Case Law Details
Michael Graves Design Group Inc Vs DCIT (ITAT Delhi)
ITAT Delhi held that passing of project-specific architectural drawings and designs with measurements did not amount to making available technical knowledge, know-how, or processes. Since ‘make available’ clause is not satisfied, services rendered to the AOP does not fall within the purview of FIS under Article 12(4)(b) of the India-USA DTAA.
Facts- The assessee is a privately held multi-faceted and multi-discipline firm headquartered in Princeton, New Jersey, USA. The firm provides design services for its clients all over the world, including India. The assessee is a tax resident of the USA. During AYs 2014–15 and 2015–16, the assessee provided certain services to one of its clients in India, AOP, under an agreement. The assessee received Rs. 4,67,60,000 in AY 2014–15 and Rs. 57,12,000 in AY 2015–16 in consideration of rendering services to AOP. The assessee’s case for both the AYs 2014–15 and 2015–16 was selected for scrutiny, and statutory notices along with questionnaires were issued and served upon the assessee.
During assessment proceedings, the assessee was asked to show cause why, in view of Article 12(4) of the India-USA DTAA, the consideration received for services rendered by the assessee should not be treated as income from Fees from Included Services (FIS). The agreement entered into by the assessee and the AOP with respect to the provision of services very clearly brings out the fact that the services provided by the assessee are of a purely technical nature and that it makes available the technology, the skill, and the experience to the parties i.e. the members of the AOP.
AO concluded that the assistance provided by the assessee makes available the technology to the clients and thus the consideration received by the assessee is to be treated as FIS.
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