TMI Blog2023 (3) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from provision of technical or consultancy services can be treated as FIS only when it makes available technical knowledge, experience, skill, know-how or processes to the service recipient. The term make available has been interpreted in various judicial precedents to mean that there must be a transfer of technical knowledge, experience, skill, know-how etc. from the service provider to service recipient in a manner so as to enable the service recipient to perform such services in future independently without any aid and assistance of the service provider. Nothing has been brought on record by the departmental authorities to demonstrate that there is complete transfer of technical knowledge, know-how, skill etc. to the recipient of service so as to enable him to use such technical know-how, knowledge, experience, skill etc. independently without the aid and assistance of the service provider. The reasoning based on which, the departmental authorities have proceeded to treat the consideration received as FIS is, provision of such services has resulted in enduring benefit to the parent company. The aforesaid interpretation of the departmental authorities is an antithesi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer, the assesse submitted that the amount received under the marketing support services agreement, being in the nature of business profit, is not taxable in India in absence of a permanent establishment (PE).The Assessing Officer, however, was not convinced with the submission of the assessee. After analyzing the terms of the marketing support services agreement he was of the view that the services rendered by the assessee to the parent company in India are in the nature of consultancy services,as, they relate to matters of strategic and operational importance and has helped the parent company in expanding its business. Further, he observed, while providing such services the make available condition in terms with Article 12(4)(b) of the Tax Treaty is also satisfied. Thus, he concluded that the amount received by the assessee from provision of marketing support services to the parent company is in the nature of FIS under Article 12(4)(b) of the Tax Treaty. Accordingly, he added back the amount to the income of the assessee and brought it to tax while proposing a draft assessment order. Against the draft assessment order, the assessee raised objections before learned DRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g support services does not qualify as FIS under Article 12(4)(b) of the Tax Treaty. In support of such contention, he relied upon the following decisions: 1. DIT Vs. Guy Carpenter Co. Ltd. [2012] 18 ITR 333 (Delhi High Court) 2. CIT Vs. De Beers India Minerals (P) Ltd., 346 ITR 467 (Kar.) 3. Fractal Analytics Pvt. Ltd. Vs. DCIT, ITA No. 3511/Mum/2015. 4. DCIT Vs. Forum Homes (P.) Ltd., [2021] 132 taxmann.com 223 (Mumbai Trib.) 5. H.J. Beinz Company Vs. ADIT, [2019] 108 taxman.com 473 6. Without prejudice, he submitted, the assessee had also earned revenue from provision of marketing support services under the very same marketing support service agreement in assessment year 2016-17. He submitted, while considering the issue of taxability of the amount received towards marketing support services in assessment year 2016-17, the Assessing Officer has accepted that it is not in the nature of FTS/FIS. Thus, he submitted, facts being identical, there was no justifiable reason for the Assessing Officer to taken a divergent view in the impugned assessment year, as, he should have followed the rule of consistency. In support, he relied upon the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, and current information with regard to the products of the Service recipient and with regard to the US market; 7. Gathering the necessary data and analysing and interpreting the information that has been gathered to enhance the marketability of the Service Recipient's products. 9. It is the case of the assessee that the services provided to the parent company are not in the nature of either technical or consultancy services and, even if they are, they do not make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design to the recipient of service. Therefore, it cannot be treated as FIS under section 12(4)(b) of the Tax Treaty. However, the departmental authorities have rejected assessee s claim on both counts. Undisputedly, the assessee is a tax resident of USA, hence, the beneficial provisions of India USA DTAA would be applicable to the assessee. Keeping in perspective, the aforesaid factual position,it has to be examined, whether the consideration received by the assessee from the provision of marketing support services would amount to FIS under Article 12(4) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether, make available condition of Article 12(4)(b) is satisfied. Article 12(4)(b) provides that a consideration received from provision of technical or consultancy services can be treated as FIS only when it makes available technical knowledge, experience, skill, know-how or processes to the service recipient. 11. The term make available has been interpreted in various judicial precedents to mean that there must be a transfer of technical knowledge, experience, skill, know-how etc. from the service provider to service recipient in a manner so as to enable the service recipient to perform such services in future independently without any aid and assistance of the service provider. Nothing has been brought on record by the departmental authorities to demonstrate that there is complete transfer of technical knowledge, know-how, skill etc. to the recipient of service so as to enable him to use such technical know-how, knowledge, experience, skill etc. independently without the aid and assistance of the service provider. The reasoning based on which, the departmental authorities have proceeded to treat the consideration received as FIS is, provision of such services has resulted i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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