Bio-Rad Laboratories Inc. vs. ACIT International Taxation – A Judgement Summary

Bio-Rad Laboratories Inc. vs. ACIT International Taxation – A Detailed Judgement Summary

Case Number: ITA No. 994/DEL/2022

Assessment Year: 2018-19

Appellant: Bio-Rad Laboratories Inc., Haryana

Respondent: ACIT International Taxation Circle-1(1)(2), New Delhi

Result: Allowed

Background

This case involves two separate appeals by Bio-Rad Laboratories Inc. against the orders dated 30.03.2022 for the Assessment Years 2018-19 and 2019-20, related to the provision of information technology and other administrative services to its affiliate in India, and whether these services qualify as Fees for Included Services (FIS) under the India-USA Double Taxation Avoidance Agreement (DTAA).

Arguments Presented

The appellant argued that the services provided to its Indian affiliate, under a General Services and Cost Allocation Agreement, do not qualify as FIS under the India-USA DTAA, because they do not make available any technical knowledge, skill, etc., to the Indian entity. The assessing officer, supported by the DRP, contended that the managerial and technical services provided do make technology available, thus, taxable under the DTAA.

Judgement & Analysis

The tribunal examined the nature of the services provided, referring to various clauses of the DTAA and judicial precedents. It was determined that for services to qualify as FIS under the DTAA, they must satisfy the ‘make available’ test, meaning the services should enable the recipient to apply the technology contained therein independently. The analysis concluded that the services in question did not satisfy this requirement; hence, cannot be categorized as FIS. The tribunal directed the Assessing Officer to delete the added income on account of provision of information technology and other administrative services.

Conclusion

The appeals by Bio-Rad Laboratories Inc. were allowed, setting a significant precedent on the interpretation of ‘make available’ under the DTAA, specifically relating to the provision of IT and administrative services and their tax implications in India. This case underlines the importance of the nature of services provided and the necessity for them to enable technological application by the recipient for taxation under the DTAA.

Bio-Rad Laboratories Inc. vs. ACIT International Taxation – A Judgement Summary