Justice P.V. Reddi, Chairman. - The applicant - a private limited company in India is a subsidiary of Intertek Holding U.K. limited - a limited liability company and incorporated under the laws of the United Kingdom. Intertek Group Plc., UK is the holding Company of the latter. The applicant states that Intertek group of companies operate in several countries. Intertek Group’s head office is in London. The applicant is engaged in the business of rendering testing and inspection services to its Indian and overseas clients. Certain companies in the Intertek group have special knowledge and/or capabilities in the field of executive, commercial, financial, marketing and administrative management systems and techniques. It was felt that it would be advantageous to pool the requisite resources and skills available among the members of Intertek group so that the services could be provided to or received from the other members within the Group. Hence, the Global Management Services Agreement (‘GMSA’) was entered into between Intertek Testing Services Management Limited, U.K. and the subsidiaries of Intertek, specified in Schedule-1 to the Agreement on 6-10-2006. The applicant and its Labtest division find place in the list of subsidiaries in Schedule-I. The applicant states that one of the key central points for the provision of services is Intertek Group’s head office in London. The applicant avers that within the framework of GMSA, the relevant services would be provided to the applicant by Intertek Testing Management Limited (‘ITM’) which is a subsidiary of Intertek Group Plc., UK. However, the applicant describes ITM as Group’s corporate head office in London (vide Note attached to supplementary written submissions). It is stated that such services are provided either directly or by deputing personnel of any other group company subject to the control and supervision of ITM, UK. It is further stated in the application that broadly, the nature of services provided under the GMSA by the UK company to the applicant are - ‘Corporate Head Office Services’, ‘Divisional Global Services’ and ‘Divisional Regional Services’ which relate to financial, executive, marketing and administrative matters. The cost of services plus mark-up of 7.5 per cent will be billed to the applicant by ITM or other group company which provides the services. It is then averred that the costs will be calculated at the beginning of the financial year based on budgeted figures. In case the difference between the budgeted figures and actual costs is more than 5 per cent, then an additional charge or refund will be made by the Group company. The third party costs specifically incurred on behalf of the applicant will also be re-charged by the concerned Group company. Certain copies of invoices raised by ITM, London during the years 2006 and 2007 have been filed by the applicant. The description of charges in the invoices is given as ‘management fee (GMSA).’ The applicant has also filed a detailed calculation of the costs included in the ‘management charge’.

2. On these facts the applicant seeks advance ruling on the following two questions :

"(i)Whether on the stated facts and in law the service fee paid by the applicant to Intertek Testing Management Limited, UK under Global Management Service Agreement is taxable as "Royalties & Fee for Technical Services" as per the provisions of Article 13 of Double Taxation Avoidance Agreement between India & United Kingdom ?

(ii)Without prejudice and in alternative, if the answer to question number (i) is in negative, whether on the stated facts and in law the applicant is required to deduct tax at source on the service fee paid to Intertek Testing Management Limited, UK, at the rate of 10 per cent plus applicable surcharge and cess as per the provisions of section 115A(1)(b)(BB) of the Income-tax Act, 1961."

3. In short, the contention of the applicant is that the payments made to ITM for various services as per the Agreement