2024 (9) TMI 1623

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....fessional service such as installation of software into customer system amount to Fee for Included Services under Article 12(4)(b) of India-US DTAA. It was submitted that on identical facts and circumstances for AY 2018-19 in assessee's own case vide ITA No.1996/Del/2022, order dated 25.07.2024, the issue No.1 with regard to software licensing has been decided in favour of the assessee. 2.4 In this regard, the ld. DR could not dispute that the issue with regard to software licensing is squarely covered by the order of the coordinate bench in which one of us i.e., Judicial Member was also on the Bench. Therein, by order dated 25.07.2024 (supra) it was held as follows:- "13. Thus it becomes necessary to examine that if DRP was right to conclude that the report or information generated by access to the software of assessee, can be called 'Technical' as with regard to the nature of services generating FIS. Admittedly what the customer of assessee can generate by access to the software of assessee is data analysis of information provided by the users of the product of the assessee. The reports so generated are merely commercial information which helps the customers of assess....

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.... deemed to include an agent, nominee, or transferee of such person). This category is narrower than the category described in paragraph 4(a) because it excludes any service that does not make technology available to the person acquiring the service. Generally speaking, technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc., are made available to the person purchasing the service, within the meaning of paragraph 4(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. Typical categories of services that generally involve either the development and transfer of technical plants or technical designs, or making technology available as described in paragraph 4(b), include:" 17. Taking aforesaid into consideration we find that that there is nothing in the order of DRP, as to how assessee was providing any services to any of the clients who acquired the service in a manner that it ....

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....ike. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology "making "available", the technical knowledge, skill?, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(....

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....tion of technical services in DTAA and not liable to tax." "27. In the background of the aforesaid principles and facts of this case, it is clear that assessees acknowledge the services of Fugro for conducting aerial survey, taking photographs and providing data information and maps. That is the technical services which the Fugro has rendered to the assessees. The technology adopted by Fugro in rendering that technical services is not made available to the assessees. The survey report is very clear. Unless that technology is also made available, the assessees are unable to undertake the very same survey independently excluding Fugro in future. Therefore that technical services which is rendered by Fugro is not of enduring in nature. It is a case specific. That information pertains to 8 blocks. The assessees can make use of the data supplied by way of technical services and put its experience in identifying the locations where the diamonds are found and carrying on its business. But the technical services which is provided by Fugro will not enable the assesses to independently undertake any survey either in the very same area Fugro conducted the survey or in any other area.....

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....es given in DTAA and the Memorumdum of Understanding along with example, we find that the assessee has obtained the commercial information of rating from Moody's and the remuneration was paid outside India. Now it is to be seen whether the assessee acquired any technical skill or technology on the basis of which commercial information was prepared. The answers is certainly in the negative because assessee has only got the commercial information and not the technical know- how/technical expertise or the technologies on the basis of which it was prepared. For bringing any payment within the definition of "fee for included services' the non- resident must make available the technical skill, expertise or technical know-how to the assessee, on the basis of which non-resident has prepared or developed the commercial information. Undisputedly in the instant case the technical skill, expertise or technical know-how used in preparing the commercial information was not made available to the assessee and hence the remittance made by the assessee for obtaining such commercial information cannot be called to be the 'fees for the included services to make it chargeable to tax in Indi....