Fees or management support u/s 9(1)(vii) of Income Tax Act is not FTS under India-Singapore DTAA: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Fees or management support under Section 9(1) (vii) of Income Tax Act, 1961, was not fees for technical services ( FTS ) under India-Singapore Double Taxation Avoidance Agreement ( DTAA )

The counsels for the assesssee Ananya Kapoor and Amit Arora pointed out that a similar issue had been resolved in favor of the assessee by the Tribunal for the assessment years 2013-14, 2014-15, and 2015-16 where it was held that the receipts from Cameron Manufacturing India Pvt. Ltd. did not constitute fees for technical services ( FTS ). A copy of this order was provided for reference.

Additionally, the counsel highlighted that the Assessing Officer acknowledged in previous assessment years (i.e., 2013-14 to 2015-16) that the services provided by the assessee to Cameron Manufacturing India Pvt. Ltd. were taxable as fees for technical services under Section 9(1)(vii) of the Act, 1961  

The counsel emphasized that the DRP's directions for the current assessment year were consistent with those given for the assessment year 2013-14, indicating continuity in the facts considered.

The counsel representing the assessee argued that the services were provided directly from the head office without any involvement of the Permanent Establishment ( PE ) in India. Furthermore, it was contended that even if some of the services rendered could be categorized as managerial services, they should not be treated as Fees for Technical Services ( FTS ) because the assessee did not impart any technical knowledge or skill. Consequently, it was asserted that the receipts cannot be deemed as FTS due to the non-fulfillment of the "make available" condition outlined in Article 12(4)(b) of the treaty.

The two member bench of the tribunal comprising G.S Pannu ( Vice President ) and C.N Prasad ( Judicial member ) concluded that in accordance with the Tribunal's decision for the assessment years 2013-14 to 2015-16, and the bench concluded that the fee received from Cameron Manufacturing India Pvt. Ltd. for management support services does not fall under the category of Fees for Technical Services ( FTS ).

As a result, appeals are allowed.

To Read the full text of the Order CLICK HERE

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