Consulting Fees is not Fee for Technical Services

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) held that consultancy fees paid by an Indian real estate developer to a UAE-based company for advisory and construction review services were not taxable in India and, consequently, no obligation arose to deduct tax at source under Section 195 of the Income-tax Act. 

The Tribunal ruled that the services did not “make available” any technical knowledge, skill, process, or know-how to the Indian recipient and therefore could not be characterised as Fees for Technical Services (FTS). 

It further held that since the India–UAE DTAA contains no separate article dealing with FTS and the UAE company had no Permanent Establishment (PE) in India, the payments constituted non-taxable business profits under Article 7 of the treaty.