Fees for included services under the India-USA DTAA triggered withholding tax on management and consultancy payments to a non-resident.

Payments for management and consultancy support to a non-resident were treated as fees for included services under the India-USA DTAA because the foreign company provided knowledge, expertise, advice, training, and decision-making support across managerial, financial, legal, treasury, and risk functions. The absence of the word "managerial" in the treaty was not decisive where technical knowledge, experience, skill, know-how, or processes were made available, so the receipts were taxable in India. As tax was deductible under section 195, the assessee's withholding obligation was triggered and liability under section 201(1) and 201(1A) followed; the cash-basis argument and reliance on Circular No. 7/2007 were rejected.

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Issues: Whether payments made for management and consultancy support to a non-resident company were taxable in India as fees for technical services under the India-USA DTAA and the Income-tax Act, and whether the assessee was obliged to deduct tax at source under section 195, failing which liability under section 201(1) and 201(1A) arose; whether the cash-basis plea and reliance on Circular No. 7/2007 altered that liability.

Analysis: The services received were found to be technical in nature because the foreign company supplied knowledge, expertise, advice, training, and decision-making support in managerial, financial, legal, treasury, and risk-management functions. The treaty provision governing fees for included services was applied, and the absence of the word "managerial" in the treaty was held not decisive where the services made available technical knowledge, experience, skill, know-how, or processes. The payments were therefore held taxable in India, attracting the withholding obligation under section 195. The plea that tax could arise only on payment was rejected, and the ground based on Circular No. 7/2007 was not accepted.

Conclusion: The payments were held chargeable to tax in India as technical or consultancy services, the assessee was held liable to deduct tax at source, and the disallowance or demand under section 201 was sustained.

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