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Issues: Whether the consideration received by the assessee for providing architectural, master-planning and project management support was taxable as Fees for Included Services under Article 12(4)(b) of the India-USA DTAA on the footing that the services made available technical knowledge, skill, experience, know-how or technical design.
Analysis: The services were confined to project-specific conceptual planning, preliminary design inputs, drawings and review support for a single project. The drawings and design inputs were intended only to guide the EPC contractor and did not amount to a transfer of executable technical plans or technical designs. The assesseee did not enable the recipient to independently apply any technical knowledge or know-how in future projects. The fact that the materials were project-specific and that ownership clauses existed did not change the character of the services, since no technical expertise was made available in the treaty sense. The Tribunal followed the settled distinction between rendering technical assistance and making technology available, and held that architectural conceptual work, by itself, does not satisfy that requirement unless the recipient acquires the ability to apply the technology independently.
Conclusion: The receipts did not qualify as Fees for Included Services under Article 12(4)(b) of the India-USA DTAA and are not taxable in India on that basis. The issue is decided in favour of the assessee.
Ratio Decidendi: Project-specific architectural or conceptual design services are taxable as Fees for Included Services only if they make available technical knowledge, skill, know-how or a technical design enabling independent future application by the recipient.
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