Case Law Details
Bombardier Transportation Sweden AB Vs DCIT (ITAT Delhi)
Conclusion: Payment of consideration would be regarded as ‘fee for technical/included services’ only if the twin test of rendering services and making technical knowledge available at the same time was satisfied. Intermediary services rendered by assessee did not make available any technical knowledge, skill etc to BTIN and BTIN was not a equipped to apply technology contained in services rendered by assessee. Therefore, the intermediary services provided by assessee to BTIN did not tantamount to FTS and accordingly, should not be taxable in India.
Held: Assesseee-company was registered and incorporated under the laws of Sweden and was a non-resident and tax resident of Sweden. During the year under consideration, assessee had rendered intermediaries services like marketing, sales, business development, project management, customer services etc. to Bombardier Transportation India Ltd [BTIN] and received fees for intermediary services. Assessee-company was engaged in the business of manufacturing of train control and signalling systems for mass transit system. During the year, the company entered into international transactions with its Associated Enterprises [AE]. The case was referred to TPO and the TPO had drawn no adverse inference with respect to international transactions carried out by assessee and, therefore, no adjustment was made to the taxable income. AO asked assessee to show cause as to why revenues received from intermediary services might not be taxed in India as FTS. It was held that the technical or consultancy services rendered should be aimed at and result in transmitting technical knowledge, etc., so that the payer of the service could derive an enduring benefit and utilize the knowledge or know-how on his own in future without the aid of the service provider. The technical knowledge or skills of the provider should be imparted to and absorbed by the receiver so that the receiver could deploy similar technology or techniques in the future without depending upon the provider. Technology will be considered ‘made available’ when the person acquiring the service was enabled to apply the technology. The fact that the provision of the service that may require technical knowledge, skills, etc., did not mean that technology was made available to the person purchasing the service. Payment of consideration would be regarded as ‘fee for technical/included services’ only if the twin test of rendering services and making technical knowledge available at the same time was satisfied. Therefore, the intermediary services rendered by assessee did not make available any technical knowledge, skill etc to BTIN and BTIN was not a equipped to apply technology contained in services rendered by assessee. Therefore, the intermediary services provided by assessee to BTIN did not tantamount to FTS and accordingly, shall not be taxable in India.
FULL TEXT OF THE ITAT JUDGEMENT
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