September 2013
ITO vs. Veeda Clinical Research Pvt Ltd [2013] 35 taxman.com 577 (Ahmedabad-Trib) A.Y. 2008-09, Dated: 28-06-2013 Article 13(4) (c), India-UK DTAA
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Fees paid by Indian company to UK company for general training does not involve transfer of technology and hence, is not covered under ‘make available’ clause.
Facts:
The taxpayer was an Indian company. It had made certain payments to a UK service provider for providing ‘market awareness and development training’ to its employees.
The issue before the Tribunal was whether the training fees paid to the service provider were covered under Article 13(4)(c) of India-UK DTAA and accordingly, were taxable in India?
Held:
The law on the connotation of ‘make available’ clause in definition of FTS is settled and the condition precedent for invoking this clause is that the services should enable the person acquiring the services to apply the technology contained in such services.
Unless the technical services provided by the UK Company resulted in transfer of technology, the ‘make available’ condition was not satisfied. To invoke ‘make available’ clause, the onus is on the tax authority to demonstrate that the training services involved transfer of technology. This onus was not discharged.
The training services provided were general in nature and did not involve transfer of technology. Therefore, the fees paid for the same could not be covered under Article 13(4) of India-UK DTAA.
