Borrowed-services receipts retained treaty protection and were not taxable as fees for technical services in India.

Borrowed-services receipts earned by a foreign assessee from its Indian group entity were examined for characterisation as fees for technical services taxable in India. The assessment treated the amounts as consultancy and technical-service fees. Earlier decisions in the assessee's own assessment years had consistently held that such borrowed-services income was not taxable under the applicable treaty. As no new facts or distinguishing material were identified, the established treaty treatment continued to apply, and the receipts were not taxable as fees for technical services.

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Issues: Whether receipts from borrowed services rendered by the foreign assessee to its Indian group entity constituted fees for technical services taxable in India.

Analysis: The assessment treated the receipts as consultancy and technical-service fees. The appellate decision deleting the addition was based on consistent decisions in the assessee's own earlier assessment years holding that borrowed-services income was not taxable under the applicable treaty. No new facts or distinguishing material was shown to warrant departure from that settled position.

Conclusion: The borrowed-services receipts were not taxable as fees for technical services; the issue was decided in favour of the assessee.

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