TMI Blog2024 (1) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. [ 2008 (6) TMI 238 - ITAT DELHI-G] held that where the business profits of the non-resident include items of income for which specific or separate provisions have been made in other articles of the tax treaty, then those provisions would apply to the items. However, in case it is found that those provisions are not applicable then the items of income would have to be considered in Article 7. Co-ordinate Bench of Tribunal in the case of Bharti Airtel Ltd. [ 2016 (3) TMI 680 - ITAT DELHI] held that where there is no FTS clause available in the treaty with a country, then the income in question would be assessable as business income and it can be taxed in India only if there is a permanent establishment in India and the income is attributable to activities or functions performed by such permanent establishment. The aforesaid expositions are fully applicable here. The assessee company has no Permanent Establishment (PE) in India. The income which has been earned in this case in absence of FTS clause in DTAA would fall as business income. Their nature would not change to be that of other income. Hence the same cannot be taxed in India in absence of a PE. Hence, keep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . General Management 4. Human Resource 5. Human Resource Operations 6. Accounting 7. Legal and Compliance 8. Purchasing 9. Information Technology Services 6. Before the revenue authorities, the assessee submitted that these are all Business Support Services and therefore Business Income, and therefore its taxability will be covered under article 5 read with article 7 of DTAA with Thailand. 7. The definition of Business as per Section 2(13) of the Act include any trade, commerce or manufacture or any adventure or concern in the nature of a trade, commerce or manufacture. The business income received generally partakes the nature of regularity of receipts, substantial involvement of taxpayer, frequency and volume of transaction etc. The assessee submitted that such attributes are missing in the impugned transaction between the Service Provider and the Beneficiary in this case. Further, such incomes are being received by the assessee at a predetermined amount as specified by the Service Level Agreements. Scrutiny of nature of service provided as specified in the agreement indicates that these are broadly managerial technical or consultancy services in nature, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under article 27 of DTAA between India and Thailand. The ld. DRP held that the matter is still not settled judicially and hence, contention of the assessee is to be rejected. Accordingly, the AO passed an order treating the amount received by the assessee as FTS and charged 10% on the total receipts. 11. Aggrieved, the assessee filed appeal before the Tribunal. 12. Before us, the ld. AR reiterated the arguments taken up before the revenue authorities and argued that in the absence of any clause for taxability of FTS even in the residuary clauses, the amount cannot be taxed in India. 13. The ld. DR strongly supported the order of the ld. DRP and the order of the Assessing Officer. 14. Heard the arguments of both the parties and perused the material available on record. 15. It is an undisputed fact that the assessee is a non-resident and the amounts received fall under the Fee For Technical Services (FTS) and the India-Thailand DTAA do not have a provision of taxing of FTS under any of the Articles of the treaty and also cannot be treated as miscellaneous income under any residual clause. Hence, the assessee cannot be made liable tax in India. Similar, proposition lai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause available in the treaty with a country, then the income in question would be assessable as business income and it can be taxed in India only if there is a permanent establishment in India and the income is attributable to activities or functions performed by such permanent establishment. The relevant extract of the judgement has been reproduced below: 41. The next aspect of this issue, which is raised as Ground No. 8 in the Department's Appeal is that, when the treaties do not contain FTS clause, what is the impact on taxability. Wherever FTS clause is not available in the treaty with a country, then the income in question would be assessable as business income and it can be brought to tax in India, only if the FTO has the permanent establishment in India and if the earning of income is attributable to activities or functions performed by such permanent establishment. This view is supported by the decision of the Coordinate Bench. 44. In view of the above reasons, we hold that wherever under the DTAA' Make available clause is found, then as there is no imparting, the payment in question is not 'FTS' under the Treaty and when there is no 'FTS' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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