Law:

Section:

JANUARY 4, 2012 â-¡Section 9, read with sections 115A and 44D, of the Income-tax Act, 1961 and Articles 12 and 7 of the DTAA between India and Australia - Income - Deemed to accrue or arise in India (FTS/Royalty) - Assessment years 1999-2000 to 2001-02 - Whether an assessee may carry on manufacturing of trading activities and can enter into a contract separately to furnish technical information for a fee to a third party and technical information which is furnished may be a result of knowledge, experience and expertise gained by assessee as a result of business or trading activity; or various tests may be required for furnishing said information, but fee received from third party is 'fee for technical services', as payment made is to acquire technical information - Held, yes - Whether first part of paragraph 3 of Article states that to determine business profits of a PE, deduction should be in accordance with and subject to limitation of law of contracting State where PE is situated and this condition must be satisfied before advantage or benefit of second part of paragraph 3 can be taken by assessee, i.e., expenses, of which deduction can be claimed, are not restricted to merely expenses in contracting State but also extend to executive and general administrative expenses which were incurred outside contracting State; to this extent paragraph 3 of Article 7 will override and will have primacy over any stipulation in Act, if any, that executive and general administrative expenses outside India cannot be taken into consideration - Held, yes - Whether, therefore, it cannot be said that once Article 7 applies, then section 44D, read with section 115A is not applicable - Held, yes - Assessee foreign company operated in India through its division RTTS - It entered into inclusive contracts with Indian concerns to provide them evaluation report - To collect and collate information for evaluation report, it was necessary to undertake certain tests, mapping and studies - Drilling was also required for tests - Assessing Officer held that payments received by assessee from Indian concerns were taxable as fee for technical services under section 9(1)(vii), read with…

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