Law:

Section:

Section 90 of the Income-tax Act, 1961, read with article 12(4) of the Double Taxation Avoidance Agreement between India and Canada - Double taxation relief - Where agreement exists (fees for included services) - Whether term 'transfer' as used in article 12(4) does not refer to absolute transfer of right of ownership; it refers to transfer of technical drawings or designs by resident of one State to resident of other State, which is to be used by or for benefit of resident of other State - Held, yes - Whether even where technical design or plan is transferred for purpose of mere use of such design or plan by person of other Contracting State and for which payment is to be made, article 12(4)(b) would be attracted - Held, yes - Assessee was a Canadian company engaged in business of providing consultancy for infrastructure projects - It had entered into an agreement with an Indian company (NHAI) to provide technical drawing and reports to NHAI for its infrastructure projects - It was receiving fees for providing aforesaid services to NHAI - Whether amount received by assessee would be taxable under article 12(4) - Held, yes FACTS The assessee was a non-resident company engaged in the business of providing consultancy for infrastructure projects. It had entered into an agreement with the National Highway Authority of India (NHAI) to provide technical drawings and reports to NHAI to enable it to use the said technology for its infrastructure projects, which was funded by the World Bank. The assessee had to investigate the availability and viability of various modern technologies to ensure most economical cost estimate without affecting the quality of work. The scope of services included preparation of the detailed project report, which covered the entire design for rehabilitation and strengthening of the existing carriage ways and required structures. It also included the study of environmental resettlement and rehabilitation needs as per the guidelines of the Government of India. The assessee was receiving charging fees for providing the aforesaid services. The contention of the assessee was that the fee received from NHAI was to be treated as 'fees for included…

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