Case Law Details
Spi Global US Vs ACIT (ITAT Delhi)
Introduction: Explore the analysis of the SPI Global US vs ACIT case, a significant legal battle that challenged the taxability of sub-contracting charges under the India-USA Double Taxation Avoidance Agreement (DTAA). In this case, the court evaluated whether the services provided by SPI Global US constituted “fees for included services” (FIS) as per Article 12(4)(b) of the DTAA.
Analysis: The case revolves around SPI Global US Inc., a US-based company that provided e-publishing services, including editorial services and page composition, to its associate enterprise SPI Technologies India Pvt. Ltd. (SPi India). The dispute arose when the Indian tax authorities treated the sub-contracting charges received by SPI Global US as FIS under the India-USA DTAA and imposed tax liability.
The central question in this case was whether the sub-contracted services met the criterion of “making available” technical knowledge or skills, as outlined in Article 12(4)(b) of the DTAA. SPI Global US contended that its services did not impart technical knowledge that could be independently applied by SPi India, thus not satisfying the “make available” condition.
SPI Global US referred to various legal precedents, including cases like Guy Carpenter & Co Ltd., De Beers India Minerals (P) Ltd., and others, which established that for a service to be considered FIS, the recipient must be empowered to apply the technical knowledge independently in the future.
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