Prolonged Pre-Trial Detention and Right to Liberty Cannot Be Ignored” - Punjab & Haryana High Court Emphasizes Bail as the Rule Taxation Law | Andhra Pradesh High Court Rules Hotel’s Expenditures on Carpets, Mattresses, and Lampshades are Deductible as Current Expenditures Orissa High Court Upholds Disengagement of Teacher for Unauthorized Absence and Suppression of Facts In Disciplined Forces, Transfers are an Administrative Necessity; Judicial Interference is Limited to Cases of Proven Mala Fide: Patna High Court Act Of Judge, When Free From Oblique Motive, Cannot Be Questioned: Madhya Pradesh High Court Quashes Disciplinary Proceedings Against Additional Collector Registration Act | False Statements in Conveyance Documents Qualify for Prosecution Under Registration Act: Kerala High Court When Junior is Promoted, Senior’s Case Cannot be Deferred Unjustly: Karnataka High Court in Sealed Cover Promotion Dispute Medical Training Standards Cannot Be Lowered, Even for Disability’ in MBBS Admission Case: Delhi HC Suspicion, However Strong It May Be, Cannot Take Place Of Proof Beyond Reasonable Doubt: Himachal Pradesh High Court Upholds Acquittal No Detention Order Can Rely on Grounds Already Quashed: High Court Sets Precedent on Preventive Detention Limits Tenant's Claims of Hardship and Landlord's Alternate Accommodations Insufficient to Prevent Eviction: Allahabad HC Further Custodial Detention May Not Be Necessary: Calcutta High Court Grants Bail in Murder Case Citing Lack of Specific Evidence High Court, As A Constitutional Court Of Record, Possesses The Inherent Power To Correct Its Own Record: Bombay High Court A Fresh Section 11 Arbitration Petition Without Liberty Granted at the Time of Withdrawal is Not Maintainable: Supreme Court; Principles of Order 23 CPC Applied Adult Sexual Predators Ought Not To Be Dealt With Leniency Or Extended Misplaced Sympathy: Sikkim High Court Retired Employee Entitled to Interest on Delayed Leave Encashment Despite Absence of Statutory Provision: Delhi HC Punjab and Haryana High Court Grants Full Disability Pension and Service Element for Life to Army Veteran Taxation Law | Director Must Be Given Notice to Prove Lack of Negligence: Telangana High Court Quashes Order Against Director in Tax Recovery Case High Court of Uttarakhand Acquits Defendants in High-Profile Murder Case, Cites Lack of Evidence In Cases of Financial Distress, Imposing A Mandatory Deposit Under Negotiable Instruments Act May Jeopardize Appellant’s Right To Appeal: Rajasthan High Court Patna High Court Acquits Accused, Questions “Capacity of Victim to Make Coherent Statement” with 100% Burn Injuries High Court of Himachal Pradesh Dismisses Bail Plea in ₹200 Crore Scholarship Scam: Rajdeep Singh Case Execution of Conveyance Ends Arbitration Clause; Appeal for Arbitration Rejected: Bombay High Court

Tribunal's Findings Overturned; IMG's Services to BCCI Not Taxable as Fees for Technical Services under DTAA: Delhi High Court

07 May 2024 8:19 AM

By: Admin


In a significant ruling, the Delhi High Court has overturned the Income Tax Appellate Tribunal's (ITAT) decision, clarifying the interpretation of the 'make available' clause under the India-UK Double Taxation Avoidance Agreement (DTAA). The court held that IMG's services to the Board of Control for Cricket in India (BCCI) did not qualify as Fees for Technical Services (FTS) under Article 13 of the DTAA, as they did not 'make available' any technical knowledge, experience, skill, or know-how to the BCCI.

The case revolved around the taxation of payments made by BCCI to IMG, a UK-based company, for consultancy and management services related to the Indian Premier League (IPL). The ITAT had previously ruled that these payments were taxable as FTS under the DTAA, as they believed the services enabled BCCI to utilize IMG's expertise independently in the future. IMG contested this, arguing that their services did not 'make available' any technical knowledge that BCCI could independently apply after the termination of their contract.

The High Court emphasized the necessity of a strict interpretation of the 'make available' clause. It clarified that for services to be deemed as 'made available', the recipient must be able to apply the technical knowledge or skill independently in the future without further assistance from the service provider. The court stated, "The mere utilisation of technical services in aid of business does not meet the 'make available' test under Article 13 of the DTAA"​​.

The court distinguished between the provision of services and the transfer of technical knowledge. It observed, "The advice and consultancy services rendered by IMG did not enable BCCI to 'absorb and apply' the information and advice independently"​​. The court highlighted that the advisory services provided were specific to each IPL season and required continuous engagement from IMG, indicating that no enduring knowledge was transferred to BCCI.

The High Court found that the ITAT had erred in its judgment by failing to acknowledge the fundamental distinction between the mere utilisation of a service and the transfer of technical knowledge. It noted, "The Tribunal's conclusion that IMG's services made technical knowledge available to BCCI is not supported by the evidence on record or the contractual terms between the parties"​​.

The court's reasoning centered on the precise meaning of 'make available' within the DTAA context. It reiterated that the essence of this clause is the enduring ability of the service recipient to apply the provided knowledge or skills independently. The court underscored that the services in question must result in the recipient's empowerment to use the technical knowledge without further dependence on the service provider.

Justice [Name] stated, "The mere provision of advisory services does not equate to making available technical knowledge, which must be capable of being independently utilized by the recipient post the service period"​​.

The Delhi High Court's ruling provides crucial clarity on the interpretation of the 'make available' clause in the DTAA, setting a significant precedent for similar cases in the future. By distinguishing between service provision and the transfer of technical knowledge, the court has underscored the importance of precise contractual terms and evidence in determining tax liabilities under international agreements. This judgment is expected to have a substantial impact on how cross-border consultancy and technical services are taxed, offering clearer guidelines for multinational entities and tax authorities alike.

 

Date of Decision: July 3, 2024

Board of Control for Cricket in India vs. Income Tax Appellate Tribunal

Similar News