Make available test defeats FTS treatment for intragroup support services under the India-UK tax treaty.

ITAT Delhi held that intragroup receipts for management, finance, legal, compliance, internal audit, planning and marketing support on a cost-recharge basis were advisory or assisting services, not technical or consultancy services for Article 13(4) of the India-UK DTAA. Even if some elements were technical in nature, the decisive make available test was not satisfied because the services did not transfer technical knowledge, experience, skill, know-how or processes enabling the Indian entity to perform the functions independently in future. The receipts therefore did not constitute fees for technical services and were not taxable in India.

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Issues: Whether the receipts from intragroup services rendered to the Indian associated enterprise were taxable as fees for technical services under Article 13(4) of the India-United Kingdom Double Taxation Avoidance Agreement.

Analysis: The services under the group arrangement were found to be in the nature of management, finance, legal, compliance, internal audit, planning and marketing support rendered on a cost recharge basis. On the facts, these services were held to be advisory or assisting services and not technical or consultancy services in the sense required by the treaty. Even assuming some services could be characterised as technical or consultancy services, the decisive requirement was whether they made available technical knowledge, experience, skill, know-how or processes to the Indian entity. Applying the accepted meaning of the make available clause, the services did not transfer any technology or technical capability enabling the recipient to perform the same functions independently in future.

Conclusion: The receipts did not constitute fees for technical services under Article 13(4) and were not taxable in India.

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