Treaty taxation of consulting and cost recharge receipts denied absent "make available" condition; interest-rate claim remanded for fresh adjudication.

Consulting and engineering service receipts were held not taxable as fees for technical services or royalty under the India-UK DTAA and the Act because the treaty "make available" condition was not satisfied; common cost recharge, being ancillary to those services, was likewise not separately taxable in the absence of a permanent establishment in India. A concessional tax rate claim on interest income, raised for the first time before the Dispute Resolution Panel, was treated as a legal claim not requiring fresh evidence and was remanded to the Assessing Officer for fresh adjudication after hearing the assessee.

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Issues: (i) Whether receipts from consulting and engineering services and common cost recharge were taxable as fees for technical services or royalty under the India-UK DTAA and the Act. (ii) Whether the claim for concessional tax rate on interest income raised for the first time before the Dispute Resolution Panel required reconsideration by the Assessing Officer.

Issue (i): Whether receipts from consulting and engineering services and common cost recharge were taxable as fees for technical services or royalty under the India-UK DTAA and the Act.

Analysis: The earlier coordinate bench decisions in the assessee's own case were followed. The amounts received for consulting engineering services had already been held not to satisfy the treaty condition of making available technical knowledge, experience, skill, know-how or processes to the recipient. On the same reasoning, the common cost recharge, being treated as ancillary to those services, could not be separately taxed as fees for technical services or royalty in the absence of a permanent establishment in India.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether the claim for concessional tax rate on interest income raised for the first time before the Dispute Resolution Panel required reconsideration by the Assessing Officer.

Analysis: The claim was treated as a legal claim not requiring fresh evidence. The matter was therefore restored to the Assessing Officer for adjudication after giving the assessee an opportunity of hearing and considering the claim in accordance with law.

Conclusion: The issue was remanded for fresh adjudication.

Final Conclusion: The appeal succeeded on the substantive transfer-pricing and treaty-taxability issues, while the interest-tax-rate issue was sent back for reconsideration, resulting in a partial relief to the assessee.

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