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2023 (9) TMI 106 - AT - Income TaxTaxability as Fee for Included Service (FIS) u/A 12 of India-USA DTAA - services in nature of technical or consultancy - nature and character of identical receipts if it requires withholding of tax? - assessee is a non-resident corporate entity and a tax resident of USA engaged in the business of providing consultancy services to global clients based in the USA or having USA operations - Assessee submitted, non-technical consultancy services are not covered under Article 12(4)(b) of the Tax Treaty - HELD THAT:- As departmental authorities have not brought any material on record to demonstrate that while rendering services, the assessee had made available technical knowledge, expertise, skill, knowhow etc. to Bain India to apply such technology, knowhow etc. independently without the aid and assistance of the assessee. The fact that Bain India is still dependent on the assessee for such services is established from the fact that since the year 2010, the assessee had been providing such services to Bain India on year to year basis. Had assessee made available the technical knowledge, knowhow skill etc. to Bain India, there would not have been any occasion for the assessee to provide such services on year to year basis as the making available or transfer of such technical knowledge, knowhow, skill etc. would have enabled Bain India to apply them on its own without requiring the assessee to continue with providing them. As per Example 7 of the Memorandum of Understanding to India-USA DTAA, a receipt cannot be treated as FTS merely because the service provider while providing consultancy services has used substantial technical skill and expertise. Because, while providing such services, the American Company is not making available to the Indian Company, any technical expertise, knowledge or skill etc. but is merely transferring commercial information to the Indian Company by utilizing technical skill. Thus, no hesitation in holding that the receipts in dispute are not in the nature of FIS under Article 12(4)(b) of India-USA DTAA. We order accordingly.
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