Fees for included services test not met where laboratory reports did not make technology available to customers.

Pre-clinical laboratory services performed outside India under customer-specific protocols did not amount to fees for technical services or fees for included services under the India-Canada tax treaty or the Income-tax Act. The reports assisted customers in evaluating samples, but they did not make available technical knowledge, know-how, skill or process, nor enable the recipients to independently conduct similar testing without the assessee's further involvement. Because no technology was made available to the recipient, the receipts were not taxable in India on that basis.

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Issues: Whether the pre-clinical laboratory services rendered by the assessee to Indian customers constituted fees for technical services or fees for included services under the India-Canada tax treaty and the Income-tax Act, and were therefore taxable in India.

Analysis: The services were rendered outside India on the basis of study-specific protocols supplied by the customers. The reports generated by the assessee assisted the customers in evaluating samples, but did not transfer technical knowledge, know-how, skill, process, or any ability to independently perform similar testing in future without recourse to the assessee. The client remained dependent on the assessee for further studies, and the contractual arrangement did not show that technology was made available to the recipient within the meaning of the treaty.

Conclusion: The receipts did not constitute fees for technical services or fees for included services and were not taxable in India on that basis. The issue is decided in favour of the assessee.

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