Make available test limits fees for technical services where business support does not transfer enduring technical capability.

Payments under a cost contribution arrangement for general business support services were held not to be fees for technical services under Article 13 of the India-UK DTAA. The court treated "technical or consultancy services" as confined by the "make available" requirement, meaning there must be transmission of technical knowledge, skill, know-how or processes enabling independent use after the service ends. Applying noscitur a sociis, consultancy in this context must be technical rather than merely managerial or commercial advice. As the arrangement involved ongoing support without transfer of enduring technical capability, the payments were not chargeable to tax in India on that basis and withholding under section 195 was not attracted.

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Issues: Whether payments made under the cost contribution arrangement for General Business Support Services constituted fees for technical services under Article 13 of the India-UK DTAA, so as to be chargeable to tax in India and attract withholding under section 195 of the Income-tax Act, 1961.

Analysis: The services described in the arrangement were managerial and business-support services. On a reading of Article 13 as a whole, the expression "technical or consultancy services" is confined by the "make available" requirement in paragraph 4(c), which demands transmission of technical knowledge, experience, skill, know-how or processes so that the recipient can apply them independently after the service ends. Applying noscitur a sociis, consultancy in this setting must be of a technical character and not merely managerial or commercial advice. The material showed ongoing support services, not a transfer of technology or enduring technical capability to the recipient. The reasoning adopted by the advance ruling authority on "make available" was not consistent with the applicable legal test.

Conclusion: The payments did not constitute fees for technical services under Article 13, were not chargeable to tax in India on that basis, and the ruling requiring withholding under section 195 could not stand.

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