Back
AUTHORITY FOR ADVANCE RULINGS
J. KHOSLA , P.V. REDDI , Member
Ernst & Young (P.) Ltd., In re
AAR No. 820 of 2009
Decided On : 19-03-2010
1. The applicant, Ernst & Young Private Ltd. (EYPL) is a company incorporated in India and is engaged in providing consultancy services (such as chartered accountancy and management studies). The applicant is one of the member entities of Ernst & Young Global (EYG). EYG has such member entities in various countries. All member entities (including EYPL) use the brand 'Ernst & Young' (EY) and adopt the international practices followed by the EY organization worldwide for providing consultancy services to their clients. Such membership enables the member companies to co-operate, collaborate and work closely together to achieve the provision of seamless, consistent, high-quality client service within the Area.
1.1 Ernst & Young (EMEIA) Services Limited is a limited liability company incorporated under the laws of England and Wales. This Company has been formed specifically to facilitate the objective of providing support in various fields such as area, global and market development, etc., to all the member entities of the EY organization so that they may gain access to standardized human, financial and other resources to ensure that consis- tent, high quality professional services are provided to the client base of all members of the EY organization. EMEIA, inter alia, provides Area Services, Market Development Support Services and Global Services as detailed in the Schedule to the Area Services and Market Development Agreement. Such support is provided from UK and it does not have any Permanent Establishment or fixed base in India. The terms and conditions under which all EY member entities would get such support from EMEIA are documented in the form of the Area Services and Market Development Agreement (for short, 'the Agreement') which has been filed. Under the Agreement, costs incurred for providing the services are allocated to EY member entities and they reimburse such costs to EMEIA, UK.
1.2 It is submitted that EMEIA does not earn any income from providing access to centralized Ernst & Young resources, facilities and services. The cost allocation is done in accordance with agreed formula. The applicant states that the payment is made by way of reimbursement of the cost incurred on behalf of the applicant company by EMEIA.
2. The following questions (as revised) are raised by the applicant for the purpose of advance ruling :
(1) Whether the amount payable by the applicant in accordance with the agreement entered into with Ernst & Young (EMEIA) Services Limited is chargeable to tax in India under the provisions of the Income-tax Act, 1961 ('the Act') and Double Taxation Avoidance Agreement, between India and UK?
(2) Whether the amount receivable by Ernst & Young (EMEIA) Services Limited from Ernst & Young (P.) Ltd., inter alia, on account of Area Services, Market Development Support Services and Global Services as detailed in the Schedule to the Area Services and Market Development Agreement is chargeable to tax in India as "fees for technical services" under section 9(1)(vii) of the Income-tax Act, 1961.
3. The applicant contends that the amount received by EMEIA for Services rendered in terms of the agreement dated 5-5-2009 with the applicant company is not 'fees for technical services' as per Article 13 of the DTAA (Tax Treaty) between India and U.K. Though it gives rise to business profit for the reason that EMEIA is in the business of providing access to central resources and services to various member entities, in the absence of permanent establishment of EMEIA in India, the receipt is not taxable in India by virtue of the provisions in article 7 of the DTAA.
4. The term 'fees for technical services' is defined in para 4 of Article 13 to mean "payment of any kind in consideration for the rendering of any technical or consultancy services (including the provision of services of technical or other personnel) which : .......(c) make available technical knowledge, experience, skills, know-how or processes or consist of the develo
The main legal point established in the judgment is the binding effect of the settlement between the parties, the waiver of the right to seek re-employment by the workmen, and the entitlement of the ....
A lockout is justified if it is declared in response to an illegal strike or a strike that is in breach of a settlement or award.
The combination of eyewitness testimonies, recovery of the weapon used, and forensic examination results can establish guilt in criminal cases, even based on circumstantial evidence.
The conviction of an accused person under Section 27(3) of the Arms Act is not permissible in law if the accused is also charged with committing murder under Section 302 of the Indian Penal Code.
The court can enhance compensation based on the deceased's income and family dependency, and adjust the multiplier used by the Tribunal if found unjustified.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
