TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 162
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....Services, IT Infrastructure Services and IT Security to its Associated Enterprises (AE's) in India and other Invesco Group Companies located Worldwide. The ld. Counsel submits that the cost incurred by the assessee for providing IT Support Services is allocated to its AE's on the basis of allocation rationale provided in Annexure II to the Master Inter Company Services Agreement. There is no element of profit embedded in such cost recoveries. The amount received by the assessee is purely on cost to cost. The Assessing Officer (AO) has erred in treating the cost recovered by the assessee as FTS/FIS as per DTAA and held that the same are taxable in India. The ld. Counsel submits that the Master Inter Company Services Agreement was entered into between assessee and Indian Associated Enterprises i.e. Invesco India P Ltd. on 20.05.2019 and the same agreement is valid during the impugned assessment year as well. Similar, additions were made by the AO in AY 2020-21 and AY 2021-22. The assessee carried the issue in appeal before the Tribunal in ITA No.784/Del/2023. The Tribunal vide order dated 23.07.2024 deleted the said additions. In the subsequent assessment year i.e. AY 2021-22, the as....
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....e technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. The import of term "make available" has been explained in the "Memorandum of Understanding relating to Article 12" which forms part of the Protocol to the India- USA DTAA. In terms of the said understanding technical and consultancy services are considered included services under paragraph 4(b) if they make available technical knowledge, experience, skill, knowhow, or processes, or consist of the development and transfer of a technical plan or technical design. It further provides that technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. It further clarifies that 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. 3.2 Ld. Counsel h....
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....ing 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 appellant/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: ........ 15. We tend to agree with the analysis and conclusion arrived at by the Tribunal." 3.6 Thus we are of considered view the condition of make available was not satisfied for services when provided by assessee did not enabled the AEs to apply the technology independently, on conclusion of the yearly contract. 4. As with regard to the observations of tax authorities below treating the services rendered by Assessee as FIS on the basis that the Assessee was providing training to the personnel of Invesco Group and thus the 'make available condition stands satisfied in the present case the Ld. Counsel submitted that the Assessee only supports and a....
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....y held that provision of training does not educate a person with respect to the functionality and attributes of the product or the service and could not be classified as a technical service. 5. Ld. Counsel also distinguished the reliance by AO on the AAR ruling in the case of Shell India Markets Private Limited by submitting that same stands overturned in view of the decision of Hon'ble Bombay High Court in the case of Shell India Markets Private Limited v. The Union of India & Others [Neutral Citation-2024: BHC-AS:10000-DB). In the said case while overturning the ruling of the AAR, the Hon'ble Bombay High Court has held as under- "18. .... .... ...... A perusal of the list of services relate to managerial services not involving anything of a technical nature. The AAR has discussed the services appearing in the CCA and has concluded that these activities in a retail business are at the core of retail marketing and hence advice tendered in taking a decision of commercial nature is a consultancy service. The AAR has further considered the definition of the word 'Consultancy' as defined in the Oxford English dictionary and has observed that a consulta....
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....ee was providing services where the IT training and facilities training, were of desktop application tools such as Microsoft Word, excel and power point etc to staff of the group. 7. Apart from that there is nothing to show in the assessment order that the AO had made any enquiry on his own or relied any provisions of the Master Inter-Company Services Agreement (in short "MSA") to show that the training as imparted was of such nature that it "made available", the technology to the associate enterprises so that on conclusion of the training the employees of AE's will be unable to use technology on their own. Rather we observed that very common softwares used in offices are mentioned for which the training was provided. Then Assessing Officer in para5 of the assessment order has merely relied the assessee's own submissions to conclude that as the assessee is training personnel of the group. The provisions of make available would become applicable. Thus we are inclined to sustain the contention of the Ld. Counsel. 8. Ld. Counsel has also stressed that otherwise too, the fee received by the Assessee is in the nature of reimbursement as it is simply allocation of costs....