TaxTMI 
TaxTMI 
2025 (6) TMI 243
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....USA]. The Assessee has also furnished a Tax Residency Certificate [TRC] from the concerned authorities of the said country. During the previous year relevant to the AY 2018-19, the Assessee had received certain amounts for the services rendered by it from resident entities. According to the AO, the said receipts were chargeable to tax as fees for technical services [FTS] under the Act as well as "Convention between the Government of the United States of America and the Government of the Republic of India for the Avoidance of Double Taxation and Prevention of Fiscal evasion with respect to taxes on income" [India-US DTAA]. The learned ITAT rejected the said view and allowed the Assessee's appeal as it did not concur with the AO's view that the services rendered entail any transfer of technology, knowhow or skill and therefore the receipts were not taxable as fees for included services [FIS] under Article 12 (4) of the India-US DTAA. 4. The Revenue has projected the following questions for consideration of this court in the present appeal: "A. Whether on the facts and in the circumstances of the case, and in law, the Hon'ble ITAT erred in holding that the receipts of the ....
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....h as advise/support, which the AO concluded were in the nature of imparting knowledge to recipient. It also observed that any support provided by the Assessee would not be required in future course. Additionally, the AO noted that its agreement with GASPL also require it to impart training and accordingly passed a draft assessment order dated 31.03.2023 under Section 144C (1) of the Act. 9. The Assessee filed its objections to the draft assessment order before the Dispute Resolution Panel [DRP] which were rejected by an order dated 27.12.2023. During the proceedings before the DRP, the Assessee also furnished additional evidence including with regard to allocation of corporate charges and repair and maintenance services. However, the DRP upheld the draft assessment order. 10. On the aforesaid basis, the AO passed the final assessment order, which is essentially on the same lines as the draft assessment order. 11. The Assessee states repair services provided by it follows two types of arrangements. The explanation regarding the said arrangements, as noted by the DRP in its order, is reproduced below: "Firstly, the Indian customer intimates the assessee about faulty....
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....ce, interpretation of make available for a concern providing services for the agricultural sector vis-à-vis education sector would be vastly different from each other. In the same way interpretation of make available is different for a concern engaged in providing services revolving around a highly specialized sector such as Aircraft industry. The make available clause deals with not only making available technical knowledge or know-how or processes or consist of the development and transfer of a technical plan or technical design but also deals with imparting experience and skill. Within the make available clause itself the enduring benefit would be different for all the items mentioned in it for example the enduring benefit of a technical design or know-how cannot be same as enduring benefit coming from imparting of skill or experience. In the former case enduring benefit will outlive the enduring benefit brought in by the latter. In case of assessee company, the enduring benefit and make available fall under skill/experience which is shared by assessee company with its customers. Both the parties in these service transactions are engaged in highly specialized work which c....
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....the property for which payment is received under paragraph 3 (b) of this Article, 10 percent of the gross amount of the royalties or fees for included services. 3. The term "royalties" as used in this Article means: (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof, and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8. 4. For purposes of this Article, "fees....
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....oyalties or fees for included services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for included services was incurred, and such royalties or fees for included services are borne by such permanent establishment or fixed base, then such royalties or fees or included services shall be deemed to arise in the Contracting State in which the permanent establishment or fixed base is situated. (b) Where under subparagraph (a) royalties or fees for included services do not arise in one of the Contracting States, and the royalties relate to the use of, or the right to use, the right or property, or the fees for included services relate to services performed, in one of the Contracting States, the royalties or fees for included services shall be deemed to arise in that Contracting State. 8. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them. and some other person, the amount of the royalties or fees for included services paid exceeds the amount which would have been paid ....
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....aborataries (Singapore) Pte. Ltd.: (2023) 459 ITR 5 and observed as under: 15. Similarly, in order for that income to fall within the ambit of "fees for included services", it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical knowledge, experience, skill, know-how or processes. As has been found by the Tribunal, the access to the database did not constitute the rendering of any technical or consultancy services and in any case did not amount to technical knowledge, experience, skill, know-how or processes being made available. 16. We note that while explaining the meaning liable to be ascribed to the expression "make available", the court in CIT v. Bio-Rad Laborataries (Singapore) Pte. Ltd. had affirmed the following opinion as expressed by the Tribunal. This is evident from a reading of paras 14, 14.1 and 15, which is extracted below (459 ITR p. 7): (SCC OnLine Del paras 14 and 15) "14. According to the Tribunal, the agreement between the respondent-assessee and its Indian affiliate had been effective from 1-1-2010, and if, as contended by the app....
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....nclusion arrived at by the Tribunal." 17. As we examine the nature of the transaction between an Indian subscriber and the assessee, it becomes manifest and apparent that it neither comprises of a transfer of copyright nor does it include a transfer of a right to apply technology and other related aspects which are spoken of in Article 12 (4) (b) of the Double Taxation Avoidance Agreement. 18. We thus find no justification to interfere with the view as expressed by the Tribunal. The appeal fails and shall consequently stand dismissed on the aforesaid terms." 16. The issue involved in the present case is covered by the several decisions of this court including CIT v. Relx Inc. We find no infirmity with the view of the learned ITAT in regard to taxability of repair and maintenance charges as FIS. 17. Insofar as the corporate allocation charges are concerned, the learned ITAT had accepted the Assessee's case that it was not rendering any services, which absolved the recipients from availing similar services in future. The learned ITAT also unequivocally stated that none of its employees had visited India for rendering any training. On examining the facts on rec....