Law:

Section:

JUDGMENT 1. The following substantial question of law would arise for consideration in this appeal: "Whether the Tribunal was correct in holding that as technology, experience or skill has not been made available to the assessee as per Article 12(4) of DTAA between India and Singapore, the payments made by the assessee were not liable to be taxed under the head "fees for technical services?" 2. The material on record discloses that the assessee entered into an agreement for availing logistic service for Sun Microsystems Singapore Private Limited ('Sun Singapore' for brevity). In terms of the agreement, Sun Singapore is required to provide distribution, management and logistic services to Sun Microsystems India Private Limited ('Sun India' for brevity) and such services included providing spare management services, provision of buffer stock, defective repair services, managing local repair centers, business planning to address service levels etc. Sun Singapore is not having any place of business or permanent establishment in India. Entire services were rendered by Sun Singapore from outside India. Sun Singapore is not engaged in the business of providing logistic services in India. Sun India the assessee avails services of Sun Singapore for which a service fee is paid. From the business description of the assessee, it is clear that assessee is engaged in marketing and support system of hardware and software products. The material on record do not disclose that Sun Singapore has made available to the assessee its technical knowledge, experience or skill. Under these circumstances, the Tribunal held that, as Sun Singapore is not having any permanent establishment and that Sun Singapore has not made available the technical knowledge, experience or skill, the payments made by assessee to Sun Singapore were not required to be taxed under the head "business" and is not taxable in view of Article 7 of DTAA between India and Singapore. The revenue is challenging the said finding on the ground that the terms of the agreement provides for making available inventory physical movement and self control process, assistance to enable inventory transactions and management and…

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