Corporate guarantee fee paid to a non-resident entity is chargeable as Fees for Technical Services under Article 12 or Article 11 of the Double Taxation Avoidance Agreement?

Last updated: 08 January 2021

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This case concerns whether a corporate guarantee fee paid to a non-resident entity, Lease Plan Corporation NV in the Netherlands, should be treated as 'Fees for Technical Services' or 'Interest' under the Double Taxation Avoidance Agreement (DTAA) between India and the Netherlands. The Income Tax Appellate Tribunal reviewed the disallowance of this fee by the tax authorities, who had classified it under Article 11 (Interest) and Article 12 (Fees for Technical Services) of the DTAA.

Court :
ITAT New Delhi

Brief :
These are two appeals filed by the assessee against the order of the ld CIT(A)-5, Delhi dated 04.09.2015 for the Assessment Year 2009-10 and 2010-11 wherein disallowance made by the learned assessing officer under section 40 (a)(i) on account of non-deduction of tax at source on guarantee commission paid to lease plan Corporation NV Netherland is confirmed holding it to be payment in nature of „Fees For Technical Services‟ as well as „Interest‟ as per the article 11 and 12 of The Double Taxation Avoidance Agreement [ DTAA] between India and Netherland.

Citation :
ITA No. 6461 & 6462/Del/2015

Daily Limit Reached