Income Tax Appellate Tribunal Delhi M/S. Nokia Siemens Networks Pvt. Ltd., ... vs Acit, New Delhi on 1 October, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No. 332/DEL/2013 ( A.Y 200809) Nokia Siemens Networks Pvt. Ltd. Vs ACIT 7th Floor, Building No. 9A Circle13(1), Room No. 406, DLF Cyber City, Sector25A C. R. Building, I. P. Estate Gurgaon AACCN3871F New Delhi (APPELLANT) (RESPONDENT) Appellant by Mrs. Rashmi Chopra, Adv, Sh. Amit Srivastava, Adv, Sh. Ankul Goyal, Adv Respondent by Sh. Sanjay I. Bara, CIT DR Date of Hearing 03.07.2018 Date of Pronouncement 01.10.2018 ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the Assessment Order dated 30/11/2012 passed by the Assessing Officer u/s 144C read with Section 143(3) of the Income Tax Act, 1961. 2. The grounds of appeal are as under: 1. "That on the facts and circumstances of the case and in law, the impugned order of assessment framed by the learned Assistant Commissioner of Incometax, Circle 13(1), New Delhi (hereinafter referred to as 'the learned AO') pursuant to the directions of the Hon'ble Dispute Resolution Panel II (hereinafter referred to as 'the Hon'ble DRP') under section 143(3) read with section 144C of the Incometax Act, 1961 ('Act'), is a vitiated order having been passed in violation of principles of natural justice and is otherwise arbitrary and is thus bad in law and void abinitio. 2. That on the facts and circumstances of the case and in law, the Hon'ble DRP/ learned AO has erred in reducing the rate of tax depreciation allowable on certain items, characterized as 'computers' by the Appellant (viz. UPS, LAN/ WAN equipment, catalyst switches, network equipments, etc.) from 60 percent to 15 percent, by treating the same as Plant and Machinery and thus, disallowing depreciation amounting to Rs 19,33,295 to the Appellant. 2.1. That on facts and circumstances of the case and in law, the Hon'ble DRP/ learned AO has failed to appreciate that UPS, LAN/ WAN equipment, catalyst switches, network equipment, etc. are "integral part of the computer system" and have been held to be in the nature of 'Computers' by the Hon'ble Jurisdictional Delhi High Court in the case of BSES Rajdhani Powers Ltd. (ITA No. 1266/ 2010), Orient Ceramics and Inds Ltd. (ITA No. 65 and 66 of 2011) and Citicorp Maruti Finance Ltd. (ITA No. 1712 and 1714 of 2010) and by the Hon'ble Special Bench of Mumbai Tribunal in the case of Datacraft India Limited (ITA No.7462 and 754/Mum/2007). 3. That on the facts and circumstances of the case and in law, the Hon'ble DRP/learned AO has erred in making a disallowance of Rs. 33,27,776 under section 40(a)(i) of the Act by alleging that the said payments made by the Appellant tantamount to income chargeable to tax in the hands of the recipient under the provisions of the applicable Double Taxation Avoidance Agreement ('DTAA') and/ or the Act and the Appellant has failed to withhold taxes under the provisions of section 195 of the Act in respect of the said expenses incurred by it in foreign currency. 3.1. That on the facts and circumstances of the case and in law, the Hon'ble DRP has erred in upholding the disallowance, on the basis that the Appellant was required to approach the tax officer for a NIL withholding order without appreciating the provisions of section 195 of the Act read with the order of the Hon'ble Supreme Court in the case of GE India Technology Centre Private Limited (Civil Appeals Nos 75417542 of 2010) which clearly provides that the Appellant was required to approach the tax officer only where the payments were chargeable to tax in India. 3.2. Without prejudice, on the facts and circumstances of the case and in law, the Hon'ble DRP/ learned AO has erred in making a disallowance amounting to Rs 10,71,227 under section 40(a)(i) of the Act, by holding that payments to: a) Hemisphere Consulting Pte. Ltd, Singapore (Rs 34,473) b) Fitch Design Pte Limited, Singapore (Rs 2,78,199) c) Barlworld Optimus UK (Rs 7,58,555) qualify as Fee for Technical Services ('FTS') under the provisions of Article 12 of India Singapore DTAA and Article 13 of India UK DTAA, respectively, without appreciating that the underlying services do not qual