TaxTMI 
TaxTMI 
2023 (9) TMI 106
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....s of providing consultancy services to global clients based in the USA or having USA operations. The assessee also provides support services to other group entities for which it is remunerated at arm's length basis. 5. For the assessment year under dispute, assessee filed its return of income on 29.11.2018 declaring income of Rs. 5, 22, 26, 919. 6. In course of assessment proceedings, the Assessing Officer observed that as per the return of income, assessee has offered to tax royalty income of Rs. 5,00,33,409 received from Bain and Company India Pvt. Ltd. (Bain India) and interest on income-tax refund amounting to Rs. 21,93,510. However, he observed that an amount of Rs. 5, 24, 00, 942 received from its Indian affiliate towards provisions of consultancy services was not offered to tax on the plea that they are not in the nature of FIS. After examining the nature and scope of services, the Assessing Officer observed that as per Article 12(4) of India-US Tax Treaty, the amount received for providing managerial, technical or consultancy services, can be regarded as FIS. Thus, he held that since the fee received by the assessee is from consultancy services, it has to be treated a....
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....nature. Thus, he submitted, non-technical consultancy services are not covered under Article 12(4)(b) of the Tax Treaty. In support of such contention, he relied upon the following decisions: i) DCIT vs. Boston Scientific Group Pte Ltd. (2005) 94 ITD 31; ii) ACIT vs. Viceroy Hotels Ltd. [2011] 11 taxman.com 2016 (Hyd.); & iii) DDIT vs. preroy A.G.. [2010] 39 SOT 10 (Mumbai). 9. Without prejudice to the aforesaid submissions, learned counsel submitted, even, assuming that the services provided are in the nature of consultancy services, however, while providing such services, the assessee had not made available any technical knowledge, skill etc. to the services recipient. Therefore, the conditions of Article 12(4)(b) of the Tax Treaty are not satisfied. Referring to the Memorandum of Understanding to the Tax Treaty, he submitted, technology is made available when the person acquiring the service is enabled to apply the technology independently without the aid and assistance of the service provider. Further, he submitted, the mere fact that the provision of service may require technical input by the service provider, does not per se mean that technology,....
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....he terms of the agreement, the nature of services provided by the assessee are technical or consultancy services, hence, covered under the definition of FIS under Article 12(4)(b) of the Tax Treaty. He further submitted, while rendering such services, assessee has also made available the technical knowledge, skill etc. to its affiliate. Thus, he submitted, the receipts squarely fall within the ambit of Article 12(4)(b) of the Tax Treaty. In support of such contentions, he relied upon various decisions referred to by the Assessing Officer and learned DRP. 13. We have considered rival submissions in the light of decisions relied upon and perused the material available on record. Upon analyzing the consulting service agreement between the assessee and Bain India, it is observed that the consulting services provided by the assessee are as under: "The nature of services performed by the Parties would vary for each project/case based on specific project requirements. The Parties will provide Professional management consulting services to each other from time to time upon request, including without limitation market research, strategic research and planning, data collection, l....
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....nt overlapping, because, a consultancy service could also be a technical services. However, the category of consultancy services also includes an advisory service, whether or not expertise in technology is required to perform it. The nature of services provided under the agreement, such as, client engagement, market research, strategic research and planning etc., in our view, certainly, do not fall under the category of technical services. 17. Further, even assuming that they fall under the category of consultancy services, however, the most crucial condition to be satisfied to qualify as FIS under Article 12(4)(b) is the make available condition. In the facts of the present appeal, the departmental authorities have not brought any material on record to demonstrate that while rendering services, the assessee had made available technical knowledge, expertise, skill, knowhow etc. to Bain India to apply such technology, knowhow etc. independently without the aid and assistance of the assessee. The fact that Bain India is still dependent on the assessee for such services is established from the fact that since the year 2010, the assessee had been providing such services to Bain Indi....