DTAA business profits from consultancy receipts taxable in India only if attributable to a permanent establishment.

Receipts from borrowed services rendered by a Thai resident enterprise were treated as business profits under the India-Thailand DTAA because they arose from ordinary strategic consultancy business and did not fall within royalties or fees for technical services under Article 12. Article 22 could not apply to income already covered by Article 7. The profits were taxable in India only if attributable to a permanent establishment in India, and no such permanent establishment existed. The income was therefore not taxable in India under Articles 12 or 22 and was excluded from total income on that basis.

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Issues: Whether the receipts from borrowed services rendered by a Thai resident enterprise were taxable in India as royalties or fees for technical services under the India-Thailand DTAA, or whether they formed business profits taxable only if attributable to a permanent establishment in India.

Analysis: The receipt arose from the assessee's ordinary business of rendering strategic consultancy services. Article 12 of the DTAA covered royalties and did not extend to fees for technical services. The income was therefore not governable by Article 12. As the amount was earned in the course of the assessee's business, it fell within Article 7 as business profits. Article 22 applied only to income not expressly dealt with in the earlier articles and could not be invoked for income already covered by Article 7. Under Article 7, such profits could be taxed in India only if the enterprise carried on business through a permanent establishment in India, which was absent.

Conclusion: The receipts were not taxable in India under Articles 12 or 22 of the DTAA and were not includible in the assessee's total income because they fell within Article 7 in the absence of a permanent establishment in India.

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