TaxTMI 
TaxTMI 
2024 (10) TMI 1841
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.... 3. Erroneous recovery of refund not received by the appellant till date. 4. Erroneous penalty proceedings-initiated u/s. 270A of the Act." 3. The facts of the case, in brief, are that the ESAB UK is a company engaged primarily in the business of providing management services to its group companies. It is a resident of UK for tax purposes in terms of article 4 of the India-UK Tax Treaty and is eligible to claim the benefit thereof. During the year under consideration, ESAB UK had provided services in the areas of accounting, finance, sales, tax, legal, insurance, information technology, human resources, quality assurance and environment, manufacturing process, lean manufacturing, business development, etc. to EWAC Alloys Limited ("EWAC Alloys") pursuant to management services agreement entered into by it with EWAC Alloys. During the period under consideration, the assessee company has earned income of Rs.15,24,14,024/- from rendering the aforesaid management services from outside India to EWAC Alloys and no personnel of ESAB UK has travelled to India for rendering such services. The assessee company has claimed the aforesaid income as non-taxable in its return of inc....
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....Company, at the outset, submits that the aforesaid management services rendered by it are majorly in the nature of managerial services as they are provided with a view to rationalize and standardize the business conducted by EWAC Alloys in India and hence, such services are only intended to support the business of EWAC Alloys in accordance with the Group global practice. In this regard, the Company seeks to submit that the ambit of FTS in Tax Treaty is narrow as compared to the provisions of the Act and managerial services are not covered under the definition of FTS under the Tax Treaty, hence, the income earned by ESAB UK from services should not be taxable as FTS under the beneficial provisions of the Tax Treaty. 2.2. In support of the aforesaid contention, Company places reliance on the decision of N.M. Rothchild & Sons Ltd. v. DCIT [2023] 152 taxmann.com 18 (Delhi Tribunal) (please refer Page 6 to 14 of the Paper Book containing 277 pages submitted on 9th September 2024 during the course of hearing/ wherein the facts of the case are similar to the case of the Respondent involving India UK DTAA and services in the nature of management services such as human resources, i....
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....nt is able to make use of the knowledge, experience etc by himself in his business without recourse to the service provider: d. The service recipient is at liberty to use the technical knowledge, skill, know-how and process in his own right. 2.6. It is submitted that the management services provided by the Company to EWAC Alloys do not "make available" technical knowledge, experience, skill, know-how or process etc. This is on account of the following reasons: a. The management services provided by the Company to EWAC Alloys are on various business and commercial matters, best practices, guidelines which are standardized and internationally accepted practices for the Group as a whole and are provided by the Company only to its various ESAB group entities (including EWAC Alloys). Thus, EWAC Alloys always needs to approach the Company to gain insights on particular aspects and is not able to apply any expertise or use any knowledge on its own. b. The management services provided by the Company ultimately lead to protection of ESAB's brand image and client relations and EW AC Alloys is not at liberty to use the technical knowledge, skill know-ho....
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.... The continuous rendition of services by the Company in addition to our earlier submissions, additionally justifies that the services are not made available to the EWAC Alloys and the EWAC Alloys has to approach the Company time and again for the said services. 2.10. It is a well-settled principle that in case of continuous rendition of services where services are provided on recurring basis, the make-available test is not satisfied as the service recipient would need to take recourse of service provider each time when services are required The Company places reliance on the various judicial precedents submitted in the case laws compilation No II which have upheld the aforesaid principle (please refer Paper Book containing 89 pages submitted on 09 September 2024 during the course of hearing)." The D.R. of the Revenue, on the other hand, relied on the order of the Ld. AO. 8. We have considered the facts of the case and the submissions made as above. It is the case of the department that the claim of the assessee company that the management services fees are not liable to be taxed in India as per the article 13 of the India & UK Treaty is not acceptable to the Ld. AO. ....
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....td. v. DCIT [2023] 152 taxmann.com 18 (Delhi Tribunal), wherein, the facts of the case are similar to the present case involving India-UK DTAA and services in the nature of management services such as human resources, internal audit, corporate funds, group finance, global finance, legal and compliance, global planning, marketing, etc. It was inter alia held by the Hon'ble Delhi ITAT that the services rendered are in the nature of advisory and do not fall in the category of either technical or consultancy services under India- UK Tax Treaty. We are in agreement with the submissions of the assessee company that the services being managerial services, does not fall within the ambit of FTS under India & UK Tax Treaty, the services rendered, even if considered as technical, do not "make available" in technical knowledge, experience, skill know-how, or processes, or consist of the developments and transfer of technical plan or technical design to EWAC Alloys. Thus, the conditions of clause 4(c) of article 13 of the India & UK Tax Treaty are not satisfied in the present case. We are also agreed with the submissions made by the assessee company that the services can be set to have made....