Fees for technical services require making available know-how; treaty protection barred TDS liability on UAE consultancy payments.

Advisory and consultative services rendered by a UAE-based consultant were not taxable as fees for technical services because the work was limited to review, comments, suggestions, and supervisory inputs, with no making available of technical knowledge, skill, or know-how for independent future use. In the absence of a treaty article taxing such income and with no permanent establishment in India, domestic law could not be used to enlarge treaty chargeability. The remittance was therefore outside the taxable category, the payer had no obligation to deduct tax at source, and the demand under sections 201(1) and 201(1A) failed.

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Issues: Whether the remittances made to the UAE-based consultant for advisory and consultative services were taxable as fees for technical services in India and whether the assessee was liable to deduct tax at source and be treated as an assessee in default.

Analysis: The services were confined to review, comments, suggestions, and supervisory inputs, with no transfer of technical know-how, skill, or methodology enabling the recipient to apply the same independently in future. The applicable treaty did not contain a specific article taxing fees for technical services, and the enterprise had no permanent establishment in India. In such circumstances, domestic law could not be invoked to enlarge treaty chargeability, and the CBDT circular could not override the treaty framework. The remittance therefore did not fall within the treaty-based taxable category relied upon by the Revenue.

Conclusion: The remittances were not taxable as fees for technical services, the assessee was not liable to deduct tax at source, and the demand raised under sections 201(1) and 201(1A) was unsustainable.

Ratio Decidendi: Mere rendering of technical or consultancy services does not constitute fees for technical services unless technical knowledge, skill, or know-how is made available to the recipient for independent future use, and where the applicable treaty does not tax such income in the absence of a permanent establishment, domestic law cannot be used to impose tax liability.

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