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“fees for included services”

International TaxDTAA FTS ArticleDTAA FTS Article385 judgments

The decision most relied on for fees for included services is CIT v. De Beers India Minerals (P.) Ltd. (346 ITR 467), cited in 371 judgments on BharatTax.

Leading authorities on fees for included services

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.

Asia Satellite Telecommunications Co. Ltd. v. DIT
332 ITR 340 · 2011 · High Court
359
citing judgments

Payments for the use of equipment, such as satellite transponders, do not constitute 'royalty' under Section 9(1)(vi) of the Income-tax Act, 1961, or under applicable tax treaties, especially when there is no transfer of the right to use a process or underlying technology.

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.

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.

CIT v. Kotak Securities Ltd.
383 ITR 1 · 2016 · Supreme Court
203
citing judgments

Fees for technical services under Section 9(1)(vii) can include payments for fully automated services even without direct human interface, as modern technological developments blur the specific human element in such processes.

Raymond Ltd. v. Dy. CIT
86 ITD 791 · 2003 · ITAT
154
citing judgments

For services to qualify as 'Fees for Technical Services' or 'Fees for Included Services' under Double Taxation Avoidance Agreements (DTAAs), they must 'make available' technical knowledge, experience, skill, or processes to the recipient, enabling them to apply such expertise independently.

EPRSS Prepaid Recharge Services India Pvt.Ltd. v. ITO
100 Taxmann.com 52 · 2018 · Reported
101
citing judgments

Payments made for the use of cloud space do not constitute royalty payments for the purpose of Indian income tax, especially when they relate to accessing standard and automated services rather than acquiring rights to copyrighted material.

Steria (India) Ltd. v. CIT
386 ITR 390 · 2016 · High Court
83
citing judgments

Managerial services are not considered 'fees for included services' under Article 13(4) of the India-UK Double Taxation Avoidance Agreement, thus payments for such services are not taxable as FTS under the treaty.

Judgments citing fees for included services

DCIT (It) 1(1)(1), Mumbai vs. Ac Nielsen Corporation, Mumbai

In the result, all the appeals of the Revenue bearing ITA Nos

ITA 162/MUM/2022[2009-10]Status: DisposedITAT Mumbai27 Oct 2022AY 2009-10

Bench: Shri Pramod Kumar, Vice- & Sh. Anikesh Banerjee

Section 143(3)Section 250Section 254

assessee for rendering certain services to the Indian companies as per the terms of “General Services Agreement” (GSA) do not qualify as “Fees for included Services” (FIS) under Article 12(4)(b) of the India- USA DTAA?” 2. “Whether on the facts and circumstances of the case ... technical skills, knowledge as per Article 12(4)(b) of the India- USA DTAA and as such payments for such services constitute “Fees for Included Services?” 3. “Whether on facts the CIT(A) was justified in accepting that the Neilsen Company (US) Inc., i.e.assessee and AC Nielsen ORG Pvt. I.T.A

DCIT (It)- 1(1)(1), Mumbai vs. Ac Nielsen Corporation, Mumbai

In the result, all the appeals of the Revenue bearing ITA Nos

ITA 161/MUM/2022[2008-09]Status: DisposedITAT Mumbai27 Oct 2022AY 2008-09

Bench: Shri Pramod Kumar, Vice- & Sh. Anikesh Banerjee

Section 143(3)Section 250Section 254

assessee for rendering certain services to the Indian companies as per the terms of “General Services Agreement” (GSA) do not qualify as “Fees for included Services” (FIS) under Article 12(4)(b) of the India- USA DTAA?” 2. “Whether on the facts and circumstances of the case ... technical skills, knowledge as per Article 12(4)(b) of the India- USA DTAA and as such payments for such services constitute “Fees for Included Services?” 3. “Whether on facts the CIT(A) was justified in accepting that the Neilsen Company (US) Inc., i.e.assessee and AC Nielsen ORG Pvt. I.T.A

DCIT 9It) 1(1)(1), Mumbai vs. Ac Nielsen Corporationcorporation, Mumbai

In the result, all the appeals of the Revenue bearing ITA Nos

ITA 160/MUM/2022[2007-08]Status: DisposedITAT Mumbai27 Oct 2022AY 2007-08

Bench: Shri Pramod Kumar, Vice- & Sh. Anikesh Banerjee

Section 143(3)Section 250Section 254

assessee for rendering certain services to the Indian companies as per the terms of “General Services Agreement” (GSA) do not qualify as “Fees for included Services” (FIS) under Article 12(4)(b) of the India- USA DTAA?” 2. “Whether on the facts and circumstances of the case ... technical skills, knowledge as per Article 12(4)(b) of the India- USA DTAA and as such payments for such services constitute “Fees for Included Services?” 3. “Whether on facts the CIT(A) was justified in accepting that the Neilsen Company (US) Inc., i.e.assessee and AC Nielsen ORG Pvt. I.T.A

M/S. the Mathworks, Inc, Bangalore vs. Deputy Commissioner of Income Tax International Taxation, Circle-2(2), Bangalore

In the result, the appeal filed by the assessee is allowed for statistical purpose

ITA 364/BANG/2022[2018-19]Status: DisposedITAT Bangalore18 Oct 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am It(Tp)A No.364/Bang/2022 : Asst.Year 2018-2019 M/S.The Mathworks, Inc. The Deputy Commissioner Of 3 Apple Hill Drive, Natick Income-Tax, V. Massachusetts 01760 International Taxation Cir.2(2) Bengaluru. United Sates Of America Pan : Aafct7230H. (Appellant) (Respondent)

For Appellant: Sri.Sumeet Kurana, CAFor Respondent: Sri.Manjunath Karhihalli, CIT -DR
Section 143(2)Section 143(3)Section 144C(13)Section 9(1)Section 9(1)(vi)Section 9(1)(vii)

royalty u/s 9(1)(vi) of the I.T.Act and Article 12 of the India- US Double Taxation Avoidance Agreement (DTAA), (ii) fees for included services (FIS) as per Article 12 of the DTAA and Fees for Technical Services (FTS) u/s 9(1)(vii) of the I.T.Act. The assessee filed objections ... towards maintenance services as Fee for Technical Services as per section 9(1)(vii) of the Act and Fee for included services as per para 4(a) of Article 12 of Treaty. (Tax effect: 4,42,20,488) 4 IT(TP)A No.364/Bang/2022 M/s.The Mathworks Inc. The Appellant craves leave

DCIT (It) 3(2) (1), Mumbai vs. M/S. Marriott International Design & Construction Services Inc., Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 455/MUM/2022[2017-18]Status: DisposedITAT Mumbai26 Aug 2022AY 2017-18
Section 143Section 195Section 9

case of Viceroy Hotels when services provided by the assessee are more than advisory in nature and come in purview of Fees for Included Services as per Indo US DTAA. 2. Whether, on the fact and circumstances of the case and in law, the Ld. CIT(A) erred in ignoring ... Assessing Officer was of the view that the amount so received by the assessee is taxable in the hands of the assessee as fees of included services under article 12 of the US Tax Treaty and also as fees for technical services u/s. 9 (1) (vii) of the Income

Sitel India Ltd, Mumbai vs. DCIT RG 8(3), Mumbai

In the result, appeal by the assessee is allowed

ITA 6875/MUM/2014[2007-08]Status: DisposedITAT Mumbai19 Jul 2022AY 2007-08

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Ajit Jain a/wFor Respondent: Shri Tejinder Pal Singh
Section 10ASection 143(3)Section 195Section 250Section 271(1)(c)Section 40

without appreciating that the payments made by the Appellant to Sitel USA and Sitel UK were not in the nature of 'fees for included services' under the applicable Double Tax Avoidance Agreements and, therefore, no tax was deductible in respect thereof under Section 195 of the Act and consequently

Toyota Boshoku Automotive India Private Limited, Ramanagaram vs. The Assistant Commissioner of Income Tax, Ltu, Circle-2, Bangalore

In the result, the appeal of the assessee is allowed

ITA 362/BANG/2021[2016-17]Status: DisposedITAT Bangalore18 Jul 2022AY 2016-17

Bench: Shri N.V Vasudevan, Hon’Ble & Shri Laxmi Prasad Sahu

For Appellant: Ms. Hirali Desai, ARFor Respondent: Shri Pradeep Kumar, CIT (DR)
Section 92D

Court set aside the ruling of Hon’ble AAR, wherein it held that, the reimbursement of salary of expatriates constitutes fees for included services in terms of Article 12(4) of India USA DTAA. Therefore, reliance placed on this decision is of no assistance to revenue. 14.22. There is another

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

In the result, the appeal for AY 2014-15 is treated as allowed for statistical purpose while the appeal for AY 2012-13

ITA 1658/BANG/2017[2014-15]Status: DisposedITAT Bangalore13 Jul 2022AY 2014-15

Bench: Shri Chandra Poojari & Smt. Beena Pillaiassessment Year: 2014-15

For Appellant: Shri K.R. Vasudevan &For Respondent: Shri Dilip, Standing Counsel for Dept
Section 143(3)

needs to be examined under Article 7 of the DTAA related to "Business Profits" and not under Article 12 related to "Royalty and Fees for included Services". 9. The learned Assessing Officer ("learned AO") and the learned DRP have erred in not taking into consideration the decision ... Court set aside the ruling of Hon’ble AAR, wherein it held that, the reimbursement of salary of expatriates constitutes fees for included services in terms of Article 12(4) of India USA DTAA. Therefore, reliance placed on this decision is of no assistance to revenue. 14.22. There is another

Interactive Avenues Pvt. Limited, Mumbai vs. DCIT 14(2)(1), Mumbai

In the result, the appeal of the assessee is allowed

ITA 3130/MUM/2019[2015-16]Status: DisposedITAT Mumbai07 Jul 2022AY 2015-16

Bench: Us :-

Section 143(3)Section 40

other years also. For this payment, the AO has also referred to the definition given in India – US DTAA for ―Royalty‖ and ―fees for included services‖. The relevant portion of AO‘s order is extracted below:- 4.1.5.There will be sites of the Assessee Company, wherein the data connectivity and networking

Owens Corning (Singapore) Pte.Ltd ., Mumbai vs. The Dy CIT(International Tax)Circle-3(2)(2), Mumbai

In the result, the ITA No

ITA 742/MUM/2021[2017-18]Status: DisposedITAT Mumbai06 Jul 2022AY 2017-18

Bench: Us Is A Company Incorporated In & Fiscally Domiciled In, The Republic Of Singapore. During The Relevant Previous Year, The Assessee Company Provided Bushing & Fabrication Services To Its

Section 143(3)

fees included services' as per Article - 12(4) (a) of the DTAA. Since as per Article 12(4) (a) of the DTAA 'Fees for Included Services' should be ancillary or subsidiary to the application or enjoyment of the right or property or information for which a payment described in Para ... skills, experience etc. either to OCIPL or to Owens Corning Industries India Pvt. Ltd. and hence does not fall within the definition of 'fees for included services' as per Article - 12(4) (b) of the DTAA" ITA Nos.: 2049/Mum/2016, 5731/Mum/2019, and 742/Mum/2021 Assessment years

Owens Corning (Singapore) Pte. Ltd., Mumbai vs. Dy. CIT (It) Circle-3 (2)(2), Mumbai

In the result, the ITA No

ITA 5731/MUM/2019[2016-17]Status: DisposedITAT Mumbai06 Jul 2022AY 2016-17

Bench: Us Is A Company Incorporated In & Fiscally Domiciled In, The Republic Of Singapore. During The Relevant Previous Year, The Assessee Company Provided Bushing & Fabrication Services To Its

Section 143(3)

fees included services' as per Article - 12(4) (a) of the DTAA. Since as per Article 12(4) (a) of the DTAA 'Fees for Included Services' should be ancillary or subsidiary to the application or enjoyment of the right or property or information for which a payment described in Para ... skills, experience etc. either to OCIPL or to Owens Corning Industries India Pvt. Ltd. and hence does not fall within the definition of 'fees for included services' as per Article - 12(4) (b) of the DTAA" ITA Nos.: 2049/Mum/2016, 5731/Mum/2019, and 742/Mum/2021 Assessment years

Owens-Corning(Singapore)Pte.Ltd., Mumbai vs. The Deputy Commissioner of Income-Tax (Internatioal Taxation) Circle-3(2)(2), Mumbai

In the result, the ITA No

ITA 2049/MUM/2016[2012-13]Status: DisposedITAT Mumbai06 Jul 2022AY 2012-13

Bench: Us Is A Company Incorporated In & Fiscally Domiciled In, The Republic Of Singapore. During The Relevant Previous Year, The Assessee Company Provided Bushing & Fabrication Services To Its

Section 143(3)

fees included services' as per Article - 12(4) (a) of the DTAA. Since as per Article 12(4) (a) of the DTAA 'Fees for Included Services' should be ancillary or subsidiary to the application or enjoyment of the right or property or information for which a payment described in Para ... skills, experience etc. either to OCIPL or to Owens Corning Industries India Pvt. Ltd. and hence does not fall within the definition of 'fees for included services' as per Article - 12(4) (b) of the DTAA" ITA Nos.: 2049/Mum/2016, 5731/Mum/2019, and 742/Mum/2021 Assessment years

Owens Corning Inc., Mumbai vs. The Dy CIT(International Tax)Circle-3(2)(2), Mumbai

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

ITA 741/MUM/2021[2017-18]Status: DisposedITAT Mumbai04 Jul 2022AY 2017-18

Bench: Shri Pramod Kumar & Shri Sandeep Singh Karhail

For Appellant: Shri Sandeep Bhalla a/wFor Respondent: Shri Milind Chavan, Sr. DR
Section 143(3)Section 144Section 234BSection 9(1)Section 9(1)(vii)

Corning Inc. ITA No.741/Mum./2021 the fabrication/refurbishment charges received by Owens Corning (Singapore) PTE Ltd were taxed in its hands under the head „Fees for Included Services‟. 9. OCIPL also entered into Technology License Agreement dated 27/01/2011 with OC NL invest Cooperatief, a company incorporated in the Netherland, whereby OCIPL

Michael Page International Pte Ltd., Mumbai vs. Dy CIT (Intl. Taxn.)-3(2)(2), Mumbai

In the result, the appeal is allowed in the terms indicated above

ITA 144/MUM/2021[2017-18]Status: DisposedITAT Mumbai04 Jul 2022AY 2017-18
Section 143(3)Section 270ASection 9(1)

this count also the said services are rightly regarded as technical services and any sum received for it will be construed as 'Fees for Included Services". 2.6.4 It has also been pointed out above, that the assessee has itself offered the income for taxation, but later claimed ... above discussion, the amount paid by MP India for the managerial/advisory/consultancy/technical support services provided by the assessee will be covered under "Fees for Included Services" as the 'make available' clause is fully satisfied. In the light of the above observations, the consideration of Rs. 3,06,12,626/- is held

Ntt Asia Pacific Holdings Pte. Ltd., Mumbai vs. The Asstt. CIT (International Taxation)-2(1)(2), Mumbai

In the result, the appeal is allowed in the terms indicated above

ITA 1212/MUM/2021[AADC4348L]Status: DisposedITAT Mumbai04 Jul 2022
Section 143(3)

technology is made available to the recipient. Whether it is the input technology or output technology? As per Memorandum of Understanding concerning Fees for Included Services in Article 12 entered between US and India, dated 15 May, 1989, various examples have been given. Let us see Example 12 as described ... necessary wiring system, adapt standard software, and provide instructions for installations. Are the fees paid to the American firm by the Indian individual fees for included services? Analysis: The services in respect of which the fees are paid are of the type which would generally be treated as fees

DCIT (It) -3(2) (2), Mumbai vs. M/S. Marriott Internation Servicesal Design & Construction, Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 2289/MUM/2021[2016-17]Status: DisposedITAT Mumbai22 Jun 2022AY 2016-17
Section 143Section 195Section 9

ITAT in the of Viceroy Hotels when services provided by the assessee are more than advisory in nature and comes in purview of fee of included services as per Indo US DTAA. “The appellant prays that the order of the Ld. CIT(A) on the above ground ... ITAT in the of Viceroy Hotels when services provided by the assessee are more than advisory in nature and comes in purview of fee of included services as per Indo US DTAA. “The appellant prays that the order of the Ld. CIT(A) on the above ground

DCIT (It) -3(2) (2), Mumbai vs. M/S. Marriott International Design & Construction Services, Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 2288/MUM/2021[2015-16]Status: DisposedITAT Mumbai22 Jun 2022AY 2015-16
Section 143Section 195Section 9

ITAT in the of Viceroy Hotels when services provided by the assessee are more than advisory in nature and comes in purview of fee of included services as per Indo US DTAA. “The appellant prays that the order of the Ld. CIT(A) on the above ground ... ITAT in the of Viceroy Hotels when services provided by the assessee are more than advisory in nature and comes in purview of fee of included services as per Indo US DTAA. “The appellant prays that the order of the Ld. CIT(A) on the above ground

DCIT (It) -3(2) (2), Mumbai vs. M/S. Marriott International Design & Construction Services, Mumbai

In the result the appeal filed by the Assessing Officer is thus dismissed

ITA 2286/MUM/2021[2013-14]Status: DisposedITAT Mumbai22 Jun 2022AY 2013-14
Section 143Section 195Section 9

ITAT in the of Viceroy Hotels when services provided by the assessee are more than advisory in nature and comes in purview of fee of included services as per Indo US DTAA. “The appellant prays that the order of the Ld. CIT(A) on the above ground ... Assessing Officer was of the view that the amount so received by the assessee is taxable in the hands of the assessee as fees of included services under article 12 of the US Tax Treaty and also as fees for technical services u/s. 9 (1) (vii) of the Income

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1345/BANG/2019[2017-18]Status: DisposedITAT Bangalore31 May 2022AY 2017-18

Bench: Smt. Beena Pillai & Ms. Padmavathy Sit(It)A Nos. 1344 & 1345/Bang/2019 Assessment Years : 2016-17 & 2017-18 M/S. Madura Coats Pvt. The Deputy Ltd., Commissioner Of 7Th Floor, Jupiter Income Tax Prestige Technology (International Park, Vs. Taxation), Outer Ring Road, Circle – 1(2), Bangalore – 560 103. Bangalore. Pan: Aabcm8297K Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Shehnawaz Ul Rahaman, Revenue By Addl. Cit (Dr) Date Of Hearing : 13-04-2022 Date Of Pronouncement : 31-05-2022 Order Per Beena Pillaipresent Appeals Are Filed By Assessee Against Order Dated 30.03.2019 Passed By Ld.Cit(A)-12, Bangalore For A.Ys. 2016-17 & 2017-18. It Is Submitted That The Issues Alleged By Assessee In Both These Years Are Identical & On Similar Facts. 2. Brief Facts Of The Case Are As Under: 2.1 Madura Coats Pvt Ltd (Mcpl) Is An Indian Company Carrying On The Business As Manufacturer & Merchant Of Sewing Threads & Other Goods, Possesses The Requisite Expertise & Experience By Virtue Of Having Several Qualified Personnel In Its Employment. During The Course Of Verification Conducted Us

For Appellant: Shri Ajay Rotti, CA
Section 195Section 201(1)

term "fees for technical services". The Indo-US DTAA also contains a Memorandum of Understanding (MOU) explaining the meaning of the term 'fees for included services' as appearing in Article 12 of the Indo-US DTAA. The MOU describes the category of services which is defined in Para

M/S. Madura Coats Private Limited, Bangalore vs. Deputy Commissioner of Income Tax., (International Transaction), Circle- 1(2), Bangalore

In the result, appeals filed by assessee for A

ITA 1344/BANG/2019[2016-17]Status: DisposedITAT Bangalore31 May 2022AY 2016-17

Bench: Smt. Beena Pillai & Ms. Padmavathy Sit(It)A Nos. 1344 & 1345/Bang/2019 Assessment Years : 2016-17 & 2017-18 M/S. Madura Coats Pvt. The Deputy Ltd., Commissioner Of 7Th Floor, Jupiter Income Tax Prestige Technology (International Park, Vs. Taxation), Outer Ring Road, Circle – 1(2), Bangalore – 560 103. Bangalore. Pan: Aabcm8297K Appellant Respondent Assessee By : Shri Ajay Rotti, Ca : Shri Shehnawaz Ul Rahaman, Revenue By Addl. Cit (Dr) Date Of Hearing : 13-04-2022 Date Of Pronouncement : 31-05-2022 Order Per Beena Pillaipresent Appeals Are Filed By Assessee Against Order Dated 30.03.2019 Passed By Ld.Cit(A)-12, Bangalore For A.Ys. 2016-17 & 2017-18. It Is Submitted That The Issues Alleged By Assessee In Both These Years Are Identical & On Similar Facts. 2. Brief Facts Of The Case Are As Under: 2.1 Madura Coats Pvt Ltd (Mcpl) Is An Indian Company Carrying On The Business As Manufacturer & Merchant Of Sewing Threads & Other Goods, Possesses The Requisite Expertise & Experience By Virtue Of Having Several Qualified Personnel In Its Employment. During The Course Of Verification Conducted Us

For Appellant: Shri Ajay Rotti, CA
Section 195Section 201(1)

term "fees for technical services". The Indo-US DTAA also contains a Memorandum of Understanding (MOU) explaining the meaning of the term 'fees for included services' as appearing in Article 12 of the Indo-US DTAA. The MOU describes the category of services which is defined in Para