Taxability of overseas investment banking fees turns on deemed accrual and the treaty make available test, with no Indian tax charge.

Fees received by an overseas investment banker from Indian companies for services performed outside India were not taxable in India as fees for technical services. The services did not fall within income deemed to accrue or arise in India merely because the Indian payer benefited from them. The India-UK DTAA was also examined, and the receipt failed the treaty's make available requirement for technical services. On that basis, the addition was unsustainable and the amount was not taxable in India.

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Issues: Whether fees received from Indian companies for overseas investment banking transactions were taxable in India as fees for technical services.

Analysis: The assessee carried out the investment banking activities outside India and received the consideration for those services from Indian companies. The services were held to fall outside the scope of income deemed to accrue or arise in India under the Act. The applicability of the India-UK DTAA was also considered, and the services were found not to satisfy the make available requirement for characterisation as taxable technical services.

Conclusion: The addition was not sustainable and the receipt was not taxable in India as fees for technical services.

Ratio Decidendi: Services rendered outside India do not become taxable in India merely because the Indian payer benefits from them, and where the treaty's make available condition is not satisfied, the receipt is not taxable as fees for technical services.

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