Make available requirement under the India-USA DTAA excluded managerial and support services from fees for included services taxation.

Receipts under a General Services Agreement were examined under Article 12(4)(b) of the India-USA DTAA and section 9(1)(vii) of the Income-tax Act. The services were characterised as managerial, administrative, support, research and coordination functions, but they did not make available technical knowledge, experience, skill, know-how or process to the Indian recipient for independent future use. Applying the treaty's make available requirement and following the coordinate bench view in the assessee's own earlier years, the tribunal held that the receipts were not taxable as fees for included services and the associated addition could not stand.

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Issues: Whether receipts under the General Services Agreement were taxable in India as fees for included services under Article 12(4)(b) of the India-USA DTAA and as fees for technical services under Section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: The services rendered under the General Services Agreement were examined in the light of the treaty definition of included services and the memorandum of understanding explaining the make available requirement. The services were found to consist of managerial, administrative, support, research, and coordination functions, and it was held that they did not transfer technical knowledge, experience, skill, know-how, or process to the Indian entities so as to enable them to perform such services independently in future. The prior coordinate bench view in the assessee's own case for earlier years was followed, and the similarity of the subsequent agreement did not alter the tax treatment.

Conclusion: The receipts were not chargeable to tax as fees for included services and the addition was not sustainable.

Final Conclusion: The Revenue's challenge failed, and the assessee's treaty-based claim of non-taxability was upheld.

Ratio Decidendi: For Article 12(4)(b) of the India-USA DTAA to apply, the service must make available technical knowledge, experience, skill, know-how, or process to the recipient, and managerial or support services that do not do so are not taxable as fees for included services.

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