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2022 (9) TMI 469 - AT - Income TaxTDS u/s 195 - fees received by applicant for services provided to Indian companies - PE in India - assessee offers clinical trial solutions to the biopharmaceutical and generic industry and a part of the trials related services were outsourced by the assessee to Lambda Canada - services were utilised in India for provision of completed package services to its clients in India - action of AO in treating the amount of remittance to Canada as Fees for Technical Services u/s. 9(l)(vii) of the Act and Fees for Included Services under Art. 12 of the India-Canada DTAA - assessee’s primary contention was that no taxes were required to be deducted on payments since the same did not qualify as “fee for technical services” under Article 12 India Canada Tax Treaty since the condition of “make available” as contained in the India Canada Treaty were not satisfied in the instant facts - HELD THAT:- The case of the assessee is directly covered by the case of Anapharm Inc., In re [2008 (9) TMI 27 - AUTHORITY FOR ADVANCE RULINGS] where the applicant is a company incorporated in Canada which provides clinical and bioanalytical services to assist pharmaceutical companies around world in development of new drugs or generic copies of drugs already being marketed. The clients pay fees to applicant in lieu of above services The AAR held that fees received by applicant for services provided to Indian companies cannot be considered to be 'fees for included services' within meaning of article 12(4) of the India Canada Treaty. AAR further held that fee paid by Indian companies to applicant in respect of bioequivalence tests conducted by it is in nature of 'business profits' under article 7 of DTAA between India and Canada and same is not taxable in India, as applicant does not have a permanent establishment in India. Determining the applicability of “make available” clause - From the terms of the Agreement, and copies of invoices produced before us, it does not seem that there is any intention on behalf of Lambda Canada to “make available” technical knowhow/ technical knowledge to the assessee so that the assessee can deploy similar technology or techniques in future without depending on the provider. In fact, it has been argued as is also evident from the terms of agreement that Lambda India also had similar technology available with it to conduct similar analysis/testing and preparation of feasibility report and the only purpose for entering the agreement was for the reason that the time being the assessee was loaded with excess work and accordingly part of the work was assigned to Lambda Canada - evidently there was no intention between the parties that any technology be “made available” to the assessee. Accordingly, we are of the considered view that in the instant facts no technology was “made available” to the assessee in respect of the above payments and hence there was no requirement to deduct tax at source under Article 12 of the India Canada DTAA. Appeal of assessee allowed.
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