Make available test for IT support receipts defeated where no specialised knowledge was transferred and reimbursements were at cost.

Routine IT support services were treated as taxable in India only if they made available technical knowledge, experience, skill, know-how or processes so the recipient could apply them independently after the contract ended. On the facts described, the Tribunal found that the Indian recipient was not enabled to perform the work on its own, and training on common office software did not amount to specialised knowledge being made available. The Tribunal also accepted that the amounts were reimbursed on a cost-to-cost basis without a profit element, and that factual position was not rebutted. The receipts were therefore held not taxable as fees for technical services or fees for included services, and the additions were deleted.

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Issues: Whether receipts from IT support services and related reimbursements were taxable in India as fees for technical services or fees for included services, and whether the make available condition was satisfied.

Analysis: The Tribunal followed its earlier decision in the assessee's own case and held that the services were routine and recurring IT support functions. The relevant treaty test required that technical knowledge, experience, skill, know-how or processes be made available so that the recipient could apply them independently after the contract ended. On the facts, the Indian recipient was not enabled to perform the same work on its own, and the training referred to common office software and did not amount to transmission of specialised knowledge. The Tribunal also accepted that the receipts were on a cost-to-cost reimbursement basis without a profit element, and the department had not rebutted that factual position.

Conclusion: The receipts were not taxable as fees for technical services or fees for included services, the reimbursement character of the amounts was accepted, and the additions were deleted.

Final Conclusion: The appeals were allowed and the assessee obtained full relief on the taxability of the impugned receipts.

Ratio Decidendi: Under the applicable treaty provisions, services are taxable as technical or included services only when they make available technical knowledge or skills so that the recipient can use them independently, and a pure cost reimbursement without profit element does not by itself constitute taxable income.

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