TaxTMI 
TaxTMI 
Make-Available Requirement for Managerial and Consultancy Services under the India-Singapore DTAA: Article 12(4)
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....n resources, information technology and compliance were held not to satisfy the treaty definition where no technical know-how, skill, process, technical plan or technical design was transferred. • The wider domestic-law definition in section 9(1)(vii) does not displace the more beneficial treaty definition where the DTAA applies. 2. Background & Context Cross-border intra-group service arrangements frequently combine strategic advisory, finance, technology support, logistics, treasury, legal, human-resources and compliance functions. Although such services may be described as managerial, technical or consultancy services in ordinary commercial terms, their treaty characterisation requires a further examination under Article 12 of the India-Singapore DTAA. The central distinction is between rendering a service and transmitting the technical capability used to render that service. A service provider may deploy specialised personnel, proprietary processes and accumulated experience for the recipient's benefit. That fact does not alone establish that the recipient has acquired the technical knowledge, experience, skill, know-how or process required to conduct ....
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....o accrue or arise in India. Explanation 2 defines FTS as consideration, including lump-sum consideration, for rendering "any managerial, technical or consultancy services", including services of technical or other personnel. It excludes consideration for a construction, assembly, mining or like project undertaken by the recipient and consideration chargeable under the head "Salaries". This definition does not contain the Article 12(4)(b) make-available condition. The treaty may nevertheless govern where it is more beneficial. Section 90(2) provides that, where an applicable agreement has been entered into for relief or avoidance of double taxation, the Act applies to the extent it is more beneficial to the assessee. The same position is reflected in Circular No. 333, which states that a specific DTAA provision prevails over the general provisions of the Act and that the Act governs where the agreement contains no specific provision. For a non-resident claiming treaty relief, section 90(4) requires a certificate of residence from the foreign jurisdiction, and section 90(5) requires such other prescribed documents and information. These eligibility requirements are distinct fro....
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.... consultancy support does not satisfy Article 12(4)(b) unless it leaves the recipient able to independently apply the technical knowledge in future. The ruling also separately examined Article 12(4)(a), holding on its facts that the management arrangement was not ancillary and subsidiary to royalty-producing licence arrangements. Thus, clauses (a) and (b) require independent factual evaluation; failure under clause (b) does not by itself answer the ancillary-and-subsidiary question under clause (a). Continuing dependence and absence of transfer In 2023 (10) TMI 1039 - DELHI HIGH COURT, the finding that a continuing service arrangement did not enable the Indian recipient to provide the services unaided was affirmed. The enduring or incidental benefit obtained from the services was held insufficient. The relevant inquiry was whether technology, technique or skill had been transferred and absorbed such that the recipient could deploy it independently. The recipient's continuing dependence was material evidence that no such capability had been imparted. In 2022 (7) TMI 1330 - ITAT MUMBAI, the Tribunal expressed the test in terms of imparting and absorption: the technical k....
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....ee. It held that a pure salary recharge, without profit element, did not become FTS merely because the individual possessed experience or skill. The decision also applied the statutory exclusion for consideration chargeable under the head "Salaries" and found no making available of enduring technical know-how. Although secondment arrangements require separate examination of employment, reimbursement and contractual facts, the decision confirms that the employee's expertise alone is not proof of treaty-level transfer. 5. Practical Implications • Service agreements should identify the actual deliverables, the personnel's role, and whether the recipient receives a transferable process, technical documentation, technical plan, technical design or capability to perform the function unaided. • The tax analysis should not stop after categorising a service as managerial, consultancy or technical. Each Article 12(4) limb must be tested separately against the contractual and factual record. • Records showing that the provider continues to perform recurring operational support, problem resolution, advisory work or centrally managed functions m....