TaxTMI 
TaxTMI 
2023 (7) TMI 165
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....y the Assessing Officer, the assessee is engaged in the business of electrification. For the assessment year under dispute, the assessee filed its return of income declaring nil income. In course of assessment proceedings, the Assessing Officer noticed that in the year under consideration, the assessee had receipts of Rs. 5,78,85,456/- from rendition of certain services to its Indian subsidiary. However, the assessee has not offered them to tax claiming that they are not taxable in India. After calling for and examining necessary details, the Assessing Officer found that the assessee has provided certain services to the Indian subsidiary. 4. After examining the nature of services provided to Indian subsidiary, the Assessing Officer was of the view that the receipts are in the nature of FTS. Therefore, he issued a show cause notice to the assessee to explain as to why it should not be treated as FTS and taxable in India as per India-France Double Taxation Avoidance Agreement (DTAA). In response to show cause notice, the assessee submitted that the services rendered by the assessee are in the nature of managerial services. It was submitted, though, the term 'FTS' in Article 13(4) ....
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....axable in India. 6. Contesting the addition made treating the receipts as FTS, the assessee filed appeal before learned Commissioner (Appeals). After considering the submissions of the assessee, learned Commissioner (Appeals) accepted assessee's claim that even without specific notification issued by the Government as per protocol to India-France DTAA, the assessee would be entitled to the benefit of MFN status. Hence, more restricted meaning of FTS as per India-UK DTAA would apply to the receipts of the assessee. However, learned Commissioner (Appeals) held that the amount received by the assessee is for the services of the nature of technical or consultancy, hence, would be covered under Article 13(4) of India-UK DTAA. Further, he held that while rendering such technical or consultancy services, the assessee has made available technical knowledge, knowhow, experience, skill etc. to the recipient of such services. Accordingly, he upheld the taxability of the receipts in the hands of the assessee. 7. Before us, learned counsel for the assessee, more or less, reiterated the stand taken before the departmental authorities and submitted that the nature of services rendered by th....
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....itted, many of the services rendered are in the nature of technical or consultancy services. Further, he submitted, since, the assessee is providing training to the employees of the service recipient, the 'make available' condition under India-UK DTAA is also satisfied. Thus, he submitted, the receipts have been rightly treated as FTS and brought to tax in India. 10. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. At the outset, we must observe that though, the Assessing Officer has held that the benefit of MFN status in terms of protocol to India-France DTAA would not be available to the assessee in absence of a specific notification issued by the Government of India, however, learned first appellate authority has reversed the aforesaid decision of the Assessing Officer and has accepted assessee's contention that in terms with protocol to India-France DTAA, the assessee can avail the benefit of MFN status. Hence, more restricted scope and meaning of FTS as provided under Article 13(4) of India-UK DTAA would apply to determine the nature of receipts. Admittedly, against aforesaid decision of learned first appellate ....
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....s like gather of information for preparation of financial statements, performing calculations and verifying the accuracy of figures, consolidation of legal entity results for each country, preparation of group-wide accounting manual to be followed by every affiliate, compilation of data for statistical studies etc. (v). Tax support : These services encompass support in relation to various applicable taxes, which includes assistance in preparation of return forms, gathering information with respect to tax payments, processing of tax payments, negotiating advance pricing agreements etc. (vi). Health, safety, environmental & regulatory affairs support and legal support: These services include preparation of internal healthy, safety and environment stands, overviewing compliances with various regulatory requirements, preparation of documentation as mandated by law etc., general legal services like reviewing contracts and agreements, providing inputs, coordinating with legal counsel maintaining records etc. (vii). Budgeting and Treasury activities support: These services include compiling data to prepare budgets and other accounting reports for management, ver....
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....ce recipient so as to enable the service recipient to utilize such technical knowledge, knowhow, skill etc. independently in future without the aid and assistance of the assessee. Thus, in our view, the Revenue having failed to demonstrate the aforesaid aspect through cogent evidence, it has to be held that the make available condition under Article 13(4)(c) of India-UK treaty is not fulfilled. While coming to such view, we have drawn support from the ratio laid down in the decisions cited before us by learned counsel for the assessee. Pertinently, in assessee's own case in assessment year 2015-16 (Converteam Group and Financiere CVT got merged and renamed as GE Energy Power Conversion Group), the Tribunal in ITA No. 8112/Del/2019 dated 23.09.2022, while considering identical nature of receipts from the very same Indian subsidiary, has confirmed the order of the first appellate authority holding that the receipts are not in the nature of FTS under Article 13(4) of India-UK DTAA. For ease of reference, following observations of the coordinate Bench are reproduced here under: "19. It would be pertinent to refer to Article -13 of the India UK Tax Treaty which is as under :- ....