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TMI Blog2024 (6) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... 891 - ITAT MUMBAI] for interpreting the expression make available . The coordinate Bench has held that in order to attract taxability of an income under Article 12(4)(b), not only payments should be in consideration for the rendering of technical services or consultancy services but in addition to that the payment being consideration for rendering of technical services the services so rendered should also be such that make available technical knowledge, experience, skill, know how or process consist of the development and transfer of a technical plan or technical design. n the present case though the AO has observed that the AE has make available the technical knowledge to assessee. However, failed to bring on record any material to support this averment. Therefore, the case of the assessee is squarely covered by the judgment of Tyco( 2023 (2) TMI 247 - ITAT BANGALORE] We also observed that the judgment of Shell ( 2012 (2) TMI 98 - AUTHORITY FOR ADVANCE RULINGS] as relied upon by the AO at the time of assessment has already stands overruled by the Hon ble Bombay High Court. So far as other judgment of EON Technology Vs DCIT relied upon by the AO there the issue was regarding the ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding company Herbalife Inc was rendering advice or opinion to the assessee for which it received consideration. Since the services for which the payments had been made were managerial, technical and consultancy in nature, these payments fell within the definition of Fees for Technical Services as per section 9 of the Act, and were taxable in India on which tax was duly required to be deducted by the payer/ Indian entity. Accordingly the AO held that assessee is liable to pay tax and interest u/s 201 and 201(1A) on an amount of Rs 21,50,93,900/-. With respect to the applicability of the provisions of DTAA Article 12(4)(b), the AO in para-5.2(ii) of his order has held that the knowledge, experience embodied in Support services was provided by the AE to the assessee for use in future. 5. Aggrieved by the Order of the CIT(A), assessee filed appeal before the CIT(A) and has raised around 12 grounds of appeal and filed written submissions in support of its contentions. Assessee also cited various judgments of the Hon ble High Court and ITAT. It has been further argued by the assessee that the payments made by assessee are in the nature of reimbursement of expenses incurred by the AE, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India (supra) has been recently reversed by the Hon ble Bombay High Court in Writ Petition No.10788 of 2012 vide its order dated 01.03.2024. The learned Counsel for the assessee also drew the attention of the Bench to the case laws considered by Hon ble Bombay High Court while deciding the case of Shell India Markets Pvt. Ltd., (supra). The learned Counsel for the assessee laid emphasis upon the judgment of CIT Ors. Vs. De Beers India Minerals (P.) Ltd., reported in 21 taxmann.com 214 (Karnataka High Court), in the context of interpretation of expression make available 8. Ld Counsel contended that when the judgment relied upon by the AO has already been reversed then the entire edifice of the additions made by the AO is gone. Thereafter, the learned Counsel for the assessee draws the attention of the Bench towards provisions of Article 12(4) of India-USA DTAA for buttressing his argument that there is no such expression like managerial services in this article and hence the assessee has an option to govern itself by the provisions of treaty instead of I.T. Act. 9. The learned Counsel for the assessee also pointed out that the services obtained were not made available to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and USA are is Article 12 which deals with taxability of Royalties and fees for included services. In terms of Article 12(1) . The same are the wordings in India-Singapore DTAA also. The discussion with regard to India-USA DTAA would therefore be applicable for payment made to Tyco International Asis Inc. Singapore. Royalties and fees for included services arising in a Contracting State (USA in this case) and paid to a resident of the other contracting State (India/Assessee in this case) may be taxed in that other state (i.e., USA). The relevant clause on which reliance was placed by the assessee for non taxability of the sum in question in India in the hands of iRunway Inc. USA was Article 12(4) which provides as follows: (4) For the purposes of this article 'fees for included services' means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provisions of services of technical or other personnel) if such services : a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in para 3 is received; or b) make available t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al knowledge, experience, skill etc. must remain with the person utilizing the services even after the rendering of the services has come to an end. A transmission of the technical knowledge, experience, skill, etc. from the person rendering services to the person utilizing the same is contemplated by the article. Some sort of durability or permanency of the result of the 'rendering services' is envisaged which will remain at the disposal of the person utilizing the services. The fruits of the services should remain available to the person utilizing the services in some concrete shape such as technical knowledge, experience skill etc. 73. In Raymond's case (supra), the Tribunal also held that rendering of technical services cannot be equated with making available the technical services. In the case of CESC Ltd. Vs. DCIT (2003) 80 TTJ (Cal) (TM) 806: (2003) 87 ITD 653 (Cal)(TM) also the question regarding the scope of expression making available came up for the consideration of the Tribunal. In that case, the Tribunal was dealing with the scope of Article 13(4)(c) of the Indo-UK tax treaty which is admittedly in parimateria with Article 12(4) of the India-USA tax treaty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be regarded as taxable in India. Consequently, there was no obligation on the part of the assessee to deduct tax at source at the time of making payment. Hence, the disallowance made u/s 40(a)(ai) of the Act cannot be sustained and is directed to be deleted. 17. Perusal of the above observation of the predecessor bench, would show that after referring to the judgment of Hon ble Jurisdiction High Court in the case of D-Beers(Supra) and Raymond 80 TTJ 120(Mum), for interpreting the expression make available . The coordinate Bench has held that in order to attract taxability of an income under Article 12(4)(b), not only payments should be in consideration for the rendering of technical services or consultancy services but in addition to that the payment being consideration for rendering of technical services the services so rendered should also be such that make available technical knowledge, experience, skill, know how or process consist of the development and transfer of a technical plan or technical design. 18. In the present case though the AO has observed that the AE has make available the technical knowledge to assessee. However, failed to bring on record any material to support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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