Landmark Cases on International Taxation and DTAA
411 decisions, ranked by how many judgments on BharatTax rely on them.
A decision in B.J. Services Co. Middle East Ltd. v. ACIT is not applicable when the facts and the specific Double Taxation Avoidance Agreement (DTAA) provisions in question differ from those in the cited case.
A remotely operated vessel used for inspecting and repairing submarine pipelines does not constitute a permanent establishment (PE) because a moving vessel is not a fixed place of business. The primary test for a fixed place of business is whether the premises are 'at the disposal' of the enterprise, not merely accessible.
The decision holds that payments made to a non-resident for services rendered outside India, where the 'make available' condition for technical services is not met, do not constitute income taxable in India under Section 9(1)(vii). Consequently, the payer is not liable for TDS under Section 201.
When interpreting expressions or clauses in tax treaties that are taken from the OECD Model Convention, the normal presumption is that they carry the meaning understood in international tax language developed by organizations like the OECD, unless a contrary intention is clearly expressed.
The decision of CIT v. Arthusa Offshore Co. is considered in the context of the India-US Treaty, with later judgments referencing it when dealing with the India-UAE Treaty. The cited passage indicates that the issue raised by the assessee was covered in their favour by this decision.
The case is authority for the proposition that the 'make available' clause in a tax treaty does not solely determine the character of income as fees for technical services, and it is important to examine the substance of the transaction and relevant domestic law provisions like Section 9(1)(vii) of the Income Tax Act.
The High Court's decision in M/s. Wipro Ltd. v. DCIT is cited to support the exclusion of telecommunication and insurance charges from export turnover for the purpose of calculating deductions under Section 10AA of the Income Tax Act.
Payments that are purely reimbursements of expenses without any profit element are not chargeable to tax.
For fees for technical services to be taxable in India, the services must be coupled with a transfer of expertise, and mere furnishing of services is insufficient. This applies even if the services are rendered outside India, especially if the income is classified as business income under a DTAA.
Subscription fees received by a non-resident for access to a database are not royalty income if the customer does not acquire copyright in the database content. The decision emphasizes that the essence of the transaction is the provision of access to information, not the transfer of copyright.
Payments for bandwidth services are not taxable as royalty under section 9(1)(vi) of the Income-tax Act if the assessee only has access to the services and not to any equipment, and the service provider retains control over the infrastructure and processes.
