Treaty change and protocol effect require fresh tax review; expense allocation also sent back for supporting evidence.

An advance ruling remains binding only until a subsequent change in law or treaty terms alters the legal position, and a protocol forms part of the treaty and may modify its scope. On that basis, the taxability of fees for technical services and the applicability of section 44D and section 115A under the substituted India-Sweden DTAA required fresh examination in light of the later treaty framework, so the matter was remitted for de novo consideration. The allocation of common expenses and lease rentals also required re-examination because complete supporting material, including full final accounts of the associated enterprise, had not been furnished; the assessee was to be given an opportunity to produce proper evidence.

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Issues: (i) Whether the taxability of fees for technical services received from Indian concerns, and the applicability of section 44D and section 115A, required reconsideration in view of the substituted India-Sweden DTAA and its Protocol, despite the earlier advance ruling; and (ii) Whether the allocation of common expenses and lease rentals was required to be re-examined on the basis of proper supporting material.

Issue (i): Whether the taxability of fees for technical services received from Indian concerns, and the applicability of section 44D and section 115A, required reconsideration in view of the substituted India-Sweden DTAA and its Protocol, despite the earlier advance ruling.

Analysis: The earlier advance ruling was binding under section 245S(1), but only so long as there was no change in law or facts under section 245S(2). The substituted treaty and its Protocol were material because a protocol forms part of the treaty and may expand, restrict, or modify the scope of the treaty provisions. Since the authorities below had proceeded only on the basis of the earlier ruling and had not examined the effect of the later DTAA and Protocol, the issue needed fresh adjudication. The matter was therefore fit to be restored to the Assessing Officer for independent consideration of the impact of the later treaty framework on the earlier ruling.

Conclusion: The issue was remitted to the Assessing Officer for fresh decision in accordance with law.

Issue (ii): Whether the allocation of common expenses and lease rentals was required to be re-examined on the basis of proper supporting material.

Analysis: The assessee had not furnished complete supporting details, including full final accounts of the associated enterprise for the relevant year, and had produced only partial figures. In the absence of reliable material, the Assessing Officer had adopted turnover-based allocation. However, the assessee claimed to possess necessary details and sought an opportunity to produce them. In these circumstances, a fresh examination was warranted after granting an opportunity of hearing.

Conclusion: The issue was remitted to the Assessing Officer for fresh adjudication.

Final Conclusion: The appeal succeeded to the extent that both disputed additions were set aside for reconsideration and the matter was restored to the Assessing Officer for a de novo decision.

Ratio Decidendi: An advance ruling remains binding only until a subsequent change in law or treaty provisions alters the legal position, and a protocol to a treaty must be treated as part of the treaty itself.

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