TMI Blog2021 (3) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... sales, marketing and business development services including vendor management, sales presentations, general treasury and financial management advice and services, legal services including contract management, contract negotiations and advice, legal compliance assistance, consulting including advice on pricing, customer negotiations, customer management etc., human resource services, information technology (IT) and solution services including network sharing development and strategic development, advice on sales presentations, training of IT engineers/employees etc. are all technical services which cannot be provided without the domain knowledge of the relevant field. Thus, the majority of the services are technical in nature and the remaining one are in the area of consultancy. Therefore, we cannot agree with the submission that they were only managerial in nature and not in the nature of technical or consultancy services. Services in the nature of direct technical advice, support and management including implementation were not only technical in nature but were also made available to Aircom India. Such advice was not in respect of any outage on the Aircom network or troubles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 'Royalty'. Whether Business Income? - Revenue has contended that there was a service PE as per Article 5(2)(k) of the India-UK Treaty - No substantive evidence of stay of any particular employee and rendering of service by them for more than 30 days in a twelvemonth period has been pointed out or brought on record by the Revenue. A mere stay of an employee doesn't establish that he had rendered the service all the time. In order to attract this provision there has to be concrete evidence to establish that the service was rendered through an employee for 30 days or more. In the absence of any such concrete evidence we can't hold that a Service PE was created in this case. The contention of Revenue is based on mere suspicion and not on hard facts. Further, as already discussed earlier the part of the services under MSA is found covered under Article 13 of the DTAA. We are, therefore, in agreement with the Applicant that it does not have a PE in India. As no business was carried out in India and in the absence of any PE, the payment for the services rendered under MSA cannot be considered as business income. Ruling:- Que. 1 The payment made by Aircom I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management advice and services Group bulk purchasing arrangement Group-led sales, marketing and business development services General Treasury and financial management advice and services Legal, Human Resource, Information Technology ('IT ) services 3. The Applicant has filed the present application in connection with this MSA and the following questions have been raised in the application: (i) Whether based on the facts and circumstances of the case, the payments being made by Aircom India to the Applicant under the MSA for the services specified there under would be characterized as fee for technical services ( FTS ) under Article 13(4) of the convention between the Government of the Republic of India and the Government of the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income and capital gains ( the India-UK Treaty )? (ii) Whether based on the facts and circumstances of the case, the payments being made by Aircom India to the Applicant for availing the services specified under the MSA would be in the nature of Royalty within the meaning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement and the same was based on the total cost incurred by the Applicant in providing these services, as increased by a mark-up of 6%, and apportioned to various affiliates (group entities) to which such services were provided. 6. The Ld. A.R. submitted that as per Explanation 2 to Section 9(1)(vii) of the Act, fee for technical services ('FTS') is defined as consideration for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel). However, Article 13(4) of India-UK Tax Treaty defines FTS as payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including the provisions of services of technical or other personnel). Based on the definition of FTS under the Income-tax Act and India-UK DTAA, the Ld. A.R. explained that the definition of FTS was narrower under the Treaty than under the Act. Therefore, the provision of India-UK Treaty was more beneficial to the Applicant than the provision of the Act. Accordingly, the beneficial provision of India-UK Treaty was applicable in the case of the Applicant under Section 90(2) of the IT Act w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' was initially included in the original definition of FTS but was omitted by the revised DTAA between India and UK entered into in the year 1993. This shows that intention of the Treaty partners was to exclude the managerial services from the purview of the Article 13 of the treaty. The Applicant has placed reliance on the Memorandum of Understanding (MoU) entered into between India USA. The MoU, on Article 12 of the India-US Treaty, which is akin to Article 13(4) of the India UK Treaty, has interpreted the definition of fee for included services (FIS) and has interpreted the meaning of the terms 'technical or consultancy services'. As per this MOU only technical or consultancy services are covered within the ambit of Article 12 and that a technical service is one that requires an expertise in technology. Further, the MoU specifies that a consultancy service is of an advisory nature and consultancy services which are not of a technical nature cannot be 'included services' under the India - US treaty. The Ld AR emphasized that the services rendered under MSA were not of technical nature and hence would not fall under the purview of 'technical or consultanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.4 of the India-UK DTAA. 11. On the issue of royalty, the Ld. A.R. submitted that the payment made to the Applicant by Aircom India does not fall within the definition of 'Royalty' as per Explanation 2 to Section 9(1)(vi) of the Act or within the meaning of the term in Article 13 of India-UK Treaty. It was explained that the term 'Royalty' as defined in the Act necessitates the transfer of a right from the owner of such right to another person for commercial exploitation. The Ld AR explained that the payments were neither for use or right to use any intangible or tangible property, nor do the services involve the right to use copyright, patent, design, know how or equipment and there was no transfer of any technical plan or design. Further, that the IT support services relating to maintenance of the Groups IT infrastructure, did not develop/customise/modify any software and did not transfer any technical design or plan. It was explained that the agreement for provision of global support services was to ensure uniformity in systems/practices followed by Aircom Group globally and not for the use of a process or formula . The Ld AR urged that under the MSA, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant through the services specified in the MSA. 15. The Revenue contended that the services rendered by the Applicant under the MSA were not only in the nature of technical and consultancy services but they also 'made available' technology to Aircom India on many counts, as under: (i) The Functional Analysis provided in the Transfer Pricing Report for the FY 2013-14 shows that all functions right from Conceptualisation to Design Review to Marketing were technical functions. The Revenue has contended that under the head 'Receipt of Management Support Services', the Indian subsidiary has conducted, all the services as per the MSA, which were incidental to business and enabled Aircom India to conduct its business operations in an effective manner. (ii) The clause of the MSA on Intellectual Property Ownership involves grant of IPR which was in the nature of 'Royalty' as it involved use or right to use Intellectual Property. A per clause 4.2, the parent (Aircom UK) licenses each subsidiary to use (IPRs) as is reasonably necessary for such subsidiary to enjoy the benefit of the services. Thus the Applicant was admittedly the beneficial owner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e formula of manufacturing to Indian entity, the test of make available was satisfied. Similarly, where American company sends experts to India to show engineers how to produce extra strong Wall Board, the make available test was satisfied. Similarly, make available test was also satisfied when an American consultant helps an Indian Company to arrive at its proper marketing strategy (instead of providing marketing strategies). On the contention of the Applicant that just because the services/discussions were continuous it cannot be said that the technological services were made available; the Revenue averred that if it was a prolonged discussion, the technology was made available for a longer period of time. It was further submitted that once certain issues were discussed with the employees of Aircom India and technical solutions were suggested, the employee of Aircom India gained the technical knowledge of resolving the same issue in future, independently. On the stand of the Applicant that the services provided were continuous because new issues kept coming up every now and then, it was argued that this does not mean that service recipient did not learn from the previous experi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. On the issue of royalty, the Revenue has submitted that payment by Aircom India to Applicant was for the use of information concerning industrial, commercial or scientific experience and hence it was covered within the ambit of 'Royalty' under India-UK DTAA. In support of this argument, the Revenue has submitted that the Applicant had passed on its experience in network planning, optimization, open source software (OSS) and consultancy for mobile networks to Aircom India which was engaged in providing consultancy and support services to wireless network operators in South Asian countries by offering end-to-end wireless solutions through a blend of software consulting and training services. Hence, it is sharing its past industrial/commercial/scientific experience with Aircom India which was within the ambit of 'Royalty' under the India-UK Treaty. 20. According to the Revenue, Aircom UK was the beneficial owner of IPRs relating to services their provisions, and the right to use these IPRs was given to its subsidiaries. The title over use of these intangible rights (IPRs) remained with the Applicant during use of these IPRs by subsidiaries and the considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Key executive decision making; Provision of central services for regional requirement. It has further been submitted that services under this head allow the entities of the Aircom Group (including Aircom India) to gain benefit of the skills, expertise, experience, information etc. possessed by the Applicants to ensure that the international best practices are followed globally. (ii) Group-led sales, marketing and business development services - Vendor management; Brochure production for all countries; Exhibition used for advertising products and services; PR campaigns; Creation and maintenance of websites for all countries; Sales presentations. It has been submitted that by leveraging on the central repository, the Indian subsidiary benefits from using global expertise for its marketing strategy and activities. (iii) General Treasury and financial management advice and services - Provision of finance advice and expertise; Overall management of banking and cash facilities for all regions; Tax advice; Leasing; Financial management; Budgeting; Accounting MIS direct support; Contract management. It has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reiterated that the services help the Aircom Group in following globally consistent policies and provide access to central platforms and systems to the group entities. 24. The Applicant further submitted that it had provided all the facts including the details of the nature of the services rendered by the Applicant and also substantiated the same with the emails to illustrate each type of service rendered by the Applicant. The Applicant filed additional email evidences along with the submission dated 03.11.2017. It was contended that these email communications clearly substantiate the precise nature of the management support services rendered by the Applicant and were in line with the description as mentioned in the MSA. 25. The Ld. A.R. submitted that the support services provided by the Applicant were merely general management advisory services in nature and did not make available technical knowhow to the recipient of such services. These services were aimed at assisting Aircom India in carrying on its business operations in line with the model, software (Information Technology) policies and best practices followed by the Aircom group. According to the Ld. A.R., the ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, consultancy services to the Applicant as well as third parties which include software deployment services and software trading services for which it charges the Applicant the cost along with the mark-up. This transaction between the Applicant and Aircom India is not the subject matter of this application. The Applicant also renders management support services to its subsidiaries including Aircom India in order to conduct its business operations in an effective and uniform manner. The services under the MSA allow the entities of the Aircom Group (including Aircom India) to gain benefit of the skills, expertise, experience, information etc. possessed by the Applicants to ensure that the international best practices are followed globally and uniformly. We are concerned with the services rendered under MSA only. 29. Aircom UK is providing various services to Aircom India in terms of the MSA effective from 01.07.2007 and the first question to be decided is whether the service charges received by the Applicant under the MSA would be characterised as FTS under Article 13(4) of the India-UK DTAA. The services being provided as per the MSA are stated to be supportive in nature in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding IPR is found to be as under: 1. Each Subsidiary acknowledges and agrees that the Parent (or its licensors) is the beneficial owner of the Intellectual Property Rights subsisting in and associated with the Services and their provision. 2. The Parent hereby licenses each Subsidiary to use the Intellectual Property Rights as is reasonably necessary for such Subsidiary to enjoy the benefit of the Services. 31. The above clause merely stipulates that the parent i.e. the Applicant is the beneficial owner of the IPRs subsisting in and associated with the services and their provisions. As the services were being provided by the parent to various subsidiaries this clause merely enabled the subsidiaries to use the IPR to enjoy the benefit of the services. The contention of the Revenue that the Applicant had given right to use these IPRs to the subsidiaries and for which service fee was payable by the subsidiaries, is not found correct. What the Applicant had agreed under MSA was for the provision of various services to the subsidiaries and the clause regarding IPR merely entitled the subsidiaries to enjoy the benefit of the services without violation of IPR rights of the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indo-UK convention stipulates that fees for technical services means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. 34. Thus, the services will qualify as FTS in the following conditions only: (i) they are ancillary and subsidiary to the services rendered for which royalty [as referred in para 13.3(a)] is being paid; or, (ii) they are ancillary and subsidiary to the enjoyment of property for which royalty [as referred in para is being paid; or, (iii) they make available technical knowledge, experience, skill know-how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, the technical or consultancy services will be considered included services to the extent: (a) They are ancillary and subsidiary to the application or enjoyment of a right, property or information for which the royalty payment is made, or; (b) They make available technical knowledge, experience, skill, knowhow or processes or consist of the development and transfer of a technical plan or a technical design. The MoU further clarifies that in order for a service fee to be considered ancillary and subsidiary , the service must be related to the application or enjoyment of the right, property or information. Thus, the pre-dominant purpose of the arrangement under which the payment of service fees is made must be the application or enjoyment of the right, property or information for which royalty is being paid. As no royalty payment is involved in this case, we have to examine whether any of the services are technical in nature and whether it makes available technical knowledge, experience, skill, know how or processes or consist of the development and transfer of a technical plan or a technical design. The consultancy services which are not of a technical nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin its fold the medical colleges . The Supreme Court observed that the dictionary meaning of the word technical is also professional and is used in contradistinction with pure sciences to prepare the professionals in applied sciences . However, we would like to observe that it is not any or every professional service that amounts to technical service. Professionalism and an element of expertise should be at the back of such services. There is a decision of Andhra Pradesh High Court in which the ambit of expression 'technical service' was considered . In G. V. K. Industries Ltd. v. ITO [ 1997] 228 ITR 564 (AP) , SSM Quadri, J. speaking for the Division Bench rejected the argument of the assessee's counsel that the NRC did not render any technical or consultancy service to the petitioner-company and that it merely rendered advice in connection with the procurement of loans by it, which does not amount to rendering technical or consultancy service within the contemplation of the said clause and that the technical or consultancy service should relate to the core of the business of the petitioner-company' It was observed. In our view advice given to procure lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through e-mail, a copy of such e-mail was called for. The Applicant has provided the brief description of various services along with the cost-allocation and copy of e-mails in support of the services rendered vide letters dated 18.08.2017 and dated 03.11.2017, which have been considered. 38. The Revenue has contended that the Applicant did not give the complete documentary evidence i.e. e-mail correspondences. On the other hand, the Applicant has submitted that it has made available the complete evidences as available with him. What was required to be provided by the Applicant was the copy of complete e-mails pertaining to services rendered. Obtaining the entire e-mail correspondence, which are not connected with the services rendered, will have no relevance as we have to only examine the correspondence pertaining to the services rendered. If the Revenue had apprehension that relevant details regarding nature of services rendered were not provided by the Applicant, nothing prevented it to obtain the required details from Aircom India, to whom the services were rendered. The Applicant has certified vide its submission dated 03.11.2017 that the complete trajectory of e-mail cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided without the domain knowledge of the relevant field. Thus, the majority of the services are technical in nature and the remaining one are in the area of consultancy. Therefore, we cannot agree with the submission that they were only managerial in nature and not in the nature of technical or consultancy services. 40. Next, we have to examine whether these services were being 'made available' to Aircom India. The Revenue has brought to our notice specific instances of services on the basis of E-mail communications that demonstrate that the nature of services rendered were not only technical or consultancy in nature but such services were also made available to Aircom India. We have gone through these instances and the communications brought to our notice and our comments thereon are as under: Sl. No. Page No. Contention of the Department Our observation 1 408-410 These emails are illustration as to how Mr Antonin Huart, Contract Manager Aircom International Limited UK, is guiding employees of Aircom India to finalize the drafting of contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The consultancy service rendered in this instance cannot be said to be made available 4 447- These emails are illustration as to how employees of the Applicant are assisting employees of Aircom India to resolve technical issues that are arising during the training that Aircom India is providing to its client. At page 449 Ishan, employee of Aircom India, writes to Tom/Billy of Aircom International about a strange issues that he facing regarding Asset GSM/UMTS training. Aircom India is providing technical training to customers but certain issues are coming up GSM cell layers, terminal types, Nth best server etc. Due to this training is getting hampered. Then on page 448, the assistance is provided by the Applicant to resolve the issues. Some part of the assistance has been blacked out. But what is clear is that technical assistance is provided to resolve the issues. At page 447, Tom is talking about problem to do with component libraries not working. Then Adam Moore of the Applicant is asking Ishan to give a call so that he can help him in resolving the issues. Thus, quite clearly, the Applicant is making available techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its client is provided by Aircom India using technical expertise of Applicant. This service is in respect of Sales and in nature of sales support service. A query was raised by a client regarding availability of a tool for converting certain reports into a specified format and the correspondence is in that regard. Even if the nature of correspondence is In respect of technical aspect of the query, there is no conclusive evidence that this service was actually rendered and the technical input was provided. Once a query is raised by the client the same has to be responded. The service is in the nature of Sales support and even if rendering of technical service is discussed, it is found not made available in this case. 6 461 This page illustrates various training programs being organized by Applicant for Aircom India. It talks about new starter training being carried out in India which will evolve into the official OPTIMA delivery programme to certify all OPTIMA engineers and ensure they are up to date on all the latest release Improvements. It also talks about training and delivery schedule being update for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at V7.0 is the largest product relapsed Aircom has ever done and it has various technology services i.e. LTE Technology support across the planning and optimization module including asset, advances and financial analysis. It again incorporates a new module in the form of carried traffic analysis providing an insight into backhaul and transmission network requirements that these new technologies other features including Google Earth support and extended corrector set available across enterprises. It enables Aircom to increase market penetration through diverse offering options and features developed in connection with leading equipment vendors. It is further mentioned it was done by the R D Team In product engineering, software development and QA for achieving. The above discussion shows that the Aircom International has sent this mail to Aircom employees which are very much technical in nature. From the above details it is quite clear that Aircom International has provided all the above technical mobile products details to Aircom employees. Hence, in this way the technical help is being provided to Aircom employees and this help is fully make available to the Aircom India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... training for the employees of the Aircom India so that they will be able to deal with the various things. In this way the make available clause is being satisfied. This correspondence is in respect of training of sales personnel about new features of ASSET 8.1 and CONNECT 8.1 as part of pre-sales activity. No technical skill can be said to made available in such training . 11 958 This email has been sent to Aircom employees related to the new release the Aircoms planning and optimization software and the update of both ASSET 7.0 and CONNECT 7.0 with Wimex and LTE mobile broadband technologies. This email has been shown under the head marketing while on perusal of it was notice that it has mentioned many technical nature advice and guidance this shown the rendered services are technical in nature and they are being make available through training This is part of Marketing service relating to new release of software. We don't find any training imparted in this case. The new release was to be posted on the website, which can't be considered as training. Nothing is made available in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s specialized for the specific person. Though this is part of Marketing service the inputs were technical to plan strategies for future. The planning and strategies discussed through case studies may make it technical in nature but we don't find any inherent skill being made available . The case study was only to demonstrate how to plan the transport capacity for small cell LTE. 14 1017 This email has been shown under the head marketing while on perusal of it, some technical challenges, the videos from the sales training details have been mentioned. It again shows that the technical help and challenges are being solved through training; hence, the technical nature and make available clause are being satisfied for charging fee for technical services. Only the Demo videos for sales pre-sales training were available on Pulse for navigation. Even if the contents are technical in nature, the placement of videos /Demos on website can't be considered as the service being made amiable. 15 1025 This email has been again shown under the head mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice could derive an enduring benefit and utilize the knowledge or know-how in future on his own without the aid of the service provider . By making available the technical skills or know-how, the recipient of the service will get equipped with that knowledge or expertise and be able to make use of it in future, independent of the service provider. In other words, to fit into the terminology make available , the technical knowledge, skills, etc. , must remain with the person receiving the services even after the particular contract comes to an end. The services offered may be the product of intense technological effort and a lot of technical knowledge and experience of the service provider would have gone into it. But that is not enough to fall within the description of services which make available the technical knowledge, etc. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in future without depending on the provider. 42. When we examine the facts of the case on the yardstick of 'make available' as decided in the case of Intertek, it is found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not in respect of any outage on the Aircom network or troubleshooting of malfunctions in the I.T. infrastructure; rather it was in respect of the specific technical problem faced by the clients of Aircom India, which was flagged to the Applicant for resolution and the solution of which was provided through the employees of Aircom India. Therefore, this service was not only technical in nature but was also made available. 44. The Applicant has submitted that the Revenue had misunderstood the nature of services rendered under MSA and that the objection was based on the services rendered under software services and was not in respect of MSA services. This contention of the Applicant is not found correct. The evidences in the form of copy of e-mail communications were filed in respect of services rendered under MSA only and not in respect of software services. Therefore, the specific instance of technical service rendered and made available as pointed out by the Revenue is found to be in respect of MSA services only and these were not in respect of software services. 45. The next exercise will be to quantify the amount in respect of the technical services which fulfil the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for provision of I. T. support charges i.e., internet charges, use of e-mail charges, backup support services etc. On these specific facts, it was held that no technology was made available and further that in the web-based training no technical knowledge was imparted by the service provider and there was no transfer of technology. In the case of Invensys Systems Inc., the services rendered are found to be different in nature. The facts of other relied upon decisions are also found to be different. 47. The Applicant has strongly relied upon the ruling of this Authority in DTZ Debenham Tie Leung Limited (AAR No. 1371 of 2012 dated 19.07.2019)). In that case, managerial services with regard to Article 13.3 and 13.4 of the India-UK DTAA were exhaustively dealt with along with the relative case laws. This Authority held in that case that payment received for various services in terms of the services agreement was not in the nature of fee for technical services under Article 13.4 of India-UK Tax Treaty as the services rendered by the non-resident company do not meet the requirement of 'make available' under the treaty. However, unlike the present case no IT services were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of a service may require technical input by the service provider does not per se mean that the technical knowledge, skills, etc. are made available to the person availing such services. 50. The decision of the Apex Court in the case of Oberoi Hotels (India) (P.) Ltd (231 ITR 148) was already referred in the decision of Intertek Trading Services India (P) Ltd., discussed earlier. In the case of Andaman Sea Food Pvt Ltd vs CIT (SLP no 36385/2014), the Supreme Court dismissed the SLP against Calcutta High Court judgment wherein it was had held that payment of consultancy fees to Singaporean company for forex derivative transaction services was taxable as 'Fees for technical services'('FTS'). Thus the facts of the cases relied upon by the Revenue are also found different from the facts of the present case. 51. In view of the foregoing discussions, we are of the view that payment received for various services in terms of the MSA was not managerial but technical in nature. However, we also hold that only direct technical advice, support and management including implementation service provided under Information Technology (IT) service meets the requirement Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of participating network entities, which amounted to mere provision of internal support services. Referring to Para 2 of OECD Commentary on Article 12, which is identical as in the case of Indo-UK Treaty applicable in the case, it was submitted that as know-how had not been transferred under the MSA, the services does not qualify as 'Royalty'. 53. We have considered the submissions of the Applicant, the objections raised by Revenue, and the details of the Agreements submitted with the application. Article 13(3) of India-UK tax treaty defines 'royalty', which has already been reproduced earlier. For a payment to be construed as royalty , the same would need to be in relation to the use or right to use or transfer of all or any rights in relation to: Copyright, patent, trademark, design or model, plan, etc; or Any secret formula or process; or Information concerning industrial, commercial or scientific experience; or Industrial, commercial or scientific equipment. 54. In this case the Applicant had entered into a MSA with Aircom India to provide certain services as stated therein with the intention to help the Aircom Group in following glob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices under SLA. We are, therefore, of the view that the amount received by the Applicant towards the services rendered under the MSA would not be in the nature of 'Royalty'. 56. In the case of Oncology Services India Pvt. Ltd. (supra) relied upon by Revenue, Oncology Service Europe had matured validated standard procedures, (SOP) accepted by regulatory body and which would take 7-10 years to establish validated clinical trial procedure on its own. The company had purchased the copyrighted SOP from the Oncology Service Europe (Germany) and was allowed to view only SOP established by Oncology Service Europe, which was non transferable. It was held that consideration for sharing of scientific, or for that purpose industrial and commercial experiences, in this case was taxable in India as royalty under article 13(3) of India-Germany DTAA. Thus the facts of that case are found to be totally different. 57. In the case of TNT Express Worldwide (UK) Ltd. (supra), the U.K. Company had entered into a Management Services Agreement with a company TNT to provide advice, assistance and sales support services. The AO had asked the assessee to submit details to justify that said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice PE in India the services including managerial services must be furnished by the Applicant for a period or periods aggregating more than 30 days within any twelvemonth period in the case of an Associated enterprise. The Revenue has submitted that from the list of employees of the Applicant present in India furnished by the Applicant, it was evident that they had been in India for more than 30 days in a twelve-month period and, therefore, there was service PE in India. However, no substantive evidence of stay of any particular employee and rendering of service by them for more than 30 days in a twelvemonth period has been pointed out or brought on record by the Revenue. A mere stay of an employee doesn't establish that he had rendered the service all the time. In order to attract this provision there has to be concrete evidence to establish that the service was rendered through an employee for 30 days or more. In the absence of any such concrete evidence we can't hold that a Service PE was created in this case. The contention of Revenue is based on mere suspicion and not on hard facts. Further, as already discussed earlier the part of the services under MSA is found co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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