Treaty taxability of IT support services followed prior years' ruling, while unresolved affiliate receipts were remitted for fresh examination.

Receipt for IT support services may fall within the domestic definition of fees for technical services, but treaty taxability depends on Article 12 of the applicable DTAA. Where the same services and agreement had already been held in the assessee's own case to be not chargeable under the treaty, and no material factual distinction existed, that treaty protection was followed and the receipt was held not taxable. For receipts from the other Indian affiliates, the nature of services had not been conclusively established for treaty purposes, so the matter was remitted for fresh factual determination in line with earlier directions.

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Issues: (i) Whether the amount received for IT support services from one Indian affiliate was chargeable to tax under Article 12 of the applicable double taxation avoidance agreement notwithstanding its character as fees for technical services under domestic law; (ii) Whether the receipts from the other Indian affiliates required fresh examination of the nature of services and consequent taxability.

Issue (i): Whether the amount received for IT support services from one Indian affiliate was chargeable to tax under Article 12 of the applicable double taxation avoidance agreement notwithstanding its character as fees for technical services under domestic law.

Analysis: The receipt was accepted as falling within the domestic-law definition of fees for technical services, but the controlling question was whether it was taxable under the treaty. The services were rendered under the same agreement and on facts identical to earlier assessment years. A coordinate bench had already held on the same set of services that the amount was not chargeable under Article 12 of the treaty, and that view had been followed for earlier years as well. In the absence of a distinguishing feature, the same treaty protection was applied.

Conclusion: The receipt from the said affiliate was held not chargeable to tax under Article 12 of the treaty, in favour of the assessee.

Issue (ii): Whether the receipts from the other Indian affiliates required fresh examination of the nature of services and consequent taxability.

Analysis: For the remaining affiliates, the factual matrix was treated as identical to that of the immediately preceding year, where the matter had been restored for fresh determination. As the nature of the services had not been conclusively established for treaty purposes, the matter was sent back for reconsideration in accordance with the earlier directions, with opportunity of hearing to the assessee.

Conclusion: The issue was remitted to the Assessing Officer for fresh determination, partly in favour of the assessee.

Final Conclusion: The domestic characterization of the receipts did not by itself determine treaty taxability, and the Tribunal granted relief for one set of receipts while directing reconsideration of the remaining receipts.

Ratio Decidendi: Where identical service receipts have already been held non-taxable under the applicable treaty in the assessee's own case, that conclusion should be followed in the absence of any material factual distinction, while unresolved receipts may be remitted for fresh factual determination.

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