BURO HAPPPOLD LIMITED ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION -1(3)(2) , MUMBAI

Keeping in vi taxability of the am As per Article-13 services arising in a State may be taxe technical services c subject to certain r the India-UK tax authorities have t technical services, under India-UK tax for technical service "4. For the p paragraph 5, payments of a any technical a technical or (a) are ancilla property or inf this article is r

Undisputedly, which has been tr technical drawings India-UK tax trea development and t the second limb ha knowledge, experie Assessing Officer treaty has to be interpretation of th "or consists of the design" will take c skill, knowhow or p

Having held technical, designs, B ITA N onditions of Article-13(5) of the India-UK resent case, it is not relevant for our pu ntal authorities and the assessee are in eived by the assessee is treated as fees f n Article-13(4)(c) of the India-UK tax tr es arise for our consideration viz., er development and transfer of a techni plicitor without making available te kill, knowhow or processes, etc., would ical services; and event, it is held that development and tr echnical design also requires making xperience, skill, knowhow or processes, such condition is satisfied." , in the present case, the amount receiv reated as fees for technical services is s/designs/plans. On a careful reading of aty it becomes clear that the words ransfer of a technical plan or technical d as to be read in conjunction with "make ence, skill, knowhow or processes". Th that the second limb of Article-13(4)(c) read independently, in our view, can e said Article. As per the rule of eju em e development and transfer of a technic colour from "make available technical kno processes". so, now it is necessary to examine w drawing, plans, the assessee has mad Buro Happold Limited 6 No. 4350/MUM/2023 K tax treaty are not rpose. Undisputedly, agreement that if, at for technical services, reaty. Therefore, the ical plan or technical chnical knowledge, d be in the nature of ransfer of a technical available technical etc., whether in the ved by the assessee, s towards supply of f Article-13(4)(c) of the "or consists of the design", appearing in e available technical he reasoning of the of the India-UK tax nnot be the correct m generis, the words cal plan or technical owledge, experience, whether by supply of e available technical knowledge, experie of law, technology i of such technolog contained therein service provider. T technical knowledg business or for his future and for th experience, skill, kn recipient is necessa knowhow or proce rendering of the se liberty to use the te in his own right. material on record assessee to the Ind Indian entity in any that it has not m knowhow or pro drawings/designs/ that through develo assessee has mad or processes, it is evidence. The asse worth mentioning, for technical service for included servic 13(4)(c) of the In Developments Pvt. passing off proje measurements doe B ITA N ence, skill, knowhow or processes. As per is considered to have been made availab gy is competent and authorised to ap independently as an owner without d The recipient of technology should be a ge, experience, skill, knowhow or process s own benefit and without recourse to th his purpose a transmission of the te nowhow or processes, from the service p ary. In other words, the technical knowled esses, must remain with the service ervices has come to an end. The service echnical knowledge, experience, skill, kn Undisputedly, in the present case, as d, the technical design/drawings/plan dian entity are project specific, hence, ca y other project in future. Therefore, the c made available any technical knowledg ocesses while developing and suppl /plans has to be accepted. If the Depar opment and supply of technical designs/ de available technical knowledge, experie for the Department to establish such essee certainly cannot be asked to prov while deciding a dispute of identical na es as per India- USA tax treaty under wh ces as per Article-12(4)(b) is identically ndia-UK tax treaty, the Tribunal, Pun Ltd. v/s DCIT, [2016] 160 ITD 439 (Pune) ect specific architectural, drawings es not amount to making available te Buro Happold Limited 7 No. 4350/MUM/2023 r the settled principle le when the recipient pply the technology depending upon the able to make use of ses by himself in his he service provider in echnical knowledge, rovider to the service dge, experience, skill, recipient even after recipient must be at nowhow or processes s revealed from the ns supplied by the annot be used by the claim of the assessee ge, experience, skill, lying the technical rtment is of the view /drawings/plans the ence, skill, knowhow fact through proper ve the negative. It is ature concerning fees hich definition of fess worded like Article ne Bench, in Gera ), has held that mere and designs with echnical knowledge, experience, skill, kn transfer of technic designs and if th designs in any m received cannot be note of other decisio intend to deliberat learned Departmen hence, not applica Department has fa supply of technica available technical service recipient so for technical service in our considered treated as busines brought to tax in In 21. Since, we hav services to be not in departmental autho have treated it as The, contention of recharge fails vario it is contrary to Departmental Auth recharge to be in t service by the asse of which we have services to be not in we hold that the a B ITA N nowhow or processes. The Tribunal held cal expertise skill or knowledge along he assessee cannot independently use manner whatsoever for commercial pu treated as fees for technical services. Th ons cited by the learned Authorised Repr te further on them. As regards the de ntal Representative, we find them to factu able to the present appeal. In any case ailed to establish on record that throug al designs / drawings / plans the a l knowledge, experience, skill, knowhow o as to bring the amount received within es under Article 13(4)(c) of the India-UK T opinion, the amount received by the ss profit and in the absence of a PE in ndia. ve held the amount received towards co n the nature of fees for technical services, orities with regard to cost recharge would ancillary and incidental to consulting e f the learned Departmental Represent ous tests, such as, need test, benefit test the finding of the Departmental Au horities have treated the amount rec the nature fees for technical services, it essee. Therefore, applying the very same e held the amount received towards co n the nature of fees for technical services amount received towards cost recharge c Buro Happold Limited 8 No. 4350/MUM/2023 d that unless there is with drawings and e the drawings and rpose, the payment ough, we have taken resentative we do not cisions cited by the ually distinguishable, e of the matter, the gh development and assessee has made w or processes to the the meaning of fees Tax Treaty. Therefore, assessee has to be n India, it cannot be onsulting engineering , the reasoning of the d also fail, since, they engineering services. tative that the cost etc. is unacceptable, uthorities. Once, the ceived towards cost implies rendering of e reason on the basis onsulting engineering as discussed above, cannot be brought to tax in India in th Assessing Officer grounds.

In the result, a 6. Further, it is o case, in ITA No. 13/07/2023, under decision, following th 13 observed as under “2. The assessee ha Ground No. I- services as Fe 1.1. On the learned DRP ( income from c 250/- as Fee Double Taxati 2. Ground common cost r 2.1 On the learned DRP ( management 33.937/-as R of India-UK Do B ITA N he absence of PE. Therefore, the add are hereby deleted. The assessee su assessee's appeal is allowed."” observed that in the appellant . 1006/Mum/2023, A.Y. 2 similar facts and circumsta he decision of co-ordinate Bench r : as raised the following grounds of appea Taxability of amount received for Consul ees for technical services (FTS) e facts and in the circumstances of the (Dispute Resolution Panel) and DCIT have consulting and engineering services amo es for technical services (FTS) as per Ar ion Avoidance Agreement (DTAA) d No. II- Taxability of amount received as recharge as Royalty and Fees for technica e facts and in the circumstances of the c (Dispute Resolution Panel) and DCIT have fees & common cost recharge amou Royalty and Fees for technical services (F ouble Taxation Avoidance Agreement (DTA Buro Happold Limited 9 No. 4350/MUM/2023 ditions made by the ucceeds in both the company’s own 020-21, dated ances, took the h for A.Y. 2012- l before us:- lting and Engineering case and in law the e erred in considering ounting to INR 15 18 rticle 13 of India-UK s management fees & al services (FTS) case and in law, the e erred in considering unting to INR 5,67 FTS) as per Article 13 TAA)

Ground payable 3.1. Withou of the case a rate of 15% a 10 92% unde Appellant. 4. Ground section 2348. 4.1. On facts has erred in l amounting to The appellant above stated 3. We have hear on record. The asse tax resident of t engineering and co of providing struct Engineering and co During the year un India from the follow a) Consulting Engin This amount is rece The assessee provi for various building India enters into B ITA N d No. III-Erroneous rate of tax applied ut prejudice to the above grounds on fact and in law, the learned DCIT has errone as per India-UK DTAA Instead of applying r the Act while computing the amount of d No. IV-Erroneous levy of consequen and circumstances of the case and in la levying consequential interest under Sec INR 32,32,988/- t craves leave to add alter amend modify Grounds of Appeal rd the rival submissions and perused the essee is a company registered in the Unit that State. The assessee is an inter nsultancy company. The assessee is eng tural and MEP (Mechanical, Electrical onsultation services for various buildings nder consideration, the assessee has rec wing streams:- neering Services - Rs 15,18,250/- eived from Buro Happold Engineers India ides structural and MEP engineering and gs and projects in India to Buro India an agreements with various Indian clien Buro Happold Limited 10 No. 4350/MUM/2023 while computing tax ts and circumstances eously applied a tax g a beneficial rate of f tax payable by the ntial interest under aw, the learned DCIT ction 234B of the Act or amplify any of the e materials available ted Kingdom and is a rnational, integrated gaged in the business and Public Healthy) s & projects in India. ceived amounts from a Pvt Ltd (Buro India). consultancy services nd other clients. Buro nts for design and consultancy service designing and eng have the requisite planning, Acoustics services are availe services and Bur independently, hen assessee to differen India, It enters into required. It was s does not make ava the services would Tax Treaty (DTAA I Income falling und taxable in India in in India. The ass assessee's favour f The Id. AO ob not been accepted preferred before the AO observed that t the nature of Fee fo Article 13(2)(a)(ii) of b) Management Fee This is the amount same has not been being managemen skill, process, know B ITA N es in relation to various projects. Typically ineering services to its client. However, expertise or requires highly specialized s Engineering, Environmental Engineerin ed from the assessee company. Since th ro India is not in a position to pro nce on a year on year basis, they ava nt projects/buildings. Typically, for each o a specific agreement with assessee, ba ubmitted that services provided by ass ailable any technical knowledge or skill not qualify as fees for technical services In short) and the same should be charac er Article 7 of the DTAA. Such business the absence of Permanent Establishment sessee also submitted that similar iss for the AY 2012-13 by this tribunal. bserved that the decision of this tribuna by the revenue and an appeal against th e Hon'ble High Court due to low tax effect the amount of Rs 15,18,250/- received b or Technical Services (FTS) and brought to f the India UK DTAA in the hands of the a es & Common Cost recharge Rs5,67,33,93 t charged to Buro India towards various n offered to tax by the assessee on the c t cost recharges does not make availa w-how and experience to Buro India as Buro Happold Limited 11 No. 4350/MUM/2023 y, Buro India renders wherever it does not services like master ng etc, then the said hese are specialized vide these services ail services from the of the project of Buro ased on the services sessee to Buro India etc and accordingly s under the India-UK cterized as Business income shall not be t (PE) of the assessee sue was decided in al in AY 2012-13 has he same could not be t. Accordingly, the Id. by the assessee is in o tax the same as per assessee. 37/- s costs incurred. The contention that these able any knowledge, per the terms of the India UK DTAA. Th AO:- The Assessee has Technology Busine for the Buro Group Group entities bas (including Buro Ind pertaining to cost r for your reference The broad function Buro India) include • IT Functions: group-wide IT syst subscriptions, hard • Business Dev Brand name and pe • Finance. This group as a who management acco strategic finance in international tax po • Human Resou the HR teams of gro o providing c o setting dev o assisting w • Corporate an worldwide group B ITA N

......... 22. ......... 6.1. We find that dated 13/11/2019 30/12/2020 had r the assessee had income but by way the Act and as wel the issue to the file consideration befo receipts as not char hold that the decisi applicable here a 15/02/2019 would following the decisi Nos. 1 and 2 raised 7. In view of ou adjudication of Gro rate of tax if the a Hence the Ground N 8. The Ground which is consequen 9. In the result, 7. Since the issues facts are also identic assessee's own case f B ITA N this tribunal for the AY 2014-15 in ITA N 9 and for the AY 2015-16 in ITA No. 83 restored the issues to the file of Id. AO in actually offered the receipts as its inco of additional ground claimed to be not ta ll as per the Treaty. In view of this fact, e of Id. AO. Whereas, for the AY 2017- 1 ore us, the assessee had claimed the rgeable to tax in India in the return of inc ion of this tribunal for AY 2014-15 and 2 and the decision of this tribunal for d be applicable here in view of same fact ion of this tribunal in AY 2012-13 referre d by the assessee are allowed. ur decision rendered hereinabove for Gro ound No. 3 would become infructuous as i aforesaid receipts were treated as inco No. 3 is hereby dismissed as infructuous. No. 4 is challenging the levy of interest ntial in nature and does not require any sp the appeal of the assessee is partly allow s are exactly similar and ground cal, respectfully following the ab for the A.Y. 2019-20 and A.Y. 20 Buro Happold Limited 15 No. 4350/MUM/2023 No. 7111/Mum/2017 34/Mum/2019 dated n view of the fact that ome in the return of axable in India as per the tribunal restored 18 i.e the year under e subject mentioned come itself. Hence we 015-16 would not be AY 2012-13 dated ts. Hence respectfully ed supra, the Ground ound Nos. 1 & 2, the it only pertains to the me of the assessee. . u/s 234B of the Act pecific adjudication. wed." ds as well as the bove decision in 012-13 and also following the princip the assessee. Ground 8. In the result, ap Order pronoun (SANDEEP GO JUDICIAL MEM Mumbai; Dated: 20/01/2025 Poonam Mirashi, Stenographer