AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (11) TMI 65
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....13) of the Income Tax Act (the Act) assessing the income of the appellant at Rs. 117350220/- instead of return income of Rs. 32804655/- is bad in law. 2. That in facts and circumstances of the case and in law the Hon'ble Dispute Resolution Panel (DRP) erred in not appreciating that once it is held that the receipts from service outside India amounting to Rs. 237750181/- are to be taxed as business income then the same is to be taxed to the extent the receipts are attributable to Permanent Establishment (PE) in India in view of the provisions of Article 5 read with 7 of the India UK Double Taxation Avoidance Agreement (DTAA of Tax Treaty) 3. That in the facts and circumstances of the case and in law, the Hon'ble DRP misinterpreted the attribution law and grossly erred in not appreciating that the attribution to the PE has already been examined and verified by the ld Transfer Pricing Officer (TPO) and the same has been accepted by the ld AO and accordingly, nothing more than that can be contributed to the PE. 4. That even otherwise the Hon'ble DRP ought to have held the receipts for the activities carried outside India cannot be attributable to India PE as per the sound cannons of....
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....ing that the receipts for work done outside India will be governed by Article 7 and not by Article 13 of the Double Taxation Avoidance Agreement even though such receipts pertain to services rendered outside India and have no nexus with PE? 2. Whether on the facts & circumstance of the case and in law, the Ld. DRP was correct in holding that the receipts for work done outside India should be assessed as 'FTS' on protective basis and not on substantive basis?" 4. The brief facts are that International Management Group UK Ltd. is a tax resident of United Kingdom in terms of Article 4 of Indo-UK Double Taxation Avoidance Agreement. It is engaged in the business of event management and talent representation activities in sports events such as golf, tennis, football etc. It primarily and its main activities are event creation, client representation and consultation. The Board of Control for Cricket in India [hereinafter referred to as 'BCCI'] entered into a Memorandum of Understanding for assistance in establishment, commercialization and operation of the India Premier League in September 2007 [herein after referred to as "IPL"). The first IPL event organized by Board of Contr....
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....dding thereto a sum of Rs. 10800000/- attributable to the permanent establishment on account of commission of the Citibank N.A. on account of sponsorship. Therefore from the gross receipt attributable to the PE of Rs. 92249819/-, deduction of expenses of Rs. 65159856/-was claimed and net profit of Rs. 32804660/- has been offered to tax at the rate of 42.23% on net basis as per section 44DA of the Income Tax Act 1961. Therefore in nutshell out of the gross receipt of Rs. 33,00,00,000/- , appellant stated that only gross receipt of Rs. 92249819/- is attributable to the Indian permanent establishment of the assessee and consequent profit of Rs. 32804660/- is the income of the assessee under the head business income chargeable to tax under the provisions of section 44 DA of the Income Tax Act 1961. 6. During the course of assessment proceedings the Ld. AO asked the assessee about the taxability of remaining receipt of Rs. 23,77,50,181/- (being Rs. 33,00,00,000/- - Rs. 9,22,49,819/- ) stating that such balance amount is Fees for Technical Services [ hereinafter referred to as 'FTS'] considering the fact that the whole of the receipt is taxable in India as services are rendered in India....
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....ii) (b) of the act cannot be accepted. He further submitted that though the applicability of the Double Taxation Avoidance Agreement is not denied but the term 'make available' has not been defined and further the benefit of protocol relied upon by the appellant is also misplaced . He further relied on ruling of the advance authority in case of Shell India Markets Private Limited and submitted that the BCCI would be able to equip itself to carry on the IPL events subsequently and therefore in fact the appellant has 'made available' the procedures, the protocols ,the agreements etc for organizing the Indian Premier league. He further stated that merely because the services are being provided it is 'made available' to the assessee. According to the Ld. AO it is difficult to accept the contention of the assessee for the simple reason that merely the assessee has been engaged on regular basis cannot be construed to mean that it does not enable the BCCI adequate skill in case it desire to do so to organize the independent event on its own basis without the help of the appellant .Therefore according to the Ld. A O it satisfies the 'make available' concept also and hence it is chargeable ....
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....37750181/- as fees for technical services considering the nature of the services being rendered by the assessee and upheld by the Ld. the DRP. Therefore, he computed the income of the appellant at Rs. 270554840/- considering the receipt of Rs. 237750181/- as fees for technical services over and about the returned income of the assessee of Rs. 32804660/- on protective basis. 9. The above order of the Ld. AO incorporating the direction of the Ld. DRP is challenged by both the parties. Against the assessment order under section 143 (3) assessee has filed an appeal against the addition of Rs. 84545561 being the profit on the above mentioned gross receipt of Rs. 237750181/- as further profits attributed to the permanent establishment of the appellant and also against the protective assessment of sum of Rs. 237750181/- as fees for technical services. Revenue has also filed an appeal against the order of the Ld. DRP challenging that that such income of Rs. 237750181/-is chargeable to tax under article 7 and not under article 13 of the Double Taxation Avoidance Agreement even though such receipts pertain to services rendered outside India and have no nexus with the permanent establishment....
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....the future events in the subsequent year. Further as per article 7 of the DTAA income as is attributable to the PE can only be taxed in India. He further stated that out of the total receipt of Rs. 33 crores the receipt of Rs. 9.22 crores is attributed to the permanent establishment under article 7 of the DTAA applying the Transactional net marginal method (TNMM) based on FAR analysis and activities carried out in India therefore the balance of Rs. 23.77 crores pertains to the work done outside India and is not taxable in India as per the provisions of the article 13 and article 7 of the DTAA. For this proposition he relied on the decision of the Hon'ble Supreme Court in the case of Ishikawajima Harima Heavy industries limited (288 ITR 408). It was further submitted that that once a portion of the FTS attributed to the permanent establishment as business profit than the balance fees cannot be taxed in the hands of the assessee as fees for technical services. For this he relied upon the decision of the Mumbai tribunal in case of Nippon Kaiji Kyokoi (2011 - TII - 115 - ITAT - MUM - INTL ). He further submitted that the above legal position was also accepted by the Ld. AO in the asses....
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....roduct which embodies technology shall not be considered to ' make technology available. In his arguments, main thrust was that that the BCCI has entered into this agreement for 9 subsequent events to be conducted of IPL and therefore had these technical expertise been obtained by the BCCI there was no need to award the contract to the appellant for such a long substantial period. He submitted that the services provided by the appellant are of highly specialized nature and do not make available technical know-how, skill etc to the BCCI. He relied on the decision of coordinate bench in case of NQA quality systems registrar Ltd versus Deputy Commissioner of Income Tax (2005) 2 SOT 249 (Delhi). He further referred to the several decisions on 'make available' concept. He further relied on the decision of the Hon'ble Delhi High Court in case of Guy Carpenter and company 346 ITR 504 on this concept. He further submitted that the reliance by the Ld. AO on the decision of the Supreme Court of India in case of Oberoi Hotels India private limited and on the decision of authority of advance ruling are misplaced for the reason that Hon'ble Supreme Court considered the applicability of section ....
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....es since assessee himself says that the amount of Rs. 33 crores is fees for technical services out of which Rs. 9 crores is falling within the provisions of article 13(6) of the act therefore obviously the balance amount of Rs. 23 crores is chargeable to tax as fees for technical services. He further submitted that whatever is covered under article 13 (6) that amount only changes the characteristics from the fees for technical services to the royalty and the balance shall always remain as fees for technical services chargeable to tax. He further submitted that it is not mandate of the law as well as the Double Taxation Avoidance Agreement that full sum which is fees for technical services, the moment it is found to be ' Effectively connected' to the Permanent Establishment, article 13 (6) of DTAA triggers, even if the small amount is charged to tax under article 7 of the DTAA , the balance amount is not to be taxed. 17. He further referred to the audited accounts of the company referring to page No. 47 of the paper book which is the profit and loss account for the year ended 31st of March 2010 where in this amount is stated to be fees for technical services. He further referred to....
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....nd auction of the players, hospitality guidelines in relation to the league, provision of legal handbooks, advise and assist in connection with the player contracts, management of the annual player trading window and assist in the creation or development of new intellectual properties relating to league and all such properties created will be the sole property of the Board of control for Cricket in India. Appellant shall also provide by bringing in global best practices in building and evaluating sporting properties and related aspects. He further referred to the clause No. 6 of the agreement which talks about the consideration being paid to the appellant of Rs. 33 crores as the payment, which is related to the consideration for the IPL 2009. In view of this, he submitted that all these are written documents and therefore they are made available to the BCCI. It is further submitted that all the intellectual property rights also belong to the BCCI and therefore nothing is left with the appellant. By citing all these clauses of the agreement, he submitted that the recipient has to be enabled and it is not necessary that he should use it all this documents, which makes the BCCI able t....
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....he UK office to the BCCI in which there is no role of the Indian permanent establishment of the appellant. Therefore there has to be some amount of income which requires to be attributed to the such activities carried out by the head office which has no connection with the income which is attributed to the permanent establishment. Therefore he submitted that there is much more which should be charged to tax in India over and above whatever is attributed by the appellant himself to the permanent establishment of the appellant in India. Therefore he assailed that the argument of the appellant that if the amount is attributed to the PE there is no further attribution which is required to be done in case of the appellant. He submitted that for all the services other than those mentioned above which are specifically listed at page No. 5 of the assessment order only 5 to 6 activities are required to be carried out with the assistance of the permanent establishment whereas the balance activities are required to be carried out by the appellant from outside India independently. He further stated that even in those 5 to 6 activities also the role of the permanent establishment is very minima....
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.... transaction at arm's length does not have any relevance with respect to taxability of the balance sum over and above Rs. 9 crores. 23. He further submitted that there cannot be an overemphasis on MOU between India and the USA Double Taxation Avoidance Agreement. He further referred to para No. 5.2 to 5.4 of the order of the Ld. DRP wherein it has been held that in order to fall within the exceptions provided under section 9 (1) (vii) (b) that it is the source of income which needs to be considered and not the receipt which should be situated outside India. In the present case, he submitted that that in order to get the benefit of the exception it is necessary for the taxpayer to show that the technical services were utilized in a business carried outside India by the payer. He therefore submitted that source of the income of the appellant resides in India and merely because the event has been held outside India in South Africa the sources of receipt is irrelevant. He stated that the source of such income is BCCI who is hosting an IPL event and is residing in India. 24. He further referred to the para No. 7.5 of the agreement of the appellant with BCCI which speaks that BCCI has ....
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....he agreement and the assessee may be directed to produce all such agreements to determine the correct nature of income of the appellant. 27. On the subsequent date of hearing the clarification was sought from the parties with respect to the services rendered by the permanent establishment of the assessee and services which are rendered by the head office of the assessee which are directly provided to the appellant and how they are effectively connected with the PE of the assesse, whether the issue of Rs. 23.77 crores was available before the Ld. transfer pricing officer while framing the order on the aspect of arms length price, further evidences were sought regarding details of services rendered by United Kingdom company to examine 'make available' concept and taxability or otherwise as per Indo UK DTAA of Rs. 23.77 Crores . 28. In response to this the Ld. authorized representative submitted a detailed reply dated 30 /06/2016. With respect to the query that how the services rendered by UK company to BCCI were effectively connected with the PE in India with respect to the services rendered by PE and services rendered by the UK company directly on account of the service agreement,....
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....t had the technical know-how skill etc were made available to the BCCI it would not have given any contract to the assessee for 9 subsequent IPL events commencing from IPL 2009 event , therefore, that itself suggests that there is no satisfaction of 'make available' concept in the services rendered by the UK head office of the appellant. On query from the bench about the status of the subsequent assessment years he submitted that in subsequent years also the revenue has taken similar stand where over and above the attribution of profits to the permanent establishment accepted by the Ld. TPO , Ld. AO has taxed balance receipt taxable as fees for technical services. He further added that these issues are pending with the various authorities. 29. In the rejoinder to the submission dated 30/06/2016 of the appellant, Ld. Departmental Representative submitted that admittedly the Ld. TPO has held that no further income is required to be attributed to the PE and Ld. assessing officer has accepted by not attributing any further income to the permanent establishment of the appellant. However he has taken such balance portion as fees for technical services therefore the contention of the of ....
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....d that is not the case here. He submitted that what is attributable to a permanent establishment and chargeable to tax under article 7 will get the benefit of deduction of expenses whereas in case of the article 13 it is chargeable to tax on grass basis. In view of above he vehemently supported the order of the ld AO. 30. We have carefully considered the rival contentions and perused the relevant material placed before us. We have also considered various judicial pronouncements cited by the parties before us. The short controversy involved in the present case is that appellant company has received Rs. 33 crores as remuneration in terms of a contract entered into with Board of control for Cricket in India (BCCI). Out of which assessee has contended that gross receipt of Rs. 92249819/-has already been offered for taxation claiming it attributable to its permanent establishment in India with respect to functions and activities carried out by its permanent establishment in India. Accordingly appellant offered resultant income as business income of Rs. 32804660/- after deducting expenses there from. However the dispute between the appellant and revenue is that whether the sum of the ba....
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.... chargeable to tax as fees for technical services as under the article 7 only Rs. 9.22 crores have been held to be attributable to the activities of the permanent establishment and balance sum of Rs. 23.77 crores still remains the fees for technical services and it is further submitted that it satisfies 'make available' test and hence same is chargeable to tax under article 13 of the Double Taxation Avoidance Agreement. 31. The basic edifice of the controversy is based on 2 documents entered into between the board of control for Cricket in India as well as the appellant. The 1st is the memorandum of understanding between the 2 parties dated 13/09/2007 and service agreement dated 24/09/2009. According to the memorandum of understanding it has been agreed between the parties that appellant shall provide services by conducting research in respect of the appropriate structure for the IPL and make cut recommendations to BCCI. Further the appellant shall provide appropriate presentation documentation in the research on various presentations to be made based upon which the BCCI will decide upon the most appropriate structure for the IPL under advice from the appellant. The BCCI has requi....
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....b) the authority of the Governing Council of the IPL (c) the structure of the tournament; (d) the IPL tournament rules and regulations (e) the franchise tender document (f) the franchise agreement and any necessary franchise regulations (g) the IPL implementation budget 1.4 In addition to the matters referred to in paragraph 1.1 to 1.3 above IMG shall carry out/ provide (as appropriate) the following: (a) the development of a rights management process in respect of the commercial rights and assets of any kind arising out of the IPL including, without limitation * Franchise rights * Media rights  Sponsorship rights * Official suppliership rights * Licensing and merchandising rights * Stadium signage rights Together the Rights (b) advice in respect of those of the Rights which may be 100% owned centrally and the division of the Rights between BCC1 and the Franchisees; (c) the preparation and execution of marketing strategies for: * the Franchise tender * the media Rights * the sponsorship Rights * the official supplier Rights * the licensing Rights * any other Rights (d) the management of the Franchise tender process; ....
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....as under:- "4. IMG's Obligations IMG shall during the Representation Period provide the services set out in Clauses 4.1 and 4.2 (the "Services") it being acknowledged that a significant proportion of the Services constitutes advice provided to the BCCI from outside India using IMG's international expertise and resources. 4.1 Having carried out research and advised the BCCI in connection with the with the formation and governance of the League and IPL, IMG shall continue to advise and assist BCCI in connection with, the following: (a) the structure of the League; (b) the League rules and regulations; (c) the Franchise agreements and any necessary franchise regulations: (d) the League implementation budget; and (c) the Media Rights agreements. i 4.2 the addition to the matters referred to in Clause 4.1 above, IMG shall continue its work in carrying out or providing (as appropriate) the following; (a) the ongoing execution of the management in respect of the Rights of BCCI and advice in connection therewith including, without limitation:; (i) Franchise Rights; (ii) Media Rights; (iii) sponsorship rights; (iv) official suppliership rights; (v) li....
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....ith the successful naming of the League and Matches including the provision of a CUIH staffed, office to do the same, at the sole cost of MG; (s) the hiring of whatever resources are required to fully perform IMGs obligations under this Agreement at the sole cost of IMG; (t) advice and assistance in connection with Anti Doping and WADA Compliance Regulations; (u) assistance in the creation / development of new intellectual properties relating to the league. All such properties created will be the sole prop of BCCI (v) carrying out research in consultation with BCCI each year to ascertain un improvements in various areas of management and execution of the League (w) development of the strategic brand framework for BCCI and marriage brand IPL working with the BCCI team; (x) bringing-in global best practices in building and evaluating sporting properties and related aspects; (y) delivering a post event report at the end of each season and be subject to review on the performance and delivery of services rendered to BCCI." 34. The obligations set out in above paragraph has been further assigned between the UK office of the appellant and the Indian permanent establ....
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....gies for media rights, sponsorship rights, official supplier rights, licensing rights, etc. 7. Formulation of policies/ procedures and work plan relating to management of the franchise tender process in India 8. Formulation of policies/ procedures and work plan relating to management of the sales process in respect of the various aforementioned rights in India 9. Preparation of and offshore assistance in negotiation of contracts with sponsors, media, successful franchisees etc. 10. Preparation of television production specifications 11. Formulating policies/ procedures and work plan relating to running of the event in India, including setting out the logistics, manpower etc. Requirements along with IMG India PE 12. Development of best practice match day guidelines for franchisees and for the IPL along with IMG India PE 13. Development of best practice match day media guidelines along with IMG India PE 14. Undertaking offshore market/ industry analysis and supervision of research activities undertaken in India for identification of prospective sponsors along with IMG India PE 15. Advice and assistance in connection with the rules and regulations relating to the registrat....
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....e for short term visits. Further, few freelancers were appointed/ engaged by IMG UK for undertaking the on-ground implementation and related supervision activities in India. However, for reasons explained earlier in the report, the event was finally hosted/ held in South Africa. The announcement of the event location shifting from India to South Africa was made on March24, 2009, till which time the on ground preparations for the event were being done in India. Accordingly, for the 2009 event, IMG India PE was involved in performing the following activities: 1) Undertaking market/ industry research to assist IMG UK in identification of prospective franchisees and sponsors in India; 2) Providing liaison/ co-ordination support in dealing with the client/ BCCI, media partners, sponsors, franchisees etc. in India; 3) Functional Analysis 4) Along with BCCI, attending meetings with sponsors for execution of marketing strategies (developed by IMG UK) relating to sponsorship rights, official supplier rights, licensing rights, etc.; 5) Assistance in negotiation of contracts with sponsors, media, successful franchisees etc., by way of presence in joint meetings along with BCCI; 6....
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....oned earlier, IMG UK/ IMG India PE sub contracted certain routine services relating to on-ground implementation/ running of the event to IMC India Branch. IMG India PE was involved in/ responsible for overseeing and managing the liaisoning and implementation support activities undertaken by IMC India Branch. All these aforesaid activities were undertaken by IMG India PE under the framework, guidelines and policies prepared by IMG UK (from outside India). Any significant divergence or variation from the framework required specific approval from the Project leader, who was based in UK. Further, it must be noted that all the activities were undertaken in India purely as a sub contracted support service to IMG UK and India was not responsible for its services to the end client/ BCCI. Functional Analysis 4.4.3. Functions performed by deputed employees/ appointed freelancers in -South Africa Post the announcement of the fact that the 2009 IPL event would be hosted in South Africa, the UK employees and freelancers appointed/ engaged by IMG UK moved out to South Africa. Such employees and the freelancers appointed/ engaged by IMG UK for undertaking event implementation and related activ....
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....r under section 92CA (3) on 31/12/2013 wherein he has examined the transfer pricing documentation of the assessee with respect to fees for technical services amounting to Rs. 92249819/- , event management expenses of Rs. 11909828/- and reimbursement of expenses of Rs. 53430529/- totaling in all to Rs. 157590176/- pertaining to the transaction entered into with its associated enterprise i.e. IMG, United Kingdom and IMG USA applying the transactional net margin method for determining the arm's length price and has held that as stated in the prior year order, article 13 of the India UK Treaty read with article 7 of the treaty states that if assessee constitutes a service PE, the profits are attributable to the PE are to be taxed in the other contracting states that is in India. This implies that profits of the PE are rightly attributable to it should be taxed in India. He further held that after going through the facts and information submitted by the assessee during the course of the assessment proceedings, it is noted that the facts and circumstances of the IPL 2009 event are different from IPL 2008 event since IPL 2009 took place in South Africa unlike the previous IPL event 2008 w....
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....s in all circumstances is effectively connected with the permanent establishment and therefore the conclusion that the instant case only article 7 will apply. The Ld. appellant further stated that the effective connection has to be read in relation to the contract and not in relation to the services rendered and during the year assessee has only one contract entered into by the appellant with the BCCI for IPL 2009 event and due to that contract only the service PE is coming into existence and therefore the whole contract has been 'effectively connected' with the permanent establishment. The appellant has further submitted that in case if the bench is of the view that the balance consideration is not attributable to the permanent establishment for the services rendered by the appellant and it is in the nature of the fees for technical services as per the provisions of article 13 (4) ( c) , then also because of the PE the receipts would be taxed as business income under article 7 of the Tax treaty. Admittedly appellant is a UK resident and without any doubt the provisions of the Income Tax Act or the provisions of the Double Taxation Avoidance Agreement whichever is more beneficial t....
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....onsideration for the use of, or the right to use, any industrial, commercial or scientific equipment, other than income derived by an enterprise of a Contracting State from the operation of ships or aircraft in international traffic. 4. For the purposes of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term "fees for technical services" means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which : (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received ; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. 5. The definition of fees for technical services in paragraph 4 of this Article shall not include amounts paid : (a) for servic....
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....es for technical services paid exceeds for whatever reason the amount which would have been paid in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In that case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Convention. 9. The provisions of this Article shall not apply if it was the main purposes or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties or fees for technical services are paid to take advantage of this Article by means of that creation or assignment. [Underline supplied by us] 36. On perusing above article of the Double Taxation Avoidance Agreement it is apparent that if the fees for technical services are 'effectively connected' with the permanent establishment of the appellant in India then provisions of article 13 (6) shall be applicable to the assessee. In that case provisions of article 7 of the Double Taxation Avoidance Agreement shall apply to that income. 37. Provision of article 7 of the DTAA provides as under :....
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....ss of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere, which are allowed under the provisions of and subject to the limitations of the domestic law of the Contracting State in which the permanent establishment is situated. 6. Where the law of the Contracting State in which the permanent establishment is situated imposes a restriction on the amount of the executive and general administrative expenses which may be allowed, and the restriction it relaxed or overridden by any Convention between that Contracting State and a third State which is a member of the Organisation for Economic Cooperation and Development or a State in a comparable stage of development, and that Convention enters into force, after the date of entry into force of this Convention, the competent authority of that Contracting State shall notify the competent authority of the other Contracting State of the terms of the relevant paragraph in the Convention with that third state immediately after the entry into force of that Convention and, if the competent authority of the other Contrac....
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....ntation support activities undertake taken by the IMC India branch. It is also important to note that how this functions were performed it was stated in the transfer pricing study report of the appellant that IMG UK employees came to India from time to time for short-term visits. Further few freelancers were appointed/engaged by IMG UK for undertaking the on- ground implementation and related supervision activities in India. As these functions performed, assessee has claimed that it has created a service PE in India and therefore the income should be chargeable to tax according to the article 7 of the Double Taxation Avoidance Agreement. Therefore according to us the above agreements and memorandum of understanding has two limb one with respect to the performance of the activities performed by the permanent establishment in India and another limb deals with respect to the performance of the services by the IMG UK directly for which the India PE has nothing to do. Admittedly the issue is concerned with respect to the fees for technical services. It is also admitted position that while the effective connection of royalties with a permanent establishment has to be evaluated by applyin....
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....were appointed for undertaking the own ground implementation related supervision activities in India. Therefore according to us there are minimum activities performed by the PE of appellant in India. Hence just performing such minimum activities it cannot be said that whole of the revenue of Rs. 33 crores involved in the contract is 'effectively connected' with the activities of the permanent establishment in India. Hence we reject the contention of the assessee that the whole of the revenue involved in the contract should be considered as effectively connected with the permanent establishment of the appellant. We also give one more reason may be a hypothetical one which supports our view. Supposedly a contract of Rs. 100 crore is awarded to an overseas entity for rendering of the management services and if such overseas entity establishes a permanent establishment by just deputing its staff for more than 90 days, it creates a service permanent establishment of that for an entity in India. On the basis of the minimum activities performed by that particular staff which is deputed in India 10% of the gross receipt say 10 crores is attributed to permanent establishment and after claim....
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....visions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 (Business profits) or Article 15 (Independent personal services) of this Convention, as the case may be, shall apply." [Underline supplied by us] 41. on reading of the above article it is apparent that the provisions of paragraph 1 and 2 of this article shall not apply if the beneficial owner of the royalty fees for technical service, being a resident of a contracting state, carries on business in other contracting State in which the royalties or fees for technical services arise through a permanent establishment situated therein....
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.... two different articles of the Double Taxation Avoidance Agreement. These two phrases are (1) "attributable to ' in article 7 of the Double Taxation Avoidance Agreement, and (2) 'effectively connected with ' in article 13 (6) the Double Taxation Avoidance Agreement, because Indo US DTAA uses the same term 'attributable to' in place of 'effectively connected' with in article 12(6) of that agreement as under:- "6. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for included services, being a resident of a Contracting State, carries on business in the other Contracting State, in which the royalties or fees for included services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the royalties or fees for included services are attributable to such permanent establishment or fixed base. In such case the provisions of Article 7 (Business Profits) or Article 15 (Independent Personal Services), as the case may be shall apply." [underline supplied by us] Therefore, in the present case, according to us, out of the total receipt ....
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....processes in his own right. In the present case the assessee has hired for conducting research in respect of the appropriate structure for the IPL and makes recommendation to BCCI accordingly. It is required to provide the Constitution of the IPL, the authority of the governing Council , the structure of IPL, tournament rules and regulation ,the franchisee tender document ,the franchisee agreement, necessary franchisee regulation and the IPL implementation budget. According to the para No. 9 of the agreement that intellectual property rights remains with the board of control for Cricket in India. Even before us Ld. authorized representative could not point out that why 'make available test' has not been satisfied in this even by providing all the rules and regulations of IPL, standard operating procedures of matches, copies of the franchisee agreement, various documentation/ contracts etc which shall remain with the BCCI. Therefore in the present case according to us the BCCI is enabled to absorb and apply the information and the advice provided by the appellant to it for conducting such sporting events. According to us when all this documentation and material is provided to the BC....
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.... by- (a) the Government ; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person55 outside India or for the purposes of making or earning any income from any source outside India55 ; or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India56 or for the purposes of making or earning any income from any source in India : 48. According to provisions of section 9 (1) of the Income tax Act the income by way of fees for technical services payable by a person who is resident to a non-resident shall be deemed to accrue or arise in India and shall be chargeable to tax u/s 5 of the Income Tax Act in the hands of a non-resident. The claim of the appellant is that receipt of Rs. 237750181/- falls within the exception provided under clause (b) of the above section which says that where the fees for technical services are payable in respect of services utilized in a business or profession carried on by such person outside India or for the purpose of making or earning any income from any s....