Case Law Details
Airports Authority of India Vs ITO(TDS) (ITAT Delhi)
Conclusion: TDS under section 195 was not applicable on payments made by company to the Federal Aviation Administration, USA (FAA), for providing technical assistance to AAI by way of providing its personnel and meeting on ATFM requirements and assisting AAI in connection with ATFM by development of detailed quantitative requirements, detailed ATFM system architecture and draft ATFM implementation plan as the “make available” clause contained in article 12(4)(b) had not been satisfied in the facts and circumstances of the present case and the payment made by assessee could not be regarded as for the purpose of “fees for included services” (FIS).
Held: Airport Authority of India (AAI) had entered into Memorandum of Agreement with Federal Aviation Administration, USA (FAA), for providing technical assistance to AAI by way of providing its personnel and meeting on ATFM requirements and assisting AAI in connection with ATFM by development of detailed quantitative requirements, detailed ATFM system architecture and draft ATFM implementation plan. AO treated these amounts paid as fees for technical services (FTS), chargeable to tax at the rate of 10%, surcharge and cess on the gross amount as per Section 115A.CIT(A) held that entire payments made by assessee to FAA were in nature of FTS and hence chargeable to tax in India under DTAA. Accordingly, it was held that assessee was under obligation to deduct tax from these payments u/s 195. It was held that the concept of make available requires that the fruits of the services should remain available to the service recipient in some concrete shape such as technical knowledge, experience, skills, etc. The assistance provided by FAA in preparation of QRs and development of ATFM system were neither any licensed product of FAA nor exclusive patents of FAA. The assistance rendered on reimbursable basis was based on the agreement between MoCA and FAA of US. The ATFM technology per se had not been made available to the AAI for any perpetual use. The provision of assistance to MoCA in developing and modernization of civil aviation structure, review analysis and documentation of a traffic flow management system was a dynamic process requiring further development of the process by MoCA, India. This was a case of assistance and technical cooperation between FAA and AAI sans any commercial interest by the rendering party. Therefore, based on the manner of transacting, agreements, services provided, reimbursement received, it was held that as the “make available” clause contained in article 12(4)(b) had not been satisfied in the facts and circumstances of the present case, the payment made by assessee could not be regarded as for the purpose of “fees for included services” (FIS).
FULL TEXT OF THE ORDER OF ITAT DELHI
ORDER
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