Held
On reference to the tax treaty, it indicates that the term ‘managerial service’ did not find place in Article 12(4) of the India US tax treaty. However, on a perusal of MOU under the tax treaty, it indicates that if technical or consultancy services make available technical knowledge, experience, skill, etc., then it would be considered as technical or consultancy services.
It was observed that consultancy services which were not of technical nature cannot fall under the ‘included services’. However, as per MOU of the tax treaty, the consultancy services which are technical in nature are to be considered as technical and consultancy services under the tax treaty.
On a perusal of management services agreement, extracted from CIT(A)’s order, it indicates that the US company provides highly technical services which were used by the taxpayer for taking managerial decision, financial decision, risk management decision, etc.
The Tribunal discussed the decisions in the case of De Beers India Minerals Pvt. Ltd., Raymond Ltd., Wokhardt Ltd, Intertek Testing Services India (P) Ltd and Sandvik Australia Pty Ltd and held that they are distinguishable from the facts of the present case.
Therefore, the expertise and technology which was made available by the US company is technical service under Article 12(4)(b) of the tax treaty.
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