By Geeta Jani, Dhishat B. Mehta Chartered Accountants
fiogf49gjkf0d
Article 14, India-Sri Lanka DTAA; section 9(1) (vii) the Act – payments for sales promotion services rendered by a Sri Lanka resident were not FTS under the Act and were also not taxable in terms of Article 14.
Facts:
The Applicant was the Indian branch of Oxford University press, which is a department of Oxford University, UK. The Applicant was engaged in publishing, printing and reprinting of educational books. The Applicant appointed an individual resident of Sri Lanka as Resident Executive for promotion of sale in Sri Lanka of books published by the Applicant. The Applicant paid certain remuneration to the Resident Executive by remitting it to her bank account in Sri Lanka. The Applicant approached AAR for its ruling on the taxability of such remuneration.
Ruling:
• On examining the scope of duties and responsibilities of Resident Executive, the services rendered by Resident Executives were promotion of brand name and sale of publications of the Applicant. The job description indicates that recipient is more a marketing executive.
• India-Sri Lanka DTAA does not define technical services and hence, definition thereof under the Act should be referred. The services rendered by Resident Executive were not covered within ‘managerial, technical or consultancy services’ mentioned in Explanation (2) to section 9(1)(vii) of the Act. Hence, the payment was not FTS, either under the Act or under India-Sri Lanka DTAA .
• The payment will be covered under Article 14 of India- Sri Lanka DTAA but is not taxable even under that provision.
