|The Tax Publishers2021 TaxPub(DT) 0134 (Mum-Trib)
INCOME TAX ACT, 1961
Double taxation relief - Agreement between India and Netherlands - Royalty under article 12(4) -
Assessee-company, based at Netherlands, was international dredging contractor and executed several contracts in India. During the financial year 2014-15, assessee had not executed any dredging contracts in India but maintained its project office for managing certain formalities in connection with earlier projects and provided certain business support services to Van Oord India Pvt. Ltd. (VOIPL). AO taxed amount received by assessee in pursuance thereto as royalty. Held: With regard to various streams of services like providing of information technology; operational support; marketing; quality, health, safety and environment; estimating and engineering; and personal and organization, administration and legal services, there was no imparting of any kind of knowledge, skill or experience by way of information concerning industrial, commercial or scientific which was made available to VOIPL. For instance, information technology services were provided for use of group companies' computer system where IT teams providing manual general information without providing any information or method to design or create a computer system. It was mainly kind of help desk and trouble shooting services which are required on regular basis. For operational support system also, it mainly provided for check-list for project plans, safety work and inspection plans, etc. Similarly, for marketing, the assessee provided for e-marketing through its website and maintaining it, printing and publishing brochures which could be distributed to its potential clients. It also helped VOIPL to obtain certificate of approval from concerned organizations and obtaining the contracts on the regular basis. Regarding quality health and safety environment services, the assessee merely conducted internal audits on regular intervals so that proper adherence to such quality standard and procedures are valid/should remain valid. Similarly, in the estimating engineering services and other services also, assessee was mainly providing tender process, helping and preparing (estimates) and bids and plan consisting in local performance and other guarantees to the client of VOIPL etc. For rendering of concerned services, there was no element of imparting of any 'know-how' or there was transfer of any knowledge, skill or experience. Thus, none of the services provided by the assessee in the terms of 'service agreement' fell within the scope and ambit of 'royalty' as defined in article 12(4) of India-Netherlands DTAA and accordingly there could be no taxation in India.
FAVOUR : In assessee's favour.
A.Y. : 2015-16
IN THE ITAT, MUMBAI BENCH
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