Construction of New Tamil Nadu Legislative Assembly Complex - supply of architectural designs and drawings – It's fee not sale; no tax as there is no PE - AAR
ASSESSEE is engaged in the business of providing architectural designs and drawings - participates in a tender floated by TN Govt for preparation of designs and drawings for the construction of Legislative Assembly - gets selected as 'consultant for supply of architectural design - appoints an Indian company as sub-contractor for part of the work - whether payments made to the non-resident are fees for technical services - Whether the payments are to be treated as business profits as per the DTAA in the absence of PE.
The Authority for Advance Ruling, recently ruled that the inescapable conclusion is that the consideration received by the applicant under the contract with the Tamil Nadu Govt. can be legitimately treated as fees for technical services and it is not appropriate to describe the transaction as a pure and single sale of drawings and designs prepared in Germany. The applicant's contention is therefore liable to be rejected for more than one reason. Since the applicant's personnel were in India for only 89 days, there is no permanent establishment. Going by the scope and nature of work actually done by the applicant, it is difficult to infer that the applicant would have had a fixed place PE in India. Further it is not the case of the Revenue that the sub-contractor's place shall be deemed to be the PE of the applicant. The facts and material on record do not lead such inference.
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