Tech Data (Singapore) Pte Limited Vs DCIT (ITAT Mumbai)
The Mumbai ITAT partly allowed the assessee’s appeal against the assessment order passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961 for AY 2023-24. The assessee challenged the assessment on the grounds of limitation under Section 153 and the taxability of management support fees received from its Indian subsidiary. The Tribunal first rejected the limitation challenge, holding that in view of the retrospective amendments to Sections 144C, 153 and 153B, the assessment order had been passed within the prescribed limitation period.
The principal dispute concerned the taxability of ₹49,68,78,301 received for providing management and business support services, including strategic business advisory, information technology, finance, logistics, branding, tax, treasury, legal, ethics and compliance, human resources, trade compliance, and corporate and administrative services. The assessee contended that the services did not constitute Fees for Technical Services (FTS) under Article 12(4) of the India-Singapore DTAA and that, even if any services were managerial, technical or consultancy in nature, no technical knowledge, skill, know-how or experience had been made available to the Indian recipient to enable it to independently apply such knowledge.
The Assessing Officer held that part of the services constituted consultancy services and the remaining services were managerial services. According to the Assessing Officer, the “make available” requirement applied only to technical services and not to managerial services. On that basis, the fees were taxed as FTS. Alternatively, the Assessing Officer also treated the receipts as royalty under Section 9(1)(vi) of the Act and Article 12(3) of the DTAA. Although the Dispute Resolution Panel noted that the Tribunal had decided the identical issue in the assessee’s favour in earlier assessment years, it nevertheless upheld the Assessing Officer’s view while observing that the Department had no appellate remedy against favourable DRP directions.
