2023 (10) TMI 1039 - HC - Income Tax

Income taxable in India - Fees for Technical Services - income from information technology and other administrative services provided by assessee to its affiliate in India Indian subsidiary - India-Singapore DTAA - AO concluded that the services provided by the respondent/assessee to the Indian subsidiary were in the nature of management support services and hence, taxable at the rate of 10% plus surcharge and education cess under the Indo-Singapore DTAA. HELD THAT - Tribunal, in concluding that services offered by the respondent/assessee to its Indian affiliates did not come within the purview of FTS, as reflected in Article 12(4)(b) of the Indo-Singapore DTAA, concluded that they did not fulfil the criteria of make available principle. According to the Tribunal, the agreement between the respondent/assessee and its Indian affiliate had been effective from 01.01.2010, and if, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. We tend to agree with the analysis and conclusion arrived at by the Tribunal. No substantial question of law.

Summary

Issues involved:
1. Condonation of delay in re-filing the appeal
2. Interpretation of 'Fees for Technical Services' under Indo-Singapore DTAA

Condonation of delay in re-filing the appeal:
An application was filed seeking condonation of a 45-day delay in re-filing the appeal, which was allowed by the court upon no objection from the respondent.

Interpretation of 'Fees for Technical Services' under Indo-Singapore DTAA:
The appeal pertained to the Assessment Year 2019-20 and challenged the Income Tax Appellate Tribunal's order regarding whether income from services provided by the respondent to its Indian affiliate constituted 'Fees for Technical Services' under the Indo-Singapore DTAA. The Assessing Officer initially treated the services as 'management support services' taxable under the DTAA. Despite objections before the Dispute Resolution Panel, the final assessment was upheld, leading to the appeal.

The Tribunal ruled in favor of the respondent, stating that the services did not meet the criteria of the 'make available' principle under the DTAA. It noted that if technical knowledge had been transferred, the agreement would not have lasted since 2010. The Tribunal emphasized that for services to qualify as FTS, they must enable the recipient to apply the technology independently even after the contract ends. It concluded that no substantial question of law arose, and the appeal was dismissed.