Law:

Section:

Section 90, read with sections 4 and 5, of the Income-tax Act, 1961 and articles 5 and 7, of the Double Taxation Avoidance Agreement between India and USA - Double taxation relief - Where agreement exists - Applicant, engaged in promotion of professional examination/certificate programmes of foreign entities, entered into agreements with two non-profit making professional organizations in USA, viz., 'APICS' and 'AST & L' - As per agreements, applicant is required to collect registration forms and fees from individuals in India, who wish to register themselves for examination and pass them on to foreign entities after deducting its administrative cost and commission whereafter foreign entities will conduct exams; evaluate answer-sheets and send certificates to applicant for local distribution - Applicant has sought advance ruling as regards liability of APICS and AST&L to pay taxes in India in relation to examination fees payable to them and liability of applicant to deduct tax in relation thereto - Whether looking from perspective of sections 4 and 5, examination fees collected by applicant on behalf of APICS and AST&L would be taxable under Act, but as APICS and AST&L are tax residents of USA, provisions of DTAA would be attracted - Held, yes - Whether since applicant is not subject to any control of APICS and AST&L with regard to manner in which it shall carry out its activities with regard to promotion of certificate examination, it cannot be deemed to be a permanent establishment of APICS and/or AST&L in India in terms of article 5 and, therefore, examination fees collected by applicant on behalf of APICS & AST&L and remitted to those organisations would not be taxable in India by virtue of article 7 of DTAA - Held, yes - Whether therefore, applicant is not required to either deduct any income-tax or to pay any such tax on examination fees collected by it - Held, yes FACTS The applicant is engaged in promoting professional examinations/certifi-cation programmes of foreign institutes, societies, professional bodies, etc., of international repute, which do not have any establishment of their own in India. In the course of this…

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