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2011 (10) TMI 617 - HC - Income TaxTDS u/s 195 - Intelsat has made available technical knowledge/know-how/skill/experience to the assessee in respect of tracking, telemetry and command support of the satellite launched by the assessee - whether such services would squarely fall within the definition of ancillary services as definrd in the DTAA between India and USA? - whether the service rendered by a non-resident is a technical service? - Held that:- By virtue of cl. 7 of the Protocol, even though such a benefit is not available under DTAA with France the beneficial clause in the DTAA entered into by India with the USA applies in respect to the DTAA with France. Therefore, unless the technical knowledge, experience, skill, know-how or processes are transferred to the assessee, the liability to tax does not arise. The said favourable clauses in the DTAA read with protocol override the provisions of the IT Act in the matter of ascertainment of chargeability to income-tax and ascertainment of total income to the extent of inconsistency with the terms of DTAC. In the instant case, it is not in dispute that the remuneration is only for the services rendered on a foreign soil. In lieu of consideration paid, the foreign company has not made available any technical knowledge to the assessee nor any technical knowledge is transferred to the assessee and therefore, the income derived out of rendering technical services is not liable to tax. If there is no liability to pay tax by a non-resident, there is no obligation cast on the assessee to deduct tax at source.
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