Treaty protection for cross-border service charges confirmed where receipts fell outside technical services and no permanent establishment existed.

Cross-border service charges were treated as outside the scope of fees for technical services or fees for included services under the Indo-US DTAA because the same receipts had already been settled under the mutual agreement procedure and the Tribunal followed its earlier consistent view in the assessee's own cases. The absence of a permanent establishment in India reinforced treaty protection, and the Department had accepted the settled position in prior proceedings. On that basis, the service charges were held not taxable in India, and relief was directed to be granted to the assessee.

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Issues: Whether borrowed service charges were taxable in India as fees for technical services or fees for included services under the Indo-US Double Taxation Avoidance Agreement, and whether treaty protection was available in the absence of a permanent establishment in India.

Analysis: The issue was treated as settled under the mutual agreement procedure between the Governments, and the Tribunal followed its earlier consistent view in the assessee's own cases that the impugned services did not fall within the scope of article 12(4). It was also noted that the assessee had no permanent establishment in India, and the Department had accepted the settled position in earlier proceedings.

Conclusion: The borrowed service charges were held not taxable in India under the treaty, and relief was directed to be granted to the assessee.

Ratio Decidendi: Where the same cross-border service receipts have been conclusively settled under the mutual agreement procedure and are not covered by the treaty definition of fees for technical or included services, they are not taxable in India in the absence of a permanent establishment.

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