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2011 (1) TMI 126

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....y group of entities, the primary business of which were to render strategic consultancy services to other clients for meeting their performance, profitability, productivity etc. McKinsey India which was one of the entities, had during the year received certain data, information and other advisory support for which a sum of Rs. 1,71,39,988/- had been paid to the assessee. The assessee claimed that the receipts were business receipts and since the assessee did not have any permanent establishment (PE) in India the same could not be taxed under Article 7 of DTAA between India and Canada. The AO however observed that the assessee had not filed details pertaining to the project in respect of which information was made available and utilized by M....

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.... referred to the provisions of Indo US Treaty which were similar to the provisions of Indo Canada Treaty. He noted from the MOU of the Indo-US treaty that the consultancy services were nothing but advisory services whether or not expertise in a technology was required to perform such services. The relevant portion of MOU was reproduced by the AO as under: "Article 12 includes only technical and consultancy services. By technical services we mean in this context, advisory services. However, the category of consultancy services also includes advisory service, whether or not expertise in a technology is required to perform it." 4. The AO thus concluded that the payment received by the assessee was nothing but 'fees for included services' und....

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....of the Treaty as business income. The decision of the CIT(A) that consultancy services could not be considered as included services under Article 12(4) as well as the decision holding that the assessee had no PE in India has been challenged by the department before the tribunal. 6. We have heard both the parties, perused the records and considered the matter carefully. The Learned AR for the assessee submitted that the assessee vide letter dated 28.12.2007 a copy of which was placed at page 45 of the paper book had provided the details of services and the projects in which these were utilized. The AO was therefore not correct in stating that details and evidences had not been given. However, we notice that the said letter was filed in the ....