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TMI Blog2019 (10) TMI 1568X X X X Extracts X X X X X X X X Extracts X X X X ..... erred on facts and in law in concluding that the reimbursements of allocated costs received by the non-resident appellant under the Management Services Agreement with Sabic Innovative Plastics India Private Limited ('SABIC IP India') was in the nature of fees for technical services/fees for included services ('FIS') under Article 12 of the India- US Double Taxation Avoidance Agreement ('DTAA') and hence liable to be taxed in India. 2. That in any case the AO/DRP completely failed to appreciate that the reimbursements made to the Appellant did not have any element of income contained therein and hence were not liable to be taxed. 3. The AO/DRP have erred in law and on the facts of the case in not appreciating that common services do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 271(1)(c) of the Act." 3. The issue revolves around taxing of management services provided by the SABIC Innovative Plastics US LLC to SABIC Innovative Plastics India Pvt. Ltd. amounts to fee for technical services or not. Brief facts of the case are that during the year, the Assessing Officer brought to tax Rs. 148,26,784/-, the assessee purported to have been received and treated as income under FTS. The assessee has offered an amount of Rs. 925,564/- to tax which pertains to the amount received on account of Information Management (IM). The other services provided by the assessee are in the areas of * Finance: It includes month-end and quarter end closing, standardizing processes, planning and facilitating entity reduction projects, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signing and compensation planning of employees. * Sourcing and procurement: It includes developing and implementing the sourcing strategy of direct materials used in the production process. Engaging in direct and indirect materials supplier search and price negotiation on direct materials. The direct material sourcing function relates to procuring hydro carbon and non hydro carbon materials used for manufacturing plastics. * Information Management (offered to tax) 4. The Assessing Officer held that the payment for technical or consultancy services would fall within the scope of definition of FTS under the Indo-US treaty only if such services make available any technical knowledge, skill, know-how etc. to the recipient of service or it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by me. I have gone through various documents furnished by the appellant indicating nature of services provided by the appellant. The services provided in present case mostly resemble with those in case of Ernest & Young (P) Ltd. AAR 820 of 2009. It appears that most of the services are in nature of management services, though some of the services may be considered to be of technical nature. However, from terms of the service agreement and also from conduct of the parties, it cannot be said that 'make available' requirement has been satisfied. The Assessing Officer has not elaborated on this aspect. As per provisions of Article 12(4) of DTAA, unless 'make available' clause is satisfied, consideration for any consultancy or technical ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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