Training workshop for employee performance/ career management not technical services

Training workshop for performance management, and career management for employees are general training programs that cannot be considered as technical services – HC

In a recent judgment, Hon’ble Karnataka High Court has held that training workshop for performance management, and career management for employees are general training programs that cannot be considered as technical services. There is no transfer of technical knowledge, technical knowhow, experience, skill or process.

ABCAUS Case Law Citation:
4686 (2025) (08) abcaus.in HC

In the instant case, the Revenue had challenged the order passed by the ITAT holding that charges paid to foreign entity by the assessee towards training were not liable for deduction of TDS and accordingly the disallowance under section 40(a)(ia) of the Income Tax Act, 1961 (the Act).

The respondent assessee was a company engaged in providing software development services. The Assessee’s return was picked up for scrutiny.

During the year, the assessee had paid professional fees to a proprietary concern of a resident of Singapore.  The Assessee had engaged him for conducting workshops for its employees on performance management and career management.  The Assessee claimed that no TDS was required to be deducted from the payments made as by virtue of Article 14 of the India Singapore DTAA, payments for Independent Personal Services are not chargeable to tax in India.  The service provider did not have any fixed place of business in India and his stay, during the previous year did not exceed the period of ninety days.

However, the AO held that the payment made to the foreign resident was chargeable to tax under the Act as “fees for technical services” (FTS) and passed the Assessment Order under Section 143(3) of the Act with addition on account of disallowance under Section 40(a)(i) of the Act, in respect of training charges paid to a Non-Resident without deduction of TDS.

The CIT(A) following the judgment of Mumbai High Court held that fees for such training could not be considered as fees for technical services under Section 9(1)(vii) of the Act.

The ITAT dismissed the appeal holding that that grounds as raised by the revenue did not arise in the assessment order.  

The Hon’ble High Court observed that there was no infirmity with the impugned order as the grounds of appeal set out by the Revenue before the ITAT did not arise from the assessment order. The AO had not found that any employees were seconded to the Assessee by any overseas entity. There was no issue raised regarding payments made to seconded employees.

The Hon’ble High Court further pointed out that clearly the payments made by the Assessee for conducting workshops could not be considered as fee for technical services under Article 12 of the India – Singapore DTAA.

The Hon’ble High Court further observed that the Hon’ble Supreme Court had reiterated that the meaning of terms and expressions defined under the double taxation avoidance treaties, were not to be controlled by definitions of those terms under the Act.  Thus, the expression ‘fee for technical services’ would necessarily confine to the meaning ascribed under Paragraph 4 of the India – Singapore DTAA. 

The Hon’ble High Court further held that plainly, training workshop for performance management, and career management for employees are general training programs that cannot be considered as technical services. There is no transfer of technical knowledge, technical knowhow, experience, skill or process. 

Accordingly, the appeal was dismissed.

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