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TMI Blog2024 (12) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... IS Services') to its affiliate in India - HELD THAT:- DRP and learned AO concluded receipts accruing to the assessee/appellant on account of provision of GIS being services in the nature of general maintenance of software and hardware procured from 3rd party and other head thereof ( routine GIS services ) to is affiliate in India are in the nature of Fees for Technical Services ( FTS ) / Fees for Included Services ( FIS ) under Article 12 of the India US Double Taxation Avoidance Agreement ( DTAA ). Undisputedly, learned DRP and AO did not sought details of the invoices. It is the fact that HD India had shut down its business of distribution of motor cycles, spare parts and accessories in India in the year under consideration. It is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s selected for scrutiny under CASS. Notice under section 143(2) of the Act was issued on 29.06.2021 and duly served upon the assessee and notice under section 142(1) of the Act along with detailed questionnaire were issued during the assessment proceedings from time to time. In compliance the above notices, the assessee filed various details which were examined and placed on record. 3. During the assessment proceedings, the assessee submitted that he is a tax resident of USA and received interest income on ECB loan given to its Indian AE, H-D Motor Company India Pvt. Ltd. (herein after referred as HD India ) along with income from offshore supply of Rs. 7,30,528/-, reimbursement of expenses of Rs. 8,65,87,527/- and reimbursement of GIS Supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO erred in concluding that the receipts amounting to Rs. 14,33,10,396/- accruing to the Appellant on account of provision of Global Information Services (GIS) being services in the nature of general maintenance of software and hardware including services procured from third party and overhead thereof ('routine GIS Services') to its affiliate in India are in the nature of fees for technical services ('FTS') / Fees for Included Services ('FIS') under Article 12 of the India - US Double Taxation Avoidance Agreement ('DTAA') (erroneous reference to the India- Singapore DTAA in the order by the DRP). Learned DRP and AO erred in not appreciating that the routine GIS services provided by the appellant do not make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taxed as FTS/FIS in view of the provisions of Article 12 of the India- USA-DTAA. The learned AO has alleged that enduring benefit has been provided by the appellant to the Indian AE. The appellant recovers GIS charges every year from the group affiliates. So, no enduring benefit is being provided at all to the recipient of services. 5.4 As per the provisions of Article 12 of the India-USA DTAA, a service is said to be FIS if the same satisfies the 'make available' condition. In this regard, it is relevant to refer to the Memorandum of Understanding (MOU') entered between India and USA which defines the term 'make available with suitable examples. According to the MOU entered between the parties, the services which do not m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is placed by the appellant on the order of Hon'ble ITAT Delhi in the case of GE Energy Management Services Inc. vs. Assistant Director of Income-tax, (International Taxation), New Delhi [2022] 135 taxmann.com 173 (Delhi - Trib.) wherein it was held that The term of the agreement is five years and services provided by the assessee are repetitive and ongoing in nature. This means that PGCIL is not able to apply technical or skill use by the assessee for rendering such services. Given that repetitive nature of the services, it would be factually incorrect to allege that the services make available any technical knowledge, expertise, skill. know-how or processes to PGCIL. 5.7 The assessee/appellant placed reliance on the following judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 12 of the India US Double Taxation Avoidance Agreement ( DTAA ). Undisputedly, learned DRP and AO did not sought details of the invoices. Copy in detailed filed as copy of GIS Agreement at pages 42-44, copy of invoices raised for GIS Charges at pages 45-60, copy of email correspondences made in respect of delivery of services for GIS support services at pages 61-72 and copy of invoices, on a sample basis, raised by the third parties like Infosys, SAP, Microsoft, Adobe etc. at pages 252-278 of the paper book. 9. It is the fact that HD India had shut down its business of distribution of motor cycles, spare parts and accessories in India in the year under consideration which is evident from the fact stated on Page 7 of the DRP directions d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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