ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 IN INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [Before Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM] I.T.A Nos. 558/Kol/2014 Assessment Year: 2010-11 & I.T.A Nos. 462/Kol/2015 Assessment Year: 2011-12 Outotec Oyj (PAN: AABCO2957Q) Vs. Deputy Director of Income-tax,(I.T)-2(1) Kolkata. (Appellant) (Respondent) Date of hearing: 22.09.2016 Date of pronouncement: 14.10.2016 For Appellant: Shri K.M. Gupta, Advocate & Shri S. Roy Choudhury, FCA For Respondent: Shri G. Mallikarjuna, CIT, DR ORDER Per Shri M. Balaganesh, AM: Both these appeals by assessee are arising out of separate orders of Dispute Resolution Panel, Kolkata dated 23.12.2013 and 30.12.2014 u/s. 144C(5) r.w.s. 144C(8) of Income-tax Act, 1961 (hereinafter referred to as Act . Since issues are identical and facts are common, we dispose of both these appeals by this consolidated order. 2. first issue to be decided in these appeals is as to whether services rendered by non-resident assessee company to Indian company would fall within ambit of Fee for Technical Services (FTS) in facts and circumstances of case. facts of Asst Year 2010-11 are stated herein and decision rendered thereon would apply with equal force for Asst Year 2011-12 also as issue involved therein is identical except with variance in figures. 3. brief facts of this issue is that assessee company is tax resident of Finland and is engaged inter alia in business of providing innovative and environmentally sound solutions for wide variety of customers in metals and mineral processing industries. assessee filed NIL return for Asst Year 2010-11 on 28.3.2012. During year under 2 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 consideration, assessee earned revenue from management support and other services. These services are provided to its group company Outotec India Pvt Ltd and revenue earned was Rs. 82,22,381/-. ld AO proposed to bring this amount to tax as Fee for Technical Services (FTS) . assessee contended before ld AO that services provided by it are managerial services and these services fall outside definition of FTS under India Finland DTAA. assessee also contended that no services have been made available so as to tax amount as FTS. 4. ld AO did not accept contentions of assessee and held that these services constituted FTS and passed draft assessment order, against which assessee preferred objections before Hon ble Dispute Resolution Panel (DRP). ld DRP observed that taxability of services rendered by assessee to its group company requires to be examined in order to ascertain true nature of services going by essence and substance of service to determine character of income. It went to examine service agreement entered by assessee with Indian group company and found that following services were required to be rendered by assessee as per agreement :- (i) Internal communication services (ii) External communication services (iii) Marketing communication services (iv) Finance and Treasury services (v) Tax services (vi) Accounting services (vii) Human resource services (viii) Legal services (ix) Business development services (x) Business intelligence services (xi) Marketing development services (xii) IT Infrastructure services (xiii) IT Infrastructure special services (xiv) IT Application services (xv) Research and technology services (xvi) After sales services 4.1. ld DRP observed that invoices furnished indicated that services have been provided by assessee to its group company for IT Services, setting up of IT Infra and also other services which have been simply described as service fee . ld DRP 3 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 observed that absence of specific nature of service fee in invoices can lead to assumption that all nature of services have been rendered by assessee. wide gamut of services includes creating correspondence letters, training group companies editors to use publishing tools so that group companies can create own content on global intranet, writing articles of projects and technologies of group companies for web site and trade press, preparing company presentations for group companies to be used for marketing purposes, consultancy of group companies in their financial risk, negotiating and / or monitoring group companies local external loan agreements and terms, consultation in home and host country tax matters, in local corporate tax, project tax and value added tax matters, assistance in local tax audit processes, training in tax matters, human resource services, advises in HR, legal services, making available developing and maintaining agency and marketing company network for group companies, making market area reports for group companies quarterly etc. It observed that above nature of services clearly indicate that :- (a) These services fall under category of consultancy services. (b) services with regard to IT Infra set up fall under category of technical services which was also admitted by assessee. (c) reports on marketing, HR services are definitely useful for Indian group company which definitely can use on its own later which satisfy make available clause. (d) training services amount to provision of manpower services and citus of manpower provision is not relevant. 4.2. Accordingly, it held that services rendered by assessee company to be FTS and accordingly upheld action of ld AO in taxing same in sums of Rs. 82,22,381/- and Rs. 1,66,45,061/- for Asst Years 2010-11 and 2011-12 respectively. 5. Aggrieved, assessee is in appeals before us on following grounds:- 1. On facts and in circumstances of case and in law, final assessment order passed in pursuance to directions issued by Learned Dispute Resolution Panel ('Ld DRP') is vitiated order as Ld. DRP has erred both on facts and in law in confirming addition made by Learned Deputy Director of Income-tax, (LT), 2(1), Kolkata ("Ld. AO") to appellant's income. 4 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 Taxability of income received from provision of services to Indian company 2(a) On facts and in circumstances of case and in law, Ld AO erred in holding and Ld DRP erred in confirming that revenue earned by appellant in respect of management support and other services are taxable as Fees for Technical Services ("FTS") under provisions of Article 13 of India-Finland Double Taxation Avoidance Agreement as applicable for subject year ("DTAA") 2 (b) On facts and in circumstances of case and in law, Ld. AO/ DRP failed to appreciate that services rendered by appellant are pre-dominantly 'managerial' in nature and that term "managerial" has specifically been excluded from purview of definition of FTS under Article 13 of DTAA 2(c) On facts and in circumstances of case and in law, Ld. AO/ DRP failed to appreciate that services rendered by appellant do not "make available" any technical knowledge, experience, skill, know-how or processes, based on incorrect understanding of nature of services provided by appellant. 2(d) On facts and in circumstances of case and in law, Ld AO/ DRP erred in holding that meaning of term "make available" under DTAA cannot be drawn from protocol to Double Taxation Avoidance Agreement entered into between India and United States of America. 2(e) On facts and in circumstances of case and in law Ld. AO/DRP erred in holding that various judgments relied on by appellant are distinguishable on facts and thus not applicable in case of appellant. Similar Grounds were raised by assessee for Asst Year 2011-12 which are not reproduced herein for sake of brevity. 6. ld AR argued that nature of services provided by assessee to Outotec India Pvt Ltd is primarily managerial in nature. word managerial has not been used in definition of FTS provided under Article 13(4) of DTAA (as applicable during FY 2010-11 and FY 2011-12) and hence such services do not fall under ambit of FTS. Wherever intention of all countries is to include managerial services, same has been expressly provided, such as India-Singapore DTAA, India France DTAA etc. In amended India Finland DTAA which has come into force w.e.f. 1.4.2011, word managerial has been included under definition of FTS, which itself proves that under old DTAA , such services were not included. Secondly, services rendered to Outotec India Pvt Ltd and other Indian parties for Asst Year 2010-11 do not make available technical know-how, skills to recipients. meaning of word make available has not been defined in India Finland DTAA and hence ld AR placed reliance on Protocol to India USA DTAA which has similar provision to determine meaning of make available . He argued that ld AO contended that 5 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 meaning of make available from India-US treaty cannot be drawn into India Finland treaty by relying on decision of Authority of Advance Rulings (AAR) in case of Perfettie Van Melle Holding B.V. reported in (2012- 342 ITR 0200 AAR) wherein it was held that Protocol to Indo-US treaty cannot be imported into India Netherland treaty to understand meaning of make available . ld AR argued that this decision has been overruled by Hon ble Delhi High Court in same case of Perfetti Van Melle Holding B.V. vs AAR reported in (2014) 52 taxmann.com 161 (Delhi) vide order dated 30.9.2014. Accordingly, by placing reliance on this Delhi High Court decision, ld AR argued that meaning of make available as mentioned in Protocol to India USA treaty could be used in India-Finland treaty. ld AR also argued that contention of ld AO that reliance cannot be placed on India-USA DTAA to understand meaning of make available is in contravention with third member decision of this tribunal in case of CESC Ltd vs DCIT reported in (2003) 87 ITD 653 (Kol ITAT) (TM ) . ld AR also placed reliance on following decisions in support of this argument :- (a) Intertek Testing Services India (P) Ltd reported in (2008) 175 Taxman 375 (AAR-New Delhi) in A.A.R. No. 751 of 2007 dated 7.11.2008 (b) Raymond Limited vs DCIT reported in (2003) 86 ITD 791 (Mumb ITAT) He argued that make available test as stated in Article 13 of India Finland DTAA is not satisfied in instant case. He also placed reliance on expression make available being explained by way of examples in Protocol to India USA DTAA which has similar provision in support of his contentions. He also placed reliance on decision of co-ordinate bench of this tribunal in case of Batlivala & Karani Securities (India) (P) Ltd vs DCIT reported in (2016) 71 taxmann.com 142 (Kolkata-Trib) dated 8.7.2016. 7. In response to this, ld DR argued that meaning of make available given by way of various examples in Protocol to Indo-US treaty should not be imported in India- Finland Treaty. In support of which, he placed reliance on decision of Authority of Advance Rulings in case of Perfettie Van Melle Holding B.V. reported in (2012- 342 ITR 0200 AAR). He argued that in instant case, services rendered by assessee squarely falls within ambit of FTS as per treaty and technology is also made available to Indian group company as has been held by ld DRP. He placed reliance 6 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 on decision of Chennai Tribunal in case of Foster Wheeler France S.A. vs DDIT reported in (2016) 67 taxmann.com 120 (Chennai Trib) dated 5.2.2016 and decision of Cochin Tribunal in case of US Technology Resources (P.) Ltd. v. Asstt. CIT reported in (2013) 39 taxmann.com 23 (Cochin Trib) in support of his arguments. 8. We have heard rival submissions and perused materials available on record. We find that essence of arguments of assessee before lower authorities and by ld AR before us are two fold:- (i) services under agreement are not technical or consultancy in nature and (ii) services are not made available by assessee arguments of ld DRP and ld DR before us could be briefly summarized as under:- (i) services rendered by assessee are technical in nature and make available technical knowledge, skill, process etc since services are capable of being replicated by Outotec India Pvt Ltd through its own personnel (ii) meaning of term make available cannot be drawn from India US protocol as treaty with one country cannot be interpreted in light of treaty with another country. 8.1. We find that services rendered by assessee squarely falls within definition of Fee for Technical Services as per provisions of Act, on which point there is no dispute by both sides. only dispute is whether same would fall under FTS as per DTAA or not. Although various arguments were advanced by both sides with regard to inclusion of term managerial in India Finland DTAA , to decide whether services rendered would fall within ambit of fee for technical services , we deem it fit and appropriate to ignore same and decide issue before us by deciding on basis of make available clause of any technical knowledge, skill etc by applying DTAA. We find that ld DRP is harping on point that expertise of assessee which was used in fields of marketing services which is in its own domain of metal industry will definitely be technical and consultancy service. This observation is made because according to ld DRP, when marketing information, web content, customized software specific to group concerns available through WAN consideration for these payments 7 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 will definitely be fees for technical services and information made available to Indian group concern is clearly capable of replicating services through its own personnel. Accordingly, ld DRP concluded that make available clause is satisfied in instant case. 8.2. At this juncture, it would be pertinent to get into definition of FTS as per India Finland Treaty which is reproduced hereunder:- Article 13 Royalties and Fees for Technical Services 4. For purposes of paragraph 2 of this Article, and subject to paragraph 5, term fees for technical services means payments of any kind of any person in consideration for rendering of any technical or consultancy services (including provision of services of technical or other personnel) which; (a) are ancillary and subsidiary to application or enjoyment of right, property or information for which payment described in sub-paragraph (a) of paragraph 3 of this Article is received; or (b) are ancillary and subsidiary to enjoyment of property for which payment described in sub-paragraph (b) of paragraph 3 of this Article is received; or (c) make available technical knowledge, experience, skill, know-how or processes, or consist of development and transfer of technical plan or technical design. In our considered view, in order to be covered by provisions of Article 13(4) of India Finland DTAA, not only services should be of technical in nature but such as to result in making technology available to person receiving technical services. We also agree that merely because provision of service may require technical input by person providing service, it cannot be said that technical knowledge, skills, etc are made available to person purchasing service. As to what are connotations of making technology available to recipient of technical services , as is appropriately summed up in protocol to Indo -US DTAA , generally speaking, technology will be considered made available when person acquiring service is enabled to apply technology . Reliance in this regard has been rightly placed by ld AR on third member decision of co-ordinate bench of this tribunal in case of CESC Ltd vs DCIT reported in 87 ITD 653. It has been held by various judicial forums that principle of parallel treaty interpretation is permissible where language of two treaties is similarly worded and one 8 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 treaty clarifies meaning of terms (or language) used . Reliance is placed on following decisions in this regard:- (a) National Organic Chemicals Industries Ltd vs DCIT reported in (2006) 5 SOT 317 (Mumbai ITAT) (b) DDIT vs Preroy A.G. reported in (2010) 39 SOT 187 (Mum ITAT) (c) Intertek Testing Services India (P) ltd In re reported in (2008) 307 ITR 418 (AAR New Delhi) dated 7.11.2008 (d) ITO vs Nokia India (P) Ltd reported in (2015) 59 taxmann.com 120 (Delhi Trib) dated 8.7.2015 (e) Steria (India) ltd vs CIT reported in (2016) 386 ITR 390 (Del HC) 8.3. We find that co-ordinate bench decision of this tribunal in case of Batlivala & Karani Securities (India) (P) Ltd vs DCIT reported in (2016) 71 taxmann.com 142 (Kolkata-Trib) dated 8.7.2016 had held as under:- 12.1. We find that moot question to be decided in this appeal is as to whether payments made by assessee to its foreign subsidiaries would fall under ambit of fees for technical services as per DTAA. We find from Article 12 of Singapore Treaty and Article 13 of UK Treaty defining term fees for technical services , consideration paid for rendering of managerial, technical or consultancy services would be covered under said definition only if such services make available any technical knowledge, experience, knowhow, or processes. nature of services rendered by subsidiaries to assessee were in respect of simple marketing services of introducing foreign institutional investors to invest in capital markets in India so that assessee would improve its business and income in India. We find that no technical service is being made available to assessee by its subsidiaries and as result, payments made to subsidiaries would not fall within definition of fees for technical services as admittedly no technical knowledge was made available to assessee by subsidiaries. 12.2. Article 12(4) and 13(4) of Singapore and UK treaty respectively reproduced hereinabove is same as Article 12(4)(b) of DTAA between India and USA. In Memorandum of understanding to DTAA between India and USA, description concerning fees for included services in Article 12 and paragraph 4 (in general) have been given. Examples of services intended to be covered within definition of included services and those intended to be excluded have been given. Memorandum explains how Paragraph 4(b) of Article-12 has to be understood. Memorandum explains that Article 12(4)(b) refers to technical or consultancy services that make available to person acquiring services, technical knowledge, experience, skill, know-how, or processes, or consist of development and transfer of technical plant or technical design to such person. 9 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 Memorandum explains category of services referred to Article 12(4)(b) as narrower than category described in paragraph 4(a) because it excludes any service that does not make technology available to person acquiring service. It further explains that generally speaking, technology will be considered made available when person acquiring service is enabled to apply technology. fact that provision of service may require technical input by person providing service does not per se mean that technical knowledge, skills, etc., are made available to person purchasing service, within meaning of paragraph 4(b). Similarly, use of product which embodies technology shall not per se be considered to make technology available. Memorandum further explains with examples as to how Article 12(4)(b) has to be understood as follows: Typical categories of services that generally involve either development and transfer of technical plants or technical designs, or making technology available as described in paragraph 4(b), include : 1. Engineering services (including sub-categories of bio-engineering and aeronautical, agricultural, ceramics, chemical, civil, electrical, mechanical, metallurgical, and industrial engineering) ; 2. Architectural services ; and 3. Computer software development. Under paragraph 4(b), technical and consultancy services could make technology available in variety of settings, activities and industries. Such services may, for examples, relate to any of following areas : 1. Bio-technical services ; 2. Food processing ; 3. Environmental and ecological services ; 4. Communication through satellite or otherwise ; 5. Energy conservation ; 6. Exploration or exploitation of mineral oil or natural gas ; 7. Geological surveys ; 8. Scientific services ; and 9. Technical training. following examples indicate scope of conditions in paragraph 4(b) : 10 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 Example 3 Facts : U.S. manufacturer has experience in use of process for manufacturing wallboard for interior walls of houses which is more durable than standard products of its type. Indian builder wishes to produce this product for its own use. It rents plant and contracts with U.S. company to send experts to India to show engineers in Indian company how to produce extra-strong wallboard. U.S. contractors work with technicians in Indian firm for few months. Are payments to U.S. firm considered to be payments for included services ? Analysis : payments would be fees for included services. services are of technical or consultancy nature; in example, they have elements of both types of services. services make available to Indian company technical knowledge, skill and processes. Example 4 Facts : U.S. manufacturer operates wallboard fabrication plant outside India. Indian builder hires U.S. company to produce wallboard at that plant for fee. Indian company provides raw materials, and U.S. manufacturer fabricates wallboard in its plant, using advanced technology. Are fees in this example payments for included services ? Analysis : fees would not be for included services. Although U.S. company is clearly performing technical service, no technical knowledge, skill, etc., are made available to Indian company, nor is there any development and transfer of technical plant or design. U.S. company is merely performing contract manufacturing service. Example 5 Facts : Indian firm owns inventory control software for use in its chain of retail outlets throughout India. It expands its sales operation by employing team of travelling salesmen to travel around countryside selling companys wares. company wants to modify its software to permit salesmen to assess companys central computers for information on what products are available in inventory and when they can be delivered. Indian firm hires U.S. computer programming firm to 11 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 modify its software for this purpose. Are fees which Indian firm pays treated as fees for included services ? Analysis : fees are for included services. U.S. company clearly performs technical service for Indian company, and it transfers to Indian company technical plan (i.e., computer programme) which it has developed. Example 6 Facts : Indian vegetable oil manufacturing company wants to produce cholesterol-free oil from plant which produces oil normally containing cholesterol. American company has developed process for refining cholesterol out of oil. Indian company contracts with U.S. company to modify formulas which it uses so as to eliminate cholesterol, and to train employees of Indian company in applying new formulas. Are fees paid by Indian company for included services ? Analysis : fees are for included services. services are technical, and technical knowledge is made available to Indian company. Example 7 Facts : Indian vegetable oil manufacturing firm has mastered science of producing cholesterol-free oil and wishes to market product world wide. It hires American marketing consulting firm to do computer simulation of world market for such oil and to adverse it on marketing strategies. Are fees paid to U.S. company for included services ? Analysis : fees would not be for included services. American company is providing consultancy service which involves use of substantial technical skill and expertise. It is not, however, making available to Indian company any technical experience, knowledge or skill, etc., nor is it transferring technical plan or design. What is transferred to Indian company through service contract is commercial information. fact that technical skills were required by performer of service in order to perform commercial information service does not make service technical service within meaning of paragraph 4(b). Paragraph 5 12 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 Paragraph 5 of Article 12 describes several categories of services which are not intended to be treated as included services even if they satisfy tests of paragraph 4. Set forth below are examples of cases where fees would be included under paragraph 4, but are excluded because of conditions of paragraph 5. 12.2.1. Memorandum of understanding is tool to understand as to what meaning was intended to be conveyed in DTAA between countries. Since wording of Article 12(4) and 13(4) of treaty with Singapore and UK respectively and Article 12(4)(b) of DTAA between India and US are identical, MOU to Indo-US treaty can be looked into to see what meaning India and Singapore / UK (as case may be) would have contemplated in treaty. law is settled that DTAA with one country can be compared with DTAA with another country in case of ambiguity and in order to understand true scope and meaning of concerned DTAA. Hon ble Karnataka High Court in case of A.E.G. Telefunken v. CIT [1998] 231 ITR 129 compared DTAA with German Democratic Republic with DTAA with Finland towards this end. 12.2.2. Mumbai Bench of Tribunal in case of Raymond Ltd. Vs. DCIT 86 ITD 791 (Mum) had to deal with case of payment of commission by Indian company to non resident in connection with Public Issue of Global Depository Receipts (GDR) for services rendered outside India. question before Tribunal was whether commission so paid can be said to be Fees for included services i.e., Fees for Technical Services under Article 13(4)(c) of Indo-UK DTAA which is same as that of Article 12(4)(b) of treaty between India and Singapore. After considering Article 12(4)(b) of Indo-US DTAA (which are similar to Article 12(4) and 13(4) of treaty between India and Singapore / UK (as case may be)), and after referring to Memorandum of understanding to Indo-US DTAA, Tribunal held as follows: Whereas section 9(1)(vii) of Act stops with rendering of technical services, DTAA goes further and qualifies such rendering of services with words to effect that services should also make available technical knowledge, experience, skills etc. to person utilizing services. These words are which make available . normal, plain and grammatical meaning of language employed, in our understanding, is that mere rendering of services is not roped in unless person utilizing services is able to make use of technical knowledge etc. by himself in his business or for his own benefit and without recourse to performer of services in future. technical knowledge, experience, skill etc. must remain with person utilizing services even after rendering of services has come to end. transmission of technical knowledge, experience, skills etc. from person rendering services to person utilizing same is contemplated by article. Some sort of durability or permanency of result of rendering of services is envisaged which will remain at disposal of person utilizing services. fruits of services should remain available to person utilizing services in some concrete shape such as technical knowledge, experience, skills etc. 13 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 12.3. Applying definition of FTS in Treaty to facts of present case in light of various decisions referred to above, it cannot be said that rendering of services by Singapore and UK Subsidiaries to assessee made available to assessee , such services , for its future use or utilization on reasonably permanent basis. Hence consideration paid thereon by assessee would not fall under ambit of fees for technical services as per treaty. 8.4. Similar views were expressed by Hon ble Karnataka High Court in case of CIT & Ors vs De Beers India Minerals (P) Ltd reported in (2012) 346 ITR 467 (Kar) wherein it was held that :- if assessee is able to carry on his business in future without technical service of service provider in respect of services rendered then, it would be said that technical knowledge is made available Furgo has not made available technical knowledge with which they rendered technical service Though Furgo rendered technical services as defined under section 9(1)(vii) Explanation 2, it does not satisfy requirement of technical services as contained in DTAA Liability of tax is not attracted case on hand does not fall in second part of Fee for technical services clause in DTAA dealing with development and transfer of plans and designs Both substantial questions of law answered in favour of assessee and against revenue Appeal dismissed. 8.5. We find in instant case , from nature of services rendered by assessee to Indian group company, there is no technology or technical knowhow, skills etc that were made available by assessee in order to enable Indian group company to function on its own without dependence of assessee. It is not in dispute that agreement entered between Outotec Oyj and Outotec India Pvt Ltd is for indefinite period and such services are provided on recurring basis by assessee to Outotec India Pvt Ltd. We find lot of force in argument of ld AR that had technical knowhow, skills etc being made available by assessee to Outotec India Pvt Ltd, then there would be no need for Outotec India Pvt Ltd to recourse to recipient for these services. We also hold that other services such as IT Infrastructure, IT administration (collectively referred to IT Support Services ) also do not satisfy make available test as no technology , knowhow, skills etc were transferred to recipient. We also hold that repair and supervision services provided to few other Indian parties do not satisfy make available test as these are routine repairs and supervisory services and there is no transfer of technology or skill or experience at time of provision of such services by assessee. 14 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 8.6. We find that reliance placed by ld DR on decision of Chennai Tribunal in case of Foster Wheeler France S.A. vs DDIT reported in (2016) 67 taxmann.com 120 (Chennai Trib) dated 5.2.2016 is factually distinguishable from facts of instant case. In facts of case before Chennai Tribunal, foreign company reviewed execution plans, emphasized on key milestones, provided best practices available in form of written procedures and specifications and details. When procedures and specifications are provided to assessee, which is also specialized company in engineering and execution of construction, it is case of providing specifications and details, execution of engineering and construction contract. These specifications and procedures made available to assessee by foreign company can very well be used by assessee-company for execution of other projects also. Moreover, when specifications and other procedures are made available to assessee-company and foreign company is reviewing and tracking execution plans periodically, not only execution but also project budget and client satisfaction, it was held by Tribunal that Foster Wheeler USA has made available its technical knowledge, expertise, knowhow in execution of contract by assessee in India. company was receiving technical services like specifications, procedures, project management, etc. and it was utilizing same in project undertaken with Reliance Petroleum Limited. specifications, technical knowledge, advice received from Foster Wheeler France S.A was vey much available with assessee- company and it can be used in execution of engineering and contract with other clients. In instant case before us, as already stated , what was rendered was only managerial services without any transfer of technology, knowhow, skills etc and it is recurring service year after year. Hence case relied upon by ld DR is not applicable to facts of instant case. 8.7. Similarly decision of Cochin Tribunal in case of US Technology Resources (P.) Ltd. v. Asstt. CIT reported in (2013) 39 taxmann.com 23 (Cochin Trib) relied upon by ld DR is factually distinguishable in as much as in that case, information, expertise and training provided by US Technology Resources had been absorbed by taxpayer in its decision making process and utilized for purpose of business and therefore it was held that expertise and technology was made available by US entity and accordingly held as 15 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 FTS within meaning of Article 12(4)(b) of tax treaty. In instant case before us, services rendered are only managerial in nature and there is no transfer of any technology, knowhow, skills , processes etc so as to fall under ambit of make available clause as per treaty. As stated above, services rendered are recurring in nature and does not enable Indian group company to function on its own based on technology, knowhow, skills etc, if any, transferred previously. Hence this case relied upon by ld DR is not applicable to facts of instant case. 8.8. In view of aforesaid facts and findings and respectfully following judicial precedents relied upon hereinabove, we hold that amounts received by assessee from Outotec India Pvt Ltd does not qualify as FTS as per DTAA. Accordingly, grounds raised by assessee in this regard are allowed for both Asst Years. 9. next ground to be decided in these appeals is with regard to chargeability of interest u/s 234A and 234 B of Act which is only consequential in nature and does not require any adjudication. 10. next ground to be decided in these appeals is with regard to initiation of penalty proceedings u/s 271(1)(c ) of Act which is only consequential in nature and does not require any adjudication. 11. last ground raised in both appeals are general in nature and does not require any adjudication. 12. In result, both appeals of assessee are allowed. Order pronounced in open court on 14.10.2016 Sd/- Sd/- (N.V. Vasudevan) (M. Balaganesh) Judicial Member Accountant Member Dated : 14th October, 2016 Jd.(Sr.P.S.) 16 ITA No.558/Kol/2014 & 462/Kol/2015 Outotec Oyj, AY 2010-11 & 2011-12 Copy of order forwarded to: 1. APPELLANT Outotec OYj, C/o Outotec India Pvt. Ltd. 12th Floor, South City Pinnacle, Plot No.-XI, Block EP, Sector-V, Salt Lake, Kol-91. 2 Respondent DDIT (IT)-2(1), Kolkata. 3. CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar. Outotec Oyj v. Deputy Director of Income-tax,(I.T)-2(1), Kolkata