Make available test for treaty FTS failed where management support services did not transfer independent technical capability.

Management support services comprising operational, accounting, legal, purchasing, personnel, training and IT support were treated as largely advisory and repetitive, but they fell outside fee for technical services because they did not satisfy the treaty's 'make available' test. The record showed no transfer of technical knowledge, skill, know-how or processes enabling the Indian recipient to apply the services independently in future, and the continuing need for assistance indicated no such capability had been imparted. Accordingly, the services were not taxable as fee for technical services under Article 12(4)(b) of the India-Singapore DTAA.

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Issues: Whether management support services rendered by the assessee to its Indian group company constituted fee for technical services under Article 12(4)(b) of the India-Singapore Double Taxation Avoidance Agreement on the footing that the services made available technical knowledge, experience, skill, know-how or processes to the recipient.

Analysis: The services consisted of operational support, accounting support, legal advice, purchasing, personnel and training, and information technology support. On the facts, the services were found to be largely advisory and repetitive, rendered according to business requirements, and capable at best of being described as managerial or consultancy services. However, the decisive statutory test was whether the services made available technical knowledge or know-how so that the recipient could apply the technology independently in future. The record did not show any transfer of technology, skill or know-how enabling the Indian recipient to perform the same functions on its own without continued recourse to the assessee. The repeated and ongoing need for the services also supported the conclusion that no such independent capability had been imparted.

Conclusion: The management support services did not satisfy the 'make available' requirement under Article 12(4)(b), and therefore were not taxable as fee for technical services under the treaty.

Final Conclusion: The addition sustained by the lower authorities on the footing of fee for technical services was set aside and the assessee's appeal succeeded.

Ratio Decidendi: Advisory or managerial services constitute treaty-based fee for technical services only when they transmit technical knowledge, experience, skill, know-how or processes in a manner that enables the recipient to apply them independently in future.

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