Law:

Section:

Section 90 of the Income-tax Act, 1961, read with article 12 of the Double Taxation Avoidance Agreement between India and Netherland (Royalties/fees for technical services) - Double taxation relief - Where agreement exists - Whether a Treaty between two sovereign country can be used to interpret a separate independent contract with another country - Held, no - Whether for a service to fall under 'rendering of any technical or consultancy services' mere development and transfer of a technical plan or technical design should be sufficient compliance - Held, yes - Applicant is a company based in Netherlands and is in business of manufacture and sale of sugar confectionary and gum - It has entered into a service agreement with its group company 'Perfetti India' to provide specified services requiring use of proprietary knowledge and processes belonging to Perfetti Group on continuous basis - All such services are required in connection with trademarks, technology and know-how license agreement (TTLA) through which consideration in form of royalty is flowing - Applicant has sought advance ruling on taxability of payments made by Perfetti India under agreement in its hands in India - According to applicant, services provided under agreement are not technical or consultancy in nature and Perfetti India will not get equipped with knowledge or expertise and would not be able to apply it in future without applicant and, therefore, these are outside purview of article 12 - Whether services giving knowledge and experience of confectionary industry to Perfetti India are technical in nature, more so, in view of fact that agreement clearly brings out intention of parties to assist Perfetti India by applying experience of its sister concerns and group companies - Held, yes - Whether since services are not being carried out independently by applicant but are only to enable Perfetti India to be able to carry out its day-to-day tasks better, it can be said that Perfetti India will get equipped with knowledge or expertise and would be able to apply it in future independent of applicant - Held, yes - Whether services under service agreement, when read with TTLA, fall within purview…

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