Authority admits application under section 245R(2) for new tax issues. Stay tuned for hearing date.

The Authority admitted the application under section 245R(2) of the Act as the issues raised were not pending before the Income Tax Authority. The date of hearing will be communicated later.

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Issues Involved:
1. Whether the amount received by the Applicant for rendering business support services qualifies as Fees for Technical Services (FTS) or Royalty under Article 12 of the India-Netherlands DTAA.
2. If not FTS or Royalty, whether such receipt is chargeable to tax in India given the Applicant does not have a Permanent Establishment (PE) in India.
3. Whether the amount received for providing IT support services qualifies as FTS or Royalty under Article 12 of the India-Netherlands DTAA.
4. If not FTS or Royalty, whether such receipt is chargeable to tax in India given the Applicant does not have a PE in India.
5. Whether the payments received by the Applicant are subject to deduction of tax at source under section 195 of the Act, and if yes, the applicable rate of tax.

Issue-wise Detailed Analysis:

1. Business Support Services as FTS or Royalty:
The Applicant sought to determine if the payments received under the Service Level Agreement for business support services qualify as Fees for Technical Services (FTS) or Royalty under Article 12 of the India-Netherlands DTAA. The Revenue argued that the Applicant had previously treated similar receipts as FTS and paid taxes accordingly. The Applicant contended that the services rendered under the new agreements effective from 01/04/2017 included additional services not covered under the previous agreements, thus necessitating a fresh determination.

2. Taxability in Absence of PE:
If the business support services do not qualify as FTS or Royalty, the Applicant questioned whether such receipts are chargeable to tax in India, considering it does not have a Permanent Establishment (PE) in India as per Article 5 of the India-Netherlands DTAA. The Revenue's position was that the nature of services rendered under the new agreements was identical to those under the previous agreements, which were taxed as FTS.

3. IT Support Services as FTS or Royalty:
Similar to the business support services, the Applicant sought clarification on whether the payments received for IT support services under the IT Support Service Agreement qualify as FTS or Royalty under Article 12 of the India-Netherlands DTAA. The Revenue maintained that the Applicant had consistently treated such receipts as FTS in previous years and paid taxes accordingly.

4. Taxability in Absence of PE for IT Services:
If the IT support services do not qualify as FTS or Royalty, the Applicant questioned whether such receipts are chargeable to tax in India, considering it does not have a PE in India. The Revenue argued that the services provided under the new agreements were essentially the same as those under the previous agreements, which were taxed as FTS.

5. Deduction of Tax at Source:
The Applicant sought to determine whether the payments received under the new agreements are subject to deduction of tax at source under section 195 of the Act, and if so, the applicable rate of tax. The Revenue's position was that the Applicant had consistently treated similar receipts as FTS and paid taxes accordingly in previous years.

Pendency of Issues:
The Revenue objected to the admission of the application, arguing that the issues raised were already pending before the Income Tax Authority due to the ongoing scrutiny for A.Y. 2016-17. The Applicant countered that the questions pertained to agreements effective from 01/04/2017, making A.Y. 2018-19 the relevant year for examination. The Authority concluded that the scrutiny for A.Y. 2016-17 was limited to reconciling receipts and tax credits and did not involve examining the nature of services under the new agreements. Therefore, the issues raised in the application were not pending before the Income Tax Authority.

Conclusion:
The Authority held that the issues involved in the questions raised by the Applicant were not pending before the Income Tax Authority. Consequently, the application was admitted under section 245R(2) of the Act. The date of hearing will be communicated in due course.

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