TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the consideration receivable by the non-resident applicant for intra-group services was chargeable to tax in India as fees for technical services or business income under the India-UK DTAA. (ii) Whether the Indian payer was required to deduct tax at source on such payment under section 195 of the Income-tax Act, 1961.
Issue (i): Whether the consideration receivable by the non-resident applicant for intra-group services was chargeable to tax in India as fees for technical services or business income under the India-UK DTAA.
Analysis: The services were examined against Article 13 of the India-UK DTAA. They were not royalty. For fees for technical services, the controlling requirement under Article 13(4)(c) was that the services must make available technical knowledge, experience, skill, know-how or processes, or consist of development and transfer of a technical plan or design. The services rendered were support, coordination, advisory and back-office functions, and the materials did not show transfer of technical capability enabling the recipient to perform the functions independently in future. The applicant also had no permanent establishment in India, so the receipts could not be taxed as business income.
Conclusion: The receipts were not taxable in India either as fees for technical services or as business income.
Issue (ii): Whether the Indian payer was required to deduct tax at source on such payment under section 195 of the Income-tax Act, 1961.
Analysis: Tax deduction at source under section 195 arises only where the payment is chargeable to tax in India. Since the underlying consideration was held not chargeable to tax under the treaty and the applicant had no permanent establishment in India, the statutory trigger for withholding did not arise.
Conclusion: No obligation to deduct tax at source arose under section 195.
Final Conclusion: The advance ruling held that the intra-group service fees were not taxable in India under the India-UK DTAA and therefore no withholding obligation arose on the Indian payer.
Ratio Decidendi: Technical or consultancy services are taxable as fees for technical services only when they are of such a nature that they make available technical knowledge, experience, skill, know-how or processes to the recipient, enabling independent future use without dependence on the service provider.
TaxTMI 
