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2012 (2) TMI 98 - AAR - Income TaxDouble Taxation Avoidance Convention between India and UK – Cost Contribution Agreement ("CCA") with SIPCL (company incorporated in UK) for availing General Business Support Services (General BSS) - determination of nature of payments made to SIPCL and its taxability - FTS or royalty – whether tax to be withhold u/s195 - Held that:- The special knowledge and use of expertise on the part of SIPCL is clearly evident from the explanation of each service as is provided by the Applicant. In our opinion, the services being rendered are consultancy services. Therefore, payments made to SIPCL for availing the General BSS under the CCA would constitute income in the hands of SIPCL and is in the nature of fees for technical services within the meaning of Article 13.4 (c) of the DTAC between India and UK; and not in the nature of royalty within the meaning of the term in Explanation 2 to Clause (vi) of Section 9(1) of the Act and under Article 13 of DTAC. Further, payment received by SIPCL is chargeable to tax in India and the declaration provided by SIPCL that it does not have a Permanent Establishment (PE) in India in terms of Article 5 of DTAC, we rule that the applicant is under obligation to withhold tax u/s 195 of the Act.
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