Case Law Details
Russell Reynolds Associates Inc. Vs DCIT (International Taxation) (ITAT Delhi)
Facts- The Appellant, incorporated under the laws of the United States of America, filed its Income-tax return for relevant assessment showing income being royalty income received from Russell Reynolds Associates India Private Limited in terms of ‘Licensing Agreement’ for use of Intellectual Property Rights (‘IPRs’) like trademarks / trade names and ‘Information Technology Licensing Agreement’ for use of databases, etc. as per Article 12(3) of the India- USA DTAA.
The Deputy Commissioner passed the assessment order u/s. 143(3), assessing the income, inter alia, adding to income the amount of support services as per ‘Services Agreement” and reimbursement of expenses as per ‘Cost Reimbursement Agreement” as Fees for Included Services (‘FIS’) under Article 12(4)(b) of India-USA DTAA by holding that such services meet the condition of “make available” of technical knowledge, experience, skill, knowhow, etc.
The appeal filed by the Appellant company against the above assessment order was disposed by the Learned Commissioner of Income-Tax (Appeals) wherein partial relief was granted but following additions to the income in the assessment order were confirmed.
In regard to the Support services as per ‘Services Agreement’. The Ld. CIT(A) upheld the contention of the assessee that the said services do not meet the condition of “make available” in Article 12(4)(b) of India-USA DTAA but upheld the addition as FIS under Article 12(4)(a) of the treaty by alleging that the said services are ancillary and subsidiary to the application and enjoyment of the right in Article 12(3) of the treaty.
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