CIT International Tax- 1 Vs Expeditors International of Washington INC (Delhi High Court)
Delhi High Court held that Freight Logistic Support Service provided by appellant are not in the nature of Fee for Technical Services/ Fee for Included Services u/s. 9(1)(vii) of the Income Tax Act and accordingly appeal fails.
Facts- The present appeal is preferred by the appellant mainly contesting that whether Freight Logistic Support services provided by the assessee is in the nature of Fee for Technical Services/Fee for Included Services as per Section 9(1)(vii) of the Income Tax Act, 1961 and Article 12(5) of the India-US Double Taxation Avoidance Treaty.
Conclusion- FTS is firstly concerned with rendition of specialized knowledge, skill, expertise and know-how. It is principally concerned with a transfer of knowledge, skill and expertise. Those three attributes must be those which are possessed by the service provider and are distinctive and special qualities that it possesses.
The second facet of FTS is the “make available” condition and which envisions an enablement or transfer of specialized knowledge and skill. As was explained in International Management Group, the mere furnishing of service would not be sufficient to categorise the service as FTS. It would have to be necessarily accompanied by a transfer of expertise and which would consequently enable the recipient of service becoming skilled in its own right and empowered to perform those functions independently.
