INCOME TAX ACT, 1961

Section 9

Income deemed to accrue or arise in India - Chargeability - Assessee a Swiss entity from an Indian Company received Fees for technical services -

Issue arose as to whether, so far as permanent establishments under article 5(2)(l) of Indo Swiss tax treaty are concerned, i.e. service PEs, assessee has a choice to be taxed on gross basis at rates provided under article 12(2) or on net basis under article 7. Held: Service PE being triggered on account of rendition of services by assessee a Swiss entity in India, or vice versa, could not place assessee to a disadvantageous position so far as tax liability in source jurisdiction was concerned. Unless assessee had a lower tax liability on taxability of PE on net basis under article 7 vis-à-vis taxability of FTS on gross basis under article 12(2), PE being triggered was in fact tax neutral. Therefore, assessee having offered to tax income received on account of fees for technical services from an Indian company at rate of 10 per cent, on gross basis, under article 12(2) of Indo Swiss tax treaty, AO was directed to tax assessee, in respect of receipts as fees for technical services- i.e. at rate of 10 per cent on gross basis under article 12(2) of Indo Swiss tax treaty.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

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