TaxTMI 
TaxTMI 
2026 (7) TMI 1872
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.... well as under Article 12 of India-USA DTAA? 2. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 3. The only issue contested by the revenue pertains to CIT(A) deleting addition made by the AO towards Passenger System Solutions treating the same in the taxable in the hands of the assessee as Fees for Technical Services (FTS) u/s 9(1)(vii) of the Act as well Article 12 of DDTA between India and USA. At the outset, the Ld. AR of the assessee submitted that the issue is fully covered by the decision of the ITAT in appellant's own case in ITA Nos. 6436, 6439 to 6444 & 6470/Mum/2024 for AYs: 2014-15 to 2021-22 dated 02.04.2025. The Ld. Sr. DR of the revenue fairly agreed that the issue stands covered by the above decision. For ready reference, the relevant part of the ITAT decision is reproduced below:- "3. We heard the parties and perused the material on record. The facts pertaining to the issue under consideration are that the assessee has entered into Passenger Services contracts with Indian airlines, mainly to National Aviation Company of India Limited ['NACIL', otherwise known as Air India Limited] towa....
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....26 (Cochin) (Trib.)] During the course of hearing the Id AR brought to our attention that the said ruling of AAR and the decision of the coordinate bench have been subsequently reversed by the Hon'ble High Courts. 5. For the purpose of examining the taxability of the impugned receipts towards passenger services under DTAA, we will look at the relevant provisions of Article 12 of the India USA DTAA which reads as under- ARTICLE 12 ROYALTIES AND FEES FOR INCLUDED SERVICES 1. Royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State 2 to 3*** 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 techni....
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.... held as FTS to be taxed in India under the DTAA which specifically provides so the observations of CIT(A) in this regard in AY 2016-17 as extracted below are relevant- "6.5.7. As held in the various decisions listed hereunder, for a payment to qualify as being in the nature of Fee for Included Services under the tax treaty, it is necessary that the services make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design Shell India Markets (P) Ltd. [2024] 463 ITR 222 (Bombay High Court) Interoute Communications Ltd. [2023] 153 taxmann.com 392(Bombay High Court) Guy Carpenter & Co. Ltd [2012] 346 ITR 504 (Delhi High Court) Buro Happold Ltd. [2019] 103 taxmann.com 344 (Mumbai ITAT) Reliance Jio Infocomm Ltd. [2019] 111 taxmann.com 371 (Mumbai ITAT) Mahindra & Mahindra Limited [2009] 30 SOT 374 (SB-Mumbai ITAT) WNS North America Inc. [2013] 146 ITD 435 (Mumbai ITAT) United Helicharters (P.) Ltd. [2013] 60 SOT 58 (Mumbai ITАТ) Raymonds Limited 86 ITD 791 (Mumbai ITAT) B4U Internat....
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....or processes and does not relate to consultancy on managerial issues. 18. The Appendix 2 of CCA contains the General BSS. The list of services availed are as follows: ............ 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 consultant is a person who gives professional advice or services in a specialized field. However, the AAR failed to appreciate that the word Consultancy appearing in the Article is to be interpreted in the context of consultancy which makes available technical knowledge, etc. and not of managerial nature. The reading of the Article clearly indicates that the consultancy service must be which makes available technical knowledge, etc. Sub-para (c) to article 13(4) restricts such services to tho....