TaxTMI 
TaxTMI 
2026 (9) TMI 708
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....ical Services (FTS). 3. Briefly the facts are, the assessee is a non-resident corporate entity incorporated under the laws of Singapore and is a tax resident of Singapore. As stated, the assessee is engaged in the business of providing support services to its group companies in other countries, including India. For the assessment year under dispute, the assessee filed its return of income on 30.11.2018, declaring income of Rs. 1,97,630/-. The return of income filed by the assessee was selected for scrutiny. In course of assessment proceedings, the Assessing Officer noticed that during the year under consideration, the assessee had received an amount of Rs. 6,33,96,361/- towards project support services and a further amount of Rs. 4,42,73,329/- towards regional support services from its group entity in India, namely, Atos India Private Limited. Being of the view that the aforesaid receipts are in the nature of royalty/FTS, the Assessing Officer brought them to tax while framing the draft assessment order. 4. Against the draft assessment order so framed, the assessee raised objections before Learned DRP. However, learned DRP did not accept the objections of the assessee. Accord....
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....learned DRP endorsed the view expressed by the Assessing Officer. Accordingly, in terms with the directions of learned DRP, the final assessment order was passed. 9. Before us, learned counsel appearing for the assessee, drawing attention to the Regional Support Services Agreement (RSA), submitted that the services rendered by the assessee under the agreement are in the nature of standard support services without requiring the assessee to transfer any information concerning technical, industrial, commercial or scientific knowledge, experience or skill, so as to make it royalty in terms with Explanation 2(iv) to Section 9(1)(vi) of the Act. She submitted, in course of rendering the services, the assessee itself applies its experience, know-how, skill, etc., rather than imparting the same to the service recipient. She submitted, this basic difference was not understood by the Departmental Authorities. 10. Drawing our attention to the various clauses of the RSA, learned counsel submitted, none of the services rendered by the assessee can be considered to be in the nature of managerial, technical or consultancy services. She submitted, even assuming but not admitting that some of....
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....ther specific or general services on remuneration basis. The services provided by the assessee to ATOS India, as per the terms of the agreement, are as under: 1. Strategic Operations * Definition of the vision of APAC strategy * Coordination with the Atos Group strategy in the area * Maximization of the utilization skills and resources within the APAC area 2. Sales / Markets / Service Line support * Regional excellence center and solutions expert - supporting key regional accounts such as SCB and Siemens * Provision of sales support and market intelligence data for APAC Key clients in Infrastructure and Data Management, Business & Platform Solutions and Big Data Services * Operational excellence, work force management and quality control and management to ensure quality and standard of services and B&PS practices are standardized across countries in the region and meets the SLAs requirements of customers (e.g Akzo Nobel) * Implementing and managing of a sales strategy at APAC level * Assess and review all operational/ technical/ quality/ delivery risks in Bid and Contract reviews at APAC level....
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....rsed by learned DRP, we need to examine the nature and character of the receipts. For this purpose, it is necessary, at the very outset, to examine the definition of "royalty" under Article 12(3) of India-Singapore DTAA. The term "royalty" is defined under Article 12(3) of the treaty, as under: "3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use: (a) any copyright of a literary, artistic or scientific work, including cinematograph film or films or tapes used for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right, property or information; (b) any industrial, commercial or scientific equipment, other than payments derived by an enterprise from activities described in paragraph 446) or 4(c) of Article 8." 16. As could be seen from the above noted Article, it is in two parts. The first part of the definition states that consideration received for use of, or right to use, any ....
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.... scientific experience. 18. On the contrary, looking at the nature of services rendered, it can be said that there are in the nature of support services to assist the Indian group entity to improve efficiency so as to maintain the standards of the group. On a reading of the RSA it cannot be assumed that while rendering such services, the assessee has either transferred the use of, or right to use, any information concerning industrial, commercial, or scientific experience as per Article 12(3)(a), or has imparted any information concerning technical, industrial, commercial, or scientific knowledge, experience and skill. No material has been brought on record by the Departmental Authorities to demonstrate that the assessee had alienated any proprietary information concerning industrial, commercial, or scientific experience. In course of rendition of services, the assessee might have applied the information and experience acquired by it, but that does not amount to imparting such information, experience or skill etc. to the service recipient so as to enable the service recipient to independently use such information, experience, skill, etc., even commercially. 19. In fact, Claus....