Delhi ITAT sets aside AO’s
order applying tax rate @20% u/s 115A on FTS received by Ericsson Telephone
Corporation India (assessee, a Swedish company) during AY 2000-01 from its AEs
in India for installation and maintenance of mobile network systems, remits
matter back to AO to decide the issue afresh in light of the Protocol amending
India-Sweden DTAA; Notes that AO had arrived at the taxability by simply
following the AAR in assessee’s own case rendered in 1996 which was based on
un-amended DTAA however, takes note of Protocol amending India-Sweden DTAA
subsequently in 1997; Considering the revised DTAA, ITAT rules that AO should
examine assessee’s argument that in view of the Most Favored Nation (‘MFN’)
clause in the Protocol, a beneficial FTS article appearing in DTAA with a third
country (i.e. Finland) should be read into the DTAA with Sweden; Rejects
Revenue’s preliminary argument that Protocol will have no application as it can
be resorted only if there is some dispute on the terms of the DTAA, remarks
that, “A Protocol to the DTAA is …to be considered as its part and parcel. …If
a particular benefit is being conferred, expanded or reduced by the Protocol,
which is absent in the DTAA, then the provisions of the Protocol shall apply
pro tanto.”; Thus, holds that a Protocol cannot be viewed as a document
independent of the DTAA and has to be considered as its addendum.:ITAT
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