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The Tax Publishers Most favoured nation clause - applicability without any specific notification from Government *Facts:* Assessee an Israeli entity had received some SAP IT support services from its Indian entity which was held taxable in India by revenue authorities. The scope of Fee for technical services (FTS) (Article-13) under Indo-Israeli DTAA extends to managerial, technical or consultancy services as well. However the DTAA also has a clause wherein subsequent to after that Indo-Israeli DTAA coming into force w.e.f. 1-1-1995, if India enters into a more beneficial terms of taxation of such FTS then the same would apply. Accordingly the Indo-Portugal and Indo-Canadian DTAA's being later dated were pressed into service by the assessee. Both these DTAA's have the "make available" clause in its ambit. Thus the plea of the assessee was the benefits of MFN (Most Favoured Nation) clause be applied to them by virtue of the other two DTAA's. Revenue's counter was in the absence of such a specific application/notification specifically by the Government of MFN being to be applied for Indo-Israeli DTAA the MFN clause cannot be pressed into service. On higher appeal post DRP's order against assessee - Held in favour of the assessee that the MFN clause will need to be read in by default. No specific notification thereafter is required or called for. The FTS was held to be not taxable in India. *Applied:*Steria (India) Ltd. v. CIT (2016) 72 taxmann.com 1 (Del.) : 2016 TaxPub(DT) 3521 (Del-HC) *Ed. Note:* Decision of GRI Renewable Industries SI v. ACIT [ITA No. 202/PUN/2021/AY 2016-17] before Pune ITAT also be referred to. The thought of revenue that to apply MFN clause a further notification from Government specifically is required is fallacious. Reference be made to the articles titled - Most favoured nation clause - India wresting its right to taxation Most favoured nation clause - Judicial decision Both above published by Tax publishers on this topic for a detailed discussion. *Case:* Netafim Ltd. v. DCIT 2023 TaxPub(DT) 1160 (Del-Trib)

The Tax Publishers

Most favoured nation clause - applicability without any specific notification from Government

Facts:

Assessee an Israeli entity had received some SAP IT support services from its Indian entity which was held taxable in India by revenue authorities. The scope of Fee for technical services (FTS) (Article-13) under Indo-Israeli DTAA extends to managerial, technical or consultancy services as well. However the DTAA also has a clause wherein subsequent to after that Indo-Israeli DTAA coming into force w.e.f. 1-1-1995, if India enters into a more beneficial terms of taxation of such FTS then the same would apply. Accordingly the Indo-Portugal and Indo-Canadian DTAA's being later dated were pressed into service by the assessee. Both these DTAA's have the "make available" clause in its ambit. Thus the plea of the assessee was the benefits of MFN (Most Favoured Nation) clause be applied to them by virtue of the other two DTAA's. Revenue's counter was in the absence of such a specific application/notification specifically by the Government of MFN being to be applied for Indo-Israeli DTAA the MFN clause cannot be pressed into service. On higher appeal post DRP's order against assessee -

Held in favour of the assessee that the MFN clause will need to be read in by default. No specific notification thereafter is required or called for. The FTS was held to be not taxable in India.

Applied:Steria (India) Ltd. v. CIT (2016) 72 taxmann.com 1 (Del.) : 2016 TaxPub(DT) 3521 (Del-HC)

Ed. Note: Decision of GRI Renewable Industries SI v. ACIT [ITA No. 202/PUN/2021/AY 2016-17] before Pune ITAT also be referred to. The thought of revenue that to apply MFN clause a further notification from Government specifically is required is fallacious.

Reference be made to the articles titled -

Most favoured nation clause - India wresting its right to taxation

Most favoured nation clause - Judicial decision

Both above published by Tax publishers on this topic for a detailed discussion.

Case: Netafim Ltd. v. DCIT 2023 TaxPub(DT) 1160 (Del-Trib)