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2018 (6) TMI 107 - AAR - Income TaxTaxability of fees received from Indian clients - withholding of tax - income from interest - whether fee payable by a customer in India under the financing arrangement would be taxable as ‘interest’ or FTS under Indo-France Tax Treaty - or whether it shall be taxable as business income - Held that:- Front end fee other than appraisal fee is to be paid after the signing of the agreement. Hence, front end fee other than appraisal fee has to be treated to be in relation to a debt claim and is income from interest under the India France DTAA following the view of JOINT DIRECTOR OF INCOME TAX (OSD) - (IT) RANGE 1, MUMBAI VERSUS M/S COMMONWEALTH DEVELOPMENT CORPORATION, [2010 (2) TMI 1150 - ITAT MUMBAI]. Commitment fee, cancellation fee, amendment fee and monitoring fee are directly related to debt claim as the fee are charged after disbursement of loan - and thus are treated as interest income under India France DTAA. Determination of PE - Held that:- Determination of PE is dependent of facts of each year - in the present case Applicant has only given a certificate that there is no PE and thus it needs to be examined by the AO - proper facts about reimbursement of expenses are also not provided - allowed for statistical purpose. Front end fee in the nature of appraisal fee (in the absence of any PE in India) would not be subjected to withholding tax under section 195 of the Act.
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