Make available test under India-UK tax treaty: routine intra-group support did not amount to fees for technical services.

Routine intra-group support services were held not to constitute fees for technical services under Article 13 of the India-UK DTAA because the services did not make available technical knowledge, experience, skill, know-how or processes to the Indian entity. The parent company retained control and supervision over marketing and scientific know-how, and the Indian entity received no transfer of technical skill in the treaty sense. Any incidental learning by employees while following instructions was insufficient to meet the make available requirement. The finding that no technical knowledge or skill was imparted was treated as factual, and no perversity was shown; the receipts therefore were not taxable as technical services.

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Issues: Whether the services rendered under the intra-group services agreement constituted fees for technical services under Article 13 of the India-UK Double Taxation Avoidance Agreement on the basis that technical knowledge, experience, skill, know-how or processes were made available to the Indian entity and an enduring benefit arose.

Analysis: The services were examined as routine commercial and administrative support within a group arrangement. It was found that the parent company retained ultimate control and supervision, including over marketing and scientific know-how, and that the Indian entity did not receive any transfer of technical skill or scientific know-how in the sense required by the treaty. Any incidental advantage or skill acquired by employees of the Indian entity during execution of instructions was held insufficient to satisfy the make available requirement. The conclusion that no technical knowledge or skill was imparted was treated as a factual finding, and no perversity in that finding was shown.

Conclusion: The make available condition was not satisfied and the receipts did not amount to fees for technical services; the appeal failed.

Ratio Decidendi: For treaty taxation of technical services, routine managerial or support services do not become fees for technical services unless they actually and specifically make available technical knowledge, experience, skill, know-how or processes to the recipient.

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