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2015 (12) TMI 142 - ITAT AHMEDABADTaxability of receipts as fees for technical services - Indo Dutch DTAA - whether provisions of the Indo US tax treaty cannot be read into the provisions of Indo Dutch tax treaty?- Held that:- Learned CIT(A) was clearly in error in holding that the provisions of the Indo US tax treaty cannot be read into the provisions of Indo Dutch tax treaty. As clearly stated in the MoU to the Indo US tax treaty, which stands incorporated in the Indo Dutch tax treaty as well by the virtue of MFN clause, “under paragraph 4(b), consultancy services which are not of a technical nature” cannot be treated as technical services. Accordingly, fees for non technical consultancy services cannot be treated as covered by the scope of ‘fees for technical services’. There are a large number of decisions by the coordinate benches which reiterate this proposition. What essentially follows, therefore, is that as long as the services rendered by the assessee are managerial or consultancy services in nature, which do not involve or transmit the technology, the same cannot be brought to tax as fees for technical services. An example of this type is a service is set out in example no. 7 to the MoU appended to the Indo US tax treaty, which is adopted in respect of Indo Dutch tax treaty as well- as noted earlier in this order As long as the Assessing Officer can demonstrate, after collecting necessary details from the assessee, that the non taxable consideration component (i.e. consideration for physical deliverables, consideration for services other than technical services and consideration for services which donnot transmit the technical know how etc) is less than fifty percent of the overall consideration paid by the assessee for basic refinery package, he can certainly come to that conclusion. It is, therefore, necessary that all the requisite details, as may be available to the assessee and as may be requisitioned by the Assessing officer, must be taken into account to facilitate this apportionment. We are, however, not inclined to conduct this exercise directly at the stage of second appeal. We, therefore, remit the matter to the file of the Assessing Officer by upholding the plea of the assessee in principle and directing the Assessing Officer to apportion the consideration for basic refinery package on the above lines. - Decided in favour of assessee for statistical purposes.
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