TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 440
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.... 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 ITS. The AO in his assessment order has stated that since there is no Article for taxability....
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....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 rendered services and consideration has been received for the same. In the present case, the main business of the as....
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....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 with MBDL, in India for transfer of glass technology know-how. The assessee received technical know-how fees for five years, which was treated as ....
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....eration 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 those provisions would apply to the items. However, in case it is found that those provisions are not applicable then the items of income would have to be considered in Article....
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....e 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 establishment in India and the income is attributable to activities or functions performed by such permanent establishment. The relevant extract of the judgement has been reproduced below: "41. The next aspect....