Cost contribution support services are not fees for technical services when no technical knowledge is made available.

Receipts under a cost contribution arrangement for General Business Support Services were treated as non-taxable fees for technical services because the functions were managerial and supportive, and did not make available technical knowledge, skill, know-how or processes under the India-UK DTAA. The note states that the earlier adverse advance-ruling view was displaced by the jurisdictional High Court and coordinate bench approach in the assessee's own case, leading to treatment of the receipts as not taxable as FTS. Interest under section 234B was to be recomputed in line with the merits outcome, with consequential relief.

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Issues: (i) Whether receipts from General Business Support Services under the cost contribution arrangement were taxable as income or as fees for technical services under the Income-tax Act, 1961 and the India-UK DTAA; (ii) whether interest under section 234B of the Income-tax Act, 1961 required recomputation.

Issue (i): Whether receipts from General Business Support Services under the cost contribution arrangement were taxable as income or as fees for technical services under the Income-tax Act, 1961 and the India-UK DTAA.

Analysis: The receipts were found to arise from a cost allocation arrangement without mark-up, and the services were treated as managerial and support functions rather than services making available technical knowledge, experience, skill, know-how or processes. The earlier adverse view based on the advance ruling was displaced by the jurisdictional High Court decision and the consistent coordinate bench view in the assessee's own case.

Conclusion: The receipts from General Business Support Services were held not taxable as fees for technical services and the issue was decided in favour of the assessee.

Issue (ii): Whether interest under section 234B of the Income-tax Act, 1961 required recomputation.

Analysis: The interest computation was directed to be aligned with the outcome on the merits and the assessment records were to be verified for correct effect.

Conclusion: The interest under section 234B was directed to be recomputed, with consequential relief in favour of the assessee.

Final Conclusion: The appeal succeeded on the core taxability dispute and received consequential relief on interest, while other grounds did not survive for separate adjudication.

Ratio Decidendi: Under the India-UK DTAA, support and managerial services that do not make available technical knowledge or skill, and that are received under a cost allocation arrangement without profit element, do not constitute taxable fees for technical services.

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