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Facts
The Revenue challenged the CIT(A)'s orders for AY 2018-19 and 2020-21, disputing whether payments of Rs. 14.56 crore and Rs. 14.71 crore made by the assessee to its non-resident group company qualified as 'fee for technical services' (FTS) under Article 13 of the India-UK DTAA. The CIT(A) had ruled in favor of the assessee, relying on a prior coordinate Bench decision for AY 2017-18 which found that the 'make available' criteria was not met.
Held
The Tribunal affirmed the CIT(A)'s findings, concluding that the 'make available' criteria for FTS was not satisfied. It observed that the assessee did not acquire any technical knowledge, experience, or skill from the IT support services provided by the UK group company. Therefore, the payments could not be treated as FTS.
Key Issues
Whether payments for IT support services to a non-resident group company constitute 'fee for technical services' under Article 13 of the India-UK DTAA, specifically if the 'make available' clause is met.
Sections Cited
Section 143(3) of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Article 13 of the India-UK DTAA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES : D : NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI BRAJESH KUMAR SINGH
(Appellant) (Respondent) Assessee by : Shri Ajay Vohra, Sr. Advocate & Ms Archana Kumar, CA Revenue by : Ms Prajna Paramita, CIT-DR Date of Hearing : 29.10.2024 Date of Pronouncement : 07.11.2024 ORDER PER ANUBHAV SHARMA, JM: These appeals are preferred by the Revenue against the orders dated 12.02.2024 and 22.02.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal Nos.NFAC/2017-18/10019957 and NFAC/2019-20/10181022 arising out of the appeal before it against the orders
ITAs No.2021 & 2019/Del/2024 dated 05.05.2021 and 26.09.2022 passed u/s 143(3) r.w.s. 144B and u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively, by the DCIT, Circle 4 (2), New Delhi (hereinafter referred to as the Ld. AO).
Heard and perused the record.
The ld. Sr. Counsel, Shri Ajay Vohra pointed out that the issues raised in the appeals of the Revenue have already been considered in AY 2017-18 by the coordinate Bench, vide order dated 22.12.2022. The ld. DR could not dispute this submission.
After going through the impugned orders and the grounds raised by the Revenue, we find that the ld. DRP had merely followed the AY 2017-18 findings. The issue primarily involved is if the payment which were made by the assessee to the tune of Rs.14,56,35,000/- (A.Y. 2018-19) and Rs.14,71,82,129/- (A.Y. 2020-21) to its non-resident group company were as fee for technical services as per Article 13 of the India-UK DTAA. We find that in AY 2017-18, for the same set of services the coordinate Bench had examined the nature of services availed by the assessee company and found that the ‘make available’ criteria was not fulfilled. The coordinate Bench had examined the agreement between the CPP group, UK (the supplier) and the CPP Assistance Services Pvt. Ltd. (the assessee) and in the following observations in para 32-34, it was held that the ‘make available test’ is not satisfied:-
ITAs No.2021 & 2019/Del/2024 “32. Whereas the facts of the case in hand show that the assessee does not gain any technical knowledge, experience or skill as it is not involved in the process that service provider is following while rendering the services. The IT support services are rendered by CPP UK from UK itself and these services are rendered for the entire group and not just for CPP India.
The agreement between CPP group services and the assessee is perpetual and such services are provided by CPP group on recurring basis to the assessee and if the technical knowledge, skill etc. is being made available to the assessee, then there would be no need for the assessee to take recourse to the CPP UK for these services.
In our considered opinion, IT support services do not satisfy the make available test as no technical know-how, skill etc were transferred to the assessee. Considering the facts of the case in totality, in light of judicial decisions discussed hereinabove, we direct the Assessing Officer to delete the disallowance of Rs. 5,46,31,534/-“
We find no reason to differ on any question of fact or law as examined by the CIT(A), while following the decision of the coordinate Bench in the appellant’s own case for AY 2017-18 (supra). The grounds of the Revenue have no substance.
In the result, the appeal of the Revenue is dismissed.