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2010 (10) TMI 480 - AT - Income TaxDTAA – Supply of technical know how - The foreign company has no permanent establishment in the territory of India - Refund - whether the payment made by the assessee is for purchase of technical know-how or it is a payment for technical services provided by the assessee - Article 5.3.1, there is no restriction to transfer or assign the agreement to any association or organization or a company - . Article 5.9 of the agreement specifically says that after expiry of the agreement or its termination, the Indian company shall continue to use the very same technical know-how for its business and other information supplied by the foreign company - In view of this specific clauses in Articles 2.7 and 5.3 of the agreement with regard to patent right and transfer and assign the agreement itself, in our opinion, what was transferred to the assessee is exclusively technical know-how on outright sale Authority for Advanced Rulings found that the periodical payments made by the applicant-company are in the nature of royalties and fees for technical service, therefore, taxable under Article 12 of the Double Taxation Avoidance Agreement (DTAA) - there was a transfer of technical know how in favour of Indian Company, therefore what was received by the Italy-company is a business receipt - Since admittedly there is no permanent establishment in India, the same is not liable to be taxed in India - In the result, appeal of the assessee stands allowed
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