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2012 (9) TMI 647 - HC - Income TaxAddition on up front appraisal fees - India-UK DTAA - Article 13(4)(c) v/s Article 7 - CIT(A) deleted the addition - Held that:- The entire appraisal process was to enable the respondent to take a decision as to whether the credit facilities ought to be advanced to the applicants or not. The respondent did not thereby or even while doing so, impart any technical or consultancy services to the applicants. Thus the upfront appraisal fee constitutes fees for technical services within the meaning of Article 13(4)(c) is unsustainable as said fees did not constitute payment in consideration of the respondent rendering any technical or consultancy services to the applicant/borrowers. Submission of the appellant that the upfront appraisal fees fall within the definition of "interest" under Section 2(28A) is not well founded as the fee is not payable in respect of any moneys borrowed or debt incurred. It is the debt itself. If any money was payable in respect thereof, it could have been held to be interest. However, admittedly, no amount was paid by the applicants in respect of the said fee. As the income on account of the upfront appraisal fees was business income and as the respondents did not have a permanent establishment in India, the same could not be charged to tax in India under Article 7 of the DTAA - against revenue.
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