Consultancy fees to non-resident insurer support provider taxable in India, with TDS upheld and treaty exclusion rejected.

Payment to a non-resident UK entity for insurance product development and related advisory support was treated as consultancy services within the scope of "fees for technical or consultancy services". The payer failed to show that the statutory exception in section 9(1)(vii)(b) applied, because an existing business or profession outside India was not established on the facts. The treaty exclusion under Article 13 was also held inapplicable on the material before the Court. The payment was therefore taxable in India and subject to tax deduction at source, and the challenge to the order was rejected.

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Issues: Whether the payment made to the non-resident UK entity for insurance product development and related services constituted fees for technical or consultancy services taxable in India, and whether the exception in section 9(1)(vii)(b) of the Income-tax Act, 1961 or the relevant treaty provisions exempted the payment from tax deduction at source.

Analysis: The payment was held to be for consultancy services, as the foreign entity was engaged to provide advisory and facilitation services in connection with product development, risk management, insurance pricing, market exploration, and related commercial support. Such services were treated as falling within the width of the expression "technical or consultancy services" and, on the facts, the payer had not established an existing business or profession outside India so as to attract the statutory exception in section 9(1)(vii)(b). The treaty provisions were also considered, but the relevant exclusion under Article 13 was found not to apply on the facts placed before the Court. The request to invalidate the tax deduction requirement was therefore not accepted.

Conclusion: The payment was taxable in India and liable to tax deduction at source; the challenge to the impugned order failed.

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