Taxability of group IT services under Article 12 of the Indo-Dutch DTAA

Facts:

Assessee an Indian subsidiary of the Dutch parent of eponymous name was in the business of baggage handling at airports, distribution centre, mail/express sortation facilities and related services. They had paid group IT services not limited to IT product licences and for various IT services pooled provided by its parent entity from Netherlands. It was the case of the revenue that these were royalty and/or Fee for technical services (FTS). Assessee's plea was that these did not make available any technology worthy of exploitation besides the fact that these were reimbursements. On Appeal to ITAT, the ITAT concluded on facts that if there were markups in the charge back by the group parent then the same cannot be held as reimbursement. Further the amended Dutch DTAA with India was also reviewed and it was confirmed that these were indeed royalty as they did make available some form of industrial equipment, business process and related technical services. The benefit of Apex court judgment in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v. CIT (2021) 432 ITR 471 (SC) : 2021 TaxPub(DT) 1208 (SC) would only apply to the licences purchased by the parent and not to the bundled composite IT services provided to the assessee.

Held against the assessee that the group IT services were taxable as royalties/FTS under Indo-Dutch DTAA.

Case: Vanderlande Industries (P) Ltd v. ACIT 2022 TaxPub(DT) 1263 (Pun-Trib)