INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and US - Fees for technical services - Payment towards services rendered in connection with project for construction of road

Assessee based at US was engaged in the providing services in connection with the construction of highways, transportation, water supply and waste management, etc. It entered into agreement with NHAI in respect of NH-45 (Tambaram-Tindivanam project. In terms of said agreement assessee was required to provide services in implementation of road project, review and approve material, its design results and recommend special tests wherever required for materials, suggest substitutes of unsuitable materials, to assess adequacy of inputs such as materials and labour. The assessee was also required to supervise and check setting out of culverts, bridges, foundations, floor slabs, all other work required for the project. AO held that income derived by assessee from NH-45 project was in the nature of 'fees for technical services' in terms of article 12 of Indo-US DTAA.Held: It was not the case of AO that there was imparting of technical skill which was absorbed by the receiver, i.e,, NHAI so that it could deploy similar technology in future without depending on the provider, i.e., assessee. In view of this, income derived by assessee did not qualify as FTS under article 12(4) of Indo-US DTAA as conditions of 'make-available' did not satisfiy.

Relied:CIT v. De beers Indfia (P) ltd. 346 ITR 467 (Karn) : 2012 TaxPub(DT) 2504 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-06

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