International Tax Newsletter - Spring 2011 - India - Recent International Tax Decisions

In a recent case under the India-United States Double Taxation Agreement (DTA), the Indian tribunal held that sharing of management experiences and business strategies cannot be regarded as technical or consultancy services subject to Indian taxation. At the request of an Indian pharmaceutical company, a U.S. company sent one of its professionals to India for two days to address a conference on future strategy held for the benefit of the Indian company's employees and was paid for the said services. Perusal of the presentation made by the professional showed that the services were essentially in the nature of sharing management experiences and business strategies, had nothing to do with pharma, and therefore could not be termed as technical services. In view of the above it was held that the payment made was in thenature of business profits and, since the U.S. company did not have any permanent establishment in India, the same was not chargeable to tax in India pursuant to the DTA.

For further details, Jack Meola of EisnerAmper LLP in New Jersey can facilitate contact with S. Hari Haran of PKF India. 

International Tax Newsletter - Spring 2011 

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