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2024 (3) TMI 1204 - AT - Income TaxIncome taxable in India or not - Taxation of Technical Collaboration Fees @ 10% u/s. 9(1)(vii) r.w.s 115A(1)(b) - As per assesee there is no “Service PE” existing in India - as submitted during the scrutiny assessment proceedings assessee has voluntarily agreed to tax the FTS u/s. 115A to buy peace, to avoid litigation and also to avoid penal proceedings, thus this amount is not taxable in India, in the absence of Service PE - HELD THAT:- There is no dispute on the fact that the assessee is not having a Permanent Establishment [PE] in India. Further, there is no specific clause in the DTAA entered into between the Republic of India and Mauritius as pointed out by the Ld. AR in his written submissions, Article-12A was inserted w.e.f 1/4/2017 and cannot be applied for the FY 2017-18. We also find that various judicial pronouncements including the Coordinate Benches and various Hon’ble High Courts have held that in the absence of any specific provisions in the DTAA, the scope of taxing the said income shall be only business profits subject to existence of PE in India, and cannot be tax under the residuary Article of the relevant DTAA. The said income cannot be expanded within the scope of section 9(1)(vii) r.w.s 115A of the Act. It is settled position of law that in the absence of a clause in DTAA not dealing with a particular item of income, the payments are not be regarded as residuary income but as business income which is not chargeable to tax in India, in the absence of any PE of the Non-Resident in India. Decided in favour of assessee.
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