01 January 0001

Direct Tax Amicus: September 2019


Satisfaction of the ‘make available’ condition in services of short duration – An analysis
by Shalini Maheshwari

The interpretation of the ‘make available’ clause in respect of Fees for Included Services (FIS) in the India-US DTAA had been matter of much debate. In the recent ruling on the taxability of reimbursement received by the assessee from its Indian affiliates for providing support services (HR, strategic planning, marketing and information system), ITAT Delhi has held that the same is taxable as FIS as it has made available the services to the Indian-recipient. While the assessee had contended that reimbursement of cost received without mark-up is not taxable and “make available” test was not satisfied, the Revenue department plead that services were ancillary to use of IP and the services continued to be at disposal of the recipient. Noting that the ITAT Order does not reflect upon as to how the entire gamut of services provided relate to the licensed technology/ licensed products, when the sale of licensed products was less than 5% of the total sales of the Indian entity, the author is of the view that it remains to be seen whether this order of the Tribunal will be sustained by the higher courts and whether its ratio will be widely applied in other cases…

Notifications and Circulars

  • Corporate tax cut - Domestic companies provided with option to pay tax at lower rates
  • E-assessment Scheme 2019 notified

Ratio decidendi

  • Communication of orders, follow up by branch office creates PE of non-resident engaged in trading activity – ITAT Delhi
  • Assessee cannot invoke bar of limitation in case of continuing default in deduc-tion of tax – ITAT Ahmedabad
  • Carry forward of MAT credit is to be allowed to assessee and is not qua unit – Assessee eligible for credit of tax paid prior to date of demerger – ITAT Mumbai
  • Notional rent cannot be added under Section 23 for a company’s registered office, part of which is let out – ITAT Delhi
  • Compensation received for breach of contract is not taxable as windfall gain – Delhi High Court
  • Non-rejection of assessee’s response to specific query in scrutiny proceedings amounts to accepting the submission – Bombay High Court

September, 2019/Issue-60 September, 2019/Issue-60

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