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2012 (2) TMI 173 - AAR - Income TaxIndo-French DTAA – French Company entered into an IT Agreement with the applicant to provide support services in the area of IT - whether royalty or FTS – whether payment would fall under the provisions of Article 13 of the Indo France DTAA in view of the Fact that foreign company does not have a PE in India – assessee contending such payment to be reimbursement of expenses - Held that:- Services provided under the IT agreement are in the nature of Fees for Technical Services and taxable under the DTAA as well as under the Act. It is also clarified that payment under the proposed agreement does not represent reimbursement of cost and is taxable in India. Article 5 of India France DTAA states that even existence of a computer server amounts to existence of a PE within a jurisdiction. In such circumstances, Areva T&D SAS France has a PE in India, the payment to it would not fall under the provision of Article 13 of the DTAC. As the Applicant has a PE in India, the income by way of FTS will be taxed under Section 44DA and at the rate provided under the Finance Act for the relevant year and tax withheld accordingly.
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