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2016 (8) TMI 809 - AT - Income TaxRoyalty income - India-Italy DTAA - technical agreement - existence of PE in India - Held that:- In substances neither there is any material about the requirement of the services by the recipient of the services nor provision of such services, if any, by the employees of the BO of the assessee. Therefore, in absence of any such material it cannot be said that income of royalty is the income arising out of results of the activities of the permanent establishment. In fact, the income of royalty is because of the direct dealing of the New Holland tractors limited with the assessee without the aid or support from its permanent establishments in India. Hence, we now decide the issue of admission of additional evidence. According to us , these evidences does not have any bearing in deciding the issue involved in the present appeal, hence we dismiss the application of revenue for admission of the linked in profile of the two employees of Bo as well as the extract of the directory. In view of this, we are not in agreement with the stand of the revenue that royalty income received by the assessee is effectively connected with its branch office in India and therefore in terms of article 12(5), assessee is not entitled for preferential tax treatment according to article 12 (1) & (2) of the DTAA. In the result We hold that royalty income earned by the assessee on account of technical agreement with the New Holland Tractors Private limited is not effectively connected with the BO of the assessee in absence of any positive and substantive material that services have been rendered by the employees of the BO of the assessee and therefore same is chargeable to tax as "Royalty" income as per article 13(1) and (2) of the India Italy DTAA - Decided in favour of assessee
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