TMI Blog2019 (4) TMI 2018X X X X Extracts X X X X X X X X Extracts X X X X ..... e activity of the assessee under the agreement is, providing managerial services. That being the case, the amount received by the assessee from HIPL cannot be treated as fees for technical services under Article 12(5) of the India Netherland Tax Treaty. More so, when the Assessing Officer has not demonstrated what amount can be attributed towards technical or consultancy service. The expression make available not only would mean that recipient of the service is in a position to derive an enduring benefit out of utilization of the knowledge or knowhow on his own in future without aid of the service provider, but such technical knowledge, experience, knowhow, skill, etc., must remain with the recipient even after expiry of the contract. It has further been held that the technology will be considered to have been made available when the person acquiring the service is able to apply the technology independently. Therefore, to come within the purview of fees for technical services under Article 15(5) of the India Netherland Tax Treaty, rendering of services and making available of technical knowledge, experience, knowhow, skill, etc., have to take place simultaneously. AO has fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as either fees for technical services or royalty under India Netherland Double Taxation Avoidance Agreement (DTAA). In sum and substance, the assessee submitted that since the services rendered by the assessee is in the nature of managerial services and the definition of fees for technical services under India Netherland Tax Treaty does not envisage managerial service, the amount received from HIPL cannot be brought to tax in India. Without prejudice, it was further submitted that since the assessee while rendering services has not made available any technical knowledge, experience, knowhow, skill, etc., the payment received cannot be treated as fees for technical services. Further, the assessee also submitted that the amount received cannot also be treated as royalty under the treaty provisions. The Assessing Officer, however, did not find merit in the submissions of the assessee. On analyzing the terms of the service agreement, the Assessing Officer was of the view that the services provided by the assessee are all inclusive comprising of managerial, technical and consultancy services. Thus, he held that it comes within the definition of fees for technical services under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, the invoices raised by the assessee also do not describe in detail the services rendered by the assessee. He submitted, without properly examining and analyzing the facts including the nature of services rendered under the service agreement it cannot be said that services rendered are purely in the nature of managerial services, hence, the amount received is not fees for technical services. Thus, he submitted, the issue may be restored back to the Assessing Officer for examining the nature of service rendered by the assessee. 6. The learned Authorised Representative drawing our attention to the service agreement between the assessee and HIPL and the amendment agreement dated 1st April 2010, copy of which is placed in the paper book, submitted that the nature of services provided under the agreement is purely managerial. He submitted, the nature of services listed in the agreement clearly reveal that they are in the nature of managerial services. He submitted, though, the Assessing Officer has treated the amount received by the assessee as fees for technical services, however, under Article 12.5 of India Netherland Tax Treaty would mean payment of any kind to any person in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in Appendix-1 to the management agreement such as information technology, R D, strategic purchasing service may have trappings of technical or consultancy services. However, the core activity of the assessee under the service agreement appears to be in the nature of managerial services. Article 12(5) of the India Netherland Tax Treaty defines fees for technical services as under: Payment of any kind to any person in consideration for rendering of any technical or consultancy including through the provisions of service of technical or other person) if such services; (a) are ancillary and subsidiary to the application or enjoyment of the right property or information for which the payment described in Para 4 of this article is received; or (b) make available technical knowledge, experience, skill, knowhow or process or consist of development and transfer of a technical plan or technical design. 9. Thus, as could be seen from the aforesaid definition of fees for technical services under the tax treaty, managerial service is not included under the definition of fees for technical services. Therefore, though some services rendered by the assessee may have the trapping ..... X X X X Extracts X X X X X X X X Extracts X X X X
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