Fees for included services under the India-USA DTAA remanded where the nature of services was not established on record.

Treaty taxability of receipts as fees for included services under Article 12(4) of the India-USA DTAA could not be conclusively determined because the precise nature of services rendered was not established on the record; the ITAT therefore remitted the matter to the Assessing Officer for fresh factual examination. Credit for tax deducted at source on interest income also required verification, so that issue was restored for examination and grant of eligible credit after verification.

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Issues: (i) whether the receipt from the Indian subsidiary was taxable as fees for included services under Article 12(4) of the India-USA DTAA, and (ii) whether credit for tax deducted at source on interest received was to be granted after verification.

Issue (i): Whether the receipt from the Indian subsidiary was taxable as fees for included services under Article 12(4) of the India-USA DTAA.

Analysis: The receipt was examined in the context of the agreements with the Indian subsidiary and the Singapore entity, the allocation of common and regional management costs, and the nature of services described only in broad terms. The "make available" requirement under the first limb of Article 12(4)(b) was recognised, but the services also had to be tested on the factual record to determine whether they consisted of development and transfer of a technical plan or design or otherwise fell within the treaty definition. As the material on record did not clearly establish the precise nature of the services actually rendered, and additional evidence had not been examined by the lower authorities, a conclusive finding on treaty taxability could not be returned.

Conclusion: The issue was remitted to the Assessing Officer for fresh determination of the nature of services and their taxability under the DTAA.

Issue (ii): Whether credit for tax deducted at source on interest received was to be granted after verification.

Analysis: The credit claim required factual verification by the Assessing Officer.

Conclusion: The matter was restored to the Assessing Officer for examination and grant of eligible credit after verification.

Final Conclusion: The appeal was disposed of with a remand on the principal taxability question and with directions on TDS credit, resulting in relief to the assessee on the issues requiring fresh verification.

Ratio Decidendi: Where the precise nature of services is not established on the record, treaty taxability as fees for included services cannot be conclusively determined and the matter may be remitted for fresh factual adjudication.

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