persuade them where possible, and when the Supplier progresses, to ensure they use the service correctly. The Supplier can choose to send invoices as a data file, or using the web-portal. If the Supplier chooses to use the integrated service (to send a data file) they will also work with the supplier implementation team in order to create and test a unique profile on OB10. f. Direct Campaigns: Each supplier in a direct campaign will be added to the OB10 Network so that they can use the web-portal g. Reporting: OB10 will provide Buyer with reports at regular agreed intervals showing the status of each active campaign for supplier enrolment. The PM will discuss the results shown by these reports and provide ideas to improve the take up if needed h. Data Cleanse: OB10 can assist with projects to enhance supplier data, to update contact information for suppliers, subject to the fees in the agreement. All data that is enhanced this way is provided to Buyer. l. Supplier Mailings: OB10 will at Buyer request mail shot or e-mail suppliers as part of the supplier enrolment service subject to the fees in the Agreement. This includes: printing letters and information packs on premium quality paper, stuffing envelopes, addressing and posting. 3. The provision of the services of a program manager to provide reasonable assistance and guidance in enrolling to the OB10 Network suppliers of the Buyer and Users located and registered for VAT (or local equivalent) in the Countries. 4. Processing and Transmission of Data h. Data Cleanse: OB10 can assist with projects to enhance supplier data, to update contact information for suppliers, subject to the fees in the agreement. All data that is enhanced this way is provided to Buyer. l. Supplier Mailings: OB10 will at Buyer request mail shot or e-mail suppliers as part of the supplier enrolment service subject to the fees in the Agreement. This includes: printing letters and information packs on premium quality paper, stuffing envelopes, addressing and posting. 3. The provision of the services of a program manager to provide reasonable assistance and guidance in enrolling to the OB10 Network suppliers of the Buyer and Users located and registered for VAT (or local equivalent) in the Countries. 4. Processing and Transmission of Data OB10 and Partner agree (within the parameters of the OB10 Network) how Data Transmission will take place, selecting one or more of the Approved Data Transmission Options. This will form part of the Partner Profile for that Partner. (The Partner may select a non-approved Data Transmission option, see Additional Services below). 5. OB10 will take invoices from Suppliers either as files of data (in the form agreed by OB10 and the relevant supplier) or via the OB10 supplier portal. This Data will then be formatted and/or translated, so that it is consistent with the relevant Partner Profile. The OB10 Network will also augment Data with the agreed standing data from the relevant Partner Profile for that Partner. 6. Data Transmission will encompass a data file of the invoices that have been prepared as stated above and a rendered image of those invoices in HTML, TIFF and/or PDF form. 7. OB10 shall use industry standard encryption technology to encrypt Data being transmitted to where the Partner’s choice of Approved Data Transmission Option or non-approved Data Transmission option supports this 8. OB10 will implement all reasonable and industry standard protections to prevent the delivery of data files or data images from the OB10 Network to Partner containing Harmful Code. Notwithstanding the foregoing. Partner shall agree that it remains responsible for ensuring that they have satisfactory Harmful Code detection technology and firewall technology implemented and operating to protect the integrity of their systems, environment and data and OB10 shall not be responsible for any damage or loss caused by any failure on their part to do so. 9. Partner may (at its option) elect to accept the delivery by OB10 of attachments from Suppliers. If Partner elects to do so, Partner accepts and acknowledges that attachments from Suppliers are transmitted by OB10 on an “as is” basis and are not subject to any Harmful Code interrogation. Minor Changes to Partner Profile 10. Minor changes notified to OB10 by Partner in writing (i.e. changes that are within the parameters of the OB10 Network and can be implemented by OB10 support, such as changes to Partner information, contact details or PO ranges) will be implemented within five (5) days of receipt of all relevant information at no additional charge File Restoration (Due to OB10 Default) Signature Not Verified 11. If Data is lost or corrupted due to a default of OB10 under the terms of any SOW, OB10’s sole liability and Partner’s sole remedy shall be for (i) OB10 to reconstruct any such Data free of charge; or (ii) if the Data cannot be restored, for OB10 to provide Partner with a credit for the fees received by OB10 in respect of the collection, processing or storage of such data. (subject in the case of each of (i) and (ii) to the cap on liability contained in any SOW. OB10 Support Desks 12. OB10 supports the availability of the OB10 Services by providing a support desk from 8 a.m to 6 p.m UK Monday to Friday (excluding UK public holidays).” File Restoration (Due to OB10 Default) Signature Not Verified 11. If Data is lost or corrupted due to a default of OB10 under the terms of any SOW, OB10’s sole liability and Partner’s sole remedy shall be for (i) OB10 to reconstruct any such Data free of charge; or (ii) if the Data cannot be restored, for OB10 to provide Partner with a credit for the fees received by OB10 in respect of the collection, processing or storage of such data. (subject in the case of each of (i) and (ii) to the cap on liability contained in any SOW. OB10 Support Desks 12. OB10 supports the availability of the OB10 Services by providing a support desk from 8 a.m to 6 p.m UK Monday to Friday (excluding UK public holidays).” 23.The MPA also includes standard form of the statement of work , which was required to be entered into for provision of services. The Assessee (OB10) entered into SOW dated 01.04.2009 effective from 05.07.2010, whereby the SOW was suitably amended to include the details of the specific services. 24.The Assessee claims that it, essentially, provides electronic invoice delivery and related services such as conversion of raw data into electronic format, archiving and other ancillary services. The Assessee claims that it simplifies and streamlines complex invoice to pay process, thus, offering legal and tax compliant invoicing in various jurisdictions. The Assessee had entered into SOWs with GIPL to provide an exclusive e-license portal, which enables generation of e-invoices for its customer (GSK) and its group entities, which are located overseas. It is the Assessee’s claim – which is not controverted – that it generates invoices for its customer for the GSK’s European Operations, which have no link with India. It is also not disputed that the services provided by the Assessee are within the framework of what are described as OB10 services under the MPA. 25.It is apparent from the nature of services rendered by the Assessee that neither GIL nor GIPL acquired any right, title or interest in the platform operated by the Assessee for generating and transmitting electronic invoices for the End Users. It is also apparent from the above that GIPL does not acquire any technology or any right in the electronic platform for exploiting the same on its own. The role of GIPL is limited to ensuring provision of the Assessee’s services to the End User by onboarding customers – in the instant case GSK – on the platform operated by the Assessee. 26.In the given circumstances, the principal question to be addressed is whether the same would constitute technical services within the scope of Article 13 of the India-UK DTAA. Article 13 of the India-UK DTAA is set out below: “ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed : (a) in the case of royalties within paragraph 3(a) of this Articles, and fees for technical services within paragraphs 4(a) and (c) of this Article,— Articles, and fees for technical services within paragraphs 4(a) and (c) of this Article,— (i) during the first five years for which this Convention has effect ; effect ; (aa) 15 per cent of the gross amount of such royalties or fees Signature Not Verified for technical services when the payer of the royalties or fees for technical services is the Government of the first-mentioned Contracting State or a political sub-division of that State, and (bb) 20 per cent of the gross amount of such royalties or fees for technical services in all other cases; and for technical services in all other cases; and (a) in the case of royalties within paragraph 3(a) of this Articles, and fees for technical services within paragraphs 4(a) and (c) of this Article,— Articles, and fees for technical services within paragraphs 4(a) and (c) of this Article,— (i) during the first five years for which this Convention has effect ; effect ; (aa) 15 per cent of the gross amount of such royalties or fees Signature Not Verified for technical services when the payer of the royalties or fees for technical services is the Government of the first-mentioned Contracting State or a political sub-division of that State, and (bb) 20 per cent of the gross amount of such royalties or fees for technical services in all other cases; and for technical services in all other cases; and (ii) during subsequent years, 15 per cent of the gross amount of such royalties or fees for technical services; and amount of such royalties or fees for technical services; and (b) in the case of royalties within paragraph 3(b) of this Article and fees for technical services defined in paragraph 4(b)of this Article, 10 per cent of the gross amount of such royalties and fees for technical services. Article and fees for technical services defined in paragraph 4(b)of this Article, 10 per cent of the gross amount of such royalties and fees for technical services. 3. For the purposes of this Article, the term “royalties” means : (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematography films or work on films, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; and use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematography films or work on films, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic. of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic. 4. For the purposes of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term “fees for technical services” means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) property for which a payment described in paragraph 3(b) Signature Not Verified of this Article is received ; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. know-how or processes, or consist of the development and transfer of a technical plan or technical design. 5. The definition of fees for technical services in paragraph 4 of this Article shall not include amounts paid : Article shall not include amounts paid : (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) property for which a payment described in paragraph 3(b) Signature Not Verified of this Article is received ; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. know-how or processes, or consist of the development and transfer of a technical plan or technical design. 5. The definition of fees for technical services in paragraph 4 of this Article shall not include amounts paid : Article shall not include amounts paid : (a) for services that are ancillary and subsidiary, as well as inextricably and essentially linked, to the sale of property, other than property described in paragraph 3(a) of this Article; inextricably and essentially linked, to the sale of property, other than property described in paragraph 3(a) of this Article; (b) for services that are ancillary and subsidiary to the rental of ships, aircraft, containers or other equipment used in connection with the operation of ships, or aircraft in international traffic; of ships, aircraft, containers or other equipment used in connection with the operation of ships, or aircraft in international traffic; (c) for teaching in or by educational institutions ; (d) for services for the private use of the individual or individuals making the payment ; or individuals making the payment ; or (e) to an employee of the person making the payments or to any individual or partnership for professional services as defined in Article 15 (Independent personal services) of this Convention. any individual or partnership for professional services as defined in Article 15 (Independent personal services) of this Convention. 6. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 (Business profits) or Article 15 (Independent personal services) of this Convention, as the case may be, shall apply. 7. Royalties and fees for technical services shall be deemed to arise in a Contracting State where the payer is that State itself, apolitical sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to make payments was incurred and the payments are borned by that permanent establishment or fixed base then the royalties or fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. 8. Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid exceeds for whatever reason the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. 8. Where, owing to a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services paid exceeds for whatever reason the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. 9. The provisions of this Article shall not apply if it was the main purposes or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties or fees for technical services are paid to take advantage of this Article by means of that creation or assignment.” 27.According to the Revenue, the consideration received by the Assessee for rendering services in question would qualify as ‘FTS’ within the scope of Clause (c) of Paragraph 4 of Article 13 of the India-UK DTAA. 28.Explanation 2 to Clause (vii) of Sub-section (1) of Section 9 of the Act defines the expression “Fees for Technical Services” to mean any consideration for rendering of any managerial, technical or consultancy services. However, the said definition would not be applicable for determining the scope of FTS under Double Taxation Avoidance Treaties if the same is inconsistent with the meaning of the said expression in the said treaty. The definition of FTS under Article 13 of the India-UK DTAA is considerably narrower. Thus, the question whether the consideration received by the Assessee for rendering the services fall within the meaning of FTS under Article 13 of the India-UK DTAA, would necessarily have to be construed in accordance with the meaning of FTS under the India-UK DTAA and not with reference to FTS as defined in Explanation 2 to Section 9(1)(vii) of the Act. 29.We may refer to the decision of the Supreme Court in Engineering Analysis Centre of Excellence (P) Ltd v. Commissioner of Income Tax[3],wherein the Supreme Court authoritatively explained as under: - “30. …… Importantly, under section 5(2) of the Income Tax Act, the total income of a person who is a non-resident, includes all income from whatever source derived, which accrues or arises or is deemed to accrue or arise to such person in India during such year. This, however, is subject to the provisions of the Income Tax Act. Certain income is deemed to arise or accrue in India, under section 9 of the Income Tax Act, notwithstanding the fact that such income may accrue or arise to a non-resident outside India. One such income is income by way of royalty, which, under section 9(1)(vi) of the Income Tax Act, means the transfer of all or any rights, including the granting of a licence, in respect of any copyright in a literary work. 31. That such transaction may be governed by a DTAA is then recognized by section 5(2) read with section 90 of the Income Tax Act, making it clear that the Central Government may enter into any such agreement with the government of another country so as to grant relief in respect of income tax chargeable under the Income Tax Act or under any corresponding law in force in that foreign country, or for the avoidance of double taxation