Referral services not making available technical know-how are not taxable in India absent a permanent establishment.

Referral fees for merely connecting clients and candidates were not taxable in India as royalty or fees for technical services because the activity did not involve any transfer of technical knowledge, experience, skill, know-how or processes, and the treaty "make available" test was not satisfied. The receipts also were not taxable as business profits under the India-UK treaty because no permanent establishment existed in India; the stated Indian address was only a virtual office and did not amount to a fixed place of business or dependent agent arrangement. Accordingly, no tax was required to be withheld under section 195.

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Issues: Whether the referral fee received by the applicant from Indian clients for proposed referral services was liable to tax withholding under section 195 of the Income-tax Act, 1961 read with the India-UK Double Taxation Avoidance Agreement.

Analysis: The referral activity did not amount to royalty or fees for technical services. Collecting and supplying candidate information or making referrals did not constitute ancillary and subsidiary services to any royalty-related right or information, and it did not involve making available technical knowledge, experience, skill, know-how or processes to the recipient. The treaty expression "make available" requires transmission of technology or expertise so that the recipient can independently apply it, which was absent here. The receipts also could not be taxed as business profits under the treaty because, on the facts stated, the applicant did not operate through a permanent establishment in India; the asserted Indian address was only a virtual office and not a fixed place of business or dependent agent arrangement.

Conclusion: The referral fee was not chargeable to tax in India under the treaty and no tax was required to be withheld under section 195.

Ratio Decidendi: Referral services that merely connect clients and candidates do not, without more, make available technical knowledge or experience and are not taxable in India as fees for technical services or business profits in the absence of a permanent establishment.

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