Forex

Place of a transaction was more easily inferable, before satellite transactions had come into vogue. Double Tax Avoidance Agreements have not tackled this problem, with the result that there are controversies. It is generally understood as more clearly stated in the Indo-US Agreement, that technical service can be inferred only where there is transfer of technology and not merely because the service may involve technical content as part of business arrangement. Softwares involving intellectual property rights conveyed whether on CDs, floppy, diskettes, perforated sheets or other means has been recognised as tangible assets liable to sales tax in Tata Consultancy Services vs. State of A.P. (2004) 271 ITR 401 (SC) and for customs duty in Sprint RPG India Ltd. vs. Commissioner of Customs (2000) 2 SCC 486. But in Bharat Sanchar Nigam Ltd. v. UOI (2006) 282 ITR 273 (SC) in the matter of service tax, supply of SIM Card in the context of supply of mobile communication service was treated as liable for service tax, inferring that supply of handset did not make it a sale, since electro-magnetic waves and radio frequencies are not goods. Income-tax law would require consideration of these decisions in future. Liability for book profits tax, fringe benefits tax, service tax and obligations relating to tax deduction at source are some of the other taxrelated problems, which are to be faced by the global partners of Indian enterprises with solution possible, only if the problems are addressed either by statutory amendments or clarifications or further protocols under Double Tax Avoidance Agreements to make it easier for the trade and industry in India and prospective investors from abroad. Source : Paper Presented at programme for Orientation & Training of New Members, Income Tax Appellate Tribunal, Mumbai. held from 12th November, 2007 to 28th November, 2007. Acknowledgement: We are thankful to Hon’ble President, Vice President, ITAT, Mumbai for granting us permission to print the article for the benefit of Tax Professional