Law:

Section:

Section 9 of the Income-tax Act, 1961, read with articles 5 and 13 of the Double Taxation Avoidance Agreement between India and UK - Income - Deemed to accrue or arise in India - Applicant is a company incorporated in India and is a part of Cable and Wireless Groups of Companies - It is engaged in business of providing international long distance and domestic long distance telecommunication services in India - It proposes to enter into an agreement with another group company, i.e., C&W UK, to provide end-to-end international long distance telecommunication services to its Indian customers - Under proposed agreement, applicant will carry calls and data within country, and C&W UK will further carry those calls and data to recipients outside India - Network and equipments of C&W UK, will not be used in India and applicant's network and equipments will not be used outside India - In respect of aforesaid services rendered by C&W UK, applicant will pay fees to it - Whether since in carrying telecom signals to other countries, C&W UK is neither providing any managerial, technical or consultancy services to applicant, nor does it make available technical knowledge, experience, skill, know-how or process to applicant, fees paid by applicant to C&W UK is not in nature of 'fees for technical services' either under Act or under article 13(4) of DTAA - Held, yes - Whether since telecom services are standard services and no material has been placed to show that C&W UK uses any secret process in transmission of international leg of service, or that applicant pays towards user of or right to use that secret process, payments made by applicant will not be royalty income in hands of C&W UK - Held, yes - Whether, on facts, payments made by applicant to C&W UK are in nature of business profits and in absence of any permanent establishment of C&W UK in India, income in question is not at all taxable in India - Held, yes FACTS The applicant is a company incorporated in India and is a part of the Cable and Wireless Groups of Companies. It is engaged in the business of providing international long distance and domestic long distance…

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