Absence Of 'FTS' In Treaty Is No Basis To Tax Technical Services Rendered To AE, In Absence Of Its PE In India: Delhi ITAT

The Delhi ITAT ruled that income received by a non-resident Thailand-based company for services to Indian associates is "fees for technical service" (FTS) but cannot be taxed in India due to the absence of an FTS clause in the Indo-Thai DTAA.\r

The Division Bench, comprising G.S. Pannu and Anubhav Sharma, clarified that these services fall under Article 7 of the DTAA as business activity, which is not taxable without a permanent establishment (PE) in India. The Assessee claimed the income as business income under Article 7, which the Tribunal upheld, ruling that Article 22, a residuary provision, could not be invoked. \r

The ITAT allowed the Assessee's appeal, noting Revenue's failure to establish a PE.