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2019 (10) TMI 1568 - AT - Income TaxIncome accrued in India - fees for technical services/fees for included services (‘FIS’) - Scope of ‘make available’ clause - reimbursements of allocated costs received by the non-resident appellant under the Management Services Agreement - India - USA DTAA - taxing of management services provided by the SABIC Innovative Plastics US LLC to SABIC Innovative Plastics India Pvt. Ltd. - CIT (A) deleted the addition holding that “firstly, the category ‘management’ is missing in definition of FIS and services provided by the appellant being in nature of management services do not fall in definition of FIS - HELD THAT:- As documents furnished by the appellant indicating nature of services provided by the appellant. The services provided in present case mostly resemble with those in case of Ernest & Young (P) Ltd [2010 (3) TMI 108 - AUTHORITY FOR ADVANCE RULINGS]. It appears that most of the services are in nature of management services, though some of the services may be considered to be of technical nature. However, from terms of the service agreement and also from conduct of the parties, it cannot be said that ‘make available’ requirement has been satisfied. AO has not elaborated on this aspect. As per provisions of Article 12(4) of DTAA, unless ‘make available’ clause is satisfied, consideration for any consultancy or technical service per se shall not become FTS/FIS.” Having gone through the provisions of Article 12(4)(b) and Article 5 of DTAA pertaining to fees for included services and after going through the management service agreement and the clauses thereof, we are of view that the by the management services provided by the assessee cannot be taxed under fee for technical services. All the grounds are treated as adjudicated. Appeal of assessee allowed.
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