2014 (5) TMI 629 - AAR - Income Tax

Payment made for management services DTAA between India and France - the term make available is not figuring in the treaty - Whether the payment made by Steria for the management services provided by Groupe Steria SCA will not be taxable in India in the hands of Steria France and whether the applicant will be liable to withhold tax as per the provisions of Section 195 of the Act from the payments made / to be made to Steria France under the Management Services Agreement Held that - The said Notification does not include anything about the make available provision. Had the intention of the Protocol or the Government is to include make available clause in the Tax Treaty between India and France it should have been done so in the said Notification. We have taken note of the Notification issued in the case of India Netherland Tax Treaty whereby the Protocol was given effect to. The changes in the Treaty on the basis of the Protocol were given effect by Notification only. We do not see any reason as to why different treatment will be given in the present case. Relying upon Perfetti Van Melle Holding B.V. 2011 (12) TMI 17 - AUTHORITY FOR ADVANCE RULINGS - A Protocol cannot be treated as the same with the provisions contained in the treaty itself though it may be an integral part of the Treaty - Tax Treaties are between two sovereign nations and every country has a particular relation with another countries and same treatment are not given to all the countries - ordinary meaning of the Treaties should be given while interpreting the provision of the Tax Treaties and even to the extent of liberal interpretation of the Treaty any clause cannot be imported like make available in the Treaty that is not there so as to change tax complexion of the Treaty provision. The services being accepted as technical services under the Act and the Tax Treaty the payment for the services will be covered by fees for technical services chargeable under the Act - The submission of the applicant that the services being managerial which was omitted in the definition of fees for technical services in the revised DTAA between India UK entered into in the year 1993 the managerial services rendered by the applicant will also automatically be omitted in the definition of fees for technical services under the Tax Treaty between India-France by application of the Protocol is also not acceptable. The payment for services rendered by the applicant will falls under the definition of fees for technical services even under the Tax Treaty between India-France - the payments made by the applicant for the services rendered comes under the definition of fees for technical services both under the Act and the Treaty and is liable to tax in India thus the payment made by Steria (India) Limited for the management services provided by Groupe Steria SCA will be taxable as Fees for Technical Services - as the consideration for the services is held to be taxable in India the applicant will be liable to withhold tax as per the provision of Section 195 of the Income-tax Act 1961 from the payments made/to be made to Steria France Decided against the assessee.