Direct Tax

Whether JV can constitute Supervisory PE /Fixed place PE in India?

M/s FCC Co. Ltd. Vs ACIT I.T.A. No 8960, 54/Del/2019

Facts

The taxpayer is a foreign company, resident of Japan. It was engaged in the business of manufacturing various parts used for motor vehicles. During the year under consideration, the taxpayer received Royalty income under the License Agreement and Fees for technical services for Dispatch of Engineers from its Joint Venture (JV) with an Indian company. It was taxed at 10% on a gross basis under India- Japan DTAA. The taxpayer also received income from the supply of raw materials, components and capital goods under the Master Sales Agreement (MSA). These receipts were not offered the tax as taxpayers treated them to be in the nature of business profit not taxable in India in the absence of a Permanent Establishment (PE) under the India-Japan DTAA provisions.

However, the Assessing Officer (AO) concluded that the JV served as a ‘branch’ and office of the taxpayer, thereby constituting Fixed Place PE. Furthermore, the AO was of the view that since taxpayer’s employees helped the JV set up a new product line in India, a supervisory PE was also constituted.

The Commissioner of Income-tax (Appeals) [CIT(A)] confirmed the order of the AO. Aggrieved by the order, the taxpayer filed an appeal before the Delhi Tribunal.

Held

The Tribunal noted that in order to constitute a Fixed Place PE under India- Japan DTAA, it was a pre-requisite that the premise must be at the disposal of the enterprise. Relying on the Supreme Court decision in the case of the Formula One World Championship, the Tribunal stated that merely giving access to the premise of the enterprise for the purposes of the project would not suffice. Furthermore, since the goods were manufactured outside India, the sale of goods took place outside India and consideration was also received by the taxpayer outside India, the title passed outside India and hence, the taxpayer did not carry out any operation in India in relation to supply of the raw material and capital goods. Hence, the Tribunal held that a Fixed Place PE was not constituted.

With respect to the constitution of Supervisory PE, Tribunal held that none of the activities performed by the employees of the taxpayer were in the nature of supervisory functions. Since supervision is the act of overseeing or watching over someone or something, which was not reflected in work done by the engineers in India for JV and was not in connection with a building site or construction installation or assembly project, the taxpayer did not constitute Supervisory PE in India.

Our Comments

The Delhi Tribunal has restated the principle that merely giving access to the premise to the enterprise for the purpose of the project would not suffice to constitute Fixed Place PE. Furthermore, the Tribunal has reaffirmed that for the constitution of supervisory PE, the activities/services must be in connection with a building site or construction installation, or assembly project.

Whether the re-imbursement of warranty expenditure can be construed as Fees for Technical Services (FTS)?

M/s. Tractors and Farm Equipment Ltd. Vs DCIT. ITA No.1069/Chny/2019

Facts

The taxpayer was primarily engaged as a manufacturer of agricultural tractors. It has sold tractors overseas through non-resident distributors.

As part of the sales obligations, the tractors are subjected to a warranty, and accordingly, the distributors carry out the warranty and incur expenditure. This warranty expenditure was incurred by the overseas distributors and the same were later on reimbursed by the taxpayer.

After examining the various stages of the warranty process, the AO concluded that the amount for the warranty was collected at the time of original sale itself, whereas the cost of services was reimbursed to nonresident distributors at the time of provision of actual services. The CIT(A) confirmed with the AO’s view that in order to comply with the contract of warranty between the taxpayer and the end customers outside India, the taxpayer had engaged the services of its distributors, which was in nature of technical service.

Aggrieved by the order, the taxpayer filed an appeal before the Chennai Tribunal.

Held

After considering data on record, the Tribunal confirmed with the view of the taxpayer that the warranty obligation was part and parcel of sales transactions and, therefore, the same could not be held to be FTS. Furthermore, the Tribunal also emphasized that services have been carried as well as utilized outside India, and therefore, there is no TDS obligation on the part of the taxpayer in view of the fact that the non-resident distributors do not have any permanent establishment in India.

Our Comments

The Chennai tribunal has clarified that when an income is said to arise from a source outside India, expenses incurred outside India for the purpose of earning such income would not require TDS under Section 195 since the income of the recipient would be excluded from the deeming provisions of Section 9(1) of the Act.

Transfer Pricing

Requirement of audited segmental results for determination of ALP of international transactions – not a pre-requisite

Teleperformance Global Services Private Limited [ITA No.6948/ Mum/2016] – AY 2012-13

Facts of the case

The taxpayer is engaged in providing Business Process Outsourcing (BPO) services in India.

a) Unaudited segmental accounts

During the year under consideration, the taxpayer has provided BPO services to its AE. The taxpayer had benchmarked the said services basis unaudited segmental results prepared for the BPO segment using TNMM as the most appropriate method and considering operating profit / operating cost as the profit level indicator.

During the assessment proceedings, the Transfer Pricing Officer (TPO) did not contest the method selected, the comparable companies, and the profit level indicator considered by the taxpayer. Furthermore, the TPO accepted the segmental results for two AEs along with allocation keys and disregarded the segmental accounts prepared by the taxpayer for one of the AE (viz. the BPO segment) on account of the same being un-audited and considered entity level margin in order to establish the ALP of the underlying international transaction and proposed an upward TP adjustment.

Being aggrieved by the addition, the taxpayer filed its objections against the TPO’s order before the Dispute Resolution Panel (DRP). During the proceedings before the DRP, the taxpayer furnished the audited segmented profit and loss statement. However, the DRP disregarded the same on the ground that the allocation keys adopted for taxpayer’s allocation of indirect expenses lacked a scientific basis and were done arbitrarily.

b) Corporate and performance guarantee

Another ground for contention was wherein the taxpayer had acquired a company through its wholly-owned subsidiary, for which the taxpayer extended a corporate guarantee to the bank in order to make available necessary funds to its wholly-owned subsidiary. The taxpayer charged no guarantee fee for the provision of corporate guarantee on the pretext that the same does not qualify as an international transaction.

Furthermore, AE (of the taxpayer) had entered into a contract with an independent customer for the provision of services. The said contract was sub-contracted to the taxpayer, for which the taxpayer had provided a performance guarantee. As per the taxpayer, the performance guarantee did not qualify as an international transaction and hence, the guarantee fee was not charged by the taxpayer (to its AE).

The TPO based on the directions of the DRP in prior years held both corporate guarantee and performance guarantee as an international transaction and computed TP adjustment considering 1.25% and 1.50% as the guarantee fee for corporate guarantee and performance guarantee, respectively. The DRP concurred with the contentions of the TPO basis the directions given by it in the prior years.

Held by the ITAT that

a) Unaudited segmental accounts

The Income Tax Appellate Tribunal (ITAT) observed that the TPO had accepted the segmental results for two AEs along with allocation keys and had raised concerns w.r.t the BPO segment on account of un-audited segmental results in spite of the allocation keys being the same for all three segments. The ITAT held that as per Accounting Standard – 17, the segmental results reflected in the audited annual accounts of the company need not be audited. Apart from that, there is no specific requirement to get the segmental accounts audited. The ITAT also observed that neither the statute requires the taxpayer to get its segments audited, nor did the TPO request the taxpayer to furnish the audited segmental data. ITAT also brought on to the record that nothing prevents the TPO from verifying and examining the unaudited segmental results matching the overall audited financial statements furnished before him. Accordingly, the ITAT accepted the segmental results prepared by the taxpayer and held the said international transaction at ALP.

b) Corporate and performance guarantee

The ITAT placed reliance on the order passed by it for the earlier years wherein the corporate guarantee fee was computed at 0.5%. With regards to the performance guarantee, the ITAT held that the guarantee extended by the taxpayer was for its own performance and that the taxpayer was not exposed to any risk on account of default. Furthermore, the ITAT contended that the TPO did not consider that the taxpayer would ultimately receive the entire compensation received from the customer. Hence, the matter was remanded back to the TPO for determining the ALP post factoring in the aforementioned facts.

Our Comments

Segmental accounts prepared ought to correspond with the audited annual accounts thereby disregarding the need for getting the segmental results statutorily audited is enunciated from the said ruling.

The statute does not require the taxpayer to furnish the audited segmental financial information. However, it is imperative that the allocation of expenses is undertaken basis of scientific allocation keys and the same is accurately documented.

Outstanding payable beyond the specified credit period is treated as a separate international transaction and cannot be aggregated to determine ALP

Peri (India) Private Limited [ITA No. 4608/Mum/2019] – AY 2012-13

Facts of the case

The taxpayer is engaged in the purchase of goods from AE as well as non-AE wherein different credit periods viz. 90 days from AE and 30 days from non-AE is allowed to the taxpayer, respectively. For the delays beyond due dates, the AE imputes an interest of 5.50% to the taxpayer, whereas no interest is charged by the non-AEs for the delay in payment. The taxpayer considered interest on outstanding payables as an international transaction and aggregated the same with the imports and adopted TNMM to determine the ALP. As the margins of the taxpayer were in line with the comparable companies, the taxpayer concluded interest payment to be at ALP.

The TPO observed that the terms of transactions with the AE were similar to that the non-AE and no satisfactory documents were produced to substantiate that less credit period was allowed by non-AE. Nevertheless, there were outstanding dues payable to non- AE as well on which no interest was charged in spite of there being a delay in the range of 92 days to 180 days.

For determining the ALP of interest paid on payable balances, the TPO considered internal CUP and concluded the ALP as ‘NIL.’ The aforesaid approach was upheld by the CIT(A) as well.

Held by the ITAT

The ITAT observed that interest transaction is a separate international transactions in terms of the provisions of the Income Tax Act, 1961 and rejected the aggregation approach adopted by the taxpayer to determine the ALP.

It further held that the difference in credit period is a distinguishing factor, but on the expiry of the credit period, the outstanding amount with AE and non-AE stands at par.

It further held that benchmarking of payment of interest on outstanding balances beyond the credit period to AE will not impact the margins earned by the taxpayer or while factoring in working capital adjustment.

In view of the aforesaid, the ITAT upheld the ALP of the interest payment as ‘NIL.’

Our Comments

Overdue balance receivable is often considered as an indirect financing arrangement between group companies and thus remains under the scanner of tax authorities. The tax authorities try to re-characterize these overdue balances as capital financing arrangements implicating the passing off of indirect benefits by one group entity to another.

Appropriate TP documentation in the form of group business model, prevailing industry practice, availability of third-party data, comparables data etc., would help defend a longer credit period and avoid the trouble of notional TP adjustment of interest on account of overdue balances, both for receivables and payables.

Indirect Tax

Union of India & Others vs. Bundl Technologies Private Limited & Others2

Whether the amount was voluntarily paid during the investigation by the company under Section 74(5) of the CGST Act?

Whether the amount was recovered from the company during the investigation under coercion and threat of arrest?

Whether the DGGI officers conducted in a high-handed and arbitrary manner during the course of the investigation?

Facts

  • The Directorate General of GST Intelligence (DGGI) officers initiated an investigation u/s 67(1) of the CGST Act against Bundl Technologies Pvt. Ltd. (the company), which operates an e-commerce platform under the brand name 'Swiggy.’
  • The investigation was initiated on the ground that one of the company's suppliers was a non-existent entity and hence, the company had wrongfully availed credit.
  • The company deposited a certain sum of amount in the Electronic Cash Ledger during the course of the investigation.
  • Thereafter, the company Directors appeared before the DGGI officers pursuant to the receipt of the summons. In order to secure their release, the company further paid a certain sum of amount under coercion.
  • While making both the payments, the company made it expressly clear that these payments should not be treated as an admission of liability and had reserved its right to claim a refund.
  • Despite a lapse of about 10 months since the initiation of an investigation, no show cause notice was issued to the company, and therefore, it sought a refund of the amount paid.
  • On failing to receive any response, a writ petition was filed before the High Court.

Ruling

  • Referring to the guidelines issued by the Gujarat High Court in the case of Bhumi Associate vs. Union of India to regulate the powers of officers carrying out search and seizure as well as to safeguard the interests of the assessee, the High Court observed that in the present case, there was no communication in writing from the company about either self ascertainment or admission of liability to infer that such a payment was made under Section 74(5) of the CGST Act.
  • It was expressly stated in DRC-03 and the letter submitted that the above payments were made as an extension of goodwill and bona fide and that the company reserved the right to seek a refund thereof.
  • Thus, it is evident that payments were not voluntary by admitting the liability under Section 74(5) of the CGST Act.
  • The other two issues of whether any threat of arrest was extended to the officers of the company and whether the DGGI officers conducted the investigation in a high handed and arbitrary manner, the High Court relied on the plethora of case laws where the Courts have observed that during the course of an investigation, the assessee should not be forced to pay any amount.
  • However, it was observed that these issues were questions of fact that could not be adjudicated in a summary proceeding under Article 226 of the Constitution, while granting liberty to the company to agitate this issue in appropriate proceedings.
  • Resultantly, the Court concluded that the amount had been collected in violation of Articles 265 and 300-A of the Constitution and accordingly, the Department was liable to refund the same to the company.
  • Accordingly, the Court upheld the order of the Single Judge Bench while dismissing the Revenue’s appeal.

Our Comments

The order should assist taxpayers facing similar investigations and inspections where they are made to pay taxes under coercion/threat before conclusion and/or final adjudication of the liability.

Whether Income tax Credit (ITC) is admissible in respect of cars used for training, press, marketing, and demo for a limited period of time and thereafter supplied to dealers as old and used vehicles?

In re: BMW India Pvt Ltd3

Note: In the case of Chowgule Industries Pvt. Ltd.4 and A M Motors5, the Maharashtra AAR and Kerala AAR, respectively, allowed ITC on motor vehicles used for demo purposes.

However, similar to the Haryana AAR, the Madhya Pradesh AAR in the matter of Khatwani Sales and Services LLP6 has disallowed ITC on demo vehicles purchased for the furtherance of business in view of barring provision of Section 17(5)(a).

Facts

  • The appellant, running a training center in Haryana, received BMW cars from its Chennai manufacturing plant on a stock transfer basis on payment of applicable IGST and Compensation Cess.
  • The cars so received were to be used inter alia for - (i) training of dealers and authorized service center operators, (ii) testing by media houses and senior journalists, (iii) undertaking various marketing and promotional activities, (iv) test drives and product experience (demo) by customers.
  • On completion of 12 months, the appellant would sell these cars to the authorized dealers as old and used vehicles, in terms of Notification No. 08/2018-CT (Rate) at a reduced rate of 18% without ITC.

Ruling

  • On perusing the provisions of Section 17(5) of the CGST Act, the legislative intent clearly indicates that when motor vehicles upto the seating capacity of 13 persons are used for other than the intended purpose, the ITC cannot be allowed.
  • The expression's intended purpose is limited to:
    • Further supply of such motor vehicles; or
    • Transportation of passengers; or
    • Imparting training on driving such motor vehicles.
  • None of the usages to which the BMW vehicles are put to fit into the uses mentioned in Section 17(5).
  • Suppose all motor vehicles, irrespective of the nature of supply, will be eligible for ITC across the industries. In that case, it will no longer be a restricted clause for car dealers but will be an open clause for all the trade and industry to avail ITC on all vehicles purchased by them. This has never been the intent of the Parliament.
  • As regards the appellant’s contention that ITC may be allowed as ‘inputs’ since these vehicles are sold after 12 months, AAAR observed that in the very first demonstration run, the demo car loses the character of a new motor vehicle and the subsequent sale as second-hand goods is treated differently under GST law. Hence, the demo car is not an ‘input.’
  • On the same rationale, ITC cannot be allowed towards such cars' repair/ insurance/maintenance services.

Our Comments

Although the advance ruling is binding only on the parties involved therein, it does have some persuasive value.

Considering the prevalent divergent views on the issue of admissibility of ITC vis-à-vis demo cars, it would be worthwhile for the Board to issue a clarification considering the nittygritty and nature of business of the automobile industry.

2. [2022 (3) TMI 265 – Karnataka High Court]
3. [TS-772-AAAR(HAR)-2021-GST]
4. [TS-1239-AAR-2019-NT]
5. [TS-542-AAR-2018-NT]
6. [TS-1222-AAR(MP)-2020-GST]

Merger & Acquisition Tax

Delhi ITAT: Brought forward losses set-off cannot be denied in case of change in shareholding of ultimate parent company

WSP Consultants India Pvt. Ltd [TS-151-ITAT-2022(DEL)]

A company WSP Consultants India Pvt. Ltd. (assessee), had brought forward losses of AY 2012-13, which were set off against profits in AY 2013-14 and 2014-15. The shareholder of the company was WSP GRP Cyprus Holding Ltd. (WSP Cyprus), and WSP Group Plc, UK was its ultimate holding company. However, there was a change in the shareholding of its ultimate holding company in AY 2013-14. The shares of the company were acquired by Genevar Inc., Canada, and later reorganized as WSP Global Inc.

From annual reports of the company, the AO invoked provisions of Section 79 of the Income Tax Act (Act) and did not allow the set-off of brought forward losses on the reasoning that WSP Global Inc holding shares as of 31 March 2013 (date when the losses were set-off) was not the beneficial shareholder of the assessee as on 31 March 2012 (date when the loss was earned).

The first appellate authority CIT(A) held that there was no change in the shareholding of the assessee company in the FY 2012-13, 2013-14, and 2014- 15. Furthermore, he also observed that a beneficial shareholder implies the registered shareholder of the company unless the shareholding is held in the capacity of nominee, agent, or trustee.

The second appellate authority (Delhi ITAT) referred to the case of Yum Restaurents1 of Delhi High Court and dismissed the Revenue’s appeal made by it against CIT(A) order by making the following observations:

  • Section 79 is invoked only when there is a change in the immediate shareholding company and not the ultimate holding company.
  • The registered shareholder shall be the beneficial shareholder of the company unless the shareholder is holding in the capacity of nominee or agent or trustee.
  • In a multilayer structure, the ultimate shareholder cannot be construed to be the shareholder of the company, which is held by the subsidiary of the intermediate holding company.
  • It also held on the basis of submissions given by the assessee that the shareholding of the assessee held by WSP Cyprus is 99.99% as of 31 March 2012, 31 March 2013 and 31 March 2014.
  • There is nothing on record that will provide an indication that the ultimate holding company was the beneficial shareholder holding more than 51% or more voting power.

Our Comments

While the Tribunal has relied on its jurisdictional High Court decision in the case of Yum Restaurants while deciding in favor of the assessee, it may be noted that there are contrary decisions of other Courts which have held that Section 79 shall not apply on change in immediate shareholding as long as the ultimate beneficial shareholding remains the same. Thus, this shareholding is expected to only add to the already prevalent conflicting position on the applicability of Section 79.

Mumbai ITAT: Valuation exercise is mechanical when share premium results lack basis

Raykan Beverages Pvt Ltd [TS-80- ITAT-2022(Mum)]

A private limited company Raykan Beverages Pvt Ltd (assessee), issued shares at a high premium to Mauritiusbased companies, to a resident director, and to another Indian resident.

During the course of the assessment proceedings, the AO noted that the company was into losses that only continued to increase in the succeeding years. The share premium was computed basis the valuation certificate of a Chartered Accountant firm which had given riders in the certificate that they are not expressing any opinion on the fairness or accuracy of the information and projections submitted by the company. The AO also noted that at a later point of time during the year, further shares were issued at an even higher premium. Based on these facts, the share premium was found to be excessive and held taxable under Section 56(2)(viib) and Section 68, resulting in a demand of tax and consequent interest. The present matter is in relation to the stay proceedings for the demand.

The ITAT, while rejecting the stay application of the assessee during the pendency of the proceeding, inter-alia made the following observations:

  • On the face of it, the computation of share premium is devoid of any basis in as much as once the person computing the net present value of the discounted cash flow, which anyway varies significantly in the different certificates issued by the same firm, is unable to form a well-considered opinion on the correctness of projected future cash flows, the entire valuation exercise is degraded to a mechanical calculation.
  • So far as foreign investors are concerned, based on the available material, prima facie, the genuineness, a necessary ingredient of tests envisaged under section 68, is far from established.
  • Additionally, so far as domestic investors are concerned, as of the stage of the hearing of the petition, there is no material whatsoever to show the reasonableness of the share premium received vis-à-vis the fair market value of a share.

Our Comments

Though the matter was before the appellate authority for stay proceeding, certain critical points emanate from this decision. While there are a series of decisions that have held that variation of the actuals vis-à-vis the projections is not a basis for disregarding the valuation, it is also worthwhile to note that the tax authorities certainly have the right to disregard the valuation if an appropriate basis is not available in making projections and other assumptions to arrive at the valuation.

Regulatory Updates

Securities and Exchange Board of India (SEBI)

SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2022 (22 March 2022)

In its meeting held on 15 February 2022, SEBI had inter-alia decided to make the requirement of separation of the role of Chairperson and MD/CEO of listed companies optional. However, the industry was awaiting an official notification from SEBI confirming this change. To bridge this gap, SEBI vide its notification dated 22 March 2022, amended the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and has omitted regulation 17(1B) related to the separation of the role of Chairperson and MD/CEO. It is provided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a voluntary basis.

Our Comments

This amendment is an official notification of the decision taken by SEBI in its meeting held on 15 February 2022 to omit the mandatory requirement of separating the role of Chairperson and MD/CEO in listed companies. The need for separation of MD and CEO roles is not a compulsion in western economies. Also, India's existing corporate governance framework is quite strong and day by day, enforcement is also becoming stronger. Hence, the separation of MD and Chairman positions was not a very big corporate governance issue. Making it voluntary reflects that government is adaptive to changes suggested by the industry.

Automation of disclosure requirements under Takeover Regulations (7 March 2022)

SEBI vide its circular dated 7 March 2022, decided that all types of encumbrances as defined under Regulation 28 (3) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) shall necessarily be recorded in the depository system. The provisions of this circular shall come into effect from 1 July 2022. However, the depositories are advised by SEBI to devise an appropriate mechanism to record all types of outstanding encumbrances in the depository system by 30 June 2022. Furthermore, to disseminate this information, the stock exchanges are also advised to devise an appropriate mechanism for disseminating disclosures under System Driven Disclosures in a simple, readable pdf format. Reconciliation of data shall be conducted by listed companies, stock exchanges and depositories at least once in a quarter or immediately whenever any discrepancy is noticed.

Our Comments

SEBI has adopted the practice of enabling System Driven Disclosures in line with the Indian Government’s motto of “Ease of Doing Business in India.” Takeover Regulations were also amended earlier, doing away with manual filing for most of the transactions with effect from 1 April 2022. However, the Promoters are still required to file disclosures on reasons for encumbered shares manually to the stock exchanges. This amendment relating to the recording of encumbrances in the depository system will help SEBI streamline the capture and dissemination of the information related to ‘encumbrances’ and thus bring in more transparency.

Competition Act, 2002

MCA extends validity of exemption notification concerning certain combination

Recently, the Ministry of Corporate Affairs (MCA) has issued a notification dated 16 March 2022 extending the validity period of exemption granted to certain combinations (like mergers and acquisitions) from compliance rigor of the Competition Act, 2002 (such as giving notice of combination and seeking pre-approval of Commission on proposed combination).

The Competition Act, 2002 required that all merger and acquisition transactions wherein the cumulative value of assets/turnover of the parties jointly exceed the notified thresholds to seek pre-approval of the Competition Commission of India, unless expressly exempted.

Resultantly, even if a transaction that entails the acquisition or transfer of a comparatively small enterprise/ business may attract the Competition Commission of India (CCI) scrutiny if the acquirer’s financials alone meet the notification thresholds.

Subsequently, it was considered that competitive concerns are unlikely to arise from transactions involving such small target enterprises. Accordingly, the MCA vide notification dated 27.03.2017 had granted an exemption to certain threshold transactions from the rigor of the Competition Act, 2002. This is popularly referred to as ‘de minimis’ exemption. As per said de minimis exemption, a transaction is exempt from the notification requirement under Competition Act, 2002 if the target (i.e., acquire or transferor company) has:

  • assets in India of not more than INR 3.5 billion; or
  • turnover in India of not more than INR 10 billion.

This notification was originally valid for five years, i.e., until 28 March 2022. Now through its notification dated 16 March 2022, the MCA has substituted the period of "five years" in the de minimis exemption with ‘10 years,’ thereby extending the exemption benefit for a further period of five years,i.e., till 28 March 2027.

Our Comments

This extension of the de minimis exemption was eagerly awaited, and it was expected that the MCA would continue the relaxation as it is. This helps certain combinations that are not likely to have any impact on competition. This gives relief to such small-size combinations as they would not be subject to rigor of compliance which is costly and time-consuming. It is also in the interest of the CCI as their administrative time in dealing with notifications will be saved.