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Issues: Whether the receipts from business support and referral services were taxable as fees for technical services under the India-Singapore DTAA and the Income-tax Act, 1961.
Analysis: The services were rendered under an inter-company agreement and were identical to those considered in the assessee's own case for the preceding assessment year. The decisive question was whether the services satisfied the "make available" requirement under Article 12 of the treaty. Following the coordinate bench decision, it was held that the recipient was not enabled to apply the technical knowledge, experience, skill or know-how independently after the services ended, and a mere incidental benefit was insufficient. Once the receipts were held not taxable under the treaty, the domestic provisions did not alter that result in view of section 90(2) of the Income-tax Act, 1961.
Conclusion: The addition treating the receipts as fees for technical services was unsustainable and was directed to be deleted, in favour of the assessee.
Ratio Decidendi: For the "make available" clause to apply, the service recipient must be enabled to use the technical knowledge or skill independently in future without dependence on the service provider; absent such transfer, the receipts are not taxable as fees for technical services under the treaty.
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