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2023 (2) TMI 906 - AT - Income TaxIncome deemed to accrue or arise in India - Permanent Establishment (PE) - Protocol to implement the DTAA was not notified - amounts received by the assessee are in the nature of FTS under Article 13 of India – Israel DTAA - Whether in course of rendering services the assessee had made available technical knowledge, experience, skill, know-how, process etc. enabling NIIPL to apply the technology contained therein independently without the aid and assistance of the assessee? - HELD THAT:- In the facts of the present appeal, except making general observation that the assessee has made available technical knowledge, knowhow, skill etc. the departmental authorities have not brought any material on record to prove such fact. The allegation of the departmental authorities that they are taking such position in absence of material/evidence furnished by the assessee to establish its claim, in our view, is not borne out from record. Not only the agreement mentions in detail the nature of services to be provided by the assessee, but the assessee has furnished various other material on record, including invoices raised for reimbursement of cost. Thus, in our view, the Revenue has failed in proving that the make available condition is satisfied. Therefore, applying the restricted meaning of FTS as per India – Portugal and India – Canada DTAAs, we hold that the amounts received by the assessee from providing SAP and IT support services are not in the nature of FTS, hence, not taxable in India in absence of a Permanent Establishment (PE). At this stage, for the sake of completeness, we must observed, learned Departmental Representative has submitted that in absence of specific notification by the Government implementing the Protocol to India – Israel DTAA the restrictive meaning in other DTAAs cannot be applied to India – Israel DTAA. Though, the aforesaid contention of learned DR is unsustainable at the threshold considering the fact that learned DRP has given the benefit of Protocol to Indian – Israel DTAA, however, we deem it appropriate to address the issue. In case of Steria (India) Ltd. [2016 (8) TMI 166 - DELHI HIGH COURT] while dealing with similar contention raised by the Revenue, has held that once the DTAA itself has been notified and contains the Protocol there is no need for the Protocol itself to be separately notified or for the beneficial provisions in some other conventions between India and another country to be separately notified to form part of India – France DTAA. Thus, in view of the aforesaid observations of Hon’ble Jurisdictional High Court, we do not find merit in the submissions of learned Departmental Representative. - Decided in favour of assessee.
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