Fees for technical services under India-Singapore DTAA not made out where project-specific design work did not transfer usable know-how.

Consultancy and architectural fees paid to Singapore-based non-resident entities for a residential project were held not to constitute fees for technical services under Article 12(4) of the India-Singapore DTAA. The services were limited to project-specific architectural, structural and MEP drawings and designs, and the agreements did not show any transfer of technical knowledge, experience, skill, know-how or processes enabling the payer to apply the technology independently in future. As the treaty requirement of "making available" technical knowledge was not satisfied, disallowance under section 40(a)(i) could not be sustained and was deleted.

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Issues: Whether consultancy and architectural fees paid to Singapore-based non-resident entities for a residential project constituted fees for technical services under Article 12(4) of the India-Singapore Double Taxation Avoidance Agreement so as to attract disallowance under section 40(a)(i) of the Income-tax Act, 1961.

Analysis: The services were confined to architectural, structural and MEP drawings and designs for a specific project. The agreements showed that the deliverables were project-specific and were not meant to enable the assessee to apply the underlying technology independently in future. No material was brought on record to show that technical knowledge, experience, skill, know-how or processes were made available to the assessee in the treaty sense. On the facts, the treaty condition for characterization as fees for technical services was not satisfied, and the disallowance under section 40(a)(i) could not be sustained.

Conclusion: The payment did not qualify as fees for technical services under Article 12(4), and the disallowance was correctly deleted.

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