Managerial support and research subscription payments may fall outside FIS and royalty where no technical knowledge or copyright transfer is made available.

Managerial support services rendered on a centralized, non-exclusive basis were treated as managerial in nature and not as Fees for Included Services under Article 12(4)(b) of the India-USA DTAA, because they did not make technical knowledge, skill, know-how, or processes available to the recipient. Subscription to published reports was characterised as access to copyrighted material, not a transfer of copyright, and therefore not royalty under Article 12(3). Customized research advisory was also viewed as advisory service without database access or technology transfer, so it was outside royalty and Fees for Included Services. A limited unresolved quantum was remitted for further adjudication.

---

---

Issues: (i) Whether management fee received for support services was taxable as Fees for Included Services under Article 12(4)(b) of the India-USA DTAA. (ii) Whether receipts from subscription to published reports and customized research advisory were taxable as royalty or Fees for Included Services under the India-USA DTAA.

Issue (i): Whether management fee received for support services was taxable as Fees for Included Services under Article 12(4)(b) of the India-USA DTAA.

Analysis: The services were found to be centralized managerial support services rendered on an independent and non-exclusive basis for group entities. They were held to be managerial in nature and, therefore, outside the scope of Fees for Included Services. The services did not make technical knowledge, experience, skill, know-how, or processes available to the recipient, nor was there any transfer of technology enabling independent application by the recipient.

Conclusion: The management fee was not taxable as Fees for Included Services and the addition was deleted in favour of the assessee.

Issue (ii): Whether receipts from subscription to published reports and customized research advisory were taxable as royalty or Fees for Included Services under the India-USA DTAA.

Analysis: Subscription to published reports was treated as a right to use copyrighted material, not a right to use copyright, and therefore did not constitute royalty under Article 12(3). Customized research advisory was held to be advisory service rendered through emails or presentations, with no grant of database access and no transfer of copyright or technology. On this reasoning, the receipts from both components were held not taxable as royalty or Fees for Included Services. In relation to the amount for which the appellate authority had not recorded a finding, the matter was restored for limited adjudication.

Conclusion: The receipts were held not taxable as royalty or Fees for Included Services, and the matter relating to the unreconciled portion was remitted for limited reconsideration.

Final Conclusion: The common order substantially relieved the assessee from the additions on merits, while preserving a limited remand only for the unresolved quantum in one year.

Ratio Decidendi: Managerial support services and advisory services that do not make technical knowledge available to the recipient, and payments for access to copyrighted reports without transfer of copyright, are not taxable as Fees for Included Services or royalty under the India-USA DTAA.

---