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2011 (11) TMI 484 - AT - Income TaxIndia USA DTTA – services rendered in relation to health care - determination of nature of fees and its taxability received from Wockhardt Hospital Ltd(WHL) and MAX India Ltd(MAX) – Royalty or Fees for Included Services(FIS) or Business Profits - Held that:- Article 12(4)(b) of DTAA states in order to attract taxability, the technical knowledge, experience, skill etc. must remain with the person utilizing the services even after the rendering of the services has come to an end. In instant case, services rendered are purely in the nature of advisory services. Nothing is made available to Max or WHL by the assessee and consideration for advisory services rendered cannot be treated as fees for included services under Article 12(4)(b). Further, with respect to usage of logo by WHA, it is held that where the agreement between the parties provides that there was no economic consideration for right to use the name it cannot be said that any payment can be called royalty. As decided in case of Sheraton International Inc. v. Dy. DIT [2006 (10) TMI 183 - ITAT DELHI-A] where main purpose of the agreement was to render services and use of trademark or trade name was only incidental then the entire payment or even a part of it cannot be considered as royalty. Thus, fees received are taxable as business profits in India. Since, the Assessee did not have a permanent establishment in India, the same was held to be not taxable - in favour of assessee. Reimbursement of expenses - Held that:- Prima facie the payments are in the nature of reimbursement of expenses. In the absence of any finding by the AO to the contrary the request to remand the issue for fresh consideration cannot be acceded. Since payments made are held to be business profits not taxable in India thereby there is no obligation to deduct tax at source - in favor of assessee.
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