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2017 (11) TMI 61 - ITAT BANGALORERoyalty receipt - DTAA between India and Saudi Arabia - receipt in question is not Royalty and it is FTS? - PE in India - Whether there is PE or not in India because if a PE is there, income is taxable @ 40% and if no PE is there, income whether Royalty or FTS is taxable @ 10%? - Held that:- This is not a case of the revenue that any other invoice is raised by the assessee. When admittedly, the only invoice raised is in respect of stay of 4 Engineers in India on the basis of man hours spent by them in India, it cannot be said that any other service was rendered in the present case without physical presence by way of virtual modes like e mail, internet, video conference etc. and therefore, physical presence of employee is not essential. Because of these differences in facts, this tribunal order cited by the learned DR of the revenue is not applicable in the present case. We, therefore, follow the tribunal order cited by the learned AR of the assessee having been rendered in the case of Clifford Chance vs. DCIT (2001 (9) TMI 1141 - ITAT MUMBAI) and hold that in the present case, the stay in India of the assessee was only 90 days and since it is less than 182 days as required under Article 5 (3) (b) of the India SA DTAA, there is no PE. Whether the impugned receipt is Royalty or FTS? - Held that:- There are some exceptions provided in Article 22 (2) where Article 22 (1) is not applicable but those exceptions do not include FTS. Therefore, we are of the considered opinion that in view of Article 22 (1) of DTAA between India & Saudi Arabia, FTS is not taxable in India because it will fall in Article 22 (1) and as per this Article, income is taxable in the state of residence i.e. Saudi Arabia. In this regard, we find that the A.O. has noted in Para 5 of the assessment order that the exact details of the work done by the four service Engineers of ELEMAC in India were never furnished. In the absence of the complete details, this issue cannot be decided. We feel it proper to restore this after to the file of the A. O. for a fresh decision with the direction that the assessee should provide all details required by the A.O. The A. O. should decide this issue afresh after providing adequate opportunity of being heard to the assessee.
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