Nord Anglia Education Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi held that routine support services would not be taxable as Fees for Technical Services (FTS) in terms of the provisions of India-UK Double Taxation Avoidance Agreement (DTAA).
Facts-
The Assessee is a company incorporated under the laws of United Kingdom (UK) and is a tax resident of UK in accordance with the Article 4 of the India-UK Double Taxation Avoidance Agreement. The Assessee has also entered into a service agreement with its group entity in India, i.e., PBIL for rendering certain centralized administrative services (information technology, human resource, marketing and communication etc.) of routine nature to bring in efficiency in managing the operations of PBIL.
The receipts on account of cross charges amounting to 28,64,22,509/- from routine services provided to PBIL was not offered to tax in India relying on the provision of section 90(2) of the Act read with Article 13(4)(c) of the India-UK DTAA since these are routine managerial activities which do not allow PBIL to enjoy any right, property or information nor does it make available any technical knowledge, experience, skill, know how or processes to PBIL.
During the course of assessment proceedings, the AO proposed to treat the cross charge receipts from PBIL is taxable as ‘FTS’ under Section 9 of the Act as well as per Article 13 of the India-UK DTAA. DRP affirmed the draft order of the AO. Being aggrieved, the present appeal is filed.
