V.K. Shridhar, Member - Applicant, Shell India Marketing Private Ltd (SIMPL) is an Indian company. It has a network of retail fuel stations in India. Shell International Petroleum Company Ltd (SIPCL) is a Shell Group Company incorporated in UK. It is in the business of providing consultancy services to various Shell operating companies. The applicant has entered into Cost Contribution Agreement (CCA) on 1.4.2008 with SIPCL for the provision of Business Support Services. Applicant submits that General Business Support Services (General BSS) under clause 4 of CCA are described in Appendix 2 to CCA. These are primarily in the nature of management support services. Any research and development, technical advice and services may be provided by a separate arrangement. The Specific BSS are provided on a specific request and are not subject matter of the questions raised in the present application.

2. According to the applicant, it is entitled to claim the application of Double Taxation Avoidance Convention between India and UK (DTAC), the contract being with a company incorporated in UK. It has therefore relied on paragraph 4 of Article 13 of DTAC, to contend that the General BSS received by it from SIPCL do not fall within the purview of Article 13.4(c) of DTAC. Applicant submits that the benefits of services rendered by SIPCL are for the Shell Group entities. The services are provided at cost and reimbursed by the Shell Group entities. No income CIT v. Dunlop Rubber Co. Ltd. [1983] 142 ITR 493/[1982] 10 Taxman 179 (Cal.); ITO v. Vidogum & Chemicals Ltd. [1987] 23 ITD 255 (Delhi); Sedco Forex International Drilling Inc. v. Dy. CIT [2000] 72 ITD 415 (Delhi) can be said to arise to SIPCL under the present arrangement in view of the decisions on the subject. Construing the General BSS as management support services of advisory nature, the applicant submits that rendering of such services would not 'make available' MOU between India-US DTAC; Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791 (Mum.); National Organic Chemical Industries Ltd. v. Dy. CIT [2005] 96 TTJ 765/[2006] 5 SOT 317 (Mum.) any technical knowledge, skill, experience, etc. to enable the applicant to apply the technology contained therein. Hence General BSS would not be in the nature of fees for technical services within the meaning of Article 13.4 of the DTAC. By contributing to the cost, the applicant and other cost sharers become the economic owners of the knowhow/intellectual property resulting from the services provided to it. This may be applied to by the applicant in its activities and hence the question of granting a right by SIPCL to use such intellectual property by the applicant would not arise to constitute royalty under section 9(1) of the Income-tax Act, (Act) or under Article 13 of the DTAC. The payments received are also not taxable as SIPCL does not have a permanent establishment in India. In the absence of any income chargeable to tax the provision under section 195 of the Act would not apply. This Authority, by an Order dated 19.10.2009, allowed the application under Section 245R(2) of the Act to rule on the following questions:-

i. Whether the payments made by the Applicant to Shell International Petroleum Company Limited, ('SIPCL') for availing General Business Support Services ("General BSS") under the terms of the Cost Contribution Agreement ("CCA"), would constitute "income" in the hands of SIPCL within the meaning of the term in Section 2(24) of the Act?

ii. If the answer to Question 1 is in the affirmative, whether the payments made by the Applicant to SIPCL for availing General BSS under the terms of the CCA would be in the nature of Fees for Technical Services ("FTS") within the meaning of the term in Article 13 of 'Convention between the Government of the Republic of India and the Government of the Republic of India and the Government of United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the preven