TaxTMI 
TaxTMI 
2017 (1) TMI 246
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....the relevant facts. Same are in a narrow compass. This assessee manufactures and markets pharmaceutical products. It remitted following payments to overseas payees located at Switzerland, Canada and USA without deducting any TDS thereupon: Sr.No. Name of the recipient Country Date Amount Reason shown Remarks 1. RCC LTD Switzerland 22.11.2007 18.01.2008 CHF 66,570 2.080 Consultancy services Article 14 of DTAA with Switzerland 2. Anapharm 2500 Canada 16.08.2007 3.11.2007 US$ 2,03,582 " 43,625 Consultancy services Article 7 of DTAA with Canada 3. MDS Pharma Services USA 08.09.2007 04.08.2007 26.10.2007 US$ 396.80 US$ 99.20 " 892.80 Professional services Article 7 of DTAA with USA 4. Pharmaceutic al Development Group inc., USA 25.09.2007 25.10.2007 25.10.2007 US$ 1243.75 US% 1063.33 " 1063.33 Professional services Article 7 of DTAA with USA 4. The Assessing Officer passed section 201 and 201(1A) order in question dated 12.3.2010 raising impugned demand after holding that the above remittances were in fact in the nature of fee for royalty/technical services covered by de....
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.... from India, the source of income is in India . More importantly, even this issue has been acceded in the grounds of appeal (refer ground no.4) by the appellant and does not arise from the grounds raised. b) The appellant has harped on its claim that the services rendered to it does not 'make available' any technical knowledge etc to it. The appellant has failed to realize that 'make available' clause is not available in India-Switzerland Treaty. The fees for technical services may also be taxed in which they arise, according to this treaty. c) The appellant's reliance on the provision of the protocol, where in case of more liberal subsequent agreement with other OECD country allows for re-negotiation of the clauses in India- Switzerland Treaty; is of no avail because till it is actually renegotiated and approved, it doesn't make any difference. Therefore, the payment made to the Swiss company is of the nature of 'fees for technical services', is deemed to be income accrued in India u/s 9(l)(vii), is also taxable in India as per India-Switzerland DTA Agreement. The appellant has failed to deduct TDS while making the payment and h....
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.... India under section 9(l)(vii) is of the nature which is exempt from taxation in India under the DTA Agreements with Canada respectively. As there is no PE in India it would have to be seen whether, in which country and how the 'fees for technical services' are taxable as per the DTA agreements. The appellant's contention is that Article 12(4)(b) of the DTAA between India and Canada is not applicable since the non-resident parties did not 'make available' any technical knowledge, experience, skill, know-how or processes. In this case the concern in Canada were conducting tests on the drugs which were already researched and after analyzing the drugs on the required parameters final reports were submitted to the assessee. I have perused the submissions made by the Appellant as well as the order passed by the AO. On perusal of the decisions cited by the Appellant it can be concluded that service, which is technical in nature can be said to be "fees for included services" only when it "make available" technical knowledge or skills to the recipient of services i.e. only when recipient of services can apply the same on his own. In this connection observations made ....
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....facts of the appellant's case. The same view has been followed in various decisions including decision of Mumbai Special Bench in the case of Mahindra &. Mahindra Limited (313 ITR 263). In view of the provisions of Article 12 of DTAA read with above referred judicial precedents, I inclined to agree with the submissions that services cannot be categorised as "fees for included services" under the DTA Agreements with Canada and therefore the income of the non-resident is not taxable in India as the more favourable DTA A provisions are to be applied. Therefore, it is held that the income of the non-resident concern in the facts and circumstances of the case are not taxable in India." 7. This is followed by lower appellate findings in case of assessee's USA remittances decided against the Revenue as reproduced in succeeding paragraphs: "5.4.3 I have gone through the facts of the case, the AO's order, the submissions and the India-USA DTA Agreement. I do not agree with the appellant when he says that the source of income is outside India just because the sales which would be made benefiting from these professional services would be made outside India. The income accrues....
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....ect to payments made for technical services. It is contended that the assessee is very much entitled to raise "make available" plea with regard to impugned technical services that its payee did not part with any technical knowhow which could be used independently on its own. It then quotes case law (2015) 167 TTJ 217 (Pune) Sandvik AB Vs. DDIT accepting very plea in case of an identical Protocol to Indian-Sweden Double Taxation Avoidance Agreement. The assessee accordingly seeks to delete the impugned demand pertaining to its swiss remittances hereinabove. 9. The Revenue strongly supports CIT(A)'s order extracted hereinabove. 10. We have heard both the parties. Relevant findings/case records stand perused. There is hardly any dispute about section 90(2) of the Act envisaging that in case there exists a Double Taxation Avoidance Agreement in respect of any country, provisions of the Act apply to the extent they are more beneficial to such an assessee and not otherwise. The assessee in the instant case refers to Indo-Portuguese DTAA containing "make available" condition to be applied in case of its Swiss remittances as per Indo-Swiss DTAA Protocol on the ground that although su....