Home Case Index All Cases Income Tax Income Tax + AAR Income Tax - 2010 (3) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (3) TMI 108 - AAR - Income TaxConsultancy services in India – DTAA between India and UK - Ernst & Young Private Ltd. (EYPL) is a company incorporated in India - Ernst & Young (EMEIA) Services Limited is a limited liability company incorporated under the laws of England and Wales. - Whether the amount payable by the applicant in accordance with the agreement entered into with Ernst & Young (EMEIA) Services Limited is chargeable to tax in India under the provisions of the Income-tax Act, 1961 (‘the Act’) and Double Taxation Avoidance Agreement between India and UK? Whether the amount receivable by Ernst & Young (EMEIA) Services Limited from Ernst & Young (P) Ltd., inter alia, on account of Area Services, Market Development Support Services and Global Services as detailed in the Schedule to the Area Services and Market Development Agreement is chargeable to tax in India as “fees for technical services” under section 9(1)(vii) of the Income-tax Act, 1961? Held that - Both the questions are answered in the negative and it is ruled that the amounts receivable by Ernst and Young EMEIA Services Ltd. from the applicant under the Agreement are not liable to be taxed under the Income Tax Act as fee for ‘included services’ or as business profits, having regard to the provisions of DTAA between India and UK. However, the Income-tax authorities are not precluded from making inquiry into the question whether the cost contribution is fixed on arm’s length basis and such determination can be made in the assessment proceeding of the applicant. What all is provided by EMEIA is informations on various business and commercial matters, guidelines, templates, best practices and strategies that could be adopted in various spheres of their business which ultimately lead to protection of EY image and client relations. Dissemination of informations, furnishing guidelines and suggesting plans of action aimed at uniformity and seamless quality in business dealings of participating group entities do not per se amount to making available to them technical knowledge and experience possessed by EMEIA to a substantial extent. There is no transfer of technical know-how in that process nor can it be said that the recipient of these coordinated/centralized services has been enabled to apply the technology which EMEIA is possessed of. In fact, EMEIA has not developed any technology of its own nor does it innovate anything.
|