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TMI Blog2019 (4) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of manufacturing and sale of readymade garments in the name and style of 'Apollo Enterprises'. They have filed their return of income for the Asstt. Year 2011-12 on 28.9.2011 declaring income of Rs. 4,08,75,250/-. During the scrutiny, learned AO found, among other things, that the assessee had paid a sum of Rs. 2,80,825/- by characterizing it as 'fees for technical services' to one M/s Association de Investigacion de la IndustriaTextil (Aitex), Plaza Emilio Sala, 1, 03801Alcoy, Alicante (Spain) and according to the assessee, the services were rendered outside India was also the payments, as such, the provisions u/s 195 of the Income-tax Act, 1961 ("the Act") are not attracted. It was further submitted that the respondent had shown this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of the learned AR that the receipts in the hands of Aitex are not chargeable to tax in India inasmuch as rendering of services and making of payments took place outside India. Laboratories and offices of the testing agents are in Spain; that the Aitex had no permanent establishment in India. 6. It is further argued that the Aitexis a Spanish company, nonresident in India and company's receipt in Spain is entitled to be governed by the provisions of Indo-Spain DTAA as per the provisions of Section 90(2) of the Act to the extent they are more beneficial as per the provisions of the Act. She further submitted that in view of the protocol to the Indian-Spain DTAA, the restricted meaning of the 'Fee for Technical Services' under Indo-UK T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate but only so much of them as is attributable to (a) that permanent establishment; (b) sales in that other State of goods or merchandise of the same or similar kind as those sold through that permanent establishment; or (c) other business activities earned on in that other State of the same or similar kind as those effected through that permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffices, by way of royalties, fees or other similar payments in return for the use of patents, know-how or other rights, or by way of commission or other charges for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices. 4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise. 5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teria (India) Ltd., vs. CIT (2016) 386 ITR 390 the Hon'ble Delhi High Court did not agree with the same. In this case, a similar protocol is there vide clause 7 in Indo-France DTAA pursuant to which the restricted meaning of 'fee for technical services' appearing in the Indo- UK DTAA was sought to be read as forming part of Indo-France DTAA as well. The Hon'ble Delhi High Court after considering the provisions of the DTAA of Indo -France, which are similarly worded as that of Indo-Spain held that less restrictive definition of expression 'Fee for Technical Services' appearing in Indo-UK DTAA, must be read as forming part of Indo-France DTAA as well. 11. We are, therefore, of the considered opinion that the decision of the Hon'ble Delhi Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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