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2023 (12) TMI 90 - AT - Income TaxIncome taxable in India - Management Support Charges - taxable as Fee for Technical Services (‘FTS’) - PE in India - India-Singapore DTAA - determinative factors/parameters to qualify as FIS - whether the services rendered by the assessee under Management Support Service Agreement are ancillary and subsidiary to the license granted for user of brand name, charges received from which are in the nature of royalty? - HELD THAT:- The issue of Management Support Charges/FTS and the issue of make available stands adjudicated by the order of the Tribunal in assessee’s own case for the A.Y. 2012-13 in [2021 (10) TMI 443 - ITAT DELHI] and in A.Ys. 2013-14 and 2014-15 in 2023 (3) TMI 1187 - ITAT DELHI] as held undisputedly, the assessee is neither the owner of the trademark nor has received any payment as a consideration for the use of, or right to use of trademark in terms of Article 12(3)(a). The payment was received by the group affiliates under a distinct and separate license agreement. Whereas, the assessee provided centralized services relating to marketing, advertisement, promotion etc. under a distinct and separate agreement. So, when the assessee is not the owner of the property, there is no question of allowing a third party to use or right to use of the property. That being the case, the services for which payments are received cannot be considered to be ancillary and subsidiary to the application or enjoyment of the right of property or information for which royalty has been paid. Thus we have no hesitation in holding that the fee received by the assessee under the Centralized Services Agreement cannot be treated as FIS either under Article 12(4)(a) or 12(4)(b) of the India–US Tax Treaty. As a natural corollary, it can only be treated as business income of the assessee. Hence, in absence of a PE in India, it will not be taxable. Appeal of assessee allowed.
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