BARCLAYS SERVICES CORPORATION,MUMBAI vs. DCIT(INTERNATIONAL TAXATION)-1(2)(1), MUMBAI

आयकर अपीलीय अिधकरण �ायपीठ मुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “I” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JM & SHRI ARUN KHODPIA, AM I.T.A. Nos. 2122/Mum/2022 & 3708/Mum/2025 (Assessment Years: 2019-20 & 2020-21) Barclays Execution Services Assistant Commissioner of Income Limited Tax (International Tax) – 1(2)(1) 1 Churchill Place London, Vs. 18th Floor, Room No.1811, Air India Greater London-E14 5 HP Building, Nariman Point, Mumbai- 400021 PAN: AAECB2079H Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

I.T.A. No. 2332/Mum/2022 (Assessment Year: 2019-20) Barclays Services Corporation Deputy Commissioner of Income Tax 1 Churchill Place London, (International Tax) – 1(2)(1) Greater London-E14 5 HP Vs. 18th Floor, Room No.1811, Air India Building, Nariman Point, Mumbai- 400021 PAN: AAICB6197N Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Madhur Agrawal Revenue by : Shri Sridhar G. Menon (Sr. DR) Date of Hearing : 21.07.2026 Date of Pronouncement : 16.10.2026 O R D E R Per Arun Khodpia, AM: The captioned appeals are preferred by the assessees, challenging the separate orders u/s 143(3) r.w.s 144C(13) of the Income Tax Act, 1961 [in short,

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited “the Act”] in pursuance to respective directions of Dispute Resolution Panel (DRP) u/s 144C(5) of the Act.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited such professionals, the said recharges are taxed as FTS as per the India-UK tax Domestic Tax Avoidance Agreement (DTAA) (hereafter referred to as 'India-UK Treaty'). (c) In ignoring the fact that the services rendered by the Appellant are not made available to the Barclays Indian entities to let the entities independently carry out the business activities but the same are provided on a recurring basis. (d) In not appreciating the fact that the Appellant is into the business of providing support services to various group entities from outside India. Thus, in absence of a Permanent Establishment of India, the business income of the Appellant should not be taxed in India as per the India-UK Treaty. (e) In not appreciating that the view adopted by the payers i.e. Barclays Indian entities on tax deduction at source is independent of the taxability of the income in the hands of the Appellant. (f) In not appreciating the fact that NIL withholding tax certificate under section 197 of the Act is not to be mandatorily obtained where the income is claimed to be exempt. (g) In ignoring the fact that the Appellant had furnished the sample tickets evidencing the communication between the Appellant and one of the Barclays Indian entity (service recipient) with respect to the rendering of services by the Appellant. 3. Ground No. 3 The learned AO has erred in holding that where the Appellate Authorities are of the view that the recharges of INR 3,58,71,13,520 are not taxed as FTS, the same shall be taxable as 'Royalty' thereby ignoring the directions of the Hon'ble DRP. 4. Ground No. 4 The learned AO, on the facts and circumstances of the case and in law, erred in granting short credit of the taxes deducted at source of INR 39,52,022 in accordance with Rule 37B of the Income-tax Rules, 1962. 5. Ground No. 5 The learned AO, on the facts and circumstances of the case and in law, erred in levying interest under section 234A and consequential levy of interest under section 234B of the Act. 6. Ground No. 6 The learned AO, on the facts and circumstances of the case and in law, erred in considering the grant of excess refund to the Appellant of INR 1,11,99,207 without appreciating the fact that the said refund is not credited to the bank account of the Appellant as on date of filing this appeal and consequentially levying interest under section 234D of the Act 7. Ground No. 7 The learned AO erred in initiating penalty proceedings under section 270(A) of the Act for under reporting of income for the captioned Assessment Year without appreciating the fact that the said recharges were disclosed as exempt income under Schedule El of

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited the return of income for bona fide reasons that the Appellant had while filing the return of income. Grounds in ITA No.2332/Mum/2022 for AY 2019-20 (Barclays Services Corporation) 1. Ground No. 1 The learned AO erred in not appreciating the fact that the assessment proceedings were invalid on account of non-issuance of a valid notice under section 143(2) of the Act, being a pre-requisite to the completion of assessment proceedings on account of the following: (a) The learned AO failed to appreciate the fact that while the National e-Assessment Centre (NeAC) had issued the notice under section 143(2) of the Act, NeAC was not the correct and authorised income-tax authority to issue the said notice. (b) The learned AO failed to appreciate the fact that where the case was transferred to the learned AO from NeAC, the primary requirement for initiating the assessment proceedings by the learned AO was to issue a notice under section 143(2) of the Act which is a pre-requisite to the completion of assessment proceedings. (c) The learned AO erred in considering the submissions filed by the Appellant in relation to the invalidity of assessment proceedings and thereby issued the draft assessment order without mentioning the reasons for rejection of the stand taken by the Appellant in relation to invalid assessment proceedings. Without prejudice to the above Ground No. 1, we wish to submit the below grounds of appeal: 2. Ground No. 2 The learned AO erred in taxing the recharges for infrastructure costs and other central costs towards the services provided by the Appellant to Barclays Bank Plc, India branches ('BBPLC India'), Barclays Securities (India) Private Limited ('BSIPL') and Barclays Global Services Centre Private Limited ('BGSCPL') (together referred to as Barclays Indian entities') aggregating to INR 21,97,62,212 as fees for included services ('FIS') on the following grounds: (a) In observing at Para 6.1 (Page 16) of the final assessment order dated 19 July 2022 that "the nature of service provided by the assessee company to its related associates are similar in nature over the years including the year under consideration", without appreciating the fact that the Appellant initiated the services to Barclays India entities for the first time during the FY 2018-19 (AY 2019-20) and has filed its Indian income- tax return also for the first time for the said year. (b) In not appreciating that the view adopted by the payers i.e. Barclays Indian entities on tax deduction at source is independent of the taxability of the income in the hands of the Appellant. (c) In concluding that the services rendered by the Appellant are not general in nature but are provided by professionals and due to the existence of the element of expertise of 4

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited such professionals, the said recharges are taxed as FIS as per the India-USA Domestic Tax Avoidance Agreement (DTAA) (hereafter referred to as 'India-USA Treaty'). (d) In ignoring the fact that the services rendered by the Appellant are not made available to the Barclays Indian entities, to let them independently carry out the business activities, but the same are provided on a recurring basis. (e) In holding that the Appellant made available the processes to the Barclays Indian entities in order to enable them to undertake decision making activities. (f) In holding the services as being 'made available' to the Barclays Indian entities and thereby taxable under Article 12 of the India-USA Treaty. (g) In not appreciating the fact that NIL withholding tax certificate under section 197 of the Act is not to be mandatorily obtained where the income is claimed to be exempt. (h) In not appreciating the fact that the Appellant is into the business of providing support services to various group entities from outside India. Thus, in absence of a Permanent Establishment of India, the business income of the Appellant is not taxable in India as per the India-USA Treaty. 3. Ground No. 3 The learned AO erred in holding that where the Appellate Authorities are of the view that the recharges of INR 21,97,62,212 are not taxed as FIS, the same shall be taxable as 'Royalty' under Article 12 of the India-USA Treaty. Without prejudice to Ground Nos. 1, 2 and 3 above, we wish to submit the below grounds of appeal: 4. Ground No. 4 The learned AO failed to appreciate the fact that out of the total amount of invoices raised on BSIPL during the year under appeal, an amount of INR 87,11,683 has been reversed out during the succeeding financial year (FY) i.e. FY 2019-20 (AY 2020-21) and thereby the same ought to have been excluded. 5. Ground No. 5 The learned AO, on the facts and circumstances of the case and in law, erred in levying excessive consequential interest under section 234B of the Act. 6. Ground No. 6 The learned AO erred in initiating penalty proceedings under section 270(A) of the Act for under reporting of income for the captioned Assessment Year without appreciating the fact that the said recharges were disclosed as exempt income under Schedule El of the return of income for bona fide reasons that the Appellant had while filing the return of income. Additional ground of appeal On the facts and in the circumstances of the case, the Appellant wishes to raise the following additional ground of appeal which is independent of the other grounds of appeal:

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 7. Ground No. 7 The Appellant prays that out of the total amount of invoices raised on BBPLC India during the year under appeal, an amount of INR 5,84,40,625 has been reversed out during the succeeding FY 2019-20 (AY 2020-21) and thereby the same ought to be excluded on similar lines as mentioned in Ground No.4. Grounds in ITA No.3708/Mum/2025 for AY 2020-21 (Barclays Execution Services Limited)

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited (e) In not following the binding judicial precedents wherein it has been held that services of similar nature as provided by the Appellant do not result into making available any technical knowledge, experience, skills, knowhow, etc. to the service recipients and, therefore, the same cannot be terms as FTS; (f) In not appreciating that the view adopted by the payers i.e., Barclays Indian entities on tax deduction at source is independent of the taxability of the income in the hands of the Appellant, and (g) In not appreciating the fact that the outcome under section 197/ 264 of the Act and not contesting the same because of lapse of time cannot be considered as the basis for deciding the case on merits, also basis the principle that there is no estoppel against the law. 4. Ground No. 4 Erred in making an alternate claim that where the Appellate Authorities are of the view that the recharges of INR 7,41,71,94,774 are not taxed as FTS, the same shall be taxable as 'Royalty' under Article 13 of the India-UK Treaty. 5. Ground No. 5 Erred in initiating penalty proceedings under section 270(A) of the Act in respect of the additions made without specifying whether the penalty is initiated for under reporting or misreporting of income. 6. Ground No. 6 Erred in levying interest and fees (serial no. 42) amounting INR 1,99,08,560 in the computation sheet annexed to the final assessment order without any trigger under the law for such levy.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 5. Briefly stated, the assessee-company filed its return of income on 19.08.2020, declaring total income at Nil. The case was subsequently selected for limited scrutiny, and notice under section 143(2) of the Income-tax Act, 1961, was issued on 31.03.2021. Thereafter, the Ld. AO passed a draft assessment order dated 24.09.2021 under section 144C of the Act, proposing variations in respect of the income earned by the assessee from its associate entities in India. The details of the income, as recorded in the draft assessment order, are extracted hereunder:

Rate of TDS Amount of TDS Sr. Name of the Nature of at which Amount deducted & No. AE's Service taxes was deposited withheld Barclays Bank Technical 1 PLC Indian 100,03,82,870 Support 13,79,98,064 15% Branch Service Barclays Technical Global Service 2 242,77,94,481 17,94,62,371 10% Support Centre Pvt. Service Ltd.

Barclays Technical Investment and 3 17,40,205 1,80,990 10% Support Loans (India) Service Pvt. Ltd.

Barclays Technical Securities 4 15,67,24,089 1,45,05,360 10% Support (India) Pvt. Service Ltd. Barclays Wealth Technical 5 4,71,875 49,080 10% Trustees Support Service (India) Pvt. Ltd.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited

Rate of TDS Amount of TDS Sr. Name of the Nature of at which Amount deducted & No. AE's Service taxes was deposited withheld

Total 358,71,13,520 33,21,95,865

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 7. The Ld. AO was not convinced with the submissions of the assessee and rejected its contentions. The Ld. AO observed that the services rendered by the assessee were not general in nature but involved professional expertise, as evident from the classification and nature of the services discussed in the assessment order. According to the Ld. AO, the element of professional expertise was inherent in the services rendered and, accordingly, the services could be characterised as technological and consultancy services. In support of his view, the Ld. AO relied upon the decision of the ITAT, Cochin, in the case of US Technology Resources Pvt. Ltd. vs. ACIT. The Ld. AO also rejected the assessee’s contention that the receipts were not taxable in India since the make available condition prescribed under the India–UK DTAA was not satisfied. The Ld. AO observed that the assessee had developed processes and provided services relating to information technology solutions, risk management strategies, design and quality, regulatory compliances, global product services, cash and trade, and technology support to the Indian group entities availing such services. The Ld. AO further reasoned that the Indian group entities had approached the assessee for such services because they required specific outputs or results which, according to the Ld. AO, they could not have achieved independently without availing the services rendered by the assessee-company.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited concluded that the services in the case of assessee also falls under the category of “make available”.

“12. CONCLUSION: As seen from the above, on the facts of the cases, providing infrastructure and other central support services to the Indian Barclays entities. These activities undertaken by the assessee BESL make available technical knowledge experience, skills, know how or processes to the Barclays Indian entities and accordingly, the said recharges shall be taxable in the hands of BESL as Fees for Technical services under Article 13 of the India-UK Tax Treaty. Even for the sake of repetition, technical knowledge, experience, skill, know how or processes is said to be made available to the recipient when it can apply the technical knowledge, experience, skill, knowhow or processes independently by itself without the aid of the service provider. 13. In view of the facts discussed supra an amount of Rs. 358,71,13,520/- received by the assessee i.e. Rs. 100,03,82,870/- from Barclays Bank PLC Indian branch, Rs. 242,77,94,481/- from Barclays Global Service Centre Pvt. Ltd., Rs. 17,40,205/- from Barclays Investment and Loans (India) Pvt. Ltd., Rs. 15,67,24,089/- from Barclays Securities (India) Pvt. Ltd. and Rs. 4,71,875/- from Barclays Wealth Trustees (India) Pvt. Ltd. for providing services in the nature of technical knowledge and FTS is being assessed to tax as FTS as defined in clause (vii) of explanation 2 to section 9(1)(vii) of the Income Tax Act.”

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited end support services of investment banking and wealth division of Barclays PLC Group. The fee for the services rendered by the assessee-company is determined on actual cost based in accordance with its internal allocation policy. The assessee has received certain amounts from its Indian AEs on account of said allocation / recharges. It is submitted that the allocation on recharges of the services provided by the assessee are not taxable in India, as held by Hon’ble Kerala High Court in the case of US Technology Resources Private Limited vs. CIT [2018] 97 taxmann.com 642 (Kerala) and Hon’ble Bombay High Court in the case of Shell India Markets Private Limited vs. Union of India [2024] 160 taxmann.com 175 (Bombay).

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 13. To explain the nature of the services rendered, the Ld. AR drew our attention to the copies of the service orders entered into between the assessee and its Indian group entities. It was submitted that the services rendered by the assessee were akin to those considered by the Hon’ble Jurisdictional High Court in the case of Shell India Markets Private Limited (supra). The Ld. AR contended that the charges were recovered pursuant to the service agreements towards sharing of costs allocated in accordance with the terms of the service orders entered into between the parties. Accordingly, it was submitted that the ratio laid down by the Hon’ble Jurisdictional High Court squarely applied to the facts of the present case and that the receipts from the Indian entities could not be characterised as fees for technical services (FTS). The Ld. AR further contended that the services did not satisfy the ‘make available’ condition under the India– UK DTAA and, therefore, the receipts could not be treated as FTS under the said treaty.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited the services rendered are chargeable to tax in India as fees for technical services (FTS) under Article 13 of the India–UK DTAA.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited India–USA DTAA, that advisory and managerial services, in the absence of transfer of technical know-how or expertise contemplated by the treaty, would not constitute fees for included services. We note that the latter decision arose under a different tax treaty; however, the decision of the Hon’ble Bombay High Court in Shell India Markets Private Limited (supra) directly interprets Article 13 of the India–UK DTAA and is, therefore, particularly relevant to the issue under consideration.

Shell India Markets (P.) Ltd. vs. Union of India [2024] 160 taxmann.com 175 (Bombay) “ANALYSIS AND FINDINGS: 14. By the impugned order, the AAR has determined that the payment made by Petitioner to SIPCL for availing the General BSS under the CCA is in the nature of fees for 'technical services' within the meaning of article 13.4(c) of the DTAA and hence, constitutes income in the hands of SIPCL. It has thus ruled that Petitioner is under obligation to deduct tax at source under section 195 of the Act. The AAR has not gone into but prima facie has accepted the declaration provided by SIPCL that it does not have permanent establishment in India and in any case that was not the issue before AAR. There is no discussion or finding pertaining to the status of SIPCL as having permanent establishment in India in terms of Article 5 of the DTAA. Hence, determination by the AAR on this issue remains inconclusive. 15. Be that as it may, the crux of the matter lies in ascertaining whether the finding of the AAR that services availed by Petitioner from SIPCL or payments made by Petitioner to SIPCL are of/for 'technical/consultation' services and secondly, whether such services are 'made available' to Petitioner. Article 13 of DTAA reads as under: "ARTICLE 13 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the law of that State; but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed: (a) in the case of royalties within paragraph (3)(a) of this Article, and fees for technical services within paragraph (4)(a) and (c) of this Article: (i) during the first five years for which this Convention has effect; (aa) 15 per cent of the gross amount of such royalties or fees for technical services when the payer of the royalties or fees for technical services is the Government of the first-mentioned Contracting State or a political subdivision of that State, and (bb) 20 per cent of the gross amount of such royalties or fees for technical services in all other cases; and (ii) during subsequent years, 15 per cent of the gross amount of such royalties or fees for technical services; and (b) in the case of royalties within paragraph (3)(b) of this Article and fees for technical services defined in paragraph (4)(b) of this article, 10 per cent of the gross amount of such royalties and fees for technical services. 3. For the purposes of this Article, the term "royalties" means: (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematograph films or work on films, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; and (b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic 4. For the purposes of paragraph (2) of this Article, and subject to paragraph (5), of this Article, the term "fees for technical services" means payments of any kind to any person in consideration for the rendering of any technical or consultancy services (including the provisions of services of technical or other personnel) which: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph (3)(a) of this Article is received; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph (3)(b) of this Article is received; or

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited (c) make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design." 16. From the bare words of the Article, it is clear that income of SIPCL will be chargeable to tax in India only if the payment by Petitioner is towards fees for technical services'. Under article 13(4), the term 'fees for technical services' means payments of any kind in consideration for the rendering of any technical or consultancy services. Sub-para (c) to article 13(4) further restricts the meaning of the term to only that which makes available technical knowledge, experience, skill, know-how or processes, or consists of the development or transfer of a technical plan or technical design. 17. The principle of noscitur a sociis mandates that the meaning of a word is to be judged by the company of other words which it keeps. The word 'consultancy' services follows 'technical' which is further followed by the phrase "which make available technical knowledge, experience, skill, know-how or processes, or consist of development and transfer of a technical plan or technical design." A clear reading indicates that even if consultancy services is 'stand alone', the bunch of words indicate that the said 'consultancy' necessarily relates to consultancy which makes available technical or any other knowledge, experience, skill, know-how or processes and does not relate to consultancy on managerial issues. 18. The Appendix 2 of CCA contains the General BSS. The list of services availed are as follows: EXAMPLES OF GENERAL BUSINESS SUPPORT SERVICES:  Management Support  Development and Provisions of Support and Business Tools  Provision of Marketing Support  Development, Communication and Audit of Standards of Performance  Promotion of Professional Competence  Information Technology Advice and Services  General Financial Advice and Services  Taxation Advice and Services  Legal Services  Employee Relations and Public Affairs/Media Advice and Services  HR Advice and Services  Contracting and Procurement Services  Other Business Support Services. A perusal of the list of services relate to managerial services not involving anything of a technical nature. The AAR has discussed the services appearing in the CCA and has concluded that these activities in a retail business are at the core of retail marketing and hence advice tendered in taking a decision of commercial nature is a consultancy service. The AAR has further considered the definition of the word 'Consultancy' as defined in the Oxford English dictionary and has observed that a consultant is a person who gives professional advice or services in a specialized field. However, the AAR failed to appreciate that the word 'Consultancy' appearing in the Article is to be interpreted in the context of consultancy which makes available technical knowledge, 17

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited etc. and not of managerial nature. The reading of the Article clearly indicates that the consultancy service must be which makes available technical knowledge, etc. Sub-para (c) to article 13(4) restricts such services to those which make available technical knowledge or consist of development and transfer of a technical plan or technical design. Thus, a harmonious reading of the provision of Article 13 in its entirety, clearly establishes the intent of the DTAA in making income chargeable to tax only if the services availed pertain to technical services or consultancy services. Technical services in this context mean services requiring expertise in a technology. By Consultancy Services, in this context, would mean advisory services. The categories of technical and consultancy services are to some extent, overlapping. Under paragraph 4, technical and consultancy services are considered included services only to the following extent: (1) as described in paragraph 4(a), if they are ancillary and subsidiary to the application or enjoyment of a right, property or information for which a payment described in paragraph (3)(a) of article 13 is received; (2) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph (3)(b) of article 13 is received; or (3) as described in paragraph 4(c), if they make available technical knowledge, experience, skill, know-how, or processes, or consist of the development and transfer of a technical plan or technical design. Thus, under paragraph 4(c), consultancy services which are not of a technical nature cannot be included services. Thus, the services availed by Petitioner cannot be said to be technical services and Article 13 is wholly inapplicable in the facts and circumstances of the present case. 19. It will be useful to refer to a decision of the Madras High Court in the case of Skycell Communications Ltd. v. Dy. CIT [2001] 119 Taxman 496/251 ITR 53 which held as follows: "8. Thus while stating that "technical service" would include managerial and consultancy service, the Legislature has not set out with precision as to what would constitute "technical" service to render it "technical service". The meaning of the word "technical" as given in the New Oxford Dictionary is adjective 1. of or relating to a particular subject, art or craft or its techniques: technical terms (especially of a book or article) requiring special knowledge to be understood: a technical report. 2. of involving, or concerned with applied and industrial sciences: an important technical achievement. 3. resulting from mechanical failure: a technical fault. 4. according to a strict application or interpretation of the law or the rules: the arrest was a technical violation of the treaty. 9. Having regard to the fact that the term is required to be understood in the context in which it is used, "fee for technical services" could only be meant to cover such things technical as are capable of being provided by way of service for a fee. The popular meaning associated with "technical" is "involving or concerning applied and industrial science". 10. In the modern day world, almost every facet of one's life is linked to science and technology inasmuch as numerous things used or relied upon in every day life is the result of scientific and technological development. Every instrument or gadget that is used to make life easier is the result of scientific invention or development and involves the use of technology. On that score, every provider

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited of every instrument or facility used by a person cannot be regarded as providing technical service. 11. When a person hires a taxi to move from one place to another, he uses a product of science and technology, viz., an automobile. It cannot on that ground be said that the taxi driver who controls the vehicle, and monitors its movement is rendering a technical service to the person who uses the automobile. Similarly, when a person travels by train or in an aeroplane, it cannot be said that the railways or airlines is rendering a technical service to the passenger and, therefore, the passenger is under an obligation to deduct tax at source on the payments made to the railway or the airline for having used it for travelling from one destination to another. When a person travels by bus, it cannot be said that the undertaking which owns the bus service is rendering technical service to the passenger and, therefore, the passenger must deduct tax at source on the payment made to the bus service provider, for having used the bus. The electricity supplied to a consumer cannot, on the ground that generators are used to generate electricity, transmission lines to carry the power, transformers to regulate the flow of current, meters to measure the consumption, be regarded as amounting to provision of technical services to the consumer resulting in the consumer having to deduct tax at source on the payment made for the power consumed and remit the same to the Revenue. 15. The use of the internet and the world wide web is increasing by leaps and bounds, and there are hundreds of thousands, if not millions, of subscribers to that facility. The internet is very much a product of technology, and without the sophisticated equipment installed by the internet service providers and the use of the telephone fixed or mobile through which the connection is established, the service cannot be provided. However, on that score, every subscriber of the internet service provider cannot be regarded as having entered into a contract for availing of technical services from the provider of the internet service, and such subscriber regarded as being obliged to deduct tax at source on the payment made to the internet service provider." 20. Thus, it is clear from the said decision that any service is construable as technical but one has to see the true import of the service actually rendered and the determination must be made in this context. There is no such discussion in the Impugned order and the finding is based on a generic reference to the meaning of the word 'consultancy' as given in the Oxford English Dictionary. The AAR further holds that the list of services mentioned in the CCA is not an exhaustive list and may include other technical services. Thus Petitioner is correct in contending that the AAR has proceeded on conjectures and surmises to render the finding in the impugned order. 21. The AAR has further held that the services are made available to Petitioner since while providing General BSS, SIPCL works closely with the employees of the applicant and supports/advises them. It is held that Petitioner is able to use the know how/intellectual property generated from the General BSS independent of the service provider and hence the services under the agreement are clearly made available to Petitioner.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited In order to understand the import of the words 'made available' as used in the context of Article 13(4)(c), it will be useful to refer to a decision of the Karnataka High Court in De Beers (supra). Paragraph 22 reads as follows: "22. What is the meaning of "make available". The technical or consultancy service rendered should be of such a nature that it "makes available" to the recipient technical knowledge, know-how and the like. The service should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. In other words, to fit into the terminology "make available", the technical knowledge, skill?, etc., must remain with the person receiving the services even after the particular contract comes to an end. It is not enough that the services offered are the product of intense technological effort and a lot of technical knowledge and experience of the service provider have gone into it. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered "made available" when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., does not mean that technology is made available to the person purchasing the service, within the meaning of paragraph (4)(b). Similarly, the use of a product which embodies technology shall not per se be considered to make the technology available. In other words, payment of consideration would be regarded as "fee for technical/included services" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied." (emphasis supplied) 22. Similarly, the Delhi High Court in the Bio-rad (supra) has discussed the said concept accordingly. Paragraphs 14 and 15 read as under: "14. According to the Tribunal, the agreement between the respondent/assessee and its Indian affiliate had been effective from 1-1-2010, and if, as contended by the appellant/revenue, technical knowledge, experience, skill, and other processes had been made available to the Indian affiliate, the agreement would not have run its course for such a long period. 14.1 Notably, this aspect is adverted to in paragraphs 17 to 23 of the impugned order. For convenience, the relevant paragraphs are extracted hereafter: "17. A perusal of the aforementioned provision shows that in order to qualify as FTS, the services rendered ought to satisfy the 'make available' test. Therefore, in our considered opinion, in order to bring the alleged managerial services within the ambit of FTS under the India-Singapore DTAA, the services would have to satisfy the 'make available' test and such services should enable the person acquiring the services to apply the technology contained therein. "18. As mentioned elsewhere, the agreement is effective from 1-1-2010 and we are in Assessment Years 2018-19 and 2019-120.[sic.....20]. In our considered 20

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited opinion, if the assessee had enabled the service recipient to apply the technology on its own, then why would the service recipient require such service year after year every year since 2010? 19. This undisputed fact in itself demolishes the action of the Assessing Officer/DRP. Facts on record show that the recipient of the services is not enabled to provide the same service without recourse to the service provider, i.e, the assessee. 20. In our humble opinion, mere incidental advantage to the recipient of services is not enough. The real test is the transfer of technology and on the given facts of the case, there is no transfer of technology and what has been appreciated by the Assessing Officer/ld. CIT(A) is the incidental benefit to the assessee which has been considered to be of enduring advantage. 21. In our understanding, in order to invoke make available clauses, technical knowledge and skill must remain with the person receiving the services even after the particular contract comes to an end and the technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver can deploy similar technology or techniques in the future without depending upon the provider." [Emphasis is ours] 15. We tend to agree with the analysis and conclusion arrived at by the Tribunal." (emphasis supplied) 23. Therefore, even if it is fees for technical or consultancy services, it can be only where fees are paid in consideration for making available technical knowledge, experience etc. Thus the view of the AAR that SIPCL works closely and advises the employees of Petitioner and hence makes available the services is not correct. This view in fact suffers from fallacy since the agreement continues to operate till date. If the view of AAR is to be held as correct then the contract must stand concluded as once the services and the know how, skill etc is transferred to Petitioner, the need of continuing to render said services must end. This is factually not so as the CCA is in effect till date. 24. Considering the above discussion it is clear that the AAR has interpreted the requirements to be satisfied for 'make available' based on its own general notion of the said term without appreciating the applicable law on the subject and also reached an erroneous conclusion that the services availed are technical services. 25. Moreover, the AAR has not dealt with the issue relating to the 'Permanent Establishment of SIPCL and there is no determination on the same. Of course, that was not a subject of reference before AAR. 26. Thus, we have no hesitation in holding that the impugned order dated 17th January 2012 of AAR suffers from legal infirmity and is quashed and set aside. 27. During the course of the arguments, Mr. Mistry stated that Petitioner only seeks relief prayed in clauses (a) and (b) of the petition and does not press the other prayers. 21

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited Rule is thus made absolute in terms of prayer clauses (a) and (b) which read as follows- "(a) That this Hon'ble Court be pleased to declare that the transactions under CCA do not amount to being technical in nature per Article 13 of DTAA between India and UK and therefore, would not be taxable in India; (b) That this Hon'ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari and/or any other appropriate writ, order or direction under Article 226 of the Constitution of India calling for the records and papers of the Petitioner's case and after examining the legality and validity thereof quash and set aside the impugned order dated 17-1-2012 passed by the Authority in AAR No. 833/2009, in the case of the Petitioner and further." 28. It is made clear that that the Department is at liberty to take necessary steps as available to it in law including as to whether the subject will be covered under Article 7 of the DTAA. We express no opinion. In such proceedings, if taken, the time taken in the present proceedings will stand excluded for the purpose of limitation.” US Technology Resources (P.) Ltd. vs. Commissioner of Income-tax [2018] 97 taxmann.com 642 (Kerala) “iv. Ought not the Appellate Tribunal have held that management services are not included/covered within the ambit of "Fee for included services" under the India-USA DTAA, prescribed under Article 12 of the said DTAA? v. Ought not the Appellate Tribunal have held that there is no services “made available” by UST Global to the appellant, going by the definition of “make available” as per the India-USA DTAA?” “18. We are conscious of the fact that the DTAA as relevant in the present case, is not applicable even in the case of De Beers India Minerals (P.) Ltd. (supra), where the non-resident hailed from Netherlands. However, on facts we are of the opinion that when the definition clause in DTAA read along with the MOU specifically refers to transfer of technologies, the facts as available in the Karnataka decision are more similar to the present facts. Herein also there is no technology transfer; nor is there a plan or strategy relating to management, finance, legal, public relations or risk management transferred to the appellant. The services promised by the non-resident Company is only advise on such aspects as are specifically referred to in the agreement. The non-resident Company only assists the Indian Company in making the correct decisions on such aspects as is specifically referred to in the agreement, as and when such advise is required. There is no transfer of technology or know-how, even on managerial, financial, legal or risk management aspects; which would be available for the Indian Company to be applied without the hands-on advise offered by the US Company. The advise offered on such aspects would have to be on a factual basis with respect to the problems arising at various points of time and there cannot be found any transfer of technical or other know-how to the Indian Company. 19. Particularly under the DTAA, we are of the opinion that none of these aspects on which the US Company has promised advise to the Indian Company would fall under the 'included services' and the 'fees for included services' would not be taxable in India 22

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited as per the DTAA. As we noticed, the business profits of a US Company would be taxable in the US. However, a portion of such business profits relating to royalty and fees for included services have been carved out to enable taxation within India also, but at a reduced rate as per Article 12 of the DTAA itself. Even before the DTAA was notified by the Central Government, a MOU was entered into between the two Governments further clarifying as to the specific services qualifying for taxation within India. A further carving out was made out of the technical and consultancy services permitting taxation only insofar as the transfer of technical know-how, which, a reading of the MOU would indicate, is clearly scientific technology not including a managerial or financial strategy. 20. On the above interpretation of the provisions of the DTAA, we have to find that the services availed of by the Indian Company, the appellant herein, from the US Company are not technical and consultancy services as defined under the DTAA, clarified by the MOU, which forms part of the notification issued by the Central Government on the double taxation avoidance between the Governments of United States and India. The remuneration received by the US Company for the services offered to the Indian Company being not a technical or consultancy service as defined under the DTAA, would also not be a fee for included services. The remuneration so obtained by the US Company definitely being an income accruing within India would not, hence, be taxable in India under the DTAA. We do not agree with the argument advanced by the learned Standing Counsel that the best evidence available for avoiding taxation within India is the tax paid within the United States of America. The non-payment of tax in the U.S cannot automatically enable taxation in India. As we noticed, with respect to fees for included services, the same being business profits, would be taxable in the US and also in India; however, in India at a reduced rate than as available under the IT Act. The said reduced rate also would not be applicable to the appellant herein with respect to the amounts paid as remuneration to the US Company for the specific services as is seen from the agreement, for it being not an included service as per the DTAA. The tax having been exempted fully, there is no obligation on the assessee/appellant to deduct it at source and the non-compliance of the provisions of Section 195(1) of the IT Act cannot be alleged against the appellant for reason of such obligation not existing in law. The questions of law raised as (i) and (ii) are answered against the Revenue 21. We have already held that the services offered by the US Company would not come under the definition of 'included services' as available under the DTAA and as a consequence, the remuneration received by the US Company would not be 'fees for included services'. We have to find that the interpretation of the provisions of the DTAA between the Governments of India and USA have not been correctly carried out by the Tribunal. We, hence, set aside the orders of the lower authorities answering the questions of law (iii) and (iv) against the Revenue and in favour of the assessee. In view of the answers already given by us, we are of the opinion that questions of law raised at (v) and (vi) need not be answered. In I.T.A.No.38 of 2014, the orders are set aside and the AO is directed to consider the claim of expenditure afresh without looking at the application of Section 195(1), which is not applicable. There is no requirement, as found by us, to deduct tax at source. In all the other appeals, the proceedings under Section 201 of the IT Act are set aside.”

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited 19. The Hon’ble Bombay High Court in Shell India Markets (P.) Ltd. v. Union of India held that managerial, commercial and business-support services do not automatically qualify as fees for technical services under Article 13(4)(c) of the India–UK DTAA. The expression “consultancy services” must be interpreted in the context of the treaty, and the services must satisfy the prescribed condition of making available technical knowledge, experience, skill, know-how or processes, or developing and transferring a technical plan or design. Mere provision of advice, assistance or specialised services does not satisfy this requirement unless the requisite knowledge or capability is transferred to the recipient. The Court accordingly quashed the impugned order of the Authority for Advance Rulings.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited consequent obligation to deduct tax at source under section 195 of the Income- tax Act, 1961.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited not involving any distinct technical service or transfer of technical know-how beyond the scope considered therein. Accordingly, the receipts in question cannot be characterised as FTS under Article 13 of the India–UK DTAA merely on the basis of the professional expertise involved in rendering the services or the commercial benefit accruing to the Indian group entities. The addition made by the Ld. AO on this basis is found to be misconceived and unsustainable.

ITA Nos. 2122 & 2332/Mum/2022 & 3708/Mum/2025 Barclays Services Corporation and Barclays Execution Services Limited applying mutatis mutandis, the ratio of our decision in ITA No. 2122/Mum/2022, in the case of Barclays Execution Services Limited (AY 2019-20).

Order pronounced in the open court on 16-10-2026.

Sd/- Sd/- (ARUN KHODPIA) (BEENA PILLAI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 16-10-2026. Ankit K., Sr. PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER, ABHINAV ANANT Digitally signed by ABHINAV ANANT GAVANDE GAVANDE Date: 2026.10.24 16:10:30 +05'30' (Dy./Asstt. Registrar) ITAT, Mumbai