Law:

Section:

Section 90 of the Income-tax Act, 1961, read with articles 7 and 12 of the Double Taxation Avoidance Agreement between India and Australia - Double taxation relief - Where agreement exists - Assessment year 2004-05 - Assessee, an Australian-company, was engaged in business of providing professional services such as engineering, procurements and project management - During relevant assessment year, assessee entered into a contract with an Indian company to monitor and supervise a project being undertaken by said Indian company as project monitoring consultant for a consideration - Assessee sought advance ruling on issues as to whether receipts from said contract are in nature of 'royalties' as defined in article 12 of DTAA between India and Australia, or whether such receipts are to be treated as business profits under article 7 of DTAA liable to be taxed in India and if so, to what extent - Whether since on account of rendering services under contract, no technical knowledge, experience, skill or know-how is made available to Indian company, payment in question would not constitute royalty income under article 12 - Held, yes - Whether in absence of any other article in DTAA dealing with fees for technical services, impugned payments are taxable as business profits and as, admittedly, assessee carried on its business through a PE, in terms with article 7 of DTAA, only profits attributable to PE in India would be liable to be taxed - Held, yes FACTS The assessee was an Australian-company engaged in the business of providing professional services such as engineering, procurements and project management. During the assessment year 2004-05, it entered into a contract with the Gas Authority of India Ltd. (GAIL) to monitor a project being undertaken by the GAIL as project monitoring consultant. Under the contract, the assessee had to carry out various responsibilities for a consideration. The assessee sought advance ruling on the issues as to whether the receipts from the contract entered into with the GAIL are in the nature of 'royalties' as defined in article 12 of the DTAA between India and Australia, or whether such receipts are to be treated as business profits…

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