Fees for included services require technical knowledge to be made available; remote support and repair did not meet that test.

Payments for remote troubleshooting, problem diagnosis and off-shore repair to an overseas associated enterprise were not fees for included services under Article 12 of the India-USA DTAA, because the services did not make technical knowledge, skill, experience or know-how available to the Indian recipient for independent future use. The Tribunal's factual finding on this point was accepted, and the Revenue did not show it to be perverse. As a result, the amounts were not subject to tax deduction at source, and disallowance under section 40(a)(i) was unwarranted.

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Issues: Whether the payments made to the overseas associated enterprise were fees for included services under Article 12 of the India-USA Double Taxation Avoidance Treaty Agreement and thus liable to tax deduction at source, attracting disallowance under section 40(a)(i) of the Income-tax Act, 1961.

Analysis: The dispute turned on the character of the services under the agreement. The services were described as remote troubleshooting, isolation of problems, diagnosis of alarms, and off-shore repair of defective equipment. The factual finding of the Tribunal was that these services did not result in technical knowledge, experience, skill or know-how being made available to the Indian recipient so as to satisfy the treaty condition under Article 12(4)(b). The Court found that the plain terms of the agreement supported this conclusion and did not show direct transfer of technical capability to the assessee for independent future use. The Revenue did not challenge the Tribunal's factual finding as perverse.

Conclusion: The payments did not constitute fees for included services under Article 12 of the treaty, and no disallowance under section 40(a)(i) was warranted. The appeal failed.

Ratio Decidendi: Remote support and repair services do not amount to fees for included services unless the recipient is enabled to apply the technical knowledge, skill, or experience independently, and a pure factual finding to that effect will not give rise to a substantial question of law absent perversity.

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