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The Tax Publishers MFN clause applicability on management fees and CBDT Circular 3/2022 restricting MFN - Indo-France DTAA read with Indo-UK DTAA *Facts :* Assessee a resident of France was in receipt of management fees from its related AE in India which was claimed as not taxable. Revenue's argument was the scope of Indo-France DTAA FTS clause covers managerial and technical consultancy in its ambit thus taxable. Assessee's plea was that such services did not "make available" any benefit; besides that the Indo-UK DTAA entered subsequently by India has a beneficial clause with no scope to tax managerial and technical consultancy thereby the benefit of MFN clause will need to fit into their claim thus not exigible to tax in India. In short the beneficial provisions of Indo-UK DTAA will need to be read into the MFN clause of Indo-France DTAA. DRP upheld the views of the AO and assessee went in higher appeal to ITAT - Held in favour of the assessee basing their own earlier year case that the management services did not make available any benefit to be taxable in India. The benefit of Indo-UK DTAA will need to be read into the Indo-France DTAA. CBDT circular imposing additional conditions to avail MFN benefits are only prospective and cannot circumscribe the DTAA. *Applied :* Assessee's own case of earlier years for make available point - M/s. Faurecia Automotive Holding v. DCIT, [ITA No.784/PUN/2015 for the assessment year 2011-12 dt. 8-7-2019] : 2019 TaxPub(DT) 5064 (Pune-Trib) On CBDT Circular 3/2022 being prospective and cannot override DTAA - GRI Renewable Industries Section L., v. ACIT [ITA. No. 202/PUN./2021, dt. 15-2-2022] : 2022 TaxPub(DT) 1303 (Pune-Trib) *Ed. Note :* Reference be also made to Netafim Ltd. v. DCIT 2023 TaxPub(DT) 1160 (Del-Trib) and Qlik Tech International AB v. Asstt. CIT2023 TaxPub(DT) 2275 (Bang-Trib) *Case:* Trigo SAS v. ACIT 2023 TaxPub(DT) 2280 (Pune-Trib)

The Tax Publishers

MFN clause applicability on management fees and CBDT Circular 3/2022 restricting MFN - Indo-France DTAA read with Indo-UK DTAA

Facts :

Assessee a resident of France was in receipt of management fees from its related AE in India which was claimed as not taxable. Revenue's argument was the scope of Indo-France DTAA FTS clause covers managerial and technical consultancy in its ambit thus taxable. Assessee's plea was that such services did not "make available" any benefit; besides that the Indo-UK DTAA entered subsequently by India has a beneficial clause with no scope to tax managerial and technical consultancy thereby the benefit of MFN clause will need to fit into their claim thus not exigible to tax in India. In short the beneficial provisions of Indo-UK DTAA will need to be read into the MFN clause of Indo-France DTAA. DRP upheld the views of the AO and assessee went in higher appeal to ITAT -

Held in favour of the assessee basing their own earlier year case that the management services did not make available any benefit to be taxable in India. The benefit of Indo-UK DTAA will need to be read into the Indo-France DTAA. CBDT circular imposing additional conditions to avail MFN benefits are only prospective and cannot circumscribe the DTAA.

Applied :

Assessee's own case of earlier years for make available point -

M/s. Faurecia Automotive Holding v. DCIT, [ITA No.784/PUN/2015 for the assessment year 2011-12 dt. 8-7-2019] : 2019 TaxPub(DT) 5064 (Pune-Trib)

On CBDT Circular 3/2022 being prospective and cannot override DTAA -

GRI Renewable Industries Section L., v. ACIT [ITA. No. 202/PUN./2021, dt. 15-2-2022] : 2022 TaxPub(DT) 1303 (Pune-Trib)

Ed. Note : Reference be also made to Netafim Ltd. v. DCIT 2023 TaxPub(DT) 1160 (Del-Trib) and Qlik Tech International AB v. Asstt. CIT2023 TaxPub(DT) 2275 (Bang-Trib)

Case: Trigo SAS v. ACIT 2023 TaxPub(DT) 2280 (Pune-Trib)