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2017 (3) TMI 572 - AT - Income TaxTDS u/s 195 - remittances towards technical consultancy and professional services - DTAAs with USA and Canada - PE in India - Held that:- We noticed that non-resident parties have no PE in India. We find that Article 12(4)(b) of the DTAAs with USA and Canada is not applicable since the non-resident parties did not ‘make available’ any technical knowledge, and the services rendered to the assessee by the above foreign parties has not transmitted any technical knowledge. We noticed that mere provision of bio-availability services cannot be said to result in a transfer of technology as the assessee has not derived enduring benefits to utilize this knowledge on his own in further. Regarding remittance to Linkalters LLP, Belgium and Price Water House Cooper, Belgium, we observed that services rendered by the non-resident were for the purpose of due diligence in connection with the proposed acquisition outside India. The services were rendered outside India and utilized outside India. We find that the assessing officer failed to prove that the Belgium non-resident parties have made available any technical knowledge or know-how to the assessee. The assessing officer has not accepted assessee’s submission and stated remittance to the professional firm/company were chargeable for tax deduction as technical consultancy services as per section 9(i)(vii) of the act as well as Article 12 of the tax treaty with Belgium. We noticed that the assessee has contended that it was entitled to the benefit of the Most Favoured Nation (MFN) clause of the DTAA with Belgium. We also noticed that the services provided by two Belgium parties cannot be considered as technical services as there was no making available of technology by the said two non-resident parties. We have also considered the findings of the Ld. CIT(A) that because of the MFN clause, the scope of fees for technical services under the India- Canada DTAA and the India-USA DTAA was more restricted than that under India-Belgium DTAA, therefore, the language of article 12 of the aforesaid two treaties shall apply to the DTAA between India and Belgium. Thus we justify the findings of the Ld. CIT(A) that the services provided to the assessee by the above stated non-resident parties did not fall within the purview of included services/technical services and hence there was no liability on the assessee to deduct TDS u/s. 195 . - Decided in favour of assessee
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