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2024 (1) TMI 1004 - AT - Income TaxAccrual of in Income in India - assessee is a company incorporated in Thailand rendered services to its group entities in India - taxability of FTS - whether Fees for Technical Services is taxable in India as per the India-Thailand Treaty or not? - taxability will be covered under article 5 read with article 7 of DTAA with Thailand or not? - HELD THAT:- It is an undisputed fact that the assessee is a non-resident and the amounts received fall under the Fee For Technical Services (FTS) and the India-Thailand DTAA do not have a provision of taxing of FTS under any of the Articles of the treaty and also cannot be treated as miscellaneous income under any residual clause. Hence, the assessee cannot be made liable tax in India. Similar, proposition laid down by the Hon’ble High Court of Madras in the case of Bangkok Glass Industry Co. Ltd. [2015 (4) TMI 503 - MADRAS HIGH COURT] The Co-ordinate Bench of Tribunal in the case of Paradigm Geophysical Pvt. Ltd. [2008 (6) TMI 238 - ITAT DELHI-G] held that where the business profits of the non-resident include items of income for which specific or separate provisions have been made in other articles of the tax treaty, then those provisions would apply to the items. However, in case it is found that those provisions are not applicable then the items of income would have to be considered in Article 7. Co-ordinate Bench of Tribunal in the case of Bharti Airtel Ltd. [2016 (3) TMI 680 - ITAT DELHI] held that where there is no FTS clause available in the treaty with a country, then the income in question would be assessable as business income and it can be taxed in India only if there is a permanent establishment in India and the income is attributable to activities or functions performed by such permanent establishment. The aforesaid expositions are fully applicable here. The assessee company has no Permanent Establishment (PE) in India. The income which has been earned in this case in absence of FTS clause in DTAA would fall as business income. Their nature would not change to be that of other income. Hence the same cannot be taxed in India in absence of a PE. Hence, keeping in view, the provisions of the Act, Articles of India-Thailand DTAA and the history of the assessee, the appeal of the assessee is hereby allowed.
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