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TMI Blog2022 (10) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax (International Taxation) 2(1)(2), Mumbai (hereinafter referred to as the 'Assessing Officer') in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel (hereinafter referred to as the "DRP") on the following grounds which are without prejudice to one another. 1. Ground No.1 - Income earned by Appellant by way of management fee-Not FTS- Not Taxable. 1.1 On the facts and in the circumstances of the case and in law, the learned Assessing Officer and the Hon'ble DRP, without appreciating the evidence and submissions filed, erred in holding that the management fee received by the Appellant is taxable as fees for technical services (FTS) under Income Tax Act, 1961 (the Act) as well as under India - Singapore Double Tax Avoidance Agreement (DTAA). The Learned Assessing Officer and the Hon'ble DRP failed to appreciate that as the Appellant did not make available any technical knowledge etc to Dimension Data India Private Limited ('DD India') the management fee received by the Appellant could not be taxed as FTS under Article 12 of the DTAA. 1.2 On the facts and in the circumstances of the case and in law, learned Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) on which no additional surcharge and education cess could be imputed. Consequently, the levy of surcharge and education cess being wholly unjustified, ought to be deleted." 3. The issue arising in ground No. 1, raised in assessee's appeal, is pertaining to taxability of management fees received by the assessee as fees for technical services under the provisions of the Act as well as under India Singapore Double Taxation Avoidance Agreement ('DTAA'). 4. The brief facts of the case, as emanating from the record, are: The assessee is a company incorporated in and is a tax resident of Singapore. The assessee filed its return of income on 30/11/2018 declaring total income of Rs. 19,82,500. The assessee on 01/04/2014 entered into Business Support Services agreement for rendering the management services to its subsidiary company i.e. Dimension Data India Ltd. During the year under consideration, the assessee has earned an income of Rs. 106,91,17,403 by way of management fees as per the aforesaid agreement. The assessee has not offered this income to tax on the ground that it has not 'made available' any technical knowledge, experience, skill, know-how or process, which has enabled it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d similar issue in favour of assessee by observing as under: "7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. While on this issue, it will be useful to refer to the following observations made by a coordinate bench, in the case of Shell Global International Solutions BV Vs ITO [(2015) 64 taxmann.com 3 (Ahd)], as follows: "17. As for the connotations of 'make available' clause in the treaty, this issue is no longer res integra. There are at least two non-jurisdictional High Court decisions, namely Hon'ble Delhi High Court in the case of DIT v. Guy Carpenter & Co Ltd. [2012] 346 ITR 504 and Hon'ble Karnataka High Court in the case of CIT v. De Beers India (P.) Ltd. [2012] 346 ITR 467/208 Taxman 406/21 taxmann.com 214 in favour of the assessee, and there is no contrary decision by Hon'ble jurisdictional High Court or by Hon'ble Supreme Court. In De Beers India (P.) Ltd. case (supra), their Lordships posed the question, as to "what is meaning of 'make available'", to themselves, and proceeded to deal with it as follows: '......The te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of supply and demand analysis, domestic refining capacity, price forecast etc did not constitute fees for technical services as it did not transmit the technical knowledge. In the case of Ernst & Young (P.) Ltd. In re [2010] 189 Taxman 409/323 ITR 184 (AAR), the Authority for Advance Ruling, inter alia, observed that "some of the services enumerated have the flavor of managerial services" but "services of managerial nature are not included in Article 13 (of Indo-UK tax treaty, which is in pari materia with the treaty provision before us) unlike many other treaties". We are in considered agreement with the views so expressed by the Authority for Advance Ruling. On the same lines are various decisions of this Tribunal in the cases of ICICI Bank Limited v. Dy. CIT [2008] 20 SOT 453 (Mum.) and McKinsey & Co. Inc v. Asstt. DIT [2006] 99 ITD 549 (Mum.). What essentially follows, therefore, is that as long as the services rendered by the assessee are managerial or consultancy services in nature, which do not involve or transmit the technology, the same cannot be brought to tax as fees for technical services. 9. Clearly, therefore, unless the recipient of the services, by virtue of ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kills and absorption of kill by the recipient of service, in our humble understanding, is not satisfied. Once the taxability fails in terms of the treaty provisions, there is no occasion to refer to the provisions of the Income Tax Act, 1961, as in terms of Section 90(2), "where the Central Government has entered into an agreement with the Government of any country outside India or specified territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee". The taxability of impugned receipts, under section 9, is thus wholly academic. We leave it at that. 10. In view of the above discussions, as also bearing in mind the entirety of the case, we uphold the plea of the assessee, and direct the Assessing Officer to exclude the sum of Rs.121,14,85,623 from his taxable income as fees for technical services. The assessee thus gets the relief accordingly." 9. As noted above, learned DRP, after noting that material facts remain same during the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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