Intra-group support services were not fees for technical services absent a nexus with the licence or make-available of technical know-how.

Intra-group support services were held not taxable as fees for technical services under the India-Singapore DTAA because the support arrangement was separate from the licensing agreement and the services were routine operational, administrative, academic, finance, human resources, and marketing assistance. A mere incidental benefit to the brand did not make the receipts ancillary and subsidiary to the licence for Article 12(4)(a). The record also did not show that technical knowledge, skill, know-how, or experience had been made available to the Indian entity so as to enable independent future performance under Article 12(4)(b). The addition for service fees was deleted.

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Issues: Whether the receipts from intra-group support services were taxable as fees for technical services under Article 12(4)(a) or Article 12(4)(b) of the India-Singapore Double Taxation Avoidance Agreement.

Analysis: The service arrangement was held to be distinct from the licensing arrangement. The support services consisted of routine operational, administrative, academic, finance, human resources, and marketing assistance, and were not shown to be connected with the use or right to use the trademark, brand name, or software licensed under the separate agreement. The receipt could not be treated as ancillary and subsidiary to the licensing arrangement merely because some marketing activities may incidentally support the brand. For Article 12(4)(b), the record did not establish that technical knowledge, skill, know-how, or experience had been made available to the Indian entity so as to enable it to perform the services independently in future.

Conclusion: The receipts from intra-group services did not fall within Article 12(4)(a) or Article 12(4)(b) and were not taxable as fees for technical services.

Final Conclusion: The addition on account of intra-group service fees was deleted and the assessee's appeal succeeded.

Ratio Decidendi: For services to be taxed as fees for technical services under the treaty, a nexus with the royalty arrangement as ancillary and subsidiary services must be established, or the make-available condition must be satisfied by showing transfer of technical capability enabling independent future performance.

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