Taxability of Payment for assignment of contractual rights in connection with the supply of products to foreign company not having PE

Recently, the Authority for Advance Rulings (AAR) in the case of Laird Technologies India Pvt. Ltd. [2010-TIOL-06-ARA-IT]  has held that the fees received by the USA company for assigning contractual rights to the applicant for supply of products in India is taxable as business profits and in the absence of a Permanent Establishment (PE) such consideration is not taxable in India under the India- USA tax treaty (the tax treaty). Accordingly, tax is not required to be deducted under section 195 of the Income Tax Act, 1961 (the Act) while making remittance outside India. Facts of the case The ...