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The AAR in [2021] 434 ITR 101 (AAR) dealt with range of service agreements between sister concerns to ascertain application of article 12 (5)(a) FTS ancillary clause.
With regard toconsultancy services which were merely advisory in nature and which merely involved discussion and advice of routine nature or exchange of information it held that they do not fulfil the requirement for withholding taxes yet because in this case the composite services rendered were ancillary and subsidiary to the enjoyment of right, property or information under the technology, trademark and know-how licence agreement hence the exercise to identify the services which satisfied the “make available” clause or not would be futile.
It further held that services rendered in setting up and maintaining accounting policies and procedures, the provision of a detailed accounting policy manual, review of financial plans, benchmarking cost of production, sales and marketing and other overhead cost, foreign exchange management and hedging of currency risk at a global level, obtaining finance at cheaper rates, corporate guarantee, setting up of global bonus schemes for sales personnel and global performance management system, benchmarking the performance standards and defining the code of ethics for the recipient, providing guidelines for safety, health and security support, global policies and framework on environmental health and safety support, managing risks in relation to fire and other perils, were all technical services which are tailor made and which could not be provided without the domain knowledge of the relevant field.

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