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2016 (9) TMI 344

Head Note:
Income chargeable to tax in India as ‘fees for included services’ - Program Fee received - India-US DTAA - PE in India - Held that:- The activity of the applicant cannot be said to be a business activity particularly because the applicant is registered in USA as a non-profit public benefit corporation formed for the purpose of providing education. This is not disputed by the Revenue. If the applicant is registered as a non-profit benefit corporation in USA then its activities i.e. providing education cannot be said to be business activity of the applicant. The reliance of Revenue, therefore, on Article 7 of the Treaty is completely uncalled for as Article 7 specifically deals with business income.

Viewed from any angle there cannot be a PE as defined in Article 5 of the Treaty as indeed there is none in India. It is to be seen that every time the program is undertaken in India, it is Northwest which has arranged for the place for conducting the programs. Northwest need not every time arrange for a same place. It may happen that Northwest may arrange different location for conducting the program. On this ground also there cannot be any fixed place of business on the part of the applicant. Therefore, on both the counts namely on the question of business and on the question of PE, the contention of the Revenue is unacceptable to us.

The program fee is held to be non-taxable as there is no Permanent Establishment of the applicant in India.


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