9911796707
TMI Blog2024 (8) TMI 1489X X X X Extracts X X X X X X X X Extracts X X X X ..... nce is akin to make available which cannot be accepted. Rather, it should be the enduring benefit to the clients to undertake repairs manage the maintenance services, then only it can be considered that the make available clause is satisfied. Since, such make available clause is not satisfied, the services cannot be treated as FTS as per India-USA DTAA. Corporate Allocation Charges FTS or not - assessee submitted that they have incurred various charges such as IT expenses, legal charges, back office support on behalf of Goodrich Aerospace Services Pvt. Ltd. and claimed that such expenses have been reimbursed without any profit element - HELD THAT:- From the facts on record, we find that the amounts have been received by the assessee as reimbursement from Goodrich Aerospace Services Pvt. Ltd. an Indian company and it collected the aforesaid charges on the basis of actual expenses incurred. The assessee was not engaged in providing any kind of technical or consultancy services or training which would enable the Indian customer to perform the services independently in future. It was merely customer based information and guidance to the recipient. There was no problem solving skill or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance services do not make available any technical knowledge, know-how or skill to the customers in India and hence, not taxable under Article 12 of India-USA DTAA, Taxability of corporate allocation charges received by the Appellant of INR 1,28,46,717 6. erred in not appreciating that corporate allocation charges amounting to INR 1,28,46,717 are in the nature of cost-to-cost reimbursement without any profit element involved and hence are not liable to be taxed under the provisions of the Act; 7. erred in making an addition of INR 1,28,46,717 by treating the corporate allocation charges provided by the assessee as FTS under the provisions of Article 12 of the India-USA DTAA without appreciating the fact that such services do not 'make available' any technical knowledge, know-how or skill to the customers in India and hence, not taxable under Article 12 of India-USA DTAA. Levy of interest under section 234A 8. erred in levying interest under section 234A of the Act amounting to INR 2,37,54,375. Levy of interest under section 234B 9. erred in levying interest under section 234B of the Act amounting to INR 3,69,51,250. Levy of late filing fees under section 234F 10. erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for all the items mentioned in it for example the enduring benefit of a technical design or know-how cannot be same as enduring benefit coming from imparting of skill or experience. In the former case enduring benefit will outlive the enduring benefit brought in by the latter. In case of assessee company, the enduring benefit and make available fall under skill/experience which is shared by assessee company with its customers. Both the parties in these service transactions are engaged in highly specialized work which can be rendered and availed by them only and once the skill/experience is rendered, it continues to give benefit until required again. When it comes to services rendered as skill and experience, the make available and enduring benefit, will almost always have a comparatively short shelf life in this context. This being the case, it cannot be ignored that the make available clause and enduring benefits are satisfied and the service is not of the nature which is so highly technical and specialized that it should be taxed as Fee for Technical Services. 6. From the above, we find that it could be technical services but the make available clause is totally absent. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R information systems, applications and processes, including: Learning Portal, Employee Scholar Program, Performance .. 2. Coordinate employees learning and development including: training, support and monitoring of Performance Feedback Tool; assist with talent development and recruiting, coordinate service awards; support relocations and assignments; and support other staffing, organizational and compensation needs as necessary. F. OPERATIONS SUPPORT Service Providers may provide operations and sourcing support services to Service Recipient consisting of some or all of inventory and demand planning, supervising and monitoring inventory levels, establishing and managing strategic sourcing process, assisting with supplier selection process, conducting supplier rationalization initiatives, providing supplier support, treasury, payroll (including design, support and maintenance of global payroll processing. 9. Based on above, the Assessing Officer proposed to treat the services as FTS. The assessee submitted that they are not rendering any service which is enables recipients to not avail similar service in future. Also the assessee submitted, no employee visited India for rendering an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kill and experience, the make available and enduring benefit, will almost always have a comparatively short shelf life in this context. This being the case, it cannot be ignored that the make available clause and enduring benefits are satisfied and the service is not of the nature which is so highly technical and specialized that it should be taxed as Fee for Technical Services. 11. From the facts on record, we find that the amounts have been received by the assessee as reimbursement from Goodrich Aerospace Services Pvt. Ltd. an Indian company and it collected the aforesaid charges on the basis of actual expenses incurred. The assessee was not engaged in providing any kind of technical or consultancy services or training which would enable the Indian customer to perform the services independently in future. It was merely customer based information and guidance to the recipient. There was no problem solving skill or operations or knowledge or technology which has been made available to the client. Hence, we hold that the provisions of FTS as per the Article of India-USA DTA are not attracted on the services. 12. The appeal of the assessee on this ground is allowed. 13. In the result ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
