AI Drafter 
TaxTMI 
TaxTMI 
2016 (8) TMI 166
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....esident company incorporated in France as a limited liability partnership. It is stated that Steria France centralizes technical skills for carrying on management functions such as legal finance, human resources, communication risk control, information systems, controlling and consolidation, delivery and industrialization, technology and management information services. It is also stated that the Steria France does not have any office presence or personnel in India and that it does not have a Permanent Establishment ('PE') in India as defined in the Double Taxation Avoidance Agreement ('DTAA') between the India and France entered into on 29th September, 1992. 3. A Management Service Agreement was entered into on 1st January, 2009 between the Petitioner and Steria France. Under the said agreement, Steria France was to provide various management services to the Petitioner with a view to rationalise and standardise the business conducted by the Petitioner in India. Services under the broad category of General Management Services included Corporate Communication Services, Group Marketing Services, Development Services, Information System and Services, Legal Services, Human Relation ....
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....inition of the expression 'fees for technical services' appearing in the Indo-UK DTAA, must be read as forming part of the India- France DTAA as well. The AAR, by the impugned order, disagreed with the Petitioner. It ruled that the Protocol could not be treated as forming part of the DTAA itself. It further held that restrictions imposed by the Protocol were only to limit the taxation at source for the specific items mentioned therein. The restriction was only on the rates. Further, the 'make available' clause found in the Indo-UK DTAA could not be read into the expression 'fee for technical services' occurring in the India-French DTAA unless there was a notification under Section 90 of the Act issued by the Central Government to incorporate the less restrictive provisions of the Indo-UK DTAA into the India-France DTAA. In other words, the plea of the Petitioner that Clause 7 of the Protocol did not require any separate notification and could straightway be operationalised was not accepted by the AAR. 8. Consequent on the above ruling of the AAR orders under Section 201(1) and 201(1A) were passed against the Petitioner which have been challenged by the Petitioner by amending the....
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....ng in or by educational institutions; (d) for services for the private use of the individual or individuals making the payment; or (e) to an employee of the person making the payments or to any individual or partnership for professional services as defined in Article 15 (independent personal services) of this Contention" 12. At this juncture, it is necessary to refer to Clause 7 of the Protocol executed separately between India and France which forms part of the DTAA. Clause 7 thereof which is relevant for the present purposes reads as under: "At the time of proceeding to the signature of the Convention between France and India for the avoidance of double taxation with respect to taxes on income and on capital, the undersigned have agreed on the following provisions which shall form an integral part of the Convention. ....... 7. In respect of articles 11 (Dividends), 12 (Interest) and 13 (Royalties, fees for technical services and payments for the use of equipment), if under any Convention, Agreement or Protocol signed after 1-9-1989 between India and a third State which is a member of the OECD, India limits its taxation at source on dividends, interest, royalties....
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....tion placed on Clause 7 of the Protocol. The words "a rate lower or a scope more restricted" occurring therein envisages that there could be a benefit on either score i.e. a lower rate or more restricted scope. One does not exclude the other. The other expression used is "if under any Convention, Agreement or Protocol signed after 1-9-1989 between India and a third State which is a member of the OECD". This also indicates that the benefit could accrue in terms of lower rate or a more restrictive scope under more than one Convention which may be signed after 1st September 1989 between India and a State which is an OECD member. The purpose of Clause 7 of the Protocol is to afford to a party to the Indo-France Convention the most beneficial of the provisions that may be available in another Convention between India and another OECD country. 16. The AAR appears to have failed to notice that the wording of Clause 7 of the Protocol makes it self-operational. It is not in dispute that the IndiaFrance DTAA was itself notified by the Central Government by issuing a notification under Section 90 of the Act. It is also not in dispute the separate Protocol signed between India and France si....
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....ailable" to the Petitioner by the DTAA with France. 20. Mr Ganesh, learned Senior Counsel made a reference to the decision of the ITAT in DCIT v. ITC Ltd. (2002) 82 ITD 239 (ITAT Kolkata), where the Protocol separately executed between the India and France which formed part of the DTAA between the two countries was interpreted. It was held by the ITAT, and in the view of this Court correctly, that the benefit of the lower rate or restricted scope of fee for technical services under the Indo-French DTAA was not dependent on any further action by the respective governments. It was held that the more restricted scope of fee for technical services as provided for in a DTAA entered into by India with another OECD member country shall also apply under the Indo-French DTAA with effect from the date on which the Indo-French DTAA or such other DTAA enters into force. 21. It has been contended by Mr. Chaudhary that the question as to the exact nature of the services provided by the Petitioner under the Management Services Agreement has not yet been examined by the AAR. It is further pointed out that the contention raised regarding Steria France having a PE in India and its income being....