Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (1) TMI 925 - AT - Income TaxTreatment of Royalty under Article 12 of DTAA - Income from borrowed services – Held that:- Once there is an income in the nature of 'Business profits', its taxability can be considered only within the ambit of Article 7 of the DTAA - As the assessee is a tax resident of Thailand, the business profits can be taxed in India only if the enterprise carries on business in India through a Permanent Establishment (PE) situated in India - the opinion of the authorities below of including it under Article 12 or under Article 22 is not sustainable - The amount falls under Article 7 as 'Business profits' and is hence not chargeable to tax because of the absence of any PE in India - the amount of Rs. 79.99 lakh falls under Article 7 and not under Article 12 or Article 22 of the DTAA. If a particular item of income is taxable under the Income-tax Act, 1961, then it shall cease to be taxable in India, if the DTAA provides exemption in respect of such income - The core of the matter is that the DTAA overrides the regular provisions of the Act, insofar as it is more beneficial to the assessee - India has entered into a DTAA with Thailand and the nature of receipt is covered under Article 7 but in the present circumstances it is not chargeable to tax in India, patently the consideration of the provisions of the Act is ruled out - the amount is not includible in the total income of the assessee – Decided in favour of Assessee.
|