DCIT (IT) - 2(2)(1), MUMBAI, MUMBAI vs. ESAB HOLDINGS LIMITED, LONDON

Facts

The revenue filed an appeal against the order of the CIT(A) which held that income from management services earned by the assessee company is not FTS under the India-UK Tax Treaty. The assessee, a UK resident company, provided management services to its Indian group company, EWAC Alloys. The assessee claimed this income as non-taxable in India, arguing the services were managerial and did not make available technical knowledge.

Held

The Tribunal held that the services rendered by the assessee were managerial in nature and outside the ambit of FTS as defined in Article 13 of the India-UK Tax Treaty. It was further held that the services did not 'make available' technical knowledge, experience, skills, know-how, or processes, nor did they involve the development and transfer of a technical plan or design. Therefore, the conditions of clause 4(c) of Article 13 were not satisfied.

Key Issues

Whether the income from management services provided by a UK resident company to its Indian group company is taxable in India as Fees for Technical Services (FTS) under the India-UK Tax Treaty, considering the nature of services and the 'make available' clause.