Receipts for ‘borrowed services or advisory support’ and reimbursement of expenses not taxable as FTS under Article 13 of the India-UK DTAA and not taxable as business profits under Article 7 of the India-UK DTAA in absence of a PE in India – Mumbai bench of the Tribunal

In brief

The Mumbai bench of the Income-tax Appellate Tribunal¹ (Tribunal) dismissed the Revenue’s appeal and upheld the order of the Commissioner of Income-tax (Appeals) [CIT(A)] which deleted additions made by the Tax Officer (TO) in respect of receipts by the taxpayer from its Indian affiliates. The Tribunal concluded that the receipts for ‘borrowed services or advisory support’ and reimbursement of expenses were not taxable as ‘fees for technical services’ (FTS) under Article 13 of the India-UK Double Taxation Avoidance Agreement (DTAA), but constituted business profits under Article 7 of the India-UK DTAA and, in the absence of a permanent establishment (PE) in India, were not taxable.