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2012 (8) TMI 781 - AAR - Income TaxIndia and Australia DTAA - applicant acquired 100% equity of an Australian company - whether the payments made to Infosys Australia for the sub-contract work is chargeable to tax in India, OR under the DTAC - Held that:- The source of income of Infosys Australia has to be fixed as India as no services are performed in India by Infosys Australia the source could be the payer. It cannot be held under the circumstances, on the materials available, that Infosys Australia is making available any technical service to the applicant so as to satisfy the requirement of clause (g) of paragraph 3 of Article 12 of the DTAC. As what is paid by the applicant to Infosys Australia is fees for technical services, the question of the existence of a Permanent Establishment does not arise. What is paid to Infosys Australia is fees for technical services under section 9(1)(vii) of the Act, but it is not royalty in terms of Article 12 of the DTAC between India and Australia in terms of the requirements of paragraph 3(g) of the said Article. Payments to overseas subsidiary towards sub contracting charges will not be liable for deduction of tax at source u/s 195 as there is no income chargeable to tax in India.
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