Make-available test under the India-Singapore DTAA: service payments were not taxable as fees for technical services.

Payments for distribution, management and logistic services were not taxable as fees for technical services under the India-Singapore DTAA because the decisive test is whether the service provider made available technical knowledge, experience or skill to the recipient. On the Tribunal's findings, the services were rendered from outside India, the provider had no permanent establishment in India, and no technical knowledge or technology was transmitted to the assessee. The receipts therefore fell outside the treaty concept of fees for technical services and were not taxable as business income in the absence of a permanent establishment.

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Issues: Whether the payments made for distribution, management and logistic services were taxable as fees for technical services under the India-Singapore DTAA when no technical knowledge, experience or skill was made available to the assessee.

Analysis: The decisive test was whether the service provider, in rendering the services, also transmitted the technology or technical knowledge used in that process to the recipient. On the facts found by the Tribunal, the services were rendered from outside India, the service provider had no permanent establishment in India, and the technical knowledge, experience or skill used in providing the services was not made available to the assessee. In such a situation, the receipt did not fall within the treaty concept of fees for technical services, and the income was not taxable as business income in the absence of a permanent establishment.

Conclusion: The issue was decided in favour of the assessee and against the revenue.

Ratio Decidendi: Services are taxable as fees for technical services under the treaty only when the technical knowledge or technology employed in rendering them is also made available to the recipient; absent such transmission, the payment is not taxable on that footing.

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