| The Tax Publishers2020 TaxPub(DT) 4606 (Del-Trib) : (2021) 090 ITR (Trib) 0405 INCOME TAX ACT, 1961
Section 90
Payment received by assessee based at Sweden did not tantamount to fees for technical services as same did not make-available any technical knowledge, skill, etc., to AE and AE was not a equipped to apply technology contianed in services rendered by assessee and, therefore, payment received from intermediary services provided by assessee to its AE in India did not tantamount to FTS and accordingly, was not taxable in India.
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Double taxation relief - Agreement between India and Sweden - Fees for technical services under article 12(3) - Payment received for rendition of intermediary services to Indian entity
Assessee based at Sweden engaged in the business of manufacturing of train control and signalling systems for mass transit system rendered intermediaries services like marketing, sales, business development, project management, customer services, etc., to Indian AE. AO held that fees received for intermediary services was taxable as fee for technical services. Held: In terms of article 12(3) of Indo-Swedish DTAA, consideration received would be regarded as 'fee for technical/included services' only if twin tests of rendering services and making technical knowledge available at the same time is satisfied. In the instant case, assessee did not make available any technical knowledge, skill, etc., to AE and AE was not equipped to apply technology contained in services rendered by assessee and, therefore, payment received from intermediary services provided by assessee to AE in India did not tantamount to FTS and accordingly, was not taxable in India.
Supported:De Beers India Minerals Private Ltd. (2012) 346 ITR 467 (Karn-HC) : 2012 TaxPub(DT) 2504 (Karn-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 9(1)(i)
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