Reimbursement for shared IT facility is not fees for technical services where no technical, managerial or consultancy service is rendered.

Amounts received as reimbursement for use of a shared IT Global Portfolio Tracking System were not fees for technical services, because they were paid for access to a standard business facility and not for technical, managerial or consultancy services. The receipts showed no profit element and were not consideration for use of human skills. They were therefore not taxable under section 9(1)(vi) or section 9(1)(vii), and the addition was deleted.

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Issues: Whether the amounts received towards shared IT Global Portfolio Tracking System constituted fees for technical services and were taxable under section 9(1)(vi) or section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: The receipts were found to be only reimbursement of cost for a facility used jointly with agents and not consideration for rendering technical, managerial or consultancy services. The facility was a standard business support system and its use, even with sophisticated equipment, did not by itself amount to provision of technical services. No profit element was shown in the receipts, and the payments were not for use of human skills but for access to a facility.

Conclusion: The receipts did not constitute fees for technical services and were not taxable on that basis; the addition was rightly deleted, in favour of the assessee.

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