‘Make Available’ clause is not satisfied if NR services are repetitive in nature

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  • Last Updated on 25 February, 2022

Income; Deemed to accrue or arise in India; Royalties/fees for technical services; Information technology support services

Case Details: GE Energy Management Services Inc. v. ADIT - [2022] 135 taxmann.com 173 (Delhi - Trib.)

Judiciary and Counsel Details

    • N.K. Billaiya, Accountant Member and Sudhanshu Srivastava, Judicial Member
    • Sachit Jolly and Ms. Disha Jham, Advs. for the Appellant.
    •  Mrs. Anupama Anand, CIT-DR for the Respondent.

Facts of the Case

Assessee-foreign company entered into an agreement to provide offshore maintenance and support services to Power Grid Corporation of India Ltd (PGCIL). The assessee from outside India performed the entire services for software and hardware maintenance and support work through remote system monitoring, remote launching of the system, telephonic discussion or internet communication, etc.

The Assessing Officer (AO) held that services rendered by the assessee to PGCIL were taxable as fees for included services (FIS) under section 9(1)(vii). The Dispute Resolution Panel (DRP) upheld the findings of AO.


On appeal, the Tribunal held that if article 12(4)(a) of India –USA treaty is read along with MOU, it is clear that for a service to qualify as FIS, there should be made available technical knowledge, experience, skill, know-how or processes to the service recipient.
The receiver of this service can be said to acquire the relevant skills used by the service provider only if he acquires those skills so that he can himself use them independently without getting any assistance or being dependent on the service provider in the future.
In the instant case, the assessee’s offshore maintenance and support services to PGCIL were not geared towards making available any technical knowledge, experience, skills, know-how, or processes to PGCIL.

Further, the term of the agreement was for five years and services provided by the assessee were repetitive and ongoing. It means that PGCIL could not apply the technical or skills used by the assessee for rendering such service.

Given the repetitive nature of the services, it would be factually incorrect to allege that the services make available any technical knowledge, expertise, skill, know-how or processes to PGCIL.

Consequently, the PGCIL would not apply technology on its own. It would continue to depend on the assessee for provision of software and hardware maintenance and support services in the future.

Thus, keeping in view of the facts and circumstances of the case, receipts from PGCIL do not qualify as ‘fees for included services ‘under articles 12(4)(a) and 12(4)(b) of India – US DTAA.

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