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2023 (1) TMI 9 - AT - Income TaxIncome deemed to accrue or arise in India - nature and description of services rendered by PTAI - payments to be made by the assessee company would clarified as ‘fees for included services’ (FIS) as per Article 12(4)(b) of Indo-US DTAA - Satisfaction of conditions of Article 12(4)(b) of Agreement for Avoidance of DTAA between India and US of ‘make available of technical service’ - assessee submitted that the AO has wrongly inferred the website of PTAI to hold that the said company as make available any kind of skills to the assessee company - HELD THAT:- From the perusal of the agreement as well as nature of services rendered by the non-resident company PTAT, we find that the payment is purely towards benchmarking of the services of SPI and such benchmarking study merely enables the clients to undertake further course of action to improve its qualitative capacity of personnel. PTAI does not provide any know how or technical knowledge, albeit prompt its clients to take corrective action in the above areas. It merely provides implementing the benchmarking study in its organisation. PTAI is not a subject domain expert in the area in which the assessee operates. It only collects data from various entities engaged in similar business and makes benchmarking study report which indicates the percentile in which the assessee operates in terms of various facets of its operations. MOU to the India US DTAA elaborates on the concept of "make available", which specifies that technology will be considered "made available" when the person acquiring the service is able to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc. are made available to the person within the meaning of paragraph 4(b). Similarly, the use of a product, which embodies technology, shall not per se be considered to make the technology available. Thus, the services rendered by PTAI are neither ancillary nor subsidiary to the application or enjoyment of any right, property or information and therefore, same are not covered under Article 12(4)(a). Merely providing commercial information through a benchmarking study does not in any manner makes available any technical knowledge, experience, skill, know how or processes, nor consist of the development and transfer of a technical plan or technical design. Thus, the services of PTAI cannot be said to be FIS under covered Article 12. Accordingly, we hold that the payment made by the assessee to PTAI towards benchmarking services constitute business profit which are not liable to tax in India under the provision of Article 7 of the India –USA DTAA and neither it has any business connection in India as defined in Explanation 2 of Section 9(1)(i) of the Act. Accordingly, the grounds of appeal raised by the revenue are dismissed.
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