Treaty protection for GDR and FCCB underwriting receipts: commission and expense reimbursements were not taxable as technical services.

Under the India-UK DTAA, underwriting commission and reimbursement of expenses received for issue of GDRs/FCCBs were treated as business income, not fees for technical services, because the services were not made available in the treaty sense and no attribution to a permanent establishment in India was shown. The Tribunal followed its earlier decision in the assessee's own case and Raymond Ltd, and applied section 90(2) to give effect to the more beneficial treaty treatment. The receipts were therefore not chargeable to tax in India, and the Revenue's challenge failed.

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Issues: Whether underwriting commission and reimbursement of expenses received in connection with the issue of GDRs/FCCBs by an Indian company were taxable in India as fees for technical services under the India-UK DTAA.

Analysis: The issue was held to be covered by the Tribunal's earlier decision in the assessee's own case and by the decision in Raymond Ltd. The governing treaty provisions were applied to hold that the receipts constituted business income and not fees for technical services. In the absence of attribution to a permanent establishment in India, and since the services were not made available to the Indian companies in the treaty sense, the receipts were not chargeable to tax in India. Section 90(2) entitled the assessee to the more beneficial treaty treatment.

Conclusion: The receipts were not taxable in India as fees for technical services under the India-UK DTAA, and the Revenue's challenge failed.

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