Management Support Service Fees Not Taxable as FTS Under India–Singapore DTAA: ITAT Mumbai

Tech Data (Singapore) Pte. Limited Vs DCIT (ITAT Mumbai)

The appeal was filed by the assessee against the final assessment order dated 16.01.2025 passed under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961 for Assessment Year 2022-23 pursuant to the directions of the Dispute Resolution Panel (DRP). At the outset, the assessee submitted that Ground No. 1 was covered in its favour by earlier Tribunal decisions and that adjudication of this ground would render the remaining grounds, including the additional legal ground, academic. The Departmental Representative agreed with this submission.

The dispute related to the taxability of ₹42,16,596 received by the assessee as fees for management and business support services. The Assessing Officer treated the amount as Fees for Technical Services (FTS) under Section 9(1)(vii) of the Act and Article 12(4) of the India–Singapore Double Taxation Avoidance Agreement (DTAA). The assessee, a non-resident company incorporated and tax resident in Singapore, had entered into an agreement with its Indian subsidiary, Tech Data Advanced Private Limited, for providing management and business support services. It treated the receipts as business income and, in the absence of a permanent establishment in India, did not offer them to tax.

During assessment, the Assessing Officer held that the services rendered were managerial, technical or consultancy services and therefore constituted FTS under Article 12(4) of the DTAA. The Assessing Officer further held that the “make available” condition under Article 12(4)(b) was not applicable to managerial and consultancy services as they did not involve transfer of technology or know-how. On this basis, the receipts were proposed to be taxed as FTS in the draft assessment order. The DRP endorsed the Assessing Officer’s view.

The Tribunal observed that the issue was recurring between the parties and that the same agreement for rendering services had continued from earlier assessment years. It noted that the Tribunal had consistently decided the issue in favour of the assessee for Assessment Years 2019-20, 2020-21 and 2021-22. It also referred to its latest order for Assessment Year 2023-24 dated 17.06.2026, which dealt with the identical agreement and similar receipts.

The Tribunal reproduced its earlier findings regarding the nature of services rendered under the agreement, including strategic business advisory services, information technology services, finance, logistics, branding, tax, treasury, legal, ethics and compliance, human resources, trade compliance and corporate, real estate and administrative services. In those earlier decisions, it had been held that none of the conditions prescribed in Article 12(4)(a), (b) or (c) of the India–Singapore DTAA were satisfied. The Tribunal had found that there was no transfer of technical knowledge, experience, skill, know-how or processes, no development or transfer of a technical plan or technical design, and no satisfaction of the “make available” requirement. It had further observed that the services were in the nature of operational management and support services, including training and strategy development, and that although the Assessing Officer had classified the services into technical, managerial and consultancy categories, no examination had been made as to whether the treaty conditions under Article 12(4) were fulfilled.

The Tribunal also referred to its earlier observations that while the definition of FTS under Section 9(1)(vii) of the Income-tax Act was broader, the assessee was entitled to the benefit of Section 90(2), under which the more beneficial provisions of the DTAA would prevail. Accordingly, earlier Benches had concluded that the management and business support service fees were not taxable as FTS under Article 12(4) of the India–Singapore DTAA.

Finding no factual difference in the present assessment year and noting that even the DRP had accepted that the issue was covered by the Tribunal’s earlier decisions, the Tribunal followed the consistent view taken in the assessee’s own cases for prior years. It held that the amount of ₹42,16,596 was not taxable as Fees for Technical Services under Article 12(4)(b) of the India–Singapore DTAA and directed the Assessing Officer to delete the addition. Ground No. 1 was allowed. Ground Nos. 2 and 3, being general and consequential, were not adjudicated, and the additional ground was kept open as it had become academic. The appeal was allowed accordingly.

Cases Discussed

• Tech Data (Singapore) Pte. Limited, ITA No. 8995/Mum/2025, order dated 17.06.2026
• Tech Data (Singapore) Pte. Limited, order dated 29.07.2024 for A.Y. 2021-22
• Tech Data (Singapore) Pte. Limited, ITA No. 3280/Mum/2023 for A.Y. 2020-21
• Tech Data (Singapore) Pte. Limited, ITA No. 2367/Mum/2022, order dated 21.08.2023

FULL TEXT OF THE ORDER OF ITAT MUMBAI

Caption appeal has been filed by the assessee, challenging the final assessment order dated 16.01.2025, passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 (`the Act’ for short), pertaining to the assessment year (`A.Y.’ for short) 2022-23, in pursuance to the directions of learned Dispute Resolution Panel (`DRP’ for short).

2. At the outset, learned counsel appearing for the assessee drew our attention to ground number 1 and submitted that the issue raised is squarely covered in favour of the assessee on merits. He submitted, once this ground is decided, the other grounds raised by the assessee, including the legal issue raised in the additional ground, would become academic.

3. Ld. Departmental Representative (`id. DR’ for short) agreed with the aforesaid submissions of the assessee.

4. In ground no. 1, the short controversy is with regard to taxabaility of Rs.42,16,596/-as Fees for Technical Services (`FTS’ for short) u/s.9(1)(vii) of the Act and Article 12(4)(b) of India-Singapore Double Taxation Avoidance Agreement (`DTAA’ for short)..

5. Briefly, the facts are, the assessee is a non-resident corporate entity, incorporated in Singapore and a tax resident of Singapore. The assessee had entered into an agreement with its Indian subsidiary, Tech Data Advanced Private Limited (ID India’; formerly known as Tech Data Advanced Solutions (India) Private Limited) for providing management/business support services. The fee received by the assessee from the provision of such services was treated as ‘business receipt’ and, in absence of a permanent establishment (PE) in India, was not offered to tax.

6. In the course of assessment proceedings, the Assessing Officer (AO), while examining the nature of receipt, was of the view that the services in connection with fee was received are in the nature of managerial, technical or consultancy services, hence, the fee received from providing such services would qualify as FTS under Article 12(4) of the tax treaty. He further observed that the ‘make available’ condition under Article 12(4)(B) is not applicable to managerial and consultancy services, as it does not involve transfer of technology, know-how etc. Accordingly, he framed a draft assessment order treating the receipt as `FTS’ under Article 12(4)of the treaty.

7. Ld. DRP endorsed the view of the AO.

8. We have considered rival submissions and perused the materials available on record. It is a common point between the parties that this is a recurring issue between the parties from past several years and in earlier assessment years, the Income Tax Appellate Tribunal (ITAT) has decided the issue in favour of the assessee. Having taken note of the submissions of the parties and perused the materials placed on record, we find that the agreement through which services are being rendered is continuing from past assessment years. While deciding identical nature of dispute in A.Ys.2019-20, 2020-21 and 2021-22, the co-ordinate bench has held that the receipts are not in the nature of FTS in terms with Article 12(4)(b) of the tax treaty. In the latest order passed for A.Y. 2023-24 in ITA No. 8995/Mum/2025 vide order dated 17.06.2026, the co-ordinate bench has held as under:

4. In Ground No. 2, the short controversy is with regard to taxability of Rs.49,68,78,301/- as Fees for Technical Services, (`FTS), under Section 9(1)(viz) of the Act and Article 12(4)(b) of India-Singapore Double Taxation Avoidance Agreement, (DTAA).

5. Briefly, the facts relating to this issue are, the assessee had entered into an agreement with its subsidiary in India, viz. Tech Data Advance Private Limited (`TD India) for providing management/business support services. The bucket of services under the agreement are;

(i) Strategic business advisory services

(ii) Information Technology Services

(iii) Finance (FP & A and controlling)

(iv) Logistics

(v) Branding

(vi) Tax

(vii) Treasury

(viii) Legal

(ix) Ethics and compliance

(x) Human resource

(xi) Trade compliance

(xii) Corporate, real estate and administrative services.

6. Before the Assessing Officer, assessee claimed that the services rendered not being in the nature of managerial, technical or consultancy services, the fee received from providing such services would not qualify asas FTS under Article 12(4) of the Treaty. Without prejudice, it was submitted by the assessee that even assuming that any of the services come within the ambit of managerial, technical or consultancy services, however, in terms with Article 12(4)(b) of the Act, the fee received from services cannot be regarded as FTS, as in course of rendition of the services, the assessee had not made available any technical knowledge, know-how, knowledge, skill, experience, etc. to the service recipient enabling him to independently apply them, without the aid and assistance of the assessee. The Assessing Officer, however, was not convinced with the submissions of the assessee. He was of the view that part of the services performed come within the ambit of consultancy, whereas the other part would come within the ambit of managerial services. Having held so, he held that so far as managerial services are concerned, there is no need for fulfilment of make available condition as it only applies in case of technical services. Accordingly, he held that the fee received would qualify asas FTS. Without prejudice, he also held that the fee received would also be in the nature of royalty under Section 9(1)(vi) of the Act and article 12(3) of the Treaty. Accordingly, he brought the amount to tax.

7. Against the draft assessment order, the assessee raised objections before learned DRP.

8. After considering the submissions of the assessee, though, learned DRP was convinced that in assessee’s case in preceding assessment years, ITAT has decided the issue in favour of the assessee, however, it observed that against any favourable direction in respect of assessee, the Department does not have any remedy of appeal. Therefore, for keeping the issue alive the learned DRP agreed with the submissions of the Assessing Officer that the amount received would qualifyas FTS both under the Act as well as under the Treaty provisions. In terms with the directions of learned DRP, assessment was finalized.

9. We have heard the parties and perused the materials on record. It is a common point between the parties that it is a recurring issue and in past assessment years, the ITAT has decided the issue in favour of the assessee. Having gone through the materials available on record, we find that identical nature of dispute came up for consideration before the Coordinate Bench in Assessment Year 2019-20. While deciding the issue, the Coordinate Bench in ITA No. 2367/Mum/2022, in order dated 21.08.2023, after going through the service agreement and the nature of services provided by the assessee to the Indian subsidiary, concluded that the fee received do not qualify asas FTS under Article 12(4) of the Treaty. The view so expressed in AY 2019-20 was followed in AYs 2020-21 and 2021-22 by the ITAT. In the latest order passed for AY 2021-22, the Tribunal, in order dated 29-07-2024, has held as under:

“6. We find that this Tribunal in ITA No. 3280/Mum/2023 for AY 2020-21, has decided a similar quarrel and held as under:-

“10. Heard both the sides and perused the material on record. Without reiterating the facts as elaborated above assesse has entered into an agreement with T.D. India, pursuant to which the assessee renders certain management and business support services to T.D. India. The services rendered inter alia includes finance, logistics, branding, business strategies, treasury, human resources etc. The assessee explained that all the resources undertaken as referred above were either support services, coordination or tax services without transfer of any technology skill to the recipient. With the assistance of ld. representative we have perused the decision of ITAT in the case of the assessee vide ITA No. 2367/Mum/2022 dated 21.08.2023 as referred above wherein identical issue on similar fact has been adjudicated in favour of the assessee. The relevant extract of the decision of the coordinate bench is reproduced as under:

“8. In ground No.3 of appeal, the assessee has assailed assessment order in treating management/services fee received by the assessee as FTS under the Act r.w. Article-12 of India-Singapore, DTAA. The assessee has drawn our attention to the Service Agreement at pages 23 to 29 of the paper book The assessee has received management fee under the said Service Agreement. The nature of services rendered by the assessee are specified in Schedule-A to the aforesaid agreement. The gist of services provided by the assessee in different areas as detailed in Schedule -A is as under:-

• • • • • Strategic business advisory services that shall and TDI in formulating its business plan for any given period.
        • Information Technology Services.
        • Finance (FP&A and controlling)
        • Logistics support from base country
        • Branding
        • Tax
        • Treasury
        • Legal
        • Ethics and compliance
        • Trade compliance
        • Human Resources
        • Real Estate Clause (3) of the said agreement specifies the compensation to be paid for providing the services. The rate of compensation is given in Schedule-B to the said agreement. A perusal of Schedule-B shows that for performing the services described in Schedule-A, the assessee shall be compensated at cost + markup @ 7.5%. We find that the Assessing Officer has held that management fee received by the assessee for rendering services is in the nature of FTS. Article- 12(4) of India – Singapore DTAA defines the expression FTS. For the sake of ready reference clause -4 of Article 12 is reproduced herein under :-

“4. The term ‘fees for technical services” as used in this Article means payments of any kind to any person in consideration for services of a managerial technical or consultancy nature (including the provision of such services through technical or other personnel) if such services:•

a. Are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3 is received; or

b. Make available technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein; or

c. Consist of the development and transfer of a technical plan or technical design, but excludes any service that does not enable the person acquiring the service to apply technology contained therein. For the purpose of (b) and (c) above, the person acquiring the service shall be deemed to include an agent, nominee or transferee of such person.

A perusal of the service agreement along with Annexure-A, that gives an exhaustive list of services to be rendered would show that none of the conditions mentioned in sub-clause (a)(b) and (c) of Clause -4 to Article -12 of India – Singapore DTAA are satisfied. There is no make available of technical knowhow nor there is any service rendered consisting of the development and transfer of a technical plan or technical design. The prerequisite for invoking Clause-4 of Article-12 of the DTAA is that either there should be transfer of some technical knowhow i.e. make available condition is satisfied or there should be development and transfer of technical plan or technical design. The services rendered by the assessee as per Schedule-A of the Service Agreement does not in any manner show that any technical knowhow has been made available or there is development and transfer of technical plan or technical design. The services rendered are in the nature of operational management and providing support system. The services also includes providing of training and developing strategies, etc. We find that the Assessing Officer has taken pains to segregate services rendered by the assessee under the segments technical, managerial and consultancy. However, no effort has been made by the Assessing Officer to examine whether the services rendered under the three segments fulfil the criteria so as to fall within the definition of FTS under Article-12(4) of the DTAA. In so far as the definition of FTS as defined in Section 9(vii) of the Act is concerned, we observe that the definition is much broader. The services rendered by the assessee may fall within the sweep of FTS as defined under the Act, but the assessee would be protected by provisions of section 90(2) of the Act. Section 90(2) of the Act lays down that, where the Central Government has entered into an agreement with any other Sovereign Nation for granting relief of tax or for avoidance of double taxation, then the provisions of the Act shall apply to the assessee only to the extent they are more beneficial to it. In case the provisions of the Act are more stringent, the assessee would be governed by the provisions of the DTAA. In the instant case, we find that the remuneration received by the assessee in lieu of services rendered do not fall within the meaning of FTS under Article-12(4) of the India-Singapore DTAA. Consequently, we hold that the payments received by the assessee in respect of management services are not taxable as FTS. In the result, ground No.3 of appeal is allowed.”

Since, the issue on hand being squarely covered by the decision of the ITAT in the case of the assessee itself as discussed above in this order, therefore, following the decision of the ITAT this ground of appeal of the assessee is allowed.”

7. It can be seen from the above that the Co-ordinate bench while deciding the appeal in favour of the assessee has followed the earlier decision given by this Tribunal in ITA No. 2367/Mum/2022 for AY 201920. Finding parity on facts, respectfully following the decision of the Co-ordinate Bench (supra), we direct the AO/TPO to delete the impugned disallowance.”

10. Undisputedly, the agreement under which the assessee is providing services to its Indian subsidiary is continuing from past assessment years. Therefore, there is no factual difference relating to the controversy in the impugned assessment year. In fact, learned DRP, while taking note of the decisions of ITAT, has accepted this position. Thus, respectfully following the consistent view expressed by the Coordinate bench in assessee’s case in past assessment years, we hold that the amount of Rs.49,68,78,301/-, not being in the nature of FTS under Article 12(4) of India-Singapore DTAA, is not taxable in India. Accordingly, this ground is allowed.

9. Finding parity in facts in the impugned assessment year, we respectfully follow the consistent view expressed by the ITAT in assessee’s case in past assessment years and hold that the amount in dispute is not taxable as `FTS’ under Article 12(4)(b) of the Treaty. Accordingly, the AO is directed to delete the addition. Ground No. 1 is allowed.

10. Ground Nos. 2 and 3 being general and consequential in nature do not require adjudication. The additional ground having become academic is kept open.

11. In the result, the appeal is allowed as indicated above.

Order pronounced in the open court on 30.06.2026