Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (8) TMI 166 - DELHI HIGH COURT

2016 (8) TMI 166 - DELHI HIGH COURT - [2016] 386 ITR 390 - TDS u/s 195 - withholding of tax - payments made/ to be made to Steria France under the Management Services Agreement - whether the payment made by Steria (India) for the management services provided by Steria France will not be taxable in India in the hands of Steria France as per the provisions of the DTAA entered into between India and France? - Held that:- AAR appears to have failed to notice that the wording of Clause 7 of the Proto .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ar. Once the DTAA has itself been notified, and contains the Protocol including para 7 thereof, there is no need for the Protocol itself to be separately notified or for the beneficial provisions in some other Convention between India and another OECD country to be separately notified to form part of the IndoFrance DTAA. - The Court is, therefore, unable to agree with the conclusion of the AAR that the Clause 7 of the Protocol, which forms part of the DTAA between India and France, does not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

at source from payment for the managerial services, would not arise. It is, therefore, not necessary for the Court to further examine the second part of the definition, viz., whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are “made available” to the Petitioner by the DTAA with France. - As regards the nature of the service being provided under the Management Services Agreement, again the Court is unable to find any case made out by the Revenue before the AAR t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r of assessee - W.P.(C) 4793/2014 & CM APPL. 9551/2014 - Dated:- 28-7-2016 - S. MURALIDHAR & NAJMI WAZIRI JJ. Petitioner Through: Mr. S. Ganesh, Sr. Advocate with Mr. S. Sukumaran, Mr Anand Sukumar and Mr. Bhupesh Kumar Pathak, Advocates. Respondents Through: Mr. Rahul Chaudhary, Sr. Standing Counsel and Mr. Raghvendra Kishore, Advocate. O R D E R Dr. S. Muralidhar, J.: 1. The challenge in this petition is to the order dated 2nd May, 2014 passed by the Authority for Advance Rulings (Income T .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

corporated in France as a limited liability partnership. It is stated that Steria France centralizes technical skills for carrying on management functions such as legal finance, human resources, communication risk control, information systems, controlling and consolidation, delivery and industrialization, technology and management information services. It is also stated that the Steria France does not have any office presence or personnel in India and that it does not have a Permanent Establishm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ral Management Services included Corporate Communication Services, Group Marketing Services, Development Services, Information System and Services, Legal Services, Human Relation Services etc. It is stated that these services are provided by Steria France through telephone, fax, e-mail etc. and no personnel of Steria France visited India for providing such services. 4. An application was filed by the Petitioner before the AAR under Section 245Q(1) of the Act seeking a ruling on the following que .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he provisions of Section 195 of the Act from the payments made/ to be made to Steria France under the Management Services Agreement? 5. In support of the above application, the Petitioner placed reliance on the provisions of the DTAA including a Protocol executed by India and France which formed part of the DTAA. 6. It is not in dispute that another DTAA was entered into between India and United Kingdom ( UK ) in which the scope and ambit of the term fees for technical services was more restrict .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

echnical knowledge, experience, skill, know how or processes to the persons to whom the service is rendered, or must have developed and transferred a technical plan or technical design to the person to whom the service is rendered. In contrast, the India-France DTAA did not incorporate any such "make available" requirement or criterion and, therefore, ambit of the term "Fees for Technical Services" is much more restricted in the IndiaUK DTAA as compared to the India-France DT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion at source for the specific items mentioned therein. The restriction was only on the rates. Further, the make available clause found in the Indo-UK DTAA could not be read into the expression fee for technical services occurring in the India-French DTAA unless there was a notification under Section 90 of the Act issued by the Central Government to incorporate the less restrictive provisions of the Indo-UK DTAA into the India-France DTAA. In other words, the plea of the Petitioner that Clause .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

outset, the Court would like to refer to the definition of fee for technical services occurring in the DTAA between India and France which reads as under: ARTICLE 13- Royalties and fees for technical services and payments for the use of equipment - **** **** **** (4) The term fees for technical services as used in this Article means payments of any kind to any person, other than payments to an employee of the person making the payments and to any individual for independent personal services men .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncy services (including the provision of services of a technical or other personnel) which: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received; or (c) make available technical knowledge, experience, skill know-how or processes .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nt used in connection with the operation of ships, or aircraft in international traffic; (c) for teaching in or by educational institutions; (d) for services for the private use of the individual or individuals making the payment; or (e) to an employee of the person making the payments or to any individual or partnership for professional services as defined in Article 15 (independent personal services) of this Contention 12. At this juncture, it is necessary to refer to Clause 7 of the Protocol .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3 (Royalties, fees for technical services and payments for the use of equipment), if under any Convention, Agreement or Protocol signed after 1-9-1989 between India and a third State which is a member of the OECD, India limits its taxation at source on dividends, interest, royalties, fees for technical services or payments for the use of equipment to a rate lower or a scope more restricted than the rate of scope provided for in this Convention on the said items of income, the same rate or scope .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Technical Services and payments for use of equipments under Article 13. In respect of any of the above payments, if any convention agreement or protocol is signed between India and a OECD member State under which India limits its taxation at source on the above to a rate lower or a scope more restricted than the rate of scope provided for in this Convention on the said items or income, the same rate or scope as provided for in that Convention, agreement or Protocol on the said items income shal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n alone has to be referred to for both purposes. He submitted that in certain Conventions where the tax base was restricted the rate of tax would be higher and vice-versa i.e. where the tax base is larger the rate of tax would be lower. In other words, he contended that it is not permissible for the Petitioner, in terms of Clause 7 of the Protocol, to rely upon one Convention between India and an OECD member State for the purposes of taking advantage of a lower rate of tax and then refer to anot .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r 1-9-1989 between India and a third State which is a member of the OECD . This also indicates that the benefit could accrue in terms of lower rate or a more restrictive scope under more than one Convention which may be signed after 1st September 1989 between India and a State which is an OECD member. The purpose of Clause 7 of the Protocol is to afford to a party to the Indo-France Convention the most beneficial of the provisions that may be available in another Convention between India and ano .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the following provisions which shall form an integral part of the Convention , makes this position clear. Once the DTAA has itself been notified, and contains the Protocol including para 7 thereof, there is no need for the Protocol itself to be separately notified or for the beneficial provisions in some other Convention between India and another OECD country to be separately notified to form part of the IndoFrance DTAA. 17. Reliance is rightly placed by the Petitioner on the following passage .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nal documents 18. The Court is, therefore, unable to agree with the conclusion of the AAR that the Clause 7 of the Protocol, which forms part of the DTAA between India and France, does not automatically become applicable and that there has to be a separate notification incorporating the beneficial provisions of the DTAA between India and UK as forming part of the India- France DTAA. 19. The next question that arises is concerning to extent to which the benefit under the India-UK DTAA can be made .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

payment for the managerial services, would not arise. It is, therefore, not necessary for the Court to further examine the second part of the definition, viz., whether any of the services envisaged under Article 13(4) of the Indo-UK DTAA are made available to the Petitioner by the DTAA with France. 20. Mr Ganesh, learned Senior Counsel made a reference to the decision of the ITAT in DCIT v. ITC Ltd. (2002) 82 ITD 239 (ITAT Kolkata), where the Protocol separately executed between the India and Fr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der the Indo-French DTAA with effect from the date on which the Indo-French DTAA or such other DTAA enters into force. 21. It has been contended by Mr. Chaudhary that the question as to the exact nature of the services provided by the Petitioner under the Management Services Agreement has not yet been examined by the AAR. It is further pointed out that the contention raised regarding Steria France having a PE in India and its income being taxable under Article 7 of the DTAA has not been addresse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version