TMI Blog2004 (12) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... onsiderable length. We have also carefully perused the entire material before us and have duly considered factual matrix of the case as also the applicable legal position. 3. We will first take up the ITA No. 2723/Mum./98. 4. The assessee has raised as many as six grounds of appeal, but, in substance, only grievance of the assessee is that the CIT(A) erred in holding that the payment of CHF 8,000 paid to M/s. RCC Registration Consulting Company Limited, Switzerland, is covered by the scope of the expression fees for included services under article 12(4) of the Indo-Swiss Tax Treaty, and is, accordingly, liable to be taxed in India at the rate of 20 per cent of the gross amount. 5. On a perusal of material before us, and part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any kind to any person in consideration for the rendering of any technical or consultancy services (including through the provision of services of technical or other personnel), if such services; ( i )are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in sub-paragraph ( a ) of paragraph 8 is received; or ( ii )make available technical knowledge, experience, skill, know-how or processes, or consist of the development and transfer of a technical plan or technical design." It is thus clear that the ambit of article 12(4) of the Indo-Swiss Tax Treaty covers only such services as make available technical knowledge, experience, skill or know-how. 7. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... protocol to the Indo-US Tax Treaty to the effect that "generally speaking, technology will be considered made available when the person acquiring the service is enabled to apply the technology". The majority view in CESC s case ( supra ) was also on the same lines. 9. In the case before us, there is not even whisper about a finding about the transfer of technology about making MSDS. It was never the case of the revenue that as a result of acquiring services from M/s. RCC Regis- tration Consulting Company Limited, Switzerland, the assessee could be in a position to use the technology of making the MSDS on its own. All that the assessee gets is a product and not the technology itself. In view of the legal position elaborated upon ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 20 per cent in respect of remittance of US$ 3,30,000 made to M/s. Techniship SA France liable to tax under article 12 of the Indo-French Tax Treaty. 14. There is no dispute about the fact that the remittance made by the assessee is liable to be taxed in India as a fees for technical services under article 13 of the Indo-French DTAA. The only dispute is the rate at which it is to be taxed. Revenue contends, and the authorities below have upheld that contention, that the fees for technical services are taxable at the rate of 20 per cent on the gross amount. On the other hand, assessee s contention is that the correct rate of tax is 15 per cent. This is a neatly identified legal issue in a very narrow compass of facts. On this issue als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the royalties or fees for included services is a resident of the other Contracting State, the tax so charged shall not exceed : ( a )in the case of royalties referred to in sub-paragraph ( a ) of paragraph 3 and fees for included services as defined in this article [other than services described in sub-paragraph ( b ) of this paragraph] : ( i )during the first five taxable years for which this Convention has effect, (A)15 per cent of the gross amount of the royalties or fees for included services as defined in this article, where the payer of the royalties or fees is the Government of that Contracting State, a political sub-division or a public sector company; and (B)20 per cent of the gross amount of the royalties or fees f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 996. In terms of the provisions of article 12(1) of the Indo-Swiss Tax Treaty, "royalties and fees for included services arising in a Contracting State and paid to a resident of the other Contracting State" are to be taxed in the source country. It is, therefore, clear that so far as taxability of royalties and fees for technical services are concerned, twin conditions of accrual as also the payment are to be satisfied. In other words, even if fees for technical services has accrued, or has arisen, but the same is not paid, the taxability under article 12 in the source country does not come to play. In view of this legal position, irrespective of the fact whether the payment in question for the fees for technical services is in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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