TaxTMI 
TaxTMI 
2023 (12) TMI 802
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....y provisions as well as under the provisions of the Act. 3. Briefly the facts relating to these two issues are, the assessee is a non-resident corporate entity and a tax resident of Unites States of America ("USA"). As stated, the assessee is engaged in the business of providing consultancy services to multinational companies in the field of strategy, performance improvement, organization enhancement, mergers & acquisitions, and private equity. It also provides support services to its subsidiaries for which it is remunerated at arm's length basis. In the assessment year under dispute, the assessee had following streams of income: (i) Royalty from Bain India Rs. 5,78,18,060 (ii) Receipt from consultancy services provided to Bain India Rs. 9,09,98,733 (iii) Receipt from professional support services provided to Bain India Rs. 18,54,90,269 (iv) Receipt from reimbursement of expenses from Bain India Rs. 10,39,89,404 4. In the return of income filed for the impugned assessment year, the assessee offered the royalty income earned of Rs. 5,78,18,060/- to tax. However, various other receipts as enumerated at serial no. (i) to (iv) were not offered ....
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....he materials on record, we find, identical issue arising in assessee's own case in assessment year 2018-19 came up before the Tribunal in the appeal referred to above. While deciding the issue, the Tribunal having analyzed the nature and character of the services rendered and the provisions contained under Article 12(4)(b) of the tax treaty, has concluded that the receipts cannot be treated as FIS/FTS, either under the treaty provisions or under the provisions of the Act. On the issue of taxability of receipts from business consultancy services, observations of the Tribunal are as under: "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 ....
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....echnical and consultancy services are to some extent 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, know how 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, t....
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.... Bench, as discussed above, we hold that the receipts from business consultancy services and reimbursement of expenses are not taxable as FIS/FTS. Ground nos. 2, 3 and 4 are allowed. 11. In ground no. 5, the assessee has challenged addition of Rs. 18,54,90,269/-, being receipts from provision of support services as FIS. 12. Briefly the facts are, the assessee had entered into a support service agreement with its Indian subsidiary, Bain India on 1^st April, 2010. In terms with the agreement, the assessee provide support services to various group entities including Bain India so as to enable them to get access to standardized support services. By providing such services, the assessee helps the group entities realize economies of scale, and other operating and financial efficiencies and function more efficiently in an increasingly globalized and competitive scenario. The cost incurred for providing such services is allocated to Bain India on a cost-to-cost basis, based on allocation keys, such as, revenue, attendance of employees at training seminars, etc. In the year under consideration, the Indian entity availed support services in the nature of TSG support services, informati....
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....f the support service agreement, a copy of which is placed at page 41 of the paper-book, it is observed that the services rendered are as under: 1.1 Financial Administration Assistance in improving financial practices and procedures. Such services may include: 1) Corporate-wide accounting practices 2) Cost accounting methods 3) Forecast and profit analysis 4) Relations with banks 5) Foreign currency management methods and techniques 6) Insurance and risk management 7) Improving financial practices and procedures 8) Assistance with tax filing obligations 9) Assembling and analyzing information on global developments in accounting, tax, banking, capital markets and related fields of potential significance to the parties. 1.2 Personnel Administration Assistance in maintaining and improving the parties' work forces (executive, administrative, and professional personnel). Such activities may include: 1) Analyzing and advising on the reallocation of responsibilities to enable employees to perform specified functions. 2) Advice on international develop....
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....ppears that some of the services rendered may not fall in the category of technical or consultancy services. However, some of the services rendered may fall either under technical or consultancy services. But the most crucial aspect, which requires examination is, whether in course of rendition of such services, the assessee has made available any technical knowledge, know-how, skill etc. to Bain India so as to enable Bain India to employ such technology, know-how, skill etc. without the aid and assistance of the assessee. In this context, it must be borne in mind that the agreement for providing support services was executed between the assessee and Bain India on 1^st day of April, 2010. Whereas, the present appeal relates to assessment year 2019-20. Thus, it is patent and obvious that from the year 2010 onwards, the assessee is providing support services to Bain India on regular basis. Had it been a case of transfer of technology from the assessee to Bain India by making available technical knowledge, know-how, skill etc. qua the services performed, it would certainly have enabled Bain India to employ such technical knowledge, know-how, skill etc. in performing such services inde....