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2018 (2) TMI 969 - AT - Income TaxIncome accrued in India - Referral fees received by the assessee from Credit Suisse Securities (India) Pvt. Limited - constitute “Fees for Technical services” - HELD THAT :- Merely because the fee was payable by the Indian Company to CSDB after execution of the work of the referred client is no ground to determine the nature of the payment. In this context, the Authority for Advance Rulings in the case of Cushman & Wakefield(S) Pte. Ltd., [2008 (7) TMI 8 - AUTHORITY FOR ADVANCE RULINGS] has dealt with a somewhat similar situation, wherein the applicant was a resident of Singapore, who had earned commission from an India based entity for having referred customers. As per the Authority for Advance Rulings, such ‘referral fee’, being in the nature of ‘commission’ was to be treated as being in the nature of ‘business income’; both, under the Act as well as under the Indo-Singapore Double Taxation Avoidance Agreement (DTAA), and not as ‘fees for technical services’. Notably, the aforesaid decisions have also been referred and relied upon by the DRP in concluding that the ‘referral fee’ is in the nature of ‘commission’ to be taxed as ‘business income’ and not as ‘fees for technical services’. In the course of hearing before us, no decision to the contrary has been brought out by the Revenue. For all the said reasons, we are unable to uphold the stand of the Assessing Officer that the impugned ‘referral fee’ was a consideration in the nature of ‘fees for technical services’. Another factual aspect which is not in dispute is that CSDB has no PE in India and also the fact that assessee’s PE in India i.e., Mumbai bank branch had no role to play in the performance of the referral activity in question. Neither the discussion in the draft assessment order and nor in the course of hearing before us any credible assertions to the contrary has been brought out by the Revenue. Thus, considering that the referral activity was undertaken outside India and assessee’s Mumbai branch (PE) had no role to play in the performance of the referral activity, the referral fee of ₹ 18,27,90,578/- earned by CSDB could not be construed to be attributable to assessee’s PE in India and thus, the DRP rightly applied Article 7 of Indo- Swiss Double Taxation Avoidance Agreement (DTAA) and held the same to be non-taxable in India.- Decided in favour of assessee.
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