Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 84 - AT - Income TaxIncome taxable in India - Taxability of certain receipts earned - Fees for Technical Services (FTS) under Article 13 of India – United Kingdom (UK) Double Taxation Avoidance Agreement (DTAA) - interpretation of ‘make available’ Clause - assessee is a non-resident corporate entity and a tax resident of UK - HELD THAT:- As from the nature of services rendered, it is quite clear that they are in the nature of advisory services in certain areas as per the terms of the agreement. From the nature of services, it is quite evident that assessee’s role in the services provided is purely to assist the Indian AE or other participating group entities in making correct decision on the aspects specifically referred to in the agreement. Thus, the nature of services provided to the Indian AE does not seem to be falling in the category of either technical or consultancy services. In fact, in the assessment orders, AO himself has stated that some of the services are of the nature of FTS. Thus, AO clearly admits that all the services rendered by the assessee are not in the nature of FTS. In spite of that the AO has treated the entire receipts as FTS and added at the hands of the assessee. This, in our view, is unacceptable. Whether the other condition of Article 13(4) of India – UK treaty is fulfilled? - As in course of rendition of service, the service provider must transfer the technology, technical know-how, skill etc. to the service recipient to the extent that service recipient can perform such services in future without required the assistance of the service provider and without depending upon the service provider. Meaning thereby, the service recipient must be in a position to acquire technical knowledge, knowhow, skill etc., so as to independently apply it. In the facts of the present case, evidently, the services provided by the assessee to the Indian AE are merely for enabling and assisting the Indian AE in making the correct decisions on certain aspects as specifically provided under the group service agreement. Such rendition of services do not result in transfer of technical knowledge, know-how, skill etc. to the Indian AE. The ‘make available’ condition provided under Article 13(4)(c) remains non-compliant. That being the position, the receipts would not fall within the definition of FTS as provided under Article 13(4) of India – UK DTAA. The receipts, not being in the nature of FTS under Article 13(4) of India – UK DTAA, are not taxable at the hands of the assessee in India - Decided in favour of assessee.
|