TaxTMI 
TaxTMI 
2025 (2) TMI 1444
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....ring to the Article 13(4) of the India UK DTAA when the fact is that assessee had made available their technical knowledge/experience/skill to the recipient and the same is of enduring nature capable of being utilized independently by the recipient without recourse to the service provider" ?. ii. "Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in referring to the ITAT order of AY 2012-13 in ITA No. 961/MUM/2016 dated 29.12.2011 where the fact of the issue was different since the agreement which was in force w.e.f 01.01.2017 was different from the agreement and the claim of services for AY 2012-13"? iii. "Whether on the facts and in the circumstances of the cases and in law, the CIT(A) has erred in referring to the old and new agreement when the old agreement was not produced and brought to the knowledge of the AO during assessment stage"? iv. "Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that reimbursements cannot be brought to tax in terms of the Act ignoring the judgment of Hon'ble Delhi High Court in the case of M/s. Centrica India Offshore Pvt.....
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....of the assessee and held that the receipt of the assessee should be treated as FTS and accordingly made addition of the entire amount of Rs. 5,97,00,210/-. The AO did not give any specific finding with regard to the amount received towards rendering other services as reimbursement by the assessee. 4. Aggrieved the assessee filed further appeal before the CIT(A). The CIT(A) allowed the appeal in favour of the assessee by holding that "4.4 I have carefully considered the submission of the appellant in light of the facts of the case. The issue is regarding the taxability of certain services rendered by the appellant to its Indian associate enterprise. The AR at the outset stated that the issue is covered by the favourable ruling pronounced by the Hon'ble ITAT, Mumbai in Appellant's own case for AY 2012-13. AY 2013-14 and A Y 2016-17. To verify the nature of services rendered in past years and the relevant financial year, the AR was required to furnish the old and new service agreements. The appellant furnished the same and the relevant extract of the services are reproduced here as follows: Services as per old agreement: 2. SERVICES PROVIDED ....
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....H Office or Project Location - Management of both wireless and wired Local Area Networks in MWH offices and project sites - Management and operation of primary Data Centre's housing business critical systems and applications - It provides the environment which allows applications to operate, including access control, server hardware, operating systems, application programs, backup systems, storage networks and support tools. 4.4.2 In the instant case, though the appellant admits that the services rendered by the Appellant are in the nature of technical/ consultancy services, it does not involve any development or transfer of technical plan or design, the said services can be considered as "FTS" under Article 13 of the India-UK DTAA only if they make available technical knowledge, experience, skill, know-how, or processes. The Appellant provides ongoing IT support to its AE, Stantec RNet to resolve its technical issues / queries and to ensure smooth functioning of day-to-day IT operations. The very fact that these services are obtained on a recurring basis demonstrate that the Appellant does not impart / share technical knowledge with Stantec ....
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....any services the third parties ....... With the assistance of the Ld. Representative, we have also gone through the Article 13 of the India-UK DTAA. The relevant extract of the said is reproduce as under "4. For the purposes of paragraph 2 of this Article, and subject to paragraph 5. of this Article, the term "fees for technical services means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which payment described in paragraph 3(a) of this article is received: or b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received, or c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design It is clear from the terms of the Article 13 referred above that for a payment to fall within the definit....
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....ow settled by the decision on the impugned issue by the Co-ordinate Bench in assessee's own case which has been rightly relied on by the CIT(A). 6. The ld. DR on the other hand vehemently argued that the decisions of the Tribunal in assessee's own case in earlier years were with regard to the receipts in the hands of the assessee as per the old agreement entered into by the assessee with its AE. For the year under consideration the assessee has entered into new agreement and therefore, the decision of the Co-ordinate Bench cannot be applied directly. 7. We heard the parties and perused the material on record. The assessee has entered into agreement with its AE for rendering services as tabulated in the earlier part of this order. The contention of the AO is that the IT Support Services rendered by the assessee to its AE makes available the technical knowledge, experience and skill and therefore the same is to be treated as FTS under Article- 13 of DTAA between India and UK. The CIT(A) has deleted the addition made by the AO by placing reliance on the earlier year decisions of the Co-ordinate Bench on the same issue. On perusal of the relevant findings of the CIT(A) as....
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....amount received by the assessee, we hold that the same cannot be taxed as income in the hands of the assessee in India following the settled legal position in this regard. Accordingly we see no infirmity in the findings of the CIT(A) deleting the addition made by the AO. 10. In result, the appeal of the Revenue for AY 2018-19 is dismissed. 11. For AY 2019-20, the assessee has received the following amounts which the AO has held as FTS. Sr. No. Description Nature of Service Reasoning ƒor non- taxability Amount (in INR) 1 INet Charges Technical Service The services provided do not "make available" technical knowledge, experience, skill, know-how or process and hence, not taxable by virtue of provisions of India-UK tax treaty 54,037,025 2 Annual System Maintenance charges These are pure reimbursement of expenses incurred by the Company and charged back to the Indian entity. In absence of any income element, reimbursement of expenses are not taxable in terms of provisions of the Act. 4,215,027 3 Professional System Maintenance charges 901,430 4 Staff Welfare expenses 31,135 5 Recr....