Taxability of support services as Fee for Technical Services under India-UK DTAA found not taxable due to make-available failure

Provision of routine corporate support services to an Indian affiliate was analysed under the India-UK DTAA for characterization as fee for technical services (FTS). The reasoning relied on the make-available test and whether services conferred an enduring transferable technology or advantage enabling independent application by the recipient; the Assessing Officer failed to produce cogent evidence of such transfer or enduring benefit. Consequently, the services (marketing, HR, corporate, legal, finance, IT, facilities management) were not treated as royalty/FTS under the DTAA and the taxpayers appeal was allowed.

---

---

Issues: Whether the receipts of INR 28,64,22,509 received by the assessee from its associated enterprise in India for centralized administrative and support services qualify as Fees for Technical Services (FTS) under Article 13 of the India-UK DTAA and are taxable in India.

Analysis: The services comprised marketing and communications, human resources, commercial/corporate/legal support, finance, information technology and facilities management provided on an ongoing and routine basis under a service agreement. Relevant authorities and precedents were applied to examine whether the services resulted in making technical knowledge, experience, skill or processes available to the recipient so as to enable the recipient to apply such technology independently in future. The material on record did not demonstrate transfer of technology or any consequential enduring benefit enabling the Indian enterprise to perform the services independently without recurring assistance. The recurring nature and long-term continuance of the service arrangement were considered relevant indicators against satisfaction of the make-available criterion. The AO/DRP's conclusions that the services imparted technical knowledge or enduring benefit were not supported by cogent evidence and were contrary to the applied precedents addressing the make-available test.

Conclusion: The receipts for the described routine and administrative support services do not satisfy the make-available criterion and therefore do not qualify as Fees for Technical Services under the India-UK DTAA; the assessee's appeal is allowed.

---