Landmark Cases on International Taxation and DTAA

For the purposes of determining residential status, an assessee's intention to stay permanently in a foreign country is not a criterion. Whether the assessee stayed in the foreign country or was travelling is also not a criterion once the assessee leaves India for the purpose of taking up employment outside India.

The Madras High Court in CIT v. Vinzas Solutions India P. Ltd. expressed views similar to the Delhi High Court's ratio in Infrasoft, concerning software royalty taxation matters.

Export commission paid to non-resident agents is not taxable in India if services were rendered and commission paid outside India, and the agents have no permanent establishment in India.

The expression 'make available' in the context of fees for technical services means that the payer must come to possess the technical knowledge provided, enabling them to utilize it independently in the future. Services consumed without leaving anything tangible with the payer for future use do not constitute 'make available' of technical services, even if the benefit flowed directly to the payer.

Referral fees are not taxable in India as fees for technical services if they are considered commission income under Article 7 of a Double Taxation Avoidance Agreement.

Commission income earned by a foreign agent from an Indian exporter is not taxable in India if the services for which the commission is paid are rendered outside India. The right to receive the commission is acquired when services are rendered, and if this acquisition occurs outside India, the income accrues outside India.

Tribunals rely on the ITAT Mumbai decision in Essar Oil Ltd., 7 SOT 216, when considering whether income should be taxed on gross receipts rather than on a net profit basis, particularly in the context of Double Taxation Avoidance Agreements (DTAA).

Expenditure incurred in foreign currency outside India is includible in 'export turnover' for computing deduction under Section 10A and 10B. This expenditure is also considered contributable to the delivery of computer software outside India.

A subsidiary company working under the direction, control, and supervision of an Indian company does not constitute a Permanent Establishment (PE) of the foreign company in India.

Payments for obtaining the right to use computer software, including the granting of a license, are taxable as royalty under Section 9(1)(vi) read with Article 12 of the India-USA DTAA, and not as a sale of a copyrighted article.

A special provision normally excludes the operation of a general provision, based on the maxim 'generalia specialibus non derogant'.

Income is deemed to accrue or arise in India only to the extent it is reasonably attributable to operations carried out within India, as mandated by Explanation 1(a) to Section 9(1)(i) of the Income Tax Act. The word 'shall' in this explanation signifies a legislative command.

Income derived by a non-resident for performing services in India is taxable in India, even if the payment is received outside India and the individual is not a resident of India, provided the services are rendered within the territorial limits of India.

Interest income payable by a resident to a non-resident is deemed to accrue or arise in India and is taxable if it is not for the purpose of carrying on business outside India or earning income from a source outside India. This is based on the interpretation of Section 9(1)(v)(b), read with Sections 5(2) and 4(1)(2).

The case is cited for the proposition that the characterisation of a transaction, specifically whether it constitutes a 'sale' or 'service' for tax purposes, is a key consideration in determining its taxability.