ITO v. Veeda Clinical Research (P.) Ltd.

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The Tax Publishers2013 TaxPub(DT) 2141 (Ahd-Trib) : (2013) 144 ITD 0297 : (2013) 156 TTJ 0115 : (2013) 090 DTR 0324 Income Tax Act, 1961 --Double taxation relief--Agreement between India and UK In house training and market awareness and development training--Assessee made payments to UK company for providing in-house training of Income Tax staff and medical staff and, market awareness and development training to its employees. The claim of the assessee that the training services received by the assessee did not 'make available' any technical knowledge, experience, skill, know-how or process, or consist of the development and transfer of a technical plan or design, had been rejected on the ground that connotations of the expression, make available also include the cases in which technical services were offered or made accessible to the recipient of services and not necessarily confined to the cases in which the recipient should be 'trained or made expert in such technical knowledge etc.' The assessing officer concluded that the training fees paid by assessee was taxable in India under article 13(4)(b) of India UK DTAA. *Held:* Unless there was a transfer of technology involved in technical services extended by the UK based company, the 'make available', clause was not satisfied and, accordingly, the consideration for such services could not be taxed under article 13(4)(c) of India UK Tax Treaty. The provisions of the Income Tax Act apply in a treaty situation only to the extent, they are more favourable vis-a-vis the provisions of tax treaties, to the assessee. Accordingly, when case of the Revenue authorities fails on the tests of the treaty provisions, there is no occasion at all for their leaning upon the provisions of the Income Tax Act. The case of the Revenue authorities, as discussed above, does not succeed on the provisions of the tax treaty as there is nothing to establish, or even indicate, that there is, any transfer of technology in the present case. In view of these discussions as also bearing in mind, entirety of the case, in our considered view, the fees for training services of In the present case, the training services rendered by the service provider were general nature, which did not involve any transfer of technology, could not be brought to tax under article 13(4)(c) of India UK Tax Treaty. Unless there was a transfer of technology involved in technical services extended by the UK based company, the make available, clause was not satisfied and, accordingly, the consideration for such services could not be taxed under article 13(4)(c) of India UK Tax Treaty. In the present case, the training services rendered by the service provider are general in nature as the training is described as in-house training of Income Tax staff and medical staff and of market awareness and development training. Clearly this training does not involve any transfer of technology. In any case, in order to successfully invoke the coverage of training fees by, make available, clause in the definition of fees for technical services, the onus is on the revenue authorities to demonstrate that these services do involve transfer of technology. That onus is not at all discharged by the assessing officer, or even by the learned Departmental Representative. The provisions of the Income Tax Act apply in a treaty situation only to the extent they are more favourable vis-a-vis the provisions of tax treaties, to the assessee. Accordingly, when case of the revenue authorities fails on the tests of the treaty provisions, there is no occasion at all for their leaning upon the provisions of the Income Tax Act. The case of the Revenue authorities, as discussed above, does not succeed on the provisions of the tax treaty as there is nothing to establish, or even indicate, that there is any transfer of technology in the present case. In view of these discussions as also bearing in mind entirety of the case, the fees for training services of general nature, which did not involve any transfer of technology, could not be brought to tax under article 13(4)(c) of India UK Tax Treaty. [Para 5] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 2141 (Ahd-Trib) : (2013) 144 ITD 0297 : (2013) 156 TTJ 0115 : (2013) 090 DTR 0324

Income Tax Act, 1961

--Double taxation relief--Agreement between India and UK In house training and market awareness and development training--Assessee made payments to UK company for providing in-house training of Income Tax staff and medical staff and, market awareness and development training to its employees. The claim of the assessee that the training services received by the assessee did not 'make available' any technical knowledge, experience, skill, know-how or process, or consist of the development and transfer of a technical plan or design, had been rejected on the ground that connotations of the expression, make available also include the cases in which technical services were offered or made accessible to the recipient of services and not necessarily confined to the cases in which the recipient should be 'trained or made expert in such technical knowledge etc.' The assessing officer concluded that the training fees paid by assessee was taxable in India under article 13(4)(b) of India UK DTAA. Held: Unless there was a transfer of technology involved in technical services extended by the UK based company, the 'make available', clause was not satisfied and, accordingly, the consideration for such services could not be taxed under article 13(4)(c) of India UK Tax Treaty. The provisions of the Income Tax Act apply in a treaty situation only to the extent, they are more favourable vis-a-vis the provisions of tax treaties, to the assessee. Accordingly, when case of the Revenue authorities fails on the tests of the treaty provisions, there is no occasion at all for their leaning upon the provisions of the Income Tax Act. The case of the Revenue authorities, as discussed above, does not succeed on the provisions of the tax treaty as there is nothing to establish, or even indicate, that there is, any transfer of technology in the present case. In view of these discussions as also bearing in mind, entirety of the case, in our considered view, the fees for training services of In the present case, the training services rendered by the service provider were general nature, which did not involve any transfer of technology, could not be brought to tax under article 13(4)(c) of India UK Tax Treaty.

Unless there was a transfer of technology involved in technical services extended by the UK based company, the make available, clause was not satisfied and, accordingly, the consideration for such services could not be taxed under article 13(4)(c) of India UK Tax Treaty. In the present case, the training services rendered by the service provider are general in nature as the training is described as in-house training of Income Tax staff and medical staff and of market awareness and development training. Clearly this training does not involve any transfer of technology. In any case, in order to successfully invoke the coverage of training fees by, make available, clause in the definition of fees for technical services, the onus is on the revenue authorities to demonstrate that these services do involve transfer of technology. That onus is not at all discharged by the assessing officer, or even by the learned Departmental Representative. The provisions of the Income Tax Act apply in a treaty situation only to the extent they are more favourable vis-a-vis the provisions of tax treaties, to the assessee. Accordingly, when case of the revenue authorities fails on the tests of the treaty provisions, there is no occasion at all for their leaning upon the provisions of the Income Tax Act. The case of the Revenue authorities, as discussed above, does not succeed on the provisions of the tax treaty as there is nothing to establish, or even indicate, that there is any transfer of technology in the present case. In view of these discussions as also bearing in mind entirety of the case, the fees for training services of general nature, which did not involve any transfer of technology, could not be brought to tax under article 13(4)(c) of India UK Tax Treaty. [Para 5]