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Perfetti Van Melle Holding B.V., In Re (2021) 434 ITR 101(AAR)

S. 9(1)(vii) : Income deemed to accrue or arise in India-Fees for technical services-Majority of services technical in nature-Services were ancillary and subsidiary to application or enjoyment of right, property or information for which royalty paid-Chargeable to tax in India-Liable to withhold tax-DTAA-India-USA-Netherlands [S.90, 92 to 92F, 195, Art, 12(5)(a)]

After analyzing the agreements and provisions the AAR held that

The payment to be made by Perfetti India for the cost to be allotted by the applicant is taxable under article 12 (5) (a) of the DTAC between India and Netherlands. Though some of the services are also taxable article 12 (5) of the DTAC, such services are not segregated as they are already taxable under article 12 (5) (a). Accordingly the payment made by the Indian company would be chargeable to tax in India. That the Indian company was liable to withhold taxes under section 195 of the Act on the payments to be made towards the costs to be allocated by the assessee. That as the applicant was liable to tax in India, it was required to file a tax return under the provisions of the Act and the transfer pricing provisions of section 92 to section 92F would be applicable in respect of the payment to be made by the Indian company. (AAR No. 869 of 2010 dt. 21-6-2019)