TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1606
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....see entered into Management Services Agreement with various Keller Group entities in Asia Pacific Region including Keller Ground Engineering India Pvt. Ltd. (Keller India). The Management Services Agreement dated 01.01.2016 is at pages 117 to 131 of paper book. The services provided by the assessee to its Indian AE are given in Schedule 1 to said agreement at page no. 126 & 127. In lieu of providing services, the assessee receives management fee from Keller India. The services are in nature of strategic management consultancy services, legal services, engineering & technical advice, marketing & advertising services, human capital, procurement and I.T services. Except for I.T services, none of the services provided by assessee to Indian AE qualify 'make available' clause. The revenue from I.T Services was offered to tax by the assessee suo-motto. The assessee is rendering these services since 2016. The AO holds management fee as FTS on the presumption that the assessee is making available Technical Knowledge Skill, etc to its AE. In preceding assessment years, the AO made addition for similar reasons. The assessee carried the issue in appeal before the Tribunal. However, the appeals....
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....acted. To support his submissions, he placed reliance on following decisions:- 1. Tagit (P.) Ltd. Vs. DCIT, 159 taxmann.com 93 (Delhi-Trib.); 2. Inter Continental Hotels Gorup (Asia Pacific) (Pte.) Ltd. Vs. ACIT, 133 taxmann.com 99 (Delhi-Trib.); 3. Bramhacrop Hotels & Resorts Ltd. Vs. DCIT (International Taxation-1), 61 taxmann.com 186 (Pune-Trib.). 2.4 Without prejudice to the submissions made on merits, the ld. AR submits that in ground no. 5 of appeal, alternate contention of the assessee is, that, if the payment received in lieu of services is held to be fee for technical services, the same should be taxed at flat rate of 10%, as per India-Singapore DTAA without levy of surcharge and cess. In support of his submissions, he placed reliance on the following decisions:- 1. FCC Co. Ltd. Vs. ACIT in ITA No. 1789/Del/2022 for AY 2017-18, decided on 26.12.2022; 2. Soregam SA Vs. DCIT, 101 taxmann.com 94 (Delhi-Trib.); 3. R.A.K Ceramics, UAE Vs. DCIT 104 taxmann.com 380 (Hyd.). 2.5. In respect of ground no. 6 of appeal, the ld. AR submits that the AO has erred in charging interest u/s. 234A of the Act, without appreciating th....
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....s (FTS), raised in ground no. 4 of appeal. The assessee is a Singapore based company and is in 6th year of operation in India. In so far as tax residence status of assessee, the same is not in dispute. Schedule-I annexed to Management Services Agreement dated 01.01.2016 between the assessee and Keller India lists the scope of services provided by assessee. The services inter alia includes: (i) Strategic Management Consulting Services; (ii) Legal Services; (iii) Engineering and Technical Advice; (iv) Marketing and Advertising Services; (v) Human Capital (vi) Procurement; & (vii) IT Services. 6. As per the agreement these services are provided on an ongoing basis through correspondence, telephone, email, telefax, periodic visits of personal for short term and any other mode mutually agreed between the parties. The assessee has offered to tax receipts in respect of IT Services. In so far as the other services mentioned in the agreement, it is contended that they are Advisory and Managerial Services. To substantiate nature of services, the assessee has placed on record some sample emails at page no. 156 to 188 of the pap....
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.... 12(4)(b), "make available" of technical knowledge, experience, skill, knowhow or processes which enables the person acquiring the services to apply the technology is must. Nowhere in the agreement there is any covenant for transferring/making available any technical knowhow. Even from the scope of work as detailed in the agreement and exchange of mails between assessee and Keller India it is not emanating that there is transfer of any knowhow or technical knowledge or processers. A perusal of Management Services Agreement would show that there is no specific life time of agreement. That mean the term of said agreement is perpetual unless the same is terminated for the reasons mentioned in clause 7 of the agreement by any the parties to the agreement. Thus, the services are provided by the assessee to Keller India on year on year basis. This itself shows that there is no transfer of any technical knowhow or skill or process or technology. Had it been a case of transfer of knowhow, Keller India would not have entered into such perpetual agreement. Further, from perusal of mails it emerges that Keller India is seeking technical consultancy and advisory services on each of the project....
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....the respondent/assessee to its Indian affiliates did not come within the purview of FTS, as reflected in article 12(4)(b) of the Indo Singapore DTAA, concluded that they did not fulfil the criteria of 'make available' principle. 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 assessee/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. 14.1 Notably, this aspect is adverted to in paragraphs 17 to 23 of the impugned order. For convenience, the relevant paragraphs are extracted hereafter: "17. A perusal of the aforementioned provision shows that in order to qualify as FTS, the services rendered ought to satisfy the 'make available' test. Therefore, in our considered opinion, in order to bring the alleged managerial services within the ambit of FTS under the India-Singapore DTAA, the services would have to satisfy the 'make available' test and such services should enable the person acquirin....
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....cidental benefit to the recipient. 58. In the instant case, Criteo India is unable to apply the technical knowledge/ skill on its own, i.e., without recourse to such personnel, in future. The technical knowledge and skill does not remain with the Criteo India after the particular contract comes to an end and the technical knowledge or skills of the assessee is not imparted to and absorbed by Criteo India so that it can deploy similar technology or techniques in the future without depending upon the assessee. The services are in the nature of support services, which are rendered by the Assessee to all group companies in the APAC region. Operational support (such as finance, accounting, business and legal support, statutory compliance, financial planning etc.) has been rendered by the Assessee with an intention to ensure consistency with the Assessee's global brand standard, and hence needs to be rendered continuously based on the requirements of Criteo India. Training/ recruitment and human resource support neither result in transfer of technology or knowledge or skill or know-how. The receipts on account of travelling, by no stretch of imagination, can be considered in....