To “make available” technical knowledge, mere provision of service is not enough; the payer must be enabled to perform the service himself

CIT vs. De Beers India Minerals Pvt Ltd (Karnataka High Court)

The assessee, engaged in prospecting and mining for diamonds entered into an agreement with a Netherlands company for conducting air borne survey and providing high resolution geophysical data. The AO held that the consideration was chargeable to tax as “fees for technical services” under Article 12 of the India-Netherlands DTAA and held the assessee liable u/s 195 & 201 for failure to deduct TDS. This was reversed by the CIT (A) & Tribunal on the ground that though the Dutch company had performed services using technical knowledge and expertise, such technical experience etc had not been “made available” to the assessee. On appeal by the department to the High Court, HELD dismissing the appeal: