Case Law Details
Planetcast International Pte Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that receipts from disaster recovery playout services and disaster recovery up-linking services are not in the nature of Fee for Technical Service (FTS) as envisaged under Article 12(4)(a) of India-Singapore DTAA.
Facts- The assessee has challenged the taxability of receipts from provision of disaster recovery up-linking services and disaster recovery play-out services as fee for technical services (FTS) under section 9(1)(vii) of the Act and Article 12(4) of India-Singapore DTAA. Without prejudice to the addition made as royalty income, the Assessing Officer relying upon the directions of learned DRP in assessment year 2017-18 held that the receipts from disaster recovery play-out services and disaster recovery up-linking services amounting to Rs.15,73,71,079/- are in the nature of FTS both under section 9(vii) of the Act and Article 12(4) of India-Singapore DTAA and added to the income of the assessee. Though, the assessee contested the aforesaid addition before learned DRP, however, the addition was upheld.
Conclusion- The disaster recovery playout service merely involves provision of uninterrupted availability of the playout service at a predetermined level. Therefore, receipts from disaster recovery playout services are not in the nature of FTS as envisaged under Article 12(4)(a) of the DTAA as they are not ancillary or subsidiary to disaster recovery uplinking and allied services.
The receipts from disaster recovery playout services are not in the nature of FTS as they do not make available any technical knowledge, experience, skill, know-how, or process or consist of the development and transfer of any technical plan or technical design.
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