Tungsten Automation England Limited Vs DCIT (Delhi High Court)
Delhi High Court held that payments received for services that may require technical expertise, technical inventions or technology would not qualify as Fees for Technical Services under Article 13 of the India-UK DTAA. Accordingly, appeal allowed.
Facts- The Assessee is a company incorporated under the laws of the United Kingdom [UK] and is a tax resident of the UK. The Assessee is a wholly owned subsidiary of Tungsten Corporation Plc, which is also a company incorporated in the UK. AO received information to the effect that the Assessee had received certain amounts during the financial years relevant to the assessment years in question – an amount of ₹2,93,92,810/- during the previous year relevant to AY 2016-17 and a sum of ₹3,31,98,980/- during the previous year relevant to AY 2017-18 – from Genpact India Pvt. Ltd. [GIPL] being a company incorporated in India.
The Assessee claimed that the amounts received for rendering services under the said agreements were its business income and were not chargeable to tax under the Act as it did not have any permanent establishment [PE] in India.
However, AO did not accept that the amounts received by the Assessee from GIPL were not chargeable to tax under the Act. According to the AO, the said amounts were required to be treated as “fees for technical services” [FTS] within the scope of Article 13 of the India-UK DTAA.
