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2022 (12) TMI 1402 - AT - Income TaxIncome deemed to accrue or arise in India - amount received by the assessee for providing management support services - scope of services performed under the MSA [Master Service Agreement] - Fee for Technical Services (FTS) - India-Belgium Double Taxation Avoidance Agreement (DTAA) - Assessee is a non-resident corporate entity incorporated under the laws of Belgium - HELD THAT:- The scope of services to be rendered under the agreement certainly does not indicate that they are anything other than managerial services as it aids and assists the customer for performing its day to day business activity. Commissioner (Appeals) has partly accepted assessee’s claim and allowed benefit of 50% of the amount received to be fee for managerial services, that too, purely on estimate. This, in our view is without any basis. Once the assessee was able to demonstrate that the amount received is in the nature of managerial services, it cannot be treated as FTS in view of the restrictive meaning of FTS under Article 13(4) of India-UK tax treaty, which specifically excludes managerial services. As regards the applicability of MFN clause and the restrictive provision of India-UK tax treaty, in our view, there cannot be any dispute as the Assessing Officer has accepted the legal position. Whether 50% of the amount received can be treated as FTS under India- UK DTAA? - Article 13(4)(c) of India-UK tax treaty says that if in course of rendering services the service provider makes available technical, knowledge, experience, skill, knowhow, or processes etc then it can be regards as FTS. The expression ‘make available’ has not been defined either under the treaty provisions or under the Act. The expression ‘make available’ has been judicially interpreted in various decisions. As per the ratio laid down ‘make available’ would mean imparting of technical knowledge, skill, knowhow, etc. which enables the recipient of service to apply such technical knowledge, experience, skill, knowhow etc. independently in exclusion of the owner of such technical knowledge, experience, skill, knowhow etc. In the facts of the present appeal, admittedly, except some general observations of the Departmental Authorities that the assessee has made available technical knowledge, skill, experience, knowhow, etc. there is no material on record to demonstrate such fact. The make available condition of Article 13(4)(c) of India-UK tax treaty has not been satisfied. In any case of the matter, attribution of 50% of the receipts to the alleged consultancy services is purely on estimate and without any reasonable basis. Thus delete the addition sustained by learned Commissioner (Appeals). Appeal of assessee allowed.
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