Make available test bars taxation of IT support receipts; TDS credit requires reconciliation of Form 15CA and Form 26AS.

Receipts from IT support, data management and related services were treated as non-taxable in India under Article 12(4) of the India-USA DTAA because the services did not satisfy the make available test; they did not transfer technical knowledge, skill, know-how or processes that the recipient could independently apply after the services ended. In the absence of a permanent establishment in India, the receipts were also not taxable as business income. On the TDS credit issue, the record mismatch between Form 15CA and Form 26AS required verification, and eligible credit was to be granted after reconciliation.

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Issues: (i) Whether the receipts from IT support, data management and related services were taxable in India as fees for included services under Article 12(4) of the India-USA DTAA and as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961; (ii) Whether the assessee was entitled to TDS credit and reconciliation of figures reflected in Form 15CA and Form 26AS.

Issue (i): Whether the receipts from IT support, data management and related services were taxable in India as fees for included services under Article 12(4) of the India-USA DTAA and as fees for technical services under section 9(1)(vii) of the Income-tax Act, 1961.

Analysis: The identical issue had already been decided in the assessee's own case for earlier assessment years on the same agreement and continuing nature of services. Applying the treaty definition of fees for included services, the decisive requirement was that the services must make available technical knowledge, experience, skill, know-how or processes, or involve development and transfer of a technical plan or design. The services rendered were in the nature of centralized IT support, maintenance, data management, back-up, helpdesk and related support functions, which did not enable the recipient to independently apply any technical knowledge after the services ended. The make available condition was therefore not satisfied, and the receipts could not be characterised as taxable fees for included services. In the absence of a permanent establishment in India, the amounts were not taxable as business income either.

Conclusion: The issue was decided in favour of the assessee and against taxation of the receipts as fees for included services.

Issue (ii): Whether the assessee was entitled to TDS credit and reconciliation of figures reflected in Form 15CA and Form 26AS.

Analysis: The mismatch between the reported figures required verification from the records available with the department and from the forms relied upon by the assessee. The appropriate course was to direct verification and grant credit in accordance with law after reconciliation of the relevant figures.

Conclusion: The issue was decided in favour of the assessee for statistical purposes, with directions for verification and grant of eligible TDS credit.

Final Conclusion: The assessment was not sustained on the main transfer-taxability issue, while the credit-related aspect was sent for verification and consequential relief, resulting in a partial success for the assessee.

Ratio Decidendi: For treaty purposes, technical or support services are taxable as fees for included services only when they satisfy the make available test by transferring enduring technical knowledge, skill, know-how or processes to the recipient.

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