Make available test under India-Israel DTAA failed, so IT and SAP support receipts were not taxable as technical services.

ITAT Delhi considered whether receipts for IT and SAP support services were taxable as fees for technical services under Article 13 of the India-Israel DTAA. It held that the protocol's more restrictive "make available" standard could be applied without a separate notification, following the notified treaty and binding precedent. On the facts, recurring helpdesk, network, SAP infrastructure and application support services did not transfer technical knowledge, skill, know-how or process so that the Indian recipient could independently use the technology without continued assistance. As the make available condition was not met and no permanent establishment was shown, the receipts were not taxable in India and the additions were deleted.

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Issues: Whether the amounts received for provision of IT and SAP support services were taxable as fees for technical services under Article 13 of the India-Israel DTAA, including whether the make available condition from more restrictive treaty provisions applied.

Analysis: The services consisted of helpdesk, network and SAP support, SAP infrastructure support, licence maintenance and application-based support. The assessee relied on the protocol to the India-Israel DTAA to invoke the more restrictive definition of fees for technical services found in other treaties, which requires that technical knowledge, experience, skill, know-how or process be made available to the recipient. The record showed recurring support services and reimbursement on a cost-to-cost basis, but no material was brought by the Revenue to show that technical knowledge or skills were transferred so that the Indian subsidiary could independently apply the technology without continued assistance. The objection that the protocol could not be applied without a separate notification was rejected by applying the notified treaty and the protocol, and by following the jurisdictional precedent that separate notification of the protocol was unnecessary.

Conclusion: The make available condition was not satisfied, so the receipts were not taxable as fees for technical services in India in the absence of a permanent establishment; the additions were deleted.

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