9911796707
TMI Blog2014 (5) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... , communication risk control, information systems, controlling and consolidation, delivery and industrialization, technology and the management information services etc. Steria France, for the purpose of the Act, is a non resident in India (as control and management of its affairs is situated wholly outside of India) and tax resident of France. Steria France does not have any office, presence or personnel based in India so as to constitute a permanent establishment in India in terms of the provisions of Article 5 of the Double Taxation Avoidance Agreement between India and France. 3. The applicant has entered into a Management Services Agreement with Steria France whereby Steria France provides various management services to the Applicant with a view to rationalize and standardize the business conducted by the applicant in India in accordance with the international best practices. As per the terms of the Management Services Agreement (MSA), the services provided to the applicant by Steria France are broadly grouped under :A.General Management, B. Corporate Communications, C. Finance, D. Group Marketing, E.Internal audit, F. Human Resources, G. Information System, H. Controlling an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case whether the payment made by Steria (India Limited ('the applicant'/ 'Steria India') for the management services provided by Groupe Steria SCA ('Steria France') will not be taxable in India in the hands of Steria France as per the provisions of the Double Taxation Avoidance Agreement ('DTAA') entered into between India and France? 2. On the facts and circumstances of the case, if the consideration for management services is not subject to tax in the hands of Steria France in India, whether the applicant will be liable to withhold tax as per the provisions of Section 195 of the Income-tax Act, 1961 from the payments made / to be made to Steria France under the Management Services Agreement? 7. It is submitted that Steria France being a non-resident in India and tax resident of France, is entitled to be governed by the provisions of India-France Double Taxation Avoidance Agreement as per provision of Section 90(2) of the Act, to the extent they are more beneficial as compared to the provisions of the Act. The main thrust of the argument of the learned counsel for the applicant is that the 'make available' c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endering 'of any managerial, technical or consultancy services'. The services being managerial may be liable to tax in India under the domestic law". Again on page 2 of the written submission it is stated as follows:- "Article 13 of India-France DTAA deals with 'Fees for Technical Services' (FTS). Article 13(4) of the India-France DTAA reads as under 'The term Fees for Technical Services as used in this Article means payments of any kind to any person either the payments to employee or person making the payment or to any individual for independent personal services mentioned in Article 15, in consideration for services of managerial, technical or consultancy nature'. Hence going merely by scope of the above definition, the services rendered to the applicant by Steria France, being managerial in nature, would have been liable to tax in India". 10. Relevant portion of the Protocol to the Tax Treaty between Indian and France on the basis of which the learned counsel made his arguments reads as under:- " 7. In respect of Article 11 (Dividends), 12 (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Understanding accompanying the India-US Double Taxation Avoidance Convention to prevail in the interpretation of its Convention with Netherlands. I am, therefore, not persuaded to accept the argument that the India-Netherlands Convention should be interpreted with the aid of Memorandum of Understanding accompanying the India-US Convention. Article 12.5 of the Convention between India and Netherlands has to be interpreted on its terms, at best with reference to the protocol of that Convention." 12. 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. According to Article 7 of the Protocol, 'India limits its taxation at source on dividends, interests, royalties, fees for technical services or payments for the use of equipment to rate lower or a scope more restricted than the rate of scope provided for in the Convention on the said items of income, the same rate or scope as provided for in that Convention, agreement or Protocol ..................'. 13. What is stated by the Protocol is for India to limit its taxation at source for the detail items mentioned therein. The restrictions are on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for the reasons discussed above regarding application of the Protocol in the Treaty. The payment for services rendered by the applicant will therefore, falls under the definition of fees for technical services even under the Tax Treaty between India-France. In summary, 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. 15. The questions are, therefore, answered as under:- (1) The payment made by Steria (India) Limited for the management services provided by Groupe Steria SCA will be taxable as Fees for Technical Services. (2) As the consideration for the services is held to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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