TaxTMI 
TaxTMI 
2025 (2) TMI 160
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....w and liable to be set aside. 2. On the facts and in the circumstances of the case, the Assessment Order passed by the AO, is bad in law and perverse as it has been passed without considering the material evidence(s) on record Re: Jurisdictional Ground 3. That the directions dated 24.08.2023 passed by the DRP are void ab initio and non-est as the same have been issued without a valid document Identification Number (DIN) and falls foul of the pre-requisites enunciated by CBDT Circular No. 19/2019 dated 14.08.2019 mandating generation/allotment/quoting of system generated Document Identification form Number on all communications/correspondence/order by the Income Tax Department. Re: Payment received as "Service Fees" being taxed as FIS 4. That the AO/DRP has erred in bringing to tax the receipts of INR 8,81,34,162, received as Service Fees in lieu of consultancy services and training provided to its customers, as being in the nature of Fees for Included Services ('FIS') under Article 12 of the India-USA Double Taxation Avoidance Agreement ('DTAA") read with section 9(1)(vii) of the Act. 5. That the AO/DRP failed to app....
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.... same are dismissed. 4. Ground No.3 is not pressed by the assessee; hence, the same is dismissed as not pressed. 5. Brief facts of the case:-The assessee company is incorporated under the laws of USA and is engaged in the business of providing consultancy and professional services. During the year, the assessee received an amount of Rs. 4,21,80,420/- on account of 'Digital Product License Fees' which has been offered to tax as royalty. However, the amount received as 'Services Fees' of Rs. 8,81,334,162/-. has been claimed as non-taxable. The Assessing Officer taxed the amount of Rs. 8,81,34,162/- holding it that it as 'Fees for Included Services' (FIS) which came under the purview of the FIS under section 12 of India-USA DTAA. Similar view was taken by the Assessing Officer in AY 2020-21 in the case of the assessee for identical services. 6. The Assessing Officer during the assessment proceedings, asked the assessee if there was any change in the business as compared to last year. The assessee replied that there was no change in the business module during the present year also. The relevant extract in assessment order in para no.6 is reproduced as under:- "6. Vide....
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....ssional development. * Rewards and Benefits: Consulting services to help organisations evaluate their reward (such as compensation, ESOPs, etc.) and payment structure from talent retention standpoint. The copy of invoices in relation to rendition of such services, on sample basis, are enclosed as Annexure 2. The aforesaid consulting services are generally rendered by assessee through emails, webinars, etc. and given the fact that such services do not make available/ impart technical knowledge to its clients to enable them to apply the technology contained therein, the "make available condition, as outlined under Article 12 of the India-USA Double Taxation Avoidance Agreement ('DTAA') for services to qualify as Fees for Included Services (FIS') is not satisfied. Further, given the fact that the assessee is a foreign company and it does not have any office/ fixed place of business in India, it does not constitute a Permanent Establishment (PE) in India [as defined under Article 5(1) of the India-USA DTAA], business profits from provision of aforesaid services are not liable to tax in India as per provisions of Article 5(1) read with Article 7 of....
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....various strategic decision making related to their businesses. These activities do enable the customers of the assessee to better equip themselves with technical knowledge, experience, skill, knowhow or processes in respect of the services rendered by the assessee. In view of the above, panel finds no fault with the AO's arguments that the 'make available' criteria is fulfilled in this case, and accordingly the receipts on this account have been rightly held as FTS taxable as per the Act as well as the DTAA. Consequently, the objections raised in ground number 2 are rejected." 5.8 It is not in doubt that the services provided by the assessee to its Indian clients are in the nature of consultancy services. The only issue that needs to be ascertained is whether the make available criteria is satisfied in the facts and the circumstances of the case. The AO in para 4 of the remand report as well as in paras 6 to 9, 11 and 14 of the DAO has clearly established that the services rendered by the assessee are provided by the employees of the assessee who are having technical knowledge, experience and skills in their respective files. Each components of the activities is comp....
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....dia-USA DTAA, the services should be in the nature of technical or consultancy services, and these services should "make available technical knowledge, experience, skill know-how or processes." The services which are in the nature of "technical" or "consultancy in nature and which satisfy the "make available" condition gets covered under the definition of FIS as per the India-USA DTAA. Further, "technical services" means the services requiring expertise in a technology which could be related to a particular subject, art or craft or its techniques requiring special knowledge to be understood in the context in which it is used. FIS is meant to cover technical as are capable of being provided by the way of providing services for a fee. Use of expertise in technology in providing the services is a requisite to treat a service as technical. "Consultancy services" involves the provision of advice or advisory services by a professional. It can be said that not all kind of advisory could qualify as technical services. For any consultancy to be treated as technical services, it would be necessary that a technical element is involved in such advisory. Thus, the consultancy ....
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....sis from preceding years. In the present case, assessee is merely providing consulting services such as organizational strategy, talent strategy, consulting in relation to rewards and benefits and related leadership and development consulting services for which clients / service recipients need to come back to assessee, as and when they have such requirement and service recipients do not get equipped in providing such services. 17. We find that the assessee has provided services to Deloitte, Flipkart and gone through the work order and the scope of service, details of project team and cost of services. On going through the entire details, we find no technical knowledge has been made available to the client. Similarly, the review of ESOPs is a continuous process taking into consideration various parameters. Even in that, it cannot be said that the assessee "Korn Ferry" has made the clients enriched by imparting or passing permanently any technical inputs. From the terms of agreements and also from the conduct of the party, it cannot be said that the "make available" requirement has been satisfied. Hence, we hold that the services rendered were not in nature of FIS under Art....