JOINT ACCREDITATION SYSTEM OF AUSTRALIA AND NEW ZEALAND Vs. DIRECTOR OF INCOME TAX
AUTHORITY FOR ADVANCE RULINGS
Joint Accreditation System of Australia and New Zealand
Director of Income Tax (International Taxation -I)
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P.V. Reddi, J. (Chairman) -
(1.) IN the application for advance ruling filed under Section 245Q of the Income -tax Act, 1961 (for short 'the Act'), the following facts are stated:
1.1. The applicant, Joint Accreditation System of Australia and New Zealand is a not for profit, self funding organization established under the Treaty between Government of Australia and New Zealand on 30.10.1991. It has been accorded the status of an international organization by virtue of the law made by both the nations. The applicant is a tax resident of Australia and to confirm this, a certificate issued by the Australian Revenue Authority has been enclosed.
1.2. The applicant provides accreditation to CABs (Conformity Assessment Bodies) in several countries including India. The applicant accredits organizations which provide third party certification and/or inspection services. The main function of the applicant is to accredit, following the successful assessment, those bodies considered competent and impartial to provide an effective service in various spheres. The applicant offers accreditation mainly for the following programmes:
Management Systems Certification - AS/NZS ISO 9001, AS/NZS ISO 14001;
Production certificate - codemark, watermark;
Greenhouse Gas validation and verification
1.3. The applicant has furnished a summary of the complete accreditation process as follows:
Formal applications are received and Application Receipt and Processing processed | | | A review of the applicant's Systems Assessment documentation is undertaken against | the appropriate criteria | | Compliance Assessment Stages 1 & 2 An assessment to ensure that the | documented procedures are being | adhered to. Stage 1 - the | assessment of the applicant's offices; | and Stage 2 - the witnessing of an | applicant undertaking activities for | which they are seeking accreditation Approval of accreditation The audit report is reviewed by the | Accreditation Review Panel for | decision on whether accreditation is to | be granted Surveillance Assessments When accredited, the body will be | subjected to surveillance audits to | ensure ongoing compliance with the | appropriate accreditation criteria Re -assessment The body is subjected to re - | assessments where their quality | system is comprehensively re - | assessed. The periodicity is generally | four years however this may vary from | program to program.
1.4. The factors affecting recommendations for accreditation are stated to be:
The adequacy of the CAB's management to run its systems and reach proper conclusions as to awarding certification;
The range of knowledge and experience on the part of the CAB, relevant to the proposed scope of accreditation;
The number and seriousness of the individual non - conformities found during the assessment stage;
The effectiveness of the system in meeting the requirements of the accreditation criteria; and
Reliance that can be placed on the internal assessment function with the CAB.
1.5. If the accreditation is approved, a certificate of accreditation is issued to the CAB; otherwise the reasons for rejection are communicated. The Accreditation vouchsafes the independence of a CAB in performing the certification and such accreditation further assists the CAB in the fields of certification and inspection. Once accreditation is granted to CAB, the applicant issues a certificate which is valid for four years and on expiry of four years, the reassessment takes place. Post accreditation, regular surveillance visits are carried out by the applicant's auditors to ensure that CAB maintains and operates its procedures in accordance with the requirements of the accreditation criteria.
1.6. The accredited CABs provide certification and inspection services to the concerned organizations. Common schemes that CABs certify are - quality management systems and environmental management systems.
1.7. In consideration of the accreditation work done by the applicant, it receives fee from CAB in the form of application fee, programme fee, certificate fees and fee for conducting surveillance audit, witnessing audit and re -assessment visits. Sample invoices raised by the applicant for various activities as stated above have been enclosed to the application.
1.8. If an Indian CAB wishes to get accreditation from the applicant it has to undergo the entire procedure as outlined above and the revenues would flow from such Indian CAB to the applicant.
(2.) HAVING regard to the above facts presented by the applicant, the following questions are formulated in order seek advance ruling:
1. Whether the consideration received/receivable by Joint Accreditation System of Australia and New Zealand (applicant) from the Conformity Assessment Bodies (CAB's) can be classified as 'fees for technical services' as defined under Section 9(1)(vii) of the Income -tax Act, 1961 ('Act')?
2. If the answer to the above question is in the negative, whether Article 12 of the Double Taxation Avoidance Agreement between India and Australia ('India -Australia Tax Treaty') can impose a liability for taxation on the applicant?
If the answer to the first question is in affirmative, whether the services rendered by the applicant fall within the ambit of 'royalties' as defined under Article 12 of the India -Australia Tax Treaty?
(3.) IF the answers to the first and third questions are in affirmative, whether the income of the applicant from Royalty or fees for technical service should be taxed in India according to the provisions of Section 115A(1)(b)(AA) or (BB) (relatable to agreements made on or after 1st day of June of 2005) of the Act, in view of the provisions of Article 12(2) of the India -Australia Tax Treaty?;
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