“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

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

Dy. Commissioner of Income Tax, International Taxation, Circle-421, Mumbai vs. Sita Information Networking Computing Usa Inc., Usa

ITA 6436/MUM/2024[2014-15]Status: DisposedITAT Mumbai02 Apr 2025AY 2014-15

Bench: Shri Amit Shukla, Jm & Ms Padmavathy S, Am

For Respondent: Shri Vivek Perampurna (CIT-DR) /

Section 143(3)Section 9(1)(vii)

technical services within the ambit of section 9(1)(vii). The AO also held that the services rendered are in the nature of fee for Included services under Article 12(4)(b) of the India US DTAA. The ld AO in this regard placed reliance on the decision of Authority ... will look at the relevant provisions of Article 12 of the India USA DTAA which reads as under – ARTICLE 12 ROYALTIES AND FEES FOR INCLUDED SERVICES 6 ITA 6436, 6439, 6470 & 6440 to 6444 /Mum/2024 Sita Information Networking Computing USA Inc. 1. Royalties and fees for included services arising

Visteon Corporation, Michigan vs. ACIT, International Taxation, Circle-2(2), Chennai

In the result, the appeal of the assessee is partly allowed

ITA 2962/CHNY/2024[2015-16]Status: DisposedITAT Chennai26 Mar 2025AY 2015-16

Bench: Shri Aby T Varkey & Shri Amitabh Shuklaआयकर अपील सं./Ita No.2962 /Chny/2024 निर्ाारण वर्ा /Assessment Years: 2015-16 Visteon Corporation Asst. Commissioner Of Income Tax, Grace Lake Corporation Centre, International Taxation, Van Buren Township, Circle-2(2), Michigan-48111 Chennai. [Pan: Aadcv5660K] (प्रत्यर्थी/Respondent) (अपीलार्थी/Appellant) अपीलार्थी की ओर से/ Assessee By : Shri Ajay Vohra, Sr. Advocate Mr.Aditya Vohra, Advocate (Virtual) प्रत्यर्थी की ओर से /Revenue By : Shri R. Raghupathy, Addl. Cit सुिवाई की तारीख/Date Of Hearing : 17.02.2025 घोर्णा की तारीख /Date Of Pronouncement : 26.03.2025 आदेश / O R D E R Per Amitabh Shukla, A.M :

For Appellant: Shri Ajay Vohra, Sr. Advocate Mr.AdityaFor Respondent: Shri R. Raghupathy, Addl. CIT

Section 263

stating that even on the merits of the case the addition of Rs.30,26,13,530/- made by the Ld. AO as fees for included services u/s 9(1)(vii) of the act r.w. article 12(4) of India USA DTAA is not maintainable. In support of its claim ... same u/s.115A of the Act at the rate of 10% and also by applying the beneficial provisions, services rendered treating it as ‘fee for included services’ as per Article 12(4) of India-US DTAA and taxed at the rate of 10%. The AO noted the following aspects:- Page

Deputy Commissioner of Income Tax(International Taxation) Circle-2(2) Bengaluru, Bangalore vs. U L India Private Limited, Bangalore

In the result, the appeals filed by the assessee are allowed for statistical purposes and the appeal filed by revenue stands dismissed

ITA 29/BANG/2024[2012-13]Status: DisposedITAT Bangalore03 Mar 2025AY 2012-13

Bench: Shri Waseem Ahmed & Shri Prakash Chand Yadav

For Appellant: Sri Ketan Ved, A.RFor Respondent: Ms. Neera Malhotra, D.R

Section 195Section 201(1)Section 250

assessee that no tax had been deducted at source u/s 195, since the impugned payment to the vendors was in the nature of fees for included services but technical knowledge, skill, etc. was not made available to the assessee in terms of the treaty provisions with USA. A notice ... before the ld. CIT(A) and has made following submissions: a) That though the amount of testing charges was in the nature of fee for included services yet the same are not taxable in India since the service provider has not made available the technical knowledge embedded in the services

M/S. Ul India Private Limited, Bengaluru vs. Assistant Commissioner of Income Tax, (International Taxation), Circle-2(2), Bengaluru

In the result, the appeals filed by the assessee are allowed for statistical purposes and the appeal filed by revenue stands dismissed

ITA 1136/BANG/2023[2012-13]Status: DisposedITAT Bangalore03 Mar 2025AY 2012-13

Bench: Shri Waseem Ahmed & Shri Prakash Chand Yadav

For Appellant: Sri Ketan Ved, A.RFor Respondent: Ms. Neera Malhotra, D.R

Section 195Section 201(1)Section 250

Visteon Corporation, Michigan vs. DCIT, International Taxation, Circle-2(2), Chennai

The appeal stands partly allowed in terms of our above order

ITA 1347/CHNY/2023[2021-22]Status: DisposedITAT Chennai26 Feb 2025AY 2021-22

Bench: Hon’Ble Shri Aby T. Varkey, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ Ita No.1347/Chny/2023 (िनधा*रण वष* / Assessment Year: 2021-22) M/S. Visteon Corporation Dcit बनाम/ Grace Lake Corporation Centre, International Taxation Van Buren Township Circle-2(2), Vs. Michigan – 48111 Chennai. "थायीलेखासं./जीआइआरसं./Pan/Tan No. Aadcv-5660-K (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ" की ओर से/ Appellant By : Ms. Jyotsna Sivakumar (Advocate) & Shri Ajay Vohra (Senior Advocate) – Ld. Ars (Through Virtual Mode ) ""थ" की ओर से/Respondent By : Shri Nilay Baran Som (Cit) -Ld. Dr सुनवाई की तारीख/Date Of Hearing : 29-01-2025 घोषणा की तारीख /Date Of Pronouncement : 26-02-2025 आदेश / O R D E R

For Appellant: Ms. Jyotsna Sivakumar (Advocate) &For Respondent: Shri Nilay Baran Som (CIT) -Ld. DR

Section 115ASection 143(3)Section 144CSection 144C(5)Section 9(1)(vii)

Panel-2, Bengaluru (DRP) u/s 144C(5) dated 21-09-2023. The substantive grievance of the assessee is assessment of Rs.44.42 Crores as fees for included services (FIS) as per Article 12(4) of India-USA Double Taxation Avoidance Agreement (DTAA). 2. The Ld. Sr. Counsel. Shri Ajay Vohra ... Electronics Pvt. Ltd. The assessee furnished copies of relevant agreements and invoices. The assessee submitted that the aforesaid services do not fall under fees for included services as per Article 12 of DTAA but it would be ‘business income’ which would be taxable only when the assessee has permanent establishment

Anand Singh, Village Shahpur Turk vs. Income Tax Officer 69(5), Delhi

In the result, the appeal of the Assessee are allowed

ITA 1022/DEL/2024[2012-13]Status: DisposedITAT Delhi20 Feb 2025AY 2012-13

Bench: Shri M. Balaganesh & Shri Vimal Kumarbombardier Inc, Vs. Acit, 400, Dorval, Cote-Vertu, Circle-1(1)(2), Road West, Quebee Delhi Canada-H4S1Y9 (Appellant) (Respondent) Pan: Aaccb7177J Assessee By : Shri Sriram Seshadri, Cas Shri Varun Jain, Ca Shri Mohit Agarwal, Ca Ms. Amulya K. Ca Revenue By: Shri M. S. Nethrapal, Cit Dr Date Of Hearing 15/09/2025 Date Of Pronouncement 10/12/2025

For Appellant: Shri Sriram Seshadri, CAsFor Respondent: Shri M. S. Nethrapal, CIT DR

Section 144C(5)Section 147Section 9(1)(vii)

Ground Nos.1.4 and 1.5 raised by the Assessee are challenging the taxability of receipts from customers as fee for technical services (FTS) / fee for included services (FIS) under the domestic provisions and under the India Canada Double Taxation Avoidance Agreement (DTAA). 5. We have heard the rival submissions and peruse ... 646/296 Taxman 167/459 ITR 5 (Delhi) and observed as under: 15. Similarly, in order for that income to fall within the ambit of "fees for included services", it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical

DCIT, New Delhi vs. M/S. Rhc Holding Pvt. Ltd., New Delhi

In the result, appeal of the assessee is allowed

ITA 2446/DEL/2014[2009-10]Status: DisposedITAT Delhi14 Feb 2025AY 2009-10

Bench: Shri Vikas Awasthy& Shri Brajesh Kumar Singhआअसं.2446/िद"ी/2024(िन.व. 2017-18) Gsma Ltd., 1000 Abernathy Road, Suite 450, Atalanta, Untied State Of America ...... अपीलाथ"/Appellant Pan: Aaecg-1610-K बनाम Vs. Assistant Commissioner Of Income-Tax, International Taxation 1(3)(1), Civic Centre, ....."ितवादी/Respondent Minto Road, New Delhi 110002 अपीलाथ" "ारा/ Appellant By: Shri P.P Singh, Advocate "ितवादी"ारा/Respondent By: Shri M.S Nethrapal, Cit-Dr सुनवाई क" ितिथ/ Date Of Hearing : 06/08/2025 घोषणा क" ितिथ/ Date Of Pronouncement : 04/11/2025 आदेश/Order Per Vikas Awasthy, Jm: This Appeal By The Assessee Is Directed Against The Assessment Order Dated 06.04.2021 Passed U/S. 143(3) R.W.S 144C(13) Of The Income Tax Act,1961(Hereinafter Referred To As ‘The Act’), For Assessment Year 2017-18. 2. The Registry Has Issued Defect Memo Stating That The Appeal Is Time Barred By 1076 Days. The Assessee Has Filed An Application Supported By An Affidavit Citing Reasons For Delay In Filing Of Appeal.

For Appellant: Shri P.P Singh, AdvocateFor Respondent: Shri M.S Nethrapal, CIT-DR

Section 143(3)Section 9(1)(vii)

that Subscription Fee is in the of nature of technical consultancy and would fall within the ambit of Article 12(4) i.e. Fee for Included Services. The Department also tried to make out a case to treat Subscription Fee as royalty within the meaning of Article 12(3) of India ... earlier years. Accordingly, the present appeals are dismissed." 15. Similarly, in order for that income to fall within the ambit of 'fees for included services', it was imperative for the Department to establish that the assessee was rendering technical or consultancy services and which included making available technical knowledge, experience