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2014 (12) TMI 388 - AT - Income TaxManagement Service Fees to be taxable as Fees for Technical Services or not – Payment received from its Indian subsidies - Article 12 of India-Sweden DTAA – Principle of Most Favored Nation - Whether the assessee can be given benefit of India-Portuguese treaty on principle of MFN clause - Held that:- The assessee is tax resident of Sweden - the amount received by the assessee from its Indian subsidies is taxable in India under normal provisions of Act more particularly u/s. 9(1)(vii) r.w.s. 5(2) of the Income-tax Act – in Sandvik Australia Pty. Ltd. Versus Deputy Director of Income-tax (International Taxation) II [2013 (4) TMI 643 - ITAT Pune] wherein the decision in Commissioner of Income-tax Versus De Beers India Minerals (P.) Ltd. [2012 (5) TMI 191 - KARNATAKA HIGH COURT] followed - the expression “making available” is very much important to decide in which contracting state the amount received for rendering the services relating to the technical know-how is to be taxed - The expression “make available” is used in the context of supplying or transferring technical knowledge or technology to another - It is different than the mere obligation of the person rendering the services of that persons own technical knowledge or technology in performance of the services. The recipient after receiving of technology may use or may not use the technology - It has no bearing on the taxability aspect is concerned - When the technical service is provided, that technical service is to be made use of by the recipient of the service in further conduct of his business - merely because his business is dependent on the technical service which he receives from the service provider, it does not follow that he is making use of the technology which the service provider utilises for rendering technical services - unless the service provider makes available his technical knowledge, experience, skill, know how or process to the recipient of the technical service, in view of the Clauses in the DTAA, the liability to tax is not attracted - on the basis of the protocol to the DTAA between the India and Sweden the assessee can claim the benefit of the conditions imposed for bringing to tax the fees for technical services in the treaty between the India and Portuguese - on the principle of the most favoured nation (MFN) clauses the payment of ₹ 5.93 Crores received by the assessee company from its Indian subsidies cannot be brought to tax – Decided in favour of assessee.
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