AI Drafter 
TaxTMI 
TaxTMI 
2022 (6) TMI 440
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.... law, the Ld. CIT(A) was justified in not holding that in absence of any specific article for taxation of Fees for Technical Services, it shall be governed by Article 22 of tax treaty and not as per Article 7 of the tax treaty between India and Thailand." 3. Brief facts of the case are that the assessee has a company incorporated in Thailand and offers a number of services, such as, business planning and coordination, engineering services, product research and development etc. to its Indian subsidiary. On offering these engineering services, the assessee obtained a revenue of Rs. 9,01,61,150. The assessee did not offer the aforesaid amount for tax as the DTAA between India and Thailand did not have any article pertaining to taxation of I....
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.... to the Indian entity is business income of the assessee. The argument of the AO, that it cannot be classified under Article 7 as business income since there is no PE in India, is also incorrect. The Article 7 per se, lays down the taxability of business income in respect of the contracting states. The article states that business income will be taxed in the contracting state of which the taxpayer is a resident except for cases where the business operates through a PE in the other contracting state. It is seen that the reference, in fact, to the PE for the purpose of determining the taxability in the other contracting state. The substantive part of Article 7 therefore, deals with any and every type of business income. The assessee has rende....
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....on, we do not find any infirmity in the order of ld. CIT(A). The reasoning given by ld. CIT(A) and the reliance upon Hon'ble Madras High Court decision in germane and support the case of the assessee. Ld. DR for the Revenue could not point out any fault in the ld. CTI (A)'s order. Hence, we agree with the view expressed by ld. CIT(A). 7. In this regard, following case laws duly support the above proposition, which have been relied upon by the assessee before the Revenue authorities:- "Hon'ble Madras High Court ("HC") in the case of Bangkok Glass Industry Co. Ltd. [2013] 34 taxmann.com 77 In the give case, the assessee, a non-resident company of Thailand, entered into technical assistance know-how agreement w....
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....art. 22 is concerned, we do not find any justifiable ground to uphold this portion of the order after the discussion on the extent of income falling for consideration under royalty as defined under art. 12 and the amount paid as towards technical services falling for consideration under art. 7. Since the said income does not fall as miscellaneous income, the same cannot be brought under art. 22... " Hon'ble Delhi Tribunal in the case of Paradigm Geophysical Pty. Ltd. [2008] 25 SOT 94 The Hon'ble Delhi Tribunal while ruling in the case held that where the business profits of the non-resident include items of income for which specific or separate provisions have been made in other articles of the tax treaty, then tho....
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....item of income sought to be taken out from the business profits. If there is no other provision in the treaty or if the provision made in the treaty is not found applicable or to cover the item of income sought to be taken out from the business profits, for whatever reason, then if follows that the particular item of income should continue to remain under article 7..." Hon'ble Delhi Tribunal in the case of Bharti Airtel Ltd. [2016] 67 taxmann.com 223 The Hon'ble Delhi Tribunal while deciding the case opined that where there is no FTS clause available in the treaty with a country, then the income in question would be assessable as business income and it can be taxed in India only if there is a permanent establishmen....