Make available test for technical services defeated: offshore calibration and testing remittance not subject to tax deduction at source.

Remittance for calibration and testing services rendered outside India was not fee for technical services because the non-resident supplied only a test report and did not transfer the underlying process or expertise to the payer. The services did not satisfy the "make available" requirement under Article 12 of the Indo-U.S. DTAA, and the technology used was not passed on. On these facts, the payment was not chargeable to tax as technical fees under the treaty or the Act, so no tax was required to be deducted at source and the payer could not be treated as an assessee in default under sections 201(1) and 201(1A).

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Issues: Whether the remittance made to the non-resident for calibration and testing services constituted fee for technical services so as to attract deduction of tax at source and consequent liability under sections 201(1) and 201(1A).

Analysis: The payment was made for testing and reporting the correctness of calibration of ultrasonic meters. The services were rendered outside India and the non-resident only supplied a test report, without passing on the process or expertise to the assessee. On these facts, the services did not satisfy the "make available" requirement under Article 12 of the Indo-U.S. DTAA, and the technology used in the process was not transferred to the assessee. In the absence of material to dislodge the factual findings of the first appellate authority, the payment could not be characterised as fee for technical services for the purpose of section 195.

Conclusion: The remittance was not chargeable as fee for technical services under the treaty or the Act, deduction of tax at source was not required, and the assessee could not be treated as an assessee in default under sections 201(1) and 201(1A).

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