Benchmarking services and make-available test under India-USA DTAA kept payments outside Indian taxation.

Payments for benchmarking services to a US resident were held not to constitute fees for included services under Article 12(4) of the India-USA DTAA because the service only collected operational and peer data, prepared reports, and identified areas for improvement. It did not transmit technical knowledge, know-how, skill, processes, or any technical plan or design, so the make-available test was not met and the service was not ancillary or subsidiary under Article 12(4)(a) or (b). In the absence of a permanent establishment in India, the consideration was treated as business profits protected by the treaty and not taxable in India.

---

---

Issues: Whether payments for benchmarking services made to a United States resident constituted fees for included services under Article 12(4) of the India-USA DTAA or were business profits not taxable in India.

Analysis: The service consisted of collecting operational data, comparing it with peer data, preparing reports, and giving benchmarking analysis. The service did not provide technical knowledge, experience, skill, know-how or processes that enabled the recipient to apply the technology independently. The study only indicated areas for improvement and prompted corrective action; it did not transfer any technical plan or technical design. On that basis, the service was neither ancillary or subsidiary under Article 12(4)(a) nor did it satisfy the make-available requirement under Article 12(4)(b). As the recipient had no permanent establishment in India, the payment remained in the nature of business profits protected by the treaty.

Conclusion: The payment for benchmarking services was not fees for included services and was not taxable in India; the revenue's appeal failed.

---