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2012 (4) TMI 74 - AAR - Income TaxDTAA - No PEs - Fees for technical services - Whether, on the facts and circumstances of the case, the payments received/receivable in connection with following costs incurred/proposed to be incurred for and on behalf of X India, are chargeable to tax in India - the payment received/receivable by the applicants in connection with the IVTC services are in the nature of technical services and taxable as FTS under section 9(1)(vii) of the Income-tax Act and that the exception provided in section 9(1)(vii)(b) is not available to the applicants - applicants have opted for and are entitled to avail the beneficial provision of the DTAA entered into by India with the respective countries of their residences - Technical services rendered by the affiliates do not “make available” technical knowledge, experience, skill, know-how or process while preparing these reports for their clients, X India / Indian customers - Held that: The payments received / receivable by the applicants in connection with IVTC Services are chargeable to tax as FTS under section 9(1)(vii) of the Act, but not under the provisions of Article on “Royalties and fees for technical services” under the respective DTAAs or when the said Article is read with the MFN clause, which has to be taken as part of the Convention In the absence of a provision on FTS, the amount received by the applicants would be taxable as business income under Article 7 of the DTAA. As the applicants do not have a PE in India, the amount received would not be taxable as business income - FTS shall be governed by Article 22 of the Tax Treaty and not as per Article 7 of the Tax Treaty that deals with taxation of business profits - Rulings are given
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