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2015 (7) TMI 476 - AT - Income TaxConsultancy fee paid to Ms Olaf Grandlund OY Finland - whether was not chargeable to tax in India and thus that there was no requirement to withhold to tax on the impugned payments, even though these had been characterized as FTS taxable on source basis? - whether services do not come within the purview of Article 13(4) (c) of the DTAA between India and Finland as technical services - the services rendered cannot be even be taxed under Article 7 read with Article 5 of the DTAA in the absence of PE of Olof in India - Held that:- As per Article 7( 1) of the tax treaty, 'Business Profits' earned by a Finnish Enterprise is taxable in India only if that Finnish enterprise carries on business in India through a PE in India. The term PE has been defined in Article 5 of the India-Finland tax treaty to include a branch, office, factory, workshop, etc of the Finnish enterprise in India. Where the Finnish enterprise does not have a PE in India under the provisions of Article 5 of the India-Finland treaty, no portion of the income from services provided to a customer in India are liable to taxation in India. In the instant case, admittedly Olof Granlund did not have any office/ place of business in India. Further, the services were performed by Olof Granlund primarily from outside India and its employees made intermittent visits to India only for the purpose of attending meetings with the respondent.Accordingly, Olof Granlund Oy did not have a PE in India under the provisions of Article 5 of the India-Finland tax treaty during the subject period. Certificate obtained by the respondent from Olof Granlund in this regard is on record. In light of the above, we are of the considered opinion that the payments received by Olof Granlund from the respondent for provision of services are not liable to taxation in India under the narrower provisions of the India-Finland tax treaty. Following the ratio laid down In Transmission Corporation’s case [1999 (8) TMI 2 - SUPREME Court] we hold that the question of deduction of tax at source on the impugned payments does not arise. The CIT(A) on the same parity of reasoning allowed the appeal. Therefore, we dismiss the grounds of appeal filed by the revenue - Decided in favour of assessee.
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