Repair and maintenance receipts were held outside fees for technical services because no technology or know-how was made available to customers.

Repair and maintenance receipts for aircraft engines were held not to constitute fees for technical services because the treaty test under Article 12 required that technical knowledge, skill, know-how or processes be made available to the recipient. The services showed performance of specialised work for customers, but the record did not show any transfer of technology or ability for the customers to independently carry out the repair and maintenance themselves in future. Applying the cited binding and coordinate bench authorities, the Tribunal excluded the receipts from FTS treatment and deleted the addition.

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Issues: Whether receipts from repair and maintenance services of aircraft engines were taxable as fees for technical services under the Income-tax Act, 1961 and the applicable India-Canada and India-Singapore DTAA provisions requiring the technical knowledge or skill to be made available to the service recipient.

Analysis: The receipts arose from repair and maintenance operations carried out for Indian customers in connection with aircraft engines. The applicable treaty provisions under Article 12 required more than mere technical or specialized service; they required that technical knowledge, experience, skill, know-how or processes be made available so that the recipient could apply the technology independently in future. The record did not show that the customers were enabled to perform such repair and maintenance themselves after the service was rendered. The service provider's expertise resulted in performance of the work, but not in transmission of technology, skill or know-how to the recipient. The Tribunal relied on the binding and co-ordinate bench authorities cited before it and applied the same principle to all similar receipts in the appeals.

Conclusion: The repair and maintenance receipts were not taxable as fees for technical services, and the addition made on that basis was deleted in favour of the assessee.

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