“fees for technical services”

International TaxSection 9(1)(vii)Section 9(1)(vii)1,408 judgments

The decision most relied on for fees for technical services is Engineering Analysis Centre of Excellence (P) Ltd. v. CIT (432 ITR 471), cited in 914 judgments on BharatTax.

Leading authorities on fees for technical services

Engineering Analysis Centre of Excellence (P) Ltd. v. CIT

432 ITR 471 · 2021 · Supreme Court

914

citing judgments

Payments for the supply or use of computer software, where there is no transfer of copyright but only a right to use the copyrighted product, are generally considered business profits and not 'royalty' or 'fees for technical services' under the Income Tax Act, 1961 or relevant DTAAs. This principle also applies to transponder fees, which are not taxable as royalty.

CIT v. De Beers India Minerals (P.) Ltd.

346 ITR 467 · 2012 · High Court

371

citing judgments

For fees for technical or consultancy services to 'make available' technical knowledge or know-how under a DTAA, the service must transmit such knowledge, allowing the recipient to derive an enduring benefit and utilize it independently in the future.

DIT v. Nokia Networks OY

358 ITR 259 · 2013 · High Court

276

citing judgments

Payments for the supply of software along with telecom equipment are not in the nature of royalty if they are for the use of a copyrighted article, not the copyright itself. Such payments are not taxable in India in the absence of a Permanent Establishment (PE).

DIT v. Infrasoft Ltd.

39 Taxmann.com 88 · 2013 · High Court

269

citing judgments

Payments for the use of copyrighted software, without the transfer of any rights in the underlying copyright itself, do not constitute 'royalty' under the Income-tax Act or tax treaties. Such payments are often treated as business income, taxable only if a permanent establishment exists.

CIT v. Siemens Aktiongesellschaft

310 ITR 320 · 2009 · High Court

259

citing judgments

Reimbursements of actual expenses without any profit element are not taxable income. Additionally, mere amendments to the Income-tax Act do not override the provisions of Double Taxation Avoidance Agreements (DTAAs).

Skycell Communications Ltd. v. DCIT

251 ITR 53 · 2001 · High Court

253

citing judgments

Technical services involve human intervention and expertise, not just routine or machine-based operations. Routine customer support and standard facility provision through technology do not constitute technical services under the Act.

Transmission Corporation of Andhra Pradesh v. CIT

239 ITR 587 · 1999 · Supreme Court

243

citing judgments

The Supreme Court lays down principles for deducting tax at source (TDS) under Section 195 on payments to non-residents, including aspects of income deemed taxable in India and the application of Double Taxation Avoidance Agreements (DTAAs) under Section 90.

ONGC v. CIT

376 ITR 306 · 2015 · Supreme Court

241

citing judgments

Income derived by a non-resident for services related to mineral oil operations, falling under the presumptive taxation regime of Section 44BB, cannot simultaneously be treated as fees for technical services under Section 9(1)(vii). The specific presumptive provisions override the general FTS definition, particularly when DTAA applies.

Judgments citing fees for technical services

Invesco Uk Limited, Uk vs. ACIT, Circle Int.Tax. 2(1)(1), New Delhi

The appeals of the assessee are allowed

ITA 785/DEL/2023[2020-21]Status: DisposedITAT Delhi23 Jul 2024AY 2020-21

Bench: Sh. G.S. Pannu & Sh. Anubhav Sharma

Section 143(3)Section 144C(5)Section 270ASection 274

income of the Company by holding that income from providing IT support services is taxable as fees for technical services ('FTS') under Article 13 of the India-United Kingdom Double Taxation Avoidance Agreement (DTAA 2. On the facts and circumstances of the case ... cause as to why payment received by the Assessee from its Indian AE(s) for rendering IT Services should not be considered as Fees for Technical Services and why should it not be taxable accordingly both under the Act as well as the DTAA. In response, the Assessee through

Invesco Holding Company (Us) Inc., Usa vs. ACIT, Circle Int. Tax. 2(1)(1), New Delhi

The appeals of the assessee are allowed

ITA 784/DEL/2023[2020-21]Status: DisposedITAT Delhi23 Jul 2024AY 2020-21

Bench: Sh. G.S. Pannu & Sh. Anubhav Sharma

Section 143(3)Section 144C(5)Section 270ASection 274

Charies River Laboratories Montreal, Ulc, Canada vs. ACIT, Circle- 1(2)(1) Int. Taxation, New Delhi

ITA 2324/DEL/2022[2019-20]Status: DisposedITAT Delhi23 Jul 2024AY 2019-20

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2019-20 Charles River Laboratories Vs Acit, Montreal, Ulc, Circle-1(2)(1), 22022 Transcanadienenne, International Taxation, Quebec, Senneville, New Delhi. Canada-H9X3R3, Canada. Pan: Aagcc4061J (Appellant) (Respondent) Assessee By : Shri Chavali S. Narayana, Ca Revenue By : Shri Vizay B. Vasanta, Cit-Dr Date Of Hearing : 25.04.2024 Date Of Pronouncement : 23.07.2024

For Appellant: Shri Chavali S. Narayana, CAFor Respondent: Shri Vizay B. Vasanta, CIT-DR

Section 142(1)Section 143(3)

enable assessee to use those services independently in future, payment made for services in question could 4 not be termed as 'fee for technical services', in the context of the India- Netherlands tax treaty. Karnataka HC has also interpreted the meaning of the term "make available" and observed that ... Applicant. Hence, we hold that the consideration received by the Applicant from Akamai India cannot be considered to be in the nature of fees for technical services as referred to in Article 12 of the India-US DTAA." (emphasis supplied). Further, in the case of Anapharm Inc., In re (A.A.R

Sanjay Manoharlal Narang, Mumbai vs. Int Tax Ward - 3 (3) (1), Mumbai

In the result, the appeal of the learned assessing officer is dismissed

ITA 3180/MUM/2023[2020-21]Status: DisposedITAT Mumbai22 Jul 2024AY 2020-21

Bench: Shri Prashant Maharishi, Am & Shri Sunil Kumar Singh, Jm The Assistant Commissioner Of Vs. De Beers U K Limited Income Tax ( International C/O S R Batliboi & Co Taxation 2(1) (1) Mumbai 14Th Floor 17Th Floor Air India Building The Ruby Nariman Point 29, Senapati Bapatmarg Mumbai Dadar W Mumbai (Appellant) (Respondent) Pan No. Aacct5530B

For Appellant: Shri Pranay GandhiFor Respondent: Shri Anil Sant , SR DR

Section 143Section 144C

holding that the services rendered under the Supply planning services is not falling within the purview of royalty under para 3 (a) and fees for technical services under para 4 (a) and Para 4 (c) of the Indo UK treaty. The learned CIT – A has held that SOC contract ... years. The dispute resolution panel for assessment year 2007 – 08, 2008 – 09 and 2009 – 10 has upheld treatment of value-added services as fees for technical services and taxed them at the rate of 10%. Thus, even the coordinate bench for assessment year 2007 – 08 and assessment year

Rachna Narang, Mumbai vs. Int Tax Ward - 3 (3) (1), Mumbai

In the result, the appeal of the learned assessing officer is dismissed

ITA 3179/MUM/2023[2020-21]Status: DisposedITAT Mumbai22 Jul 2024AY 2020-21

For Appellant: Shri Pranay GandhiFor Respondent: Shri Anil Sant , SR DR

Section 143Section 144C

Rbw Global Sarl, Mumbai vs. ACIT(International Taxation) Circle-4(1)(1), Mumbai

In the result, appeal of the assessee is allowed

ITA 733/MUM/2019[2010-11]Status: DisposedITAT Mumbai22 Jul 2024AY 2010-11

Bench: Shri Narendra Kumar Billaiya, Hon'Ble

Section 144C(13)Section 147Section 234ASection 234B

consequently ought to be struck down. WITHOUT PREJUDICE TO THE FOREGOING 3:0 Re.: Taxing the receipts in respect of membership cards as Fees for Technical Services under the Income-tax Act, 1961 : 3:1 The Assessing Officer / the Dispute Resolution Panel have erred in treating the receipts in respect ... sale of membership cards of Rs. 3,28,58,448/- as "Fees for Technical Services" under the Income- tax Act, 1961. 3:2 The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the amount received by it during the year

Ashok Bablani, Mumbai vs. Income Tax Office (Int Tax)-1(2)(1), Mumbai

In the result, appeal of the assessee is allowed on merits

ITA 3281/MUM/2023[2011-12]Status: DisposedITAT Mumbai16 Jul 2024AY 2011-12

Bench: SHRI AMIT SHUKLA (Judicial Member)

Section 133(6)Section 143(3)Section 147Section 148Section 194JSection 9(1)Section 9(1)(vii)

conditions of the agreement, the appellant was paid consultancy fees @ 25% of the net investment revenue from the accepted clients. The meaning of "Fees for Technical Services" has been explained in Explanation 2 to Section 9(1)(vii) of the IT. Act. As per the Explanation, fees for technical services ... Explanation 2 to Section 9(1)(vii) of the IT Act, the consultancy services provided by the appellant are covered under "Fees for Technical Services" and therefore, the consultancy fees received by the appellant are taxable u/s.9(1)(vii) of the 1.T. Act. 8. He also referred

Western Outdoor Interactive Pvt Ltd, Mumbai vs. Assessement Unit, Income Tax Department Asstt Comm. of Income Tax, Circle-16(1), Mumbai

ITA 2474/MUM/2022[2018-19]Status: DisposedITAT Mumbai16 Jul 2024AY 2018-19

Bench: Ms Padmavathy S, Am & Shri Rahul Chaudhary, Jm

For Appellant: Shri Dhanesh Bafna, Shri AmolFor Respondent: Shri Himanshu Sharma, CIT-DR

Section 143(3)Section 234ASection 244ASection 270ASection 40

deducted tax at source on the export commission which as per the DTAA between India and these countries is to be treated as Fees for Technical Services (FTS). The AO held that as per the terms and condition of the agreement entered into by the assessee with the foreign agent

Western Outdoor Interactive Private Limited, Mumbai vs. Asstt. Comm. of Income Tax, Circle-16(1), Mumbai

ITA 2461/MUM/2022[2017-2018]Status: DisposedITAT Mumbai16 Jul 2024AY 2017-2018

Bench: Ms Padmavathy S, Am & Shri Rahul Chaudhary, Jm

For Appellant: Shri Dhanesh Bafna, Shri AmolFor Respondent: Shri Himanshu Sharma, CIT-DR

Section 143(3)Section 234ASection 244ASection 270ASection 40

DCIT It 3 2 1 Mumbai, Air India Building Mumbai vs. Mckinsey and Company Lme Limited, U.K

In the result, appeal of the revenue is dismissed and cross- objection filed by the assessee is dismissed

ITA 2759/MUM/2023[2016-17]Status: DisposedITAT Mumbai15 Jul 2024AY 2016-17

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Sandeep Singh Karhail, Hon’Ble

For Appellant: Shri Poras Kaka & Shri Divesh Chawal, A/RsFor Respondent: Shri Anil Sant, Sr. D/R

Section 9(1)(vii)

recipient in the different decision making from financial to legal issues and are in the nature of consultancy services and treated as fees for technical services under section 9(1)(vii) of the Income Tax Act, 1961. Therefore the Ld. CIT(A) erred in the nature of consultancy services ... assessee was asked to explain as to why the borrowed services income of ₹6,79,39,779 should not be treated as fees for technical services. In its reply, the assessee filed various documentary evidences to substantiate the services rendered to McKinsey India during the year along with reasons

DCIT, Circle-2(1)(1), Ahmedabad vs. Elitecore Technologies Private Limited, Ahmedabad

In the result, the appeal filed by the Revenue is dismissed

ITA 1728/AHD/2019[2011-12]Status: DisposedITAT Ahmedabad12 Jul 2024AY 2011-12

Bench: Shri T.R. Senthil Kumar & Shri Makarand V. Mahadeokar, Accountnat Member आयकर अपील सं /Ita No.1728/Ahd/2019 "नधा"रण वष" /Assessment Year : 2011-12 The Dy.Cit Elitecore Technologies Pvt.Ltd. Circle-2(1)(1) बनाम/ (Now Merged With Sterlite Ahmedabad Technolgies Limited) V/S. 904, Silicon Tower, B/H. Pariseema Building Off. C.G. Road Ahmedabad, Gujarat-380 009 "थायी लेखा सं./Pan: Aaace 6815G (अपीलाथ"/ Appellant) ("" यथ"/ Respondent) Assessee By : Shri Dhinal Shah, Ar Revenue By : Shri Atul Pandey, Sr.Dr सुनवाई क" तार"ख/Date Of Hearing : 27/06/2024 घोषणा क" तार"ख /Date Of Pronouncement: 12/07/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am: This Appeal Is Filed By The Revenue As Against The Order Passed By The Ld.Commissioner Of Income-Tax(Appeals)-10, Ahmedabad [Hereinafter Referred To As “The Ld.Cit(A)”], Dated 04/09/2019, Arising Out Of The Assessment Order Passed By The Assessing Officer (Ao) Under Section 143(3) Dcit Vs. Elitecore Technologies Pvt.Ltd. Asst. Year : 2011-12

For Appellant: Shri Dhinal Shah, ARFor Respondent: Shri Atul Pandey, Sr.DR

Section 143(2)Section 143(3)Section 195Section 250Section 40Section 92C

submitted that the services rendered to ETPL are not technical nature and hence, the payments made are not covered within the definition of Fees for Technical Services as provided under the respective treaties. Further, in absence of fixed place of business of such parties in India, the payment made ... conclude that the services rendered for product certification, which include evaluating technical quality and issuing certificates, do not fall under the definition of Fees for Technical Services as per Section 9(1)(vii) of the Act. This view is consistent with the Ld.CIT(A)’s findings and supported

M/S. Steer America Inc., United States vs. The Deputy Commissioner of Income Tax, International Taxation Circle -1(2), Bengaluru

In the result, both the appeals of the assessee are partly allowed

ITA 833/BANG/2024[2014-15]Status: DisposedITAT Bangalore10 Jul 2024AY 2014-15

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri Vasanth Kumar, A.RFor Respondent: Ms. Anjala Sahu, D.R

Section 144CSection 147Section 148

Income Tax Act, 1961 ('Act'). ii) The Lower authorities have erred in Not appreciating that services provided by appellant does not qualify as Fees for Technical Services (FTS) as per Act and does not satisfy the test of 'Make Available' as envisaged in India-USA DTAA and therefore does ... satisfy the test of "Make Available" as envisaged in INDIA- USA DTAA and transfer does not qualify as fees for included services or fees for technical services under DTAA. 7. The lower authorities have erred in placing reliance on the judicial decisions which are distinguishable both on facts

M/S. Steer America Inc., United States vs. The Deputy Commissioner of Income Tax, International Taxation Circle -1(2), Bengaluru

In the result, both the appeals of the assessee are partly allowed

ITA 832/BANG/2024[2013-14]Status: DisposedITAT Bangalore10 Jul 2024AY 2013-14

Bench: Shri Chandra Poojari & Shri Prakash Chand Yadav

For Appellant: Sri Vasanth Kumar, A.RFor Respondent: Ms. Anjala Sahu, D.R

Section 144CSection 147Section 148

Qai India Ltd., New Delhi vs. DCIT, Circle- 21(2), New Delhi

In the result, the appeal of assessee is allowed for statistical purpose

ITA 1033/DEL/2018[2013-14]Status: DisposedITAT Delhi10 Jul 2024AY 2013-14

Bench: Dr. B.R.R. Kumar & Sh. Sudhir Kumarassessment Year: 2013-14 Qai India Ltd. Vs. Dcit 1010-12, Ansal Towers, 38, Circle -21(2) Nehru Place, New Delhi- New Delhi 110019 Pan No.Aaacq0883C (Appellant) (Respondent) Appellant By Sh. Ved Jain, Ar Supriya Mehta, Ar Respondent By Sh. Amaninder Singh, Sr. Dr Date Of Hearing: 04/06/2024 Date Of Pronouncement: 10/07/2024 Order Per Sudhir Kumar, Jm:

Section 143(2)Section 143(3)Section 195Section 40

receipt may be outside India, the source of income was very much in India. The amount in question is admittedly 'royalty'; not 'fees for technical services'. Hence, In view of the foregoing discussion, it is held that the amounts paid by the appellant to Everest Global Inc. constituted royalty ... year under consideration to Project Management Institute which is in the nature of membership fees and does not fall under the purview of fee for technical services. There is nothing on record to show that this non-resident person had PE in India. Following the reasoning given above in respect

Fixed & Mobile Pte. Ltd., Singapore vs. ACIT, Circle-1(3)(1) Int. Taxation, New Delhi

The appeals are allowed

ITA 767/DEL/2023[2016-17]Status: DisposedITAT Delhi09 Jul 2024AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2016-17 Assessment Year : 2017-18 Fixed & Mobile Pte Ltd., Vs Acit, 1 Raffles Place, International Taxation, #28-01 One Raffles Place, Tower-2, Circle 1(3)(1), Singapore, Singapore 9999. New Delhi. Pan: Aabcf4910G (Appellant) (Respondent) Assessee By : Shri Alok Vasant, Fca & Ms Poonam Ahuja, Advocate Revenue By : Shri Vizay B. Vasanta, Cit-Dr Date Of Hearing : 25.04.2024 Date Of Pronouncement : 09.07.2024 Order Per Anubhav Sharma, Jm:

For Appellant: Shri Alok Vasant, FCA &For Respondent: Shri Vizay B. Vasanta, CIT-DR

Section 142(1)Section 143(2)Section 147Section 148

assessment order on January 21, 2023 in pursuance of the DRP Directions and confirmed the addition of Rs. 1,46,00,560 as fees for technical services. Accordingly, the Appellant has preferred this appel in hand. Amongst other grounds on merits the Ld. AR has stressed on ground no.2, introduced

Springer Nature Customer Service Center Gmbh, Germany vs. ACIT Circle 3(1)(2) Intl Tax New Delhi, Intl Tax New Delhi

In the result, both the appeals of the assessee are allowed

ITA 3307/DEL/2023[2021-22]Status: DisposedITAT Delhi05 Jul 2024AY 2021-22

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Himanshu Sinha, Adv. &For Respondent: Sh. Vijay B. Vasanta, CIT-DR

Section 143(3)Section 234ASection 234BSection 270A

received by the Appellant from third-party end- customers in India on behalf of Springer Nature Group’s affiliated publisher entities as fee for technical services (“FTS”) both under the provisions of the Act and Article 12 of India-Germany Double Taxation Avoidance Agreement (“DTAA”). 3. That on the facts ... journals in printed form”. Meanwhile, the CIT(A) categorized the first component of the first addition, i.e., Rs, 22,89,835, as a fee for technical services [in short, “FTS”], instead of a royalty. The CIT(A), accordingly, took recourse to the provisions of Section

Springer Nature Customer Service Center Gmbh, Germany vs. ACIT-3(1)(2) Int. Taxation, Delhi

In the result, both the appeals of the assessee are allowed

ITA 2420/DEL/2023[2020-21]Status: DisposedITAT Delhi05 Jul 2024AY 2020-21

Bench: Sh. Saktijit Deydr. B. R. R. Kumar

For Appellant: Sh. Himanshu Sinha, Adv. &For Respondent: Sh. Vijay B. Vasanta, CIT-DR

Section 143(3)Section 234ASection 234BSection 270A

Rane Engine Valve Ltd, Chennai vs. DCIT Corporate Circle-5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 885/CHNY/2020[2015-16]Status: DisposedITAT Chennai03 Jul 2024AY 2015-16

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT

Section 143(3)

Ms.Eva are only facilitation in nature not involving managerial, technical or consultancy knowledge and hence does not fall within the meaning of "fee for technical service" as per explanation 2 to section 9(1)(vii) of the Act. 2.1.3 Without prejudice to the above, even if the above services ... India. 2.1.6 Without further prejudice to the above, the CIT(A) ought to have appreciated that even if the payment is treated as fee for technical services, it is not chargeable to tax in India under section 9(1)(vii)(b) of the Act, as it relates to services utilized

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5(1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 2815/CHNY/2018[2014-15]Status: DisposedITAT Chennai03 Jul 2024AY 2014-15

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT

Section 143(3)

Rane Engine Valve Limited, Chennai vs. DCIT Corporate Circle 5 (1), Chennai

In the result, the appeals filed by the assessee for assessment year 2012-13 in ITA No

ITA 1477/CHNY/2018[2013-14]Status: DisposedITAT Chennai03 Jul 2024AY 2013-14

Bench: Shri Mahavir Singhand Shri Amitabh Shukla

For Appellant: Shri Vikram Vijayaraghavan, AdvocateFor Respondent: Shri G. Suresh, JCIT

Section 143(3)