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AUTHORITY FOR ADVANCE RULINGS
DR. ARIJIT PASAYAT, T.B.C. Rozara, JJ.
Booz & Company (Australia) (P.) Ltd., In re
A.A.R. Nos. 1018 to 1027 of 2010
Decided On : 14-02-2014
Sunil Moti Lala, Jayesh Kariya, Prashant Maheshwari, Nirmal Nagda, Vyomesh Pathak,R.S. Rawal, Rajkumar
1. These ten applications involve identical disputes concerning Double Tax Avoidance Agreement (in short DTAA) of different countries, except in case of the applicant M/s. Booz & Co. (ME) Ltd., Cayman Island in which case no treaty is involved.
The basic features involved, special features of the treaties if any shall be dealt with in the detail infra.
2. In respect of the ten applications which have been filed u/s. 245Q (1) of the Income-tax Act 1961 (in short the "Act") seeking advance ruling, following questions are involved:
'(1) Whether, on the facts and circumstances of the case, the payments received/receivable by the Applicant in connection with the provision of services of technical/professional personnel to Booz & Company (India) Private Limited ("Booz India") is chargeable to tax in India as "Fees for Technical Services"(in short"FTS") /Royalty under the provisions of Article 12 and its sub articles of the relevant India - and the country concerned Double Taxation Avoidance Agreement ("the Tax Treaty") in the absence of Permanent Establishment("PE") in India?(expression supplied)
(2) Whether, on the facts and circumstances of the case, the payments received/receivable by the Applicant in connection with the provision of services of technical/professional personnel to Booz India is chargeable to tax in India as FTS under section 9(1)(vii) read with section 115A as well as Section 44DA of the Act in the absence of fixed place PE in India?
(3) Whether, on the facts and circumstance of the case, the payments received/receivable by the Applicant towards reimbursement of actual ' out of pocket' expenses incurred by the Applicant for and on behalf of Booz India (as explained in Para B.4 of Annexure I) during the course of provision of services of technical/professional personnel to Booz India is chargeable to tax in India under the provisions of the Act and the Tax Treaty and consequently, whether Booz India is required to withhold tax from such reimbursements?
(4) Whether, on the facts and circumstances of the case at what rate Booz India is required to withhold tax under Section 195 of the Act from payments made/proposed to be made in connection with the transactions as mentioned in question no.1 and 2 above?'
However, in the case of Booz & Co. ME Ltd. Cayman Island, the question (2), (3) & (4) above are rechristened as number (1), (2) & (3) respectively.
3. The details of the applicants, the treaty applicable and the questions raised are as follows:
| No. | Name of the applicant | Treaty applicable | Questions and Arguments taken by Applicants |
| 1. | M/s. Booz & Co. GmbH | India - Germany | (i) Amount to be treated as FTS under Article 12(4) read with 12(5) |
| (ii) The amount payable would be chargeable to tax as FTS under section 115A read with section 9(1)(vii) of the Act. | |||
| (iii) The expenses recovered from Booz India being on account of reimbursement of expenses like air ticket cost, freight charges, courier charges, travel expenses, communication expenses, etc on the personnel deputed to India and borne by the applicant are part of service provisioning and thus do not have any element of income embedded therein. | |||
| (iv) Payment by Booz India to the applicant is subject to withholding tax @ 10% as per Article 12. | |||
| 2. | M/s Booz & Co. SAS Japan | India - Japan | (i) Amount to be treated as FTS under Article 12(4) read with 12 (5) |
| (ii) The amount payable would be chargeable to tax as FTS under section 115A read with section 9(1)(vii) of the Act | |||
| (iii) The expenses recovered from Booz India being on account of reimbursement of expenses like air ticket cost, freight charges, courier charges, travel expenses, communication expenses, etc on the personnel deputed to India and borne by the applicant are part of service provisioning and thus do not have any element of income embedded therein. | |||
| (iv) Payment by Booz India to the applicant is subject to withholding tax @ 10% as per Article 12. | |||
| 3. | M/s. Booz & Co. NA Inc USA | India-USA | (i) Amount to be treated as FTS under Article 12 (4) re |
