TaxTMI 
TaxTMI 
2025 (5) TMI 2316
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....f the income-tax Act, 1961 (the Act') and the Ld. Dispute Resolution Panel-II, New Delhi ('Ld.. DRP) has erred in issuing the directions as per section 144C of the Act, on the following grounds. 1. On the facts and circumstances of the case and in law, the Ld. AO has grossly erred in passing the final assessment order without considering the material available on record and is bad in law since it has been passed without giving sufficient opportunity to the appellant. 2. On the facts and in the circumstances of the case and in law, Ld. AO has erred in alleging that receipts from provision of product analytics solutions amounting to Rs 42,59,36,336/-, is taxable as Fee for included Services as per the Act and also as per the provisions of India-USA Double Taxation Avoidance Agreement ('DTAA'). i. The said finding of the Impugned Order is, on the face of it, illegal and fallacious in view of the decisions of this Hon'ble Tribunal in Appellant's own case, for AYs 2018-19 and AY 2021-22, wherein on basis the identical facts as involved in present case and no further appeal has been filed against the same, this Tribunal held that the pay....
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....pellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal. The Appellant prays that appropriate relief be granted based on the above grounds of appeal and the facts and circumstances of the case." 3. Heard both the sides. The ld. AR has submitted that the issue involved is covered in favour of the assessee in the assessee's own case by the decision of the Tribunal in AY 2021-22. In this context, we find that the DRP in internal page 12 of its order at para No.6(iii) has observed as follows:- "6. ...... ............... (iii) As can be seen from the above the DRP in its directions for AY 2021-22 has analyzed in detail the work done by the assessee company for its customers and has affirmed the draft order passed by the AO. It has been submitted by the assessee that the Hon'ble ITAT has recently decided the appeal in favour of the assessee for AY 2021-22. The panel members consider it appropriate to direct the AO to verify if the factual matrix and the issues involved are identical and if the said decision has been accepted by the Revenue. If ....
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....e falls clearly under the definition of FTS/FIS" ii. That knowledge imparted through application "become knowledge base for future use " 10. Now the relevant Article 12(4)(b) of the India-USA DTAA reads as follows: "4. For purposes of this Article, "fees for included services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel) if such services: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or (b) make available technical knowledge, experience, skill, know- how, or processes, or consist of the development and transfer of a technical plan or technical design." 11. As per plain terms of Article 12(4)(b) of the India-US Tax Treaty, following twin conditions are required to be cumulatively satisfied in order to qualify as FIS: i. such services are technical or consultancy services if they make available knowledge, experience, skill, know-how, or processes or alternativel....
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.... the Indian company through the service contract is commercial information. The fact that technical skills were required by the performer of the service in order to perform the commercial information does not make the service a technical service within meanings of para (4)(b). 15. Clearly, commercial information/output from a technical application does not constitute FIS as there is no technical design, process or plan which has been transferred to the client providing enduring benefit. 16. Ld. Sr. Counsel has also relied on the MOU dated 12 September, 1989 to India USA DTAA and we are of considered view that same also sheds light on the scope of Article 12(4)(b) in the following words: Paragraph 4(h) Paragraph 4(b) of Article 12 refers to technical or consultancy services that make available to the person acquiring the services, technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plant or technical design to such person. (For this purpose, the person acquiring the service shall be deemed to include an agent, nominee, or transferee of such person). This category is narrower than the cat....
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....s 'Fugro'). Fugro had a team of experts who are specialized in performing air borne geophysical services for clients, process the data acquired during the survey and provide necessary reports. The services are engaged to conduct the air borne survey for providing high quality, high resolution, geophysical data suitable for selecting probable kimberlite targets. For the technical services rendered by them the assessee had paid consideration. The Assessing Officer treated the consideration paid to Fugro under the agreement as falling within the definition of fees for technical services under Article 12 of the Indo-Netherlands Double Tax Avoidance Agreement (DTAA) read with Section 90 of the Income-tax Act, 1961. 19.1 In aforesaid set of fact the Hon'ble Karnataka High Court, explained the phrase 'make available' as appears in the Article 12(4) of India-USA DTAA, as follows; "22. What is the meaning of "make available". The technical or consultancy service rendered should be of such a nature that it "makes available" to the recipient technical knowledge, know- how and the like. The service should be aimed at and result in transmitting technical kn....
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....ess and the technologies which the Fugro adopted in arriving at the information/data which is passed on to the assessee as technical service. The assessee is unable to make use of the said technical knowledge by itself in its business or for its own benefit without recourse to Fugro. In fact, the question whether along with rendering technical services, whether the technical knowledge with which that services was rendered was also made available to the assessees/customers is purely a question of fact which is to be gathered from the terms of the contract, the nature of services undertaken and what is transmitted in the end after rendering technical services. If along with technical services rendered, if the service provider also makes available the technology which they used in rendering services, then it falls with the definition of fee for technical services as contained in DTAA. However if the technology is not made available along with the technical services and what is rendered is only technical services and the technical knowledge is with-held, then, such a technical service would not fall within the definition of technical services in DTAA and not liable to tax." "2....
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....e facts of these cases. The maps which are delivered are not of kind of any developmental activity. As such, earlier the information which is furnished to the assessee by way of technical services in the digital form is also given in the form of maps. Therefore the case on hand do not fail in the second part of the aforesaid clause dealing with development and transfer of plans and designs. Therefore the second substantial question of law is also answered in favour of the assessee and against the Revenue." 20. Reliance is also placed on decision of Mumbai Bench in the case of ICICI BANK LTD. v/s DCIT-ITA 486/2004 [MUMBAI ITAT]. The relevant paragraphs reads as follows: 3. The Assessee bank had appointed Moody's Investors Service, a credit rating agency for the purpose of ratings its floating rate euro notes issue amounting to US $ 150,00,00, The fees charged by Moody's Investors Service for rendering analytical services in connection with counter party rating of the issue amounted to US $ 45,000 14. Having given a close look to the facts of the case in the light of definition of fees for included services given in DTAA and the Memorumdum of Unders....