2005 (9) TMI 26

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....s advance rulings of this Authority on the following three questions:- • Whether applicant is required to deduct tax at source in respect of the monthly payments (consultancy fees $ 10000) made to consultant whose office and area of operation is situated in U.S.A. [As per agreement dated 1 st March, 2004- Copy of Agreement Attached]. • Whether applicant is required to deduct tax at source in respect of commission payable @ 10% on the orders procured by the consultant to the applicant. • Whether applicant is required to deduct tax at source in respect of the reimbursement of payments made to "Consultant" who had engaged/engages the services of professionals for rendering services to the applicant from time to time. [copy of bi....

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....c drugs and formulations to be manufactured by WALLACE and exported to United States; and • Carry out additional projects and services in the Field, as mutually agreed upon (collectively 'Services'). SERVICES shall include but are not limited to telephone time, on-site consulting at WALLACE or elsewhere, review of written documents and data, and preparation of written documents. It is, further, submitted that PENSER had utilized the services of an Advocate and paid him $30,000 which was reimbursed by the applicant. The TDS in India is not recognized by USA Tax Authorities. It is asserted that the services have been rendered to the applicant outside India, in USA , therefore, the applicant need not deduct tax @ 20%/15% on the aforeme....

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....ct, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which - • is received or is deemed to be received in India in such year by or on behalf of such person ; or • accrues or arises or is deemed to accrue or arise to him in India during such year. 7. It is not in controversy that consultancy fee payable under the agreement of 1 st March, 2004 by the applicant to PENSER falls within the meaning of "fees for technical services" in Explanation 2 to clause (vii) of sub-section (1) of section 9 of the Act. It would be apt to refer to clause (vii) of sub-section(1) of Section 9 of the Act in so far as it is relevant for our purpose. Section 9 Income deemed to a....

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....ay of promoting sales or otherwise is utilized in India by the applicant. The sales are effected by the applicant in India albeit with customers outside India. The nature of consultancy services include "identifying certain target pharma and biotech companies in the United States and outside ("PROSPECTS") to market WALLACE's products along with any or all support from WALLACE's product team" as per clause (d) of the Agreement. Clauses (f) and (g) require PENSER to explain to PROSPECTS the capability of WALLACE to promote, distribute and sell their products in India the prevailing laws of India for Trademarks and Patents and that all legal and administrative formalities in India, including product registration and EMR filing, on behalf of PE....