Make available test under the India-Singapore DTAA failed for general training services, so no TDS default arose.

Payments for soft-skill and general employee training to a Singapore entity were not fees for technical services because the training did not transfer technology or make available technical knowledge, skill, know-how or processes under the India-Singapore DTAA. The make available test in Article 12 was therefore not met, so the sum was not chargeable to tax in India. As a result, no tax was required to be deducted at source under section 195, and the consequential section 201 demand for assessee-in-default liability could not stand.

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Issues: Whether payments made for soft-skill and general training services to a Singapore entity constituted fees for technical services under the India-Singapore DTAA and section 9(1)(vii) of the Income-tax Act, 1961, so as to require deduction of tax at source and attract liability as assessee in default under section 201.

Analysis: The services were for leadership, communication, teamwork and similar general training for employees. The training improved skills but did not involve transfer of technology or transmission of technical knowledge, experience, skill, know-how or processes that enabled the recipient to apply the technology independently. The make available condition in Article 12 of the DTAA was therefore not satisfied. Since the payment was not chargeable to tax in India on these facts, the obligation to deduct tax at source under section 195 did not arise, and the consequential demand under section 201 could not be sustained.

Conclusion: The issue was decided in favour of the assessee. The payment was not taxable as fees for technical services and the assessee could not be treated as an assessee in default for non-deduction of tax at source.

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