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TMI Blog2025 (4) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of INR 15,34,27,420 from providing IT support services is taxable as fees for technical services (FTS') under Article 13 of the India- United Kingdom Double Taxation Avoidance Agreement (DTAA'). 2. On the facts and circumstances of the case and in law, the Ld.AO and the Hon'ble DRP erred in merely assuming that there is make available of technical knowledge by the Appellant to the service recipient without bringing any materials on record to substantiate the same. 3. The Ld. AO and the Hon'ble DRP erred in relying on the decision of the AAR in the case of Aircom International Ltd (AAR No. 1329 of 2012) and the decision of the Hon'ble Delhi ITAT in the case of H.J. Heinz Company Vs ADIT [2019] 108 taxmann.com 473 and on the decision of the AAR in the case of Shell India Markets Pvt Ltd (AAR No. 833 of 2009). 4. Notwithstanding and without prejudice to Ground No 1 to 3 above, on the facts and circumstances of the case and in law, the Ld. AO erred in computing total tax liability as INR 1,68,25,676 instead of INR 1,67,65,513. 5. On the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under section 234A and 234B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case and in law, the Ld. AO erred in levying interest under section 234A and 234B of the Act and initiating penalty proceedings by issuing notice under section 274 read with section 270A of the Act. The Appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or at the time of hearing of the appeal. 2. At the outset, the Ld. Counsel for the assessee submitted that the issues involved in the present appeals are covered by the decision of ITAT in assessee's own case for A.Y. 2020-21 in ITA No.784 and 784/Del/2023 vide order dated 23.07.2024 in favour of the assessee. 3. The Ld. DR for the revenue did not controvert the above proposition. 4. We have considered the rival contentions and perused the relevant material available on record. We find that the issues involved are covered in favour of the assessee by the decision of ITAT in assessee's own case vide order dated 23.07.2024 (supra). For the sake of clarity we reproduce the relevant findings of the aforesaid order as under :- 3.1 In view of the aforesaid clause, an amount is chargeable to tax under Article 12(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. ACIT, International Taxation - [2023] 149 taxmann.com 342 (Delhi - Trib.) where the bench having considered the fact that agreement was continuing over the years observed as under; "22. In our humble opinion, mere incidental advantage to the recipient of services is not enough. The real test is the transfer of technology and on the given facts of the case, there is no transfer of technology and what has been appreciated by the Assessing Officer/ld. CIT(A) is the incidental benefit to the assessee which has been considered to be of enduring advantage. 23. In our understanding, in order to invoke make available clauses, technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end and the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider." 3.5 The aforesaid observation further stands affirmed by the Hon'ble Jurisdictional High Court in Commissioner of Income- 16 tax (International Taxation)-1 v. Bio Rad Laboratories (Singapore) Pte. Ltd. - [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd training which Section 4.3 of the Reseller Agreement speaks of was concerned with fields wholly unrelated to providing technical service. 43. Similarly Exhibit B speaks of the products being concerned with assisting the Reseller in the performance of its sales and marketing obligations. All of the above was thus aimed at merely equipping and educating the representatives of SFDC India to be in a position to comprehensively brief potential customers. The training and assistance was thus primarily aimed at the sale of 18 SFDC products and customer related issues. This does not appear to comprise a transmission of specialised knowledge or skill. This more so when we bear in mind the indubitable fact that the phrase "technical service" is to be read in conjunction with "managerial" and "consultation" and it being the settled position in law that the principle of noscitur a sociis is to apply. 4.1 Ld. Counsel has submitted that the above observations of the Hon'ble High Court have been rendered in the context of Section 9(1)(vii) of the Act read with Article 12 of the IndiaIreland DTAA wherein the condition of make available is not contained therein. Be that as it may, the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included services only to the following extent: (1) as described in paragraph 4(3), If they are uncillary and subsidiary to the application or enjoyment of a right, property or information for which a payment described in paragraph (3)(4) of Article 13 received: (2) are ancillary and subsidiary to the enjoyment of the property for Chich a payment described in 20 paragraph (3)(b) of Article 13 is received on (3) as described in paragraph above they make available technical knowledge, experience, skill know how the preces of consist of the development and transfer of a technical plan of technical design. Thus, nature paragraph 4(c), consultancy services which are not of a technical nature cannot be included services. Thus, the services availed by Petitioner cannot be said to the technical services and Article 13 is wholly inapplicable in the facts and circumstances of the present case. 26. Thus, we have no hesitation in holding that the impugned order dated 17th January 2012 of AAR suffers from legal infirmity and is quashed and set aside. 5.1 Ld. DR has however relied the orders of the authorities below. 6. In this context we find that in regard to IT administration services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding IT support services is allocated to its AE's without any element of profit. In this context as we consider the copy of a MSA dated 20.05.2019 as made available on pages 131 to 149 of the paper book alongwith the copies of debit note made available on pages-150 to 153 of the paper book. We find that it was agreed that remuneration for the services has been calculated with the objective of determining an arms length price for the services provided by using methodology as set forth under 'service fee clause". The annexure-1 provided that service fee shall be determined and allocated to the parties based on allocation keys for which in the appendix, annexure-2 provided as under :- "Annex II to the Master Intercompany Service Agreement made on 20 MAY, 2019 between Invesco (India) Private Limited ("the Recipient") and Invesco Holding Company (US) Inc. ("the Provider") Services Provided Commencing on 01 April 2018, the Provider will provide IT support services to the Recipient in respect of IT Application Service Functions, IT Infrastructure Service Functions and IT Security & Administration Service Functions. Details of the services are 23 included in the table below. For ..... X X X X Extracts X X X X X X X X Extracts X X X X
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