[aaykarbhavan] Consultant doesn't impart any experience to client when he renders consultancy services; not to be treated as royalty

 

Consultant doesn't impart any experience to client when he renders consultancy services; not to be treated as royalty

August 8, 2014[2014] 48 taxmann.com 148 (Mumbai - Trib.)

IT/ILT : The royalty payment received as consideration for information concerning industrial, commercial, scientific experience alludes to the concept of knowhow. There is an element of imparting of knowhow to the other, so that the other person can use or has right to use such knowhow. In case of industrial, commercial and scientific experience, if services are being rendered simply as an advisory or consultancy, then it cannot be termed as "royalty", because the advisor or consultant is not imparting his skill or experience to other, but rendering his services from his own knowhow and experience. All that he imparts is a conclusion or solution that draws from his own experience. If there is no "alienation" or the "use of" or the "right to use of" any knowhow i.e., there is no imparting or transfer of any knowledge, experience or skill or knowhow, then it cannot be termed as "royalty" within the meaning of Article 12 of India-Thailand DTAA

Editor's Note: The DTAA between India and Thailand does not include any provision for taxability of Fees for Technical Services

Regards

Prarthana Jalan

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Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

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