Fees for Technical Services–Section 9(1)(vii)
Income by way of fees for technical services payable by—
(a) the Government ; or
(b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or
(c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India :
Meaning of Fees for Technical Services- Explanation 2 For the purposes of this clause, “fees for technical services” means any consideration (including any lump sum consi-deration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”.
Remuneration paid to overseas liaison agent is not ‘consultancy fees’ and is not FTS u/s 9(1)(vii). Consultancy services’ would mean something akin to advisory services provided by the non-resident, pursuant to deliberation between parties. Ordinarily, it would not involve instances where the non-resident is acting as a link between the resident and another party, facilitating the transaction between them, or where the non-resident is directly soliciting business for the resident and generating income out of such solicitation. CIT v Grup Ism (P.) Ltd. (2015) 57 Taxmann.com 450 (Delhi)
Deemed Accrual or arise of Interest, Royalty and Fees for Technical services in case of non-resident –Explanation Income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) and shall be included in the total income of the non-resident, whether or not,—
(i) the non-resident has a residence or place of business or business connection in India; or
(ii) the non-resident has rendered services in India.
Place of business or business connection or rendering of services in India is not necessary for deemed accrual or arise of Interest, Royalty and Fees for Technical services in the hands of non-resident.