Mere availing of services of non resident company for global market survey is not fees for Technical Services hence not TDS

By | November 2, 2015
Mere availing of services of non-resident company for global market survey to determine business prospects to carry out project in India is not ‘ Fees for Technical Services’ under India UK Treaty

Income Tax Officer v. Skill Infrastructure Ltd.,  [ITAT Mum.]

ITA No. 865-867 of 2011

Date of Decision:  July 29, 2015

Facts of the case

The assessee-company entered into an agreement with a UK company (Appledore) to undertake evaluation of business opportunities in India. The assessee made payment for said services but had not deducted tax at source on said payment on the ground that Article- 13 was not applicable as the services rendered by Appledore were consultancy services and did not make available any technical knowledge, skill, etc.

Decision of the Tribunal

The Mumbai ITAT held that, “Services can be said to ‘make available’ technical knowledge, etc., where such technical knowledge is transferred to the person utilizing the service, and such person is able to make use of the technical knowledge, etc., by himself in his business or for his own benefits and without recourse to the performance of service in the future. Appledore had merely provided services for global market survey to determine demand for repairs, conversions, new builds and to determine the short/medium/long-term business prospects in India and to determine a strategy for manning and training personnel, an estimation of cash flows and capital requirements, financial structure and pay-back period and provide report for the same. These services by Appledore were not given towards imparting any technical knowledge or experience to the assessee that could be used by the assessee independently in its business and without recourse to Appledore. These services were neither geared to nor did they ‘make available’ any technical knowledge, skill or experience to the assessee or consisted of development and of a technical man or technical design to the assessee”. Therefore, the payments made by the assessee to Appledore for services do not qualify as FTS under the provision of Indo-UK treaty.

Category: Uncategorized

Leave a Reply