Test reports provided by the Singapore company did not ‘make available’ technical knowledge, etc., and therefore, the payment did not constitute FTS under Article 12(4) of the India-Singapore DTAA.

Test reports provided by the Singapore company did not ‘make available’ technical knowledge, etc., and therefore, the payment did not constitute FTS under Article 12(4) of the India-Singapore DTAA.

The taxpayer was a tax resident of Singapore (“SingCo”). The taxpayer provided services for testing of toxicity level in animal feeds to Indian companies. The Indian companies were forwarding products’ samples to the laboratory of the taxpayer in Singapore. After testing, the taxpayer forwarded the reports to the Indian company. In consideration, the Indian company paid service fee to the taxpayer. Admittedly, the taxpayer did not have PE in India. The issue before the Tribunal was whether the services provided by the taxpayer ‘made available’ any technical knowledge, experience, skill, knowhow or process in terms of Article 12(4)(b) of the India-Singapore DTAA?

Held

The Tribunal observed and held as follows: The expression ‘make available’ has been examined by various judicial authorities. There is a difference between section 9 of I-T Act and Article 12(4)(b). While Article 12(4)(b) requires the services to be ‘made available’, section 9 has no such requirement. In terms of Article 12, the payment would constitute FTS only if the service provider provides the services in a manner which equips the recipient to independently perform his functions in future without any help from the service provider. Since the test reports provided by SingCo did not ‘make available’ technical knowledge, etc. to the Indian company, the payments made for such reports were not FTS.