India-Thailand DTAA: Non-Resident’s Fee for Technical Services Exempt from Taxation

Solvay Asia Pacific Pte. Ltd. Vs DCIT (ITAT Delhi)

Introduction: The case of Solvay Asia Pacific Pte. Ltd. versus the Deputy Commissioner of Income Tax (DCIT) before the Income Tax Appellate Tribunal (ITAT) Delhi revolves around the taxability of income derived from providing business support services to Indian group entities under the India-Thailand Double Taxation Avoidance Agreement (DTAA).

Detailed Analysis:

1. Background: Solvay Asia, a Thai company, provided various business support services to its Indian group entities during the assessment year 2014-15, receiving substantial amounts in return. The dispute arose regarding the taxability of these receipts under Indian tax laws.

2. Assessee’s Contentions: Solvay Asia argued that the income derived from providing business support services should be treated as business income and taxed accordingly. It contended that since the India-Thailand DTAA does not contain provisions for taxing Fees for Technical Services (FTS), the income cannot be subjected to tax in India.

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