Construction-linked consultancy receipts treated as business income, not fees for technical services, under the applicable tax provisions.

Consultancy and supervisory receipts from a highway construction project were treated as business income rather than fees for technical services because they fell within the exclusion for consideration relating to a construction or like project undertaken by the recipient. The analysis applied earlier coordinate bench rulings on identical facts and rejected gross-basis taxation under section 44D read with section 115A where the receipts were attributable to a permanent establishment, requiring taxation under the normal business provisions instead. On that basis, the FTS addition was deleted and the Revenue's challenge failed.

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Issues: Whether receipts from the NHAI highway project were taxable as fees for technical services under section 44D read with section 115A, or as business income under the normal provisions of the Act.

Analysis: The receipts arose from supervisory and consultancy work connected with highway construction and were held to fall within the exclusion in the definition of fees for technical services for consideration relating to a construction or like project undertaken by the recipient. The earlier coordinate bench decisions in the assessee's own case on identical facts had already held that such receipts were not taxable as fees for technical services and were instead assessable as business income. The reasoning also rejected application of the gross-basis provisions and treated the treaty-based computation as requiring deduction of actual business expenditure where a permanent establishment existed.

Conclusion: The receipts were not taxable as fees for technical services under section 44D read with section 115A and were assessable as business income. The addition was rightly deleted and the Revenue's appeal failed.

Final Conclusion: The assessment was upheld only to the extent that the receipts were taxed under the normal business provisions, and the Revenue's challenge to the deletion of the FTS addition was rejected.

Ratio Decidendi: Consultancy or supervisory receipts connected with a construction or like project are excluded from fees for technical services, and where such receipts are attributable to a permanent establishment, they cannot be brought to gross taxation under section 44D and section 115A merely because they are technical in character.

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