Make available test limits treaty fees for technical services where consultancy remains commercial and non-technical.

Consultancy services limited to market survey, business prospect assessment, manpower strategy, cash flow estimation and report preparation were held not to satisfy the India-UK treaty "make available" test. The services did not impart technical knowledge, skill or experience for independent use, nor did they involve transfer of a technical plan or design. Accordingly, the payment did not constitute fees for technical services under Article 13, and the amount was instead referable to the business profits article, which would require a permanent establishment in India. No tax was deductible at source on the payment, and the assessee could not be treated as in default.

---

---

Issues: Whether the payment made for the second set of consultancy services to the UK enterprise constituted fees for technical services under the India-UK tax treaty so as to require deduction of tax at source and justify treatment of the assessee as an assessee in default under sections 201(1) and 201(1A).

Analysis: The services for which no tax was deducted were confined to a global market survey, assessment of business prospects, manpower strategy, cash flow estimation and report preparation. The decisive test under Article 13(4)(c) was whether the services made available technical knowledge, skill or experience to the recipient so that it could apply the same independently without recourse to the service provider. The services were held to be commercial in nature and did not amount to imparting or transferring technical knowledge, nor did they involve development and transfer of a technical plan or design. As the payment did not qualify as fees for technical services, Article 13 was held inapplicable, and the question of taxation would fall under the business profits provisions, which would require a permanent establishment in India.

Conclusion: The payment of GBP 88,950 did not constitute fees for technical services under the India-UK tax treaty and no tax was deductible at source on that amount; the assessee could not be treated as in default on that count.

Final Conclusion: The revenue's challenge failed, and the common order of the first appellate authority was left undisturbed.

Ratio Decidendi: Consultancy services are taxable as fees for technical services only when they make available technical knowledge, skill, experience or a technical plan or design to the recipient for independent use.

---