Make available test excludes cloud and hosting receipts from fees for technical services taxation in India

Cloud and hosting service receipts were examined under section 9(1)(vii) and Article 12 of the India-USA DTAA to determine whether they constituted fees for technical services. The Tribunal applied the treaty "make available" test, requiring the services to transmit technical knowledge, skill, know-how or process to the recipient; on the recorded facts, that condition was not met. Relying on consistency with earlier Tribunal orders in the assessee's own case, the receipts were treated as protected by the treaty and not taxable in India.

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Issues: Whether receipts from cloud and hosting related services were taxable in India as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961 and Article 12 of the India-USA Double Taxation Avoidance Agreement, or were excluded because the services did not make available technical knowledge, skill, know-how or process to the recipient.

Analysis: The dispute was identical to the issue decided in the assessee's own case for earlier assessment years. The record showed that the Dispute Resolution Panel had also noted the prior Tribunal decisions on the same issue. The governing treaty test under Article 12 required the services to make available technical knowledge or similar expertise to the payer. On the facts recorded, that condition was not satisfied. Applying consistency with the earlier Tribunal orders, the Tribunal treated the receipts as falling within treaty protection and not taxable in India.

Conclusion: The issue was decided in favour of the assessee. The receipts were held not taxable in India as fees for technical services because the make available condition was not met.

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