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2016 (1) TMI 792 - AAR - Income TaxSupply management service fees received - is in the nature of “Fees for Technical Services” or “royalties” within the meaning of the term in Article 13 of the India-UK double tax avoidance agreement (‘India-UK treaty’)? - concept of ‘make available’ - Held that:- The objection of the Revenue that the agreement entered into by the applicant with CTIL is a scheme for tax avoidance is without any merits. To say that the applicant has entered into contract with Indian company with the main purpose to take advantage of India-UK Treaty is factually incorrect. The facts as stated by the applicant in the application show that the applicant maintains Global Cummins contract supply agreement with suppliers and is responsible for finalization of supplier prices to Cummins Turbo Technologies worldwide, including CTIL , from UK and US suppliers. There is no mandate for CTIL to source the components from the approved suppliers only and if CTIL finds a better pricing from an alternate supplier, it shall be free to source the component from them. It is incorrect to say that such arrangement has been done with the main purpose to avoid tax. Therefore, the objection of the Revenue on this count fails. As regards services being royalty and covered under Article 13(3), it must be said that the nature of services related to identification of products and competitive pricing cannot qualify as royalties under the provisions of Article 13 under India-UK Tax Treaty because it is not related with the use of, or the right to use any copyright, patent, trademark, design or modal, plan, secret formula or process etc. The Supply Management Services fees received by the applicant is not in the nature of FTS or royalties under the India-UK Tax Treaty. In view of the fact that the applicant has no PE in India, the fees received are not taxable in India. CTIL is not required to withhold tax under section 195 of the Indian Income-tax Act.
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