TaxTMI 
TaxTMI 
2022 (12) TMI 881
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....) and DCIT have erred in considering income from consulting and engineering services amounting to INR 15 18 250/- as Fees for technical services (FTS) as per Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA) 2.Ground No. II- Taxability of amount received as management foos & common cont recharge as Royalty and Fees for technical services (FTS) 2.1 On the facts and in the circumstances of the case and in law, the leamed DRP (Dispute Resolution Panel) and DCIT have erred in considering management fees & common cost recharge amounting to INR 5,67 33.937/- as Royalty and Fees for technical services (FTS) as per Article 13 of India-UK Double Taxation Avoidance Agreement (DTAA) 3. Ground No. III-Erroneous rate of tax applied while computing tax payable 3.1.Without prejudice to the above grounds on facts and circumstances of the case and in law, the learned DCIT has erroneously applied a tax rate of 15% as per India-UK DTAA instead of applying a beneficial rate of 10 92% under the Act while computing the amount of tax payable by the Appellant. 4. Ground No. IV-Erroneous levy of consequential interest under section 234B. ....
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.... of the assessee in India. The assessee also submitted that similar issue was decided in assessee's favour for the AY 2012-13 by this tribunal. The ld. AO observed that the decision of this tribunal in AY 2012-13 has not been accepted by the revenue and an appeal against the same could not be preferred before the Hon'ble High Court due to low tax effect. Accordingly, the ld. AO observed that the amount of Rs 15,18,250/- received by the assessee is in the nature of Fee for Technical Services (FTS) and brought to tax the same as per Article 13(2)(a)(ii) of the India UK DTAA in the hands of the assessee. b) Management Fees & Common Cost recharge - Rs 5,67,33,937/- This is the amount charged to Buro India towards various costs incurred. The same has not been offered to tax by the assessee on the contention that these being management cost recharges does not make available any knowledge, skill, process, know-how and experience to Buro India as per the terms of the India UK DTAA. The assessee made the following submissions before the ld. AO :- The Assessee has incurred certain common expenses in relation to Information Technology Business Development, Finance, Human Resource ....
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.... not be considered as taxable in India as per India-UK DTAA Further, even where it considered that few of the services may be considered as technical or consultancy services, the same would still be not taxable under Article 13(4)(c) of the India-UK DTAA as these services does not make available any technical knowledge, experience, skill know-how or processes, etc. to the recipient of the service. The said position is also confirmed by the Hon'ble ITAT in Assessee's own case during AY 2012-13" The ld. AO concluded that the payment received under the head 'Cost Recharge' would be Royalty as per the Act as well as per India UK DTAA as it is received as consideration for the use of, or the right to use the trademark or brand name 'Buro Happold' owned by it. He also observed that description of the services under all heads as per the agreement mentioned earlier clearly shows that the assessee is charging Buro India for the use of , or the right to use the information concerning industrial, commercial or scientific experience. Therefore, the amount of Rs 5,67,33,937/- received by the assessee under the head 'Cost Recharge' was treated by the ld. AO as Royalty u/s 9(1)(vi) ....
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....echnical design/ drawings/plans by it to the Indian entity does not make available any technical knowledge, knowhow, process, etc., it cannot be treated as fees for technical services under Article-13(4)(c) India-UK tax treaty. Whereas, the Assessing Officer has rebutted such contention of the assessee on the reasoning that as per the second limb of Article-13(4)(c) of the India-UK tax treaty, amount received towards development and transfer of a technical plan or technical design, by itself, is in the nature of fees for technical services and there is no necessity of fulfilling the condition of "make available". The learned Commissioner (Appeals) while agreeing with the aforesaid reasoning of the Assessing Officer has further supplemented it by observing that through the provision of technical drawing and design and consultancy services provided through personnel at the site, the assessee has made available technical knowledge, experience, skill, knowhow or processes to the Indian entity, hence, the amount received is in the nature of fees for technical services. 16. For a better understanding of the dispute, it is necessary to look into the scope of work to be undertaken....
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....f a technical plan or technical design." Buro Happold Limited 18. Since, the conditions of Article-13(5) of the India-UK tax treaty are not applicable in the present case, it is not relevant for our purpose. Undisputedly, both the departmental authorities and the assessee are in agreement that if, at all, the amount received by the assessee is treated as fees for technical services, it will come within Article-13(4)(c) of the India-UK tax treaty. Therefore, the following two issues arise for our consideration viz., (i) Whether development and transfer of a technical plan or technical design simplicitor without making available technical knowledge, experience, skill, knowhow or processes, etc., would be in the nature of fees for technical services; and (ii) In the event, it is held that development and transfer of a technical plan or a technical design also requires making available technical knowledge, experience, skill, knowhow or processes, etc., whether in the present case such condition is satisfied." 19. Undisputedly, in the present case, the amount received by the assessee, which has been treated as fees for technical services is t....
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....eveloping and supplying the technical drawings/designs/plans has to be accepted. If the Department is of the view that through development and supply of technical designs/drawings/plans the assessee has made available technical knowledge, experience, skill, knowhow or processes, it is for the Department to establish such fact through proper evidence. The assessee certainly cannot be asked to prove the negative. It is worth mentioning, while deciding a dispute of identical nature concerning fees for technical services as per India-USA tax treaty under which definition of fess for included services as per Article-12(4)(b) is identically worded like Article 13(4)(c) of the India-UK tax treaty, the Tribunal, Pune Bench, in Gera Developments Pvt. Ltd. v/s DCIT, [2016] 160 ITD 439 (Pune), has held that mere passing off project specific architectural, drawings and designs with measurements does not amount to making available technical knowledge, experience, skill, knowhow or processes. The Tribunal held that unless there is transfer of technical expertise skill or knowledge along with drawings and designs and if the assessee cannot independently use the drawings and designs in any manner ....