AAR holds that payment
received by the Applicant (a US based technology company) from its India based
group company under the non-exclusive Reseller Agreement for
sale of applicant's content delivery solutions directly to customers in
India, not taxable as FTS/FIS or Royalty under the Act or
India-US DTAA; Accepts Applicant’s contention that the Solutions provided
by it are in the nature of a 'standard facility' and do not cater to
individual requirements of the customer, moreover absent human intervention it
cannot be termed as FTS under Explanation 2 to Sec. 9(1)(vii) of the Act, also
holds that the Solutions provided do not 'make available' knowledge to
the end user so as to fall under definition of FIS under Article 12 of DTAA;
Further holds that “when payments under Reseller Agreement are not towards
any IPR/Trademarks, it cannot be covered within the definition of royalty”,
also observes that Reseller Services Agreement does not contemplate
providing any kind of a software “product” to any of its customers or to the
Reseller; Distinguishes Revenue’s reliance on ABB FZ ruling which was rendered
in the context of use/sharing of specialized knowledge, expertise, etc. by
assessee through its employees, observes in present case there is no
use/sharing of knowledge, information, etc. by the Applicant with the Reseller
or the end user, likewise distinguishes Revenue’s reliance on various of
rulings including Samsung-Synopsis ruling, Vodafone South and Verizon rulings
on facts; With respect to PE, AAR clarifies that “once we have ruled
above that income does not accrue or arise in the hands of the Applicant as
Royalty or FTS/FIS…the question of existence of a PE under Article 5 becomes
irrelevant and academic, as no income can be attributed to it, if at all there
was one.”:AAR
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