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TMI Blog2022 (12) TMI 1558X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of provision of information technology and other administrative services to its affiliate in India are in the nature of Fees for Technical Services [FTS] under the India Singapore Double Taxation Avoidance Agreement [DTAA]. 4. Briefly stated, the facts of the case are that the assessee is incorporated under the laws of Singapore and is engaged in the trading of scientific goods, instruments, apparatus, reagents, kits of life science group. The assessee also provides business support services to its group companies. Being a tax resident of Singapore, the assessee is entitled to the beneficial provisions of the DTAA. The assessee does not have any presence in India either in form of an office, a branch or a factory, a warehouse or any other fixed place of business. 5. During the year under consideration the assessee has cross charged to its affiliate in India for rendition of information technology and other administrative services. Such services were rendered pursuant to the General Services and Cost Allocation Agreement entered into between the members of the Bio-Rad Group. 6. In both the years under consideration, the Assessing Officer concluded by holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the very same judgments which have been referred to by the Assessing Officer in his assessment order. 13. We have given thoughtful consideration to the orders of the authorities below and have carefully considered the judicial decisions relied upon by both the representatives. We have also considered the relevant documentary evidences brought on record in light of Rule 18(6) of ITAT Rules. 14. General Services and Cost Allocation Agreement is effective from 01.01.2010 by which it was, inter alia, agreed that the service providers are willing to use their personnel, expertise and faculties to provide such services on the terms and conditions set forth herein and the parties acknowledge that the costs and expenses incurred with respect to the services benefit certain or all the members of the BioRad Group in their efforts to conduct the business and to promote, sell or support the products. 15. The description of the services are as under: "Pursuant to Article 2.1 of this Agreement, Service Provider, to the extent of its capabilities, may perform any of the following Services for a Benefiting Party or Benefiting Parties: 1. Information Technology Services. Services includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to hold training classes at Party's or customer's site and attendance at trainings held at Service Provider's site. 8. Treasury Services. Treasury Services may include management of the following: cash and its equivalents, investments, stock plans, hedging, foreign currency exchange risks, and other treasury-related executive and administrative services. 9. Materials Management, Procurement, and Logistics Services. Services in connection with inventory, product, and component handling; transport; inventory; warehousing; packaging; materials; and other related services. 10. General, Administrative and Other Services. Other Services shall include any services not otherwise specified in this Agreement." 16. Article 12 of the DTAA provides for royalties and fees for technical services and relevant Article is 12(4)(b) which reads as under: "4. The term "fees for technical services" as used in this Article means payments of any kind to any person in consideration for services of a managerial, technical or consultancy nature (including the provision of such services through technical or other personnel) if such services: (a) are ancillary and subsidiary to the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y kind to any person in consideration for the rendering of any technical or consultancy services which, inter alia, "makes available" technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design. According to the Tribunal this "make available" condition has not been satisfied inasmuch as no technical knowledge, experience, skill, know-how, processes, have been made available by the assessee to the insurance companies operating in India. It also does not consist of the development and transfer of any technical plan or technical design. 10. The Tribunal examined the evidence available on record in order to return a finding on the issue as to whether the payments received by the assessee from the insurance companies operating in India would fall within the expression 'fees for technical services' as appearing in article 13(4)(c) of the DTAA read with section 9(1)(vii) of the said Act. XXXXX 11. The Tribunal also noted the process by which the transaction takes place. It has been pointed out that the originating insurer in India would contact J.B. Bodal M.B. Boda for placing identified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement which explicitly makes clear the meaning of the word make available, the said clause has to be applied, and to be read into this agreement also. Therefore, it follows that for attracting the liability to pay tax not only the services should be of technical in nature, but should be made available to the person receiving the technical services. The technology will be considered 'made available' when the person who received service is enabled to apply the technology. The service provider in order to render technical services uses technical knowledge, experience, skill, know how or processes. To attract the tax liability, that technical knowledge, experience, skill, know-how or process which is used by service provider to render technical service should also be made available :it is open to the recipient of the services, so that the recipient also acquires technical knowledge, experience, skill, know -how or processes so as to render such technical services. Once all such technology is made a a able it is open to the recipient of the service to make use of the said technology. The tax is not dependent on the use of the technology by the recipient. The recipient after rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice provider have gone 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 the future without depending upon the provider. Technology will be considered 'made available' when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical edge, skills, etc., does not mean that technology is made available to the person purchasing the service 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. In other words, payment of consideration would be regarded as 'fee for technical/included services' only if the twin test of rendering services and making technical knowledge available at the same time is satisfied." 24. In light of the aforementioned judicial decisions, we are of the considered view that the service recipient of the assessee is unable to make use of the said technology only by itself in its business or for its own benefit without recourse to the assessee year a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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