Foreign Entity's Interconnectivity Charges Not Taxable in India; Lacks Human Involvement, Not FTS, No Permanent Establishment.

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....Interconnectivity usage charges received by a foreign entity from an Indian entity cannot be considered as Fees for Technical Services (FTS) under domestic law or the tax treaty. The services were provided without human intervention through an automated system, lacking the human element required for 'technical services' under Explanation 2 to Section 9(1)(vii). The charges cannot be treated as 'other income' u/s 56 or the residual Article 24 of the tax treaty, as they constitute business income covered under Article 7. Since the foreign entity did not have a Permanent Establishment in India, the business profits are taxable only in the country of residence. The interconnectivity charges are not taxable in India, either as FTS or other income.....