INCOME TAX ACT, 1961

Section 90

Double taxation relief - Agreement between India and USA - Fee for technical services ('FTS') - Sending of expert experienced technocrat by non-resident assessee to Indian counterpart

Assessee based at USA was engaged in providing management and consulting services solely to group entities worldwide. It entered into Management Provision Agreement ('MPA') with General Motors India Limited ('GMIL') engaged in manufacture, assembly, marketing, and sale of motor vehicles and other products in India. AO taxed consideration received by assessee from GMIL as fee for technical services ('FTS'). Assessee's case was that no technology was made available to the Indian counterpart, therefore, assessee could not be held liable for taxation of FTS. Held: Execution and implementation of technology in India can be possible even if person knowing the technology are transferred in India or there is a technological transfer agreement for which royalties are paid by the Indian counterpart to assessee. In the garb of sending technical experts in India, it cannot be permitted to say that they were merely employees and the cost was reimbursed by the Indian counterpart to assessee for the services rendered by such employees. In the instant case, Vice President manufacturing was knowing the technology and was having the experience to implement standards of assessee in India and by sending said vice president in India, in fact the technology was made available in India by the non-resident assessee and therefore, AO rightly concluded that assessee was liable for fees for technical services.

Distinguished:Rolls Royce, (2010) 42 SOT 264 (Del) : 2010 TaxPub(DT) 2297 (Del-Trib)

REFERRED :

FAVOUR : Against the assessee.

A.Y. :

INCOME TAX ACT, 1961

Section 92C

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