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2010 (1) TMI 48 - AUTHORITY FOR ADVANCE RULINGSTransfer outside India – Fees for Technical Service (FTS) – Permanent Establishment – Amount received from subcontractors – consultancy charges paid to sub contractors - In response to a tender invited by the Govt. of Tamil Nadu for preparation of designs and drawings for the construction of a huge complex for Tamil Nadu Legislative Assembly, the applicant (a Germen Company) submitted the tender and it was selected as “consultant for supply of the architectural designs and drawings”. An Agreement was entered into on 15th Feb, 2008 for the supply of designs and drawings for block A. The applicant was additionally entrusted with the work of preparation of architectural designs and drawings for block B also in October 2008 – held that - income received under the contract with the Government of Tamil Nadu is in the nature of FTS - the transaction can not be construed to be an outright sale of designs and drawings - Going by the scope and nature of work actually done by the applicant, it is difficult to infer that the applicant would have had a fixed place PE in India. Further it is not the case of the Revenue that the sub-contractor’s place shall be deemed to be the PE of the applicant - The payment received by the sub-contractor from the client on the basis of certification made by the applicant cannot be tagged on to the applicant’s income. In fact, tax is allowed to be deducted only on the amounts received by the applicant from the Government as per the order passed by the concerned income-tax authority
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