INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and US - Applicability of article 12(4)(a)/12(4)(b) - Management fee received in relation to services rendered on standalone basis

Assessee based at US received management fee from KSIPL. AO held that services rendered by assessee made available technical knowledge or know-how or skill to KSIPL and were ancillary and subsidiary to enjoyment of rights granted by assessee to KSIPL for which assessee received royalty from KSIPL, therefore, same was taxable as fee for included services' (FIS) under article 12(4) of Ind-US DTAA.Held: Article 12(4)(a) of Indo-US DTAA deals with payments for rendition of technical or consultancy services ancillary and subsidiary to application or enjoyment of a right, property or information for which a payment described in article 12(3) is received. The services in question were independent services on standalone basis, and, as such, article 12(4) did not come into play. As for application of article 12(4)(b), there was nothing on record to show that there was any transfer of technology so as to satisfy make available. Therefore, management fee received by assessee could not be taxed as fee for included services.

Relied:DIT v. Guy Carpenter & Co. Ltd. (2012) 346 ITR 504 (Del) : 2012 TaxPub(DT) 2095 (Del-HC) and CIT v. De Beers India (P.) Ltd. (2012) 346 ITR 467 (Karn) : 2012 TaxPub(DT) 2504 (Karn-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

INCOME TAX ACT, 1961

Section 90

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