Make available test under India-US DTAA: management support reimbursements were not taxable as technical services.

Management support reimbursements under the India-US DTAA were not taxable as fees for technical services or fees for included services because the treaty required the services to make available technical knowledge, skill, know-how or processes to the recipient for independent future use. On the facts, the arrangement involved functional support, but it did not satisfy the make available condition, so the consideration fell outside Article 12.

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Issues: Whether reimbursements received for management services under the agreement were taxable in India as fees for technical services or fees for included services under Article 12 of the India-US DTAA on the basis of the make available requirement.

Analysis: The service arrangement and the nature of the services showed that the payments were for management support in several functional areas. The relevant treaty provision required not only technical or consultancy character, but also that the service should make available technical knowledge, skill, know-how, or processes to the recipient so that it could apply them independently in future. On the facts, the services rendered did not satisfy that requirement, and the character of the consideration could not be brought within fees for technical services or fees for included services.

Conclusion: The issue was decided in favour of the assessee, and the receipts were held not taxable as fees for technical services or fees for included services under the India-US DTAA.

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