ITA
No. 1503/Del/2014 (Delhi)
Ceva Asia Pacific Holdings vs. DDIT
A.Ys: 2010-11, Date of Order: 8th
January, 2018
Taxpayer, a non-resident company, operated
as a regional headquarter company providing management and support services to
its subsidiaries and related corporations in Asia pacific region. Taxpayer
entered into an administrative support agreement with its Indian affiliate
(ICo) to provide day-to-day administrative and management support services. As
per the agreement, Taxpayer rendered MIS and accounting support service,
information technology support service, marketing and advertising support as
well as treasury functions support services to ICo.
AO examined the nature of administrative
support services rendered to ICo, details of employees visiting India as well
as copies of the emails, bills, and ledger accounts with respect to such
services rendered. Based on these documents, AO noted that the services were
rendered by Taxpayer by working closely with employees of ICo in order to
customise its services as per the needs of ICo as well as to improve the
performance of ICo by employing the best practices and industry experience
possessed by Taxpayer in the functions of management, finance, accounts and IT.
AO held that Taxpayer made available administrative support services to ICo and
therefore, payment for such services qualifies as FTS under Article 12(4) of
the Indian-Singapore DTAA.
Taxpayer, however, contended that the
services did not satisfy the make available condition and hence did not qualify
as FIS as per Article 12 of India-Singapore DTAA. Hence, Taxpayer appealed
before the DRP who upheld AO’s order.
Aggrieved, the Taxpayer appealed before the
Tribunal.
Held
– “Make available? means that the person
receiving the service should become wiser on the subject of services. In other
words, service recipient should be able to perform the services on its own.
– While the documents produced by the Taxpayer
indicate that the nature of services rendered by the Taxpayer were preliminary,
basic, or simple support services; the nature of queries raised by ICo and the
nature of information that was transmitted by the Taxpayer to ICo indicated
that the services rendered by the Taxpayer are of such nature that, if they are
rendered for a long period of time, it would enable ICo to perform the services
on its own.
– One needs to however, examine various
correspondence between the Taxpayer and ICo, conduct of the Taxpayer and ICo as
well as the nature of services involved, to evaluate if services rendered by
the Taxpayer, in fact, satisfied the “make available” condition or not.
– Hence, the matter was remanded back to the
file of AO for deciding whether the services satisfy the “make Available?
criterion or not after taking into account all the relevant information and
documents. _
