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TMI Blog2025 (4) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... AYs 2014-15 to 2017-18, ITA Nos.259 to 262/Chny/2023 dated 26-07-2024 which has been rendered on identical facts. A copy of the order has been placed on record. It has been stated the same agreement is continuing and the nature of the services remain the same. The Ld. CIT-DR, though supported the stand of lower authorities, could not controvert this fact. Having heard rival submissions and perusal of case records, the appeal is disposed-off as under. Proceedings before lower authorities 3.1 The assessee is a USA incorporated company. In the return of income, the assessee claimed exempt income for Rs.26.21 Crores and TDS credit of Rs.2.79 Crores. The income was in the shape of data management charges and reimbursement of expenses as received from M/s Visteon Electronics Pvt. Ltd. The assessee furnished copies of relevant agreements and invoices. The assessee submitted that the aforesaid services do not fall under fees for included services as per Article 12 of DTAA but it would be 'business income' which would be taxable only when the assessee has permanent establishment (PE) in India which was not the case. 3.2 The Ld. AO, upon perusal of relevant clauses of the agreement, reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rth in the Agreement, as Base fees or Project Fees or Fees (Fees for Additional Services); 4. The assessee though shall be sole and exclusive owner of all Intellectual Property created by it, has also granted to its clients a non-exclusive, non sub licensable, non-transferable and limited license to use such Intellectual Property; 5. As per 9.2, the assessee has granted access to any hardware or software to its clients, who, though will not acquire any right, title or interest in or to any such hardware or software other than the right to use; 6. Further, in Exhibit A - IT Services Description, as per Section 3(7), the assessee will for rendering the services, under "Conditions and Assumptions" will maintain full authority and control for access to the computer room. And, under the heads, Business Application Services, Manufacturing ITA Solutions Services, Data Management Services, End User Computing Services, Central IT Support, Security Services, Network services, Server services, Telecom Services and IT Staff Support Services, the assessee was rendered services to its clients. Except for the Security Services, Network services, Server services, Telecom Services and IT Staf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'fees for included services' [FIS] under Article 12 of India-US DTAA, services rendered must make available technical knowledge, expertise, skill, know how or processes or consist of the development and transfer of a technical plan or technical design. We have gone through the Memorandum of Understanding explained the phrase 'make available' and the paragraph 4 (b) clarifies that the use of a product which embodies technology shall not per se be considered to make the technology available in paragraph 4(b) of the protocol as critical categories of services that jointly involves the development and transfer of technical plants or technical designs or making technology available as described in paragraph 4(b). In our view, these services rendered by assessee to its sister concern and compensation received on account of the same does not fall in these typical categories mentioned in paragraph 4(b) which includes 'making technology available' nor to be taxable under Article 12 of the tax treaty as FIS, the payment should fit into the terminology 'make available' wherein the technical knowledge, skill etc., must remain with the person receiving the services even after the particular con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to render technical services uses technical knowledge, experience, skill, know-how or processes. To attract the tax liability, that technical knowledge, experience, skill, know how or process which is used by the service provider to render technical service should also be made available to the recipient of the services, so that the recipient also acquires technical knowledge, experience, skill, know-how or processes so as to render such technical services. Once all such technology is made available it is open to the recipient of the service to make use of the said technology. The tax is not dependent on the use of the technology by the recipient. The recipient after receiving of technology may use or may not use the technology. It has no bearing on the taxability aspect is concerned. When the technical service is provided, that technical service is to be made use of by the recipient of the service in further conduct of his business. Merely because his business is dependent on the technical service which he receives from the service provider, it does not follow that he is making use of the technology which the service provider utilises for rendering technical services. The crux of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue that the assessee's case is covered in clause (g) of para 3 to Article 12 of the India Australia Treaty as the assessee has not made available any technical knowledge or expertise to the recipient Indian company. In our opinion, the assessee has only provided the back-up services and IT support services for solving IT related problems to its Indian subsidiary. Hence, unless and until the services are not made available, same cannot be taxable in India. We, therefore hold that the services rendered by assessee company to its Indian group companies, though are in the nature of technical services, but is not covered in para (3)(g) to Article 12 of the India Australia Treaty and hence, the same is not taxable in India. We also hold that the amount received by the assessee cannot be treated as a Royalty even under the normal provisions of I.T. Act. But under the normal provision of the I.T. Act the same constitute consideration for rendering the technical services covered u/s.9(1)(vii) of the I.T. Act. Accordingly, Ground No.1 is allowed and issue is decided in favour of the assessee. 10.3 Another case cited by ld. counsel for the assessee of ITAT, Delhi Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igures between Form No.26AS and Form No.15CA, as pointed out by ld. counsel for the assessee, we are of the view that Form No.15CA filed by the banker and the assessee was not in a position to verify the details forming part of Form No.15CA. The assessee has made claim as per Form No.26AS, this is subject to verification. The assessee will be provided necessary details as received by the AO in Form No.15CA and will confront the same to the assessee so that the assessee can peruse the same and provide suitable response and reconcile the figures. In term of the above, this particular verification is restored back to the file of the AO. Facts being identical, we would take the same view and allow the appeal on merits subject to aforesaid verifications of figures by Ld. AO. The assessee shall reconcile the figures as reported in Form No.15CA and Form No.26AS or any other relevant form. The corresponding grounds stand allowed accordingly. 5. In Ground Nos.5 & 6, the assessee seeks correct TDS credit as reported in Form No.26AS. It has also been stated that the assessee has not received any refund and Ld. AO has erred in noting the correct fact. In this regard, it would suffice on our ..... X X X X Extracts X X X X X X X X Extracts X X X X
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