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Issues: Whether the income received from the use of the Maersk Net system was taxable as fees for technical services or was only reimbursement of cost as part of the shipping business.
Analysis: The communication network was a common facility used by the assessee's agents across countries to carry out booking, documentation, cargo tracking and related shipping operations. It was an automated software-based system maintained centrally for efficient conduct of the shipping business, and the agents paid their proportionate share of the costs. No technical service was rendered to the agents in the sense required by the Income-tax Act or the DTAA. The mere use of a facility available to all agents did not amount to technical services, and the payments were not shown to contain any profit element. The receipt was therefore in the nature of reimbursement of expenses and formed part of the shipping business.
Conclusion: The amount received for use of Maersk Net was not fees for technical services and was not chargeable to tax as such; the issue was answered in favour of the assessee.
Ratio Decidendi: A common automated facility used for the efficient conduct of business, where the payment represents proportionate cost reimbursement and not specialized, exclusive, or individually tailored services, does not constitute fees for technical services.
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