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TMI Blog2023 (5) TMI 1221X X X X Extracts X X X X X X X X Extracts X X X X ..... e available to the service recipient. Therefore, the assistance, support or advice provided by the assessee to BTPL shall not per se be considered to make technology available since the assessee did not make available any technical knowledge, experience or skill to BTPL by way of rendering the above support services to BTPL. Article 13(4) of the India UK DTAA does not apply to the assessee s case and hence the consideration could not be included in FTS. Services rendered by the assessee to BTPL do not satisfy make available clause as envisaged under Article 13(4)(c) of the India-UK DTAA to fall within the scope of FTS. Hence, the fees for the services rendered by the assessee from outside India to BTPL are not in the nature of FTS as per the provisions of Article 13(4)(c) of India-UK DTAA. Decided in favour of the assessee. - ITA No. 820/Del/2022 - - - Dated:- 26-5-2023 - Shri G.S. Pannu, Hon ble President And Ms. Astha Chandra, Judicial Member For the Assessee : Ms. Bhavya Bansal, CA For the Department : Shri Vizay Vasanta, CIT- DR ORDER PER ASTHA CHANDRA, JM The appeal filed by the assessee is directed against the order dated 28.02.2022 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s erred in facts and in law by initiating penalty proceedings u/s 270A of the Act mechanically for under-reporting and misreporting without recording any adequate satisfaction for such initiation. 3. Briefly stated, the facts are that the assessee, Infobip Ltd., is a foreign company incorporated under the laws of England and Wales with a registered office in London, United Kingdom (UK). The assessee provides solutions in the communication and messaging space, offering a cloud based delivery model that helps organisations drive growth globally. The assessee contracts with global customers for the provision of such SMS messaging solutions by cloud-based technology. For the AY 2017-18, the assessee filed its return on 17.11.2017 declaring total income of Rs. 34,65,980/- and claiming Nil refund. The assessee s case was selected for scrutiny and statutory notices were issued and served upon the assessee. In response thereto the assessee filed various details which were examined and placed on record by the Ld. AO. 3.1 During the relevant AY the assessee provided services to its Associated Enterprise ( AE ), namely bSmart Tech Pvt. Ltd. ( BTPL ) under the Business Cooperation Agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledge and know-how are made available to the AE. Hence, on an understanding of the overall effect of the services agreement, it has to be held that the managerial and consultancy services are made available by the assessee to its AE. 7. Thus, on a true construction of the agreement between Infobip Limited and Bsmart Tech Pvt. Ltd, it has to be held that the assessee is rendering managerial and consultancy services to the applicant. These technical services are taxable under paragraph 4 of Article 13 of the DTAA. They are taxable even if one were to invoke the concept of make available for making the payments for such services taxable. Thus, the technical services provided are taxable in terms of Article 13.4 of the DTAA between India and UK. 8. Reliance is place on the following case laws to support the arguments: The term 'make available' came under the examination by the AAR in its ruling in the case of Shell India Markets Pvt. Ltd. (order dated 12.1.2012 in AAR No. 833 of 2009).In this case, the foreign company provided industry specific expertise to the assessee which was applied in running business. This way the assessee s employees would be equippe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e making payments for aforesaid services. Thus, the term make available is not limited to services of technical nature but also includes the consultancy services. The term make available came under the examination by the AAR in its ruling in the case of Shell India Markets Pvt. Ltd. (order dated 12.1.2012 in AAR No. 833 of 2009). In this case, the foreign company provided industry specific expertise to the assessee which was applied in running business. This way the assessee's employees would be equipped to carry on that business/ service on their own without reference of the service provider, when the service agreement comes to an end. It has been stated that it was not a per-requisite for applicability of make available clause that the right to continue the practice put into effect and adopted under the service agreement on its expiry should be conveyed specifically. It was found that while describing the services, the term 'advise/advice' has been used repeatedly and the services are themselves called support services . This itself indicates that while providing General BSS, foreign company works closely with the employees of the assessee and supports/ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The services are not of enduring nature and BTPL is not in a position to apply and use the technical knowledge on their own without the support of the assessee. These services are continuously provided year after year on a regular basis and there is no change in the nature of services rendered by the assessee. The Ld. AR took us through the sample copies of e-mail correspondence between the assessee and its AE i.e BTPL for the provision of services to show that the services offered by the assessee are simple review of legal contracts and that no transfer of technical knowledge, skills, experience, know-how etc. is made from the assessee to BTPL while rendering these services. 7.2 The Ld. AR relied on the following cases in support of his contention that mere rendering of service is not considered as make available unless the assessee is able to use the technical knowledge by himself in his business:- i) De Beers India Minerals (P) Ltd. vs CIT 208 Taxmann.406 ii) Raymond Ltd. vs CIT 80 TTJ 120 [Mum ITAT] iii) DIT v. Guy Carpenter Co. Ltd.[2012] 20 taxmann.com 807/207 Taxman 121/346 ITR 504 (Delhi) iv) ADIT Vs. Rolls Royce Industrial Power India Ltd. ITA No. 1599(De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the offer of provision of bulk SMS services as requested by the customer of BTPL. The Finance and Sales Support team of the assessee sends timely reminder emails to the sales managers of BTPL to follow up with its customers for outstanding dues. Further, the Finance and Sales Support team maintains the records of Payroll details of the employees and reimbursement claims of the employees of BTPL. 2. Legal Support services: The Legal team of the assessee based in UK provides legal inputs on the agreement to be entered for the provision of bulk SMS services by BTPL to its customers. The Legal team reviews the draft agreement between BTPL and its customer and provides suggestion if any changes are required in the draft agreement on email to BTPL. 3. Technical Support services: The Technical Support team of the assessee based in UK provides technical support services to BTPL and its customers. The technical support team of the assessee attends to the queries/request lodged on company portal or sent via email and provides resolution on email or on Skype. 9.4 The service recipient i.e. BTPL is in the business of sales, marketing and product development of mobile tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee for provision of these services. BTPL is in no way able to apply and use the technical knowledge provided by the assessee on its own in its business. A mere provision of service may require technical knowledge by service provider but that would not per se mean that such technical knowledge has been made available to the service recipient. Therefore, the assistance, support or advice provided by the assessee to BTPL shall not per se be considered to make technology available since the assessee did not make available any technical knowledge, experience or skill to BTPL by way of rendering the above support services to BTPL. In our view, Article 13(4) of the India UK DTAA does not apply to the assessee s case and hence the consideration could not be included in FTS. 9.6 There are plethora of judicial precedents where the courts have tested the expression make available in the context of fees for technical services viz-a-viz the nature of services rendered by the assessee. We have considered the decisions (supra) relied upon by the assessee. The sum and substance of all these decisions are that mere rendering of services is not considered as make available unles ..... X X X X Extracts X X X X X X X X Extracts X X X X
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