By Geeta Jani | Dhishat B. Mehta | Bhaumik Goda
Chartered Accountants
10 Cadila Healthcare Ltd. vs. DCIT (Intl.Taxn) & ACIT vs. Cadila Healthcare Ltd.
[ITA No: 711 & 1140/Ahd/2019]
A.Y.: 2013-14
Date of order: 9th September, 2022
Article 12 of India-USA DTAA, India-Canada DTAA and India-Mexico DTAA –
(i) On facts, American and Canadian tax resident entities did not satisfy “make available” condition; they did not develop and transfer technical plan/design; they did not transfer ‘industrial or commercial experience’ – hence, payments were not taxable as either FTS/FIS or as royalty.
(ii) Mexican tax resident entity had provided ‘technical services’ – since India-Mexico DTAA does not incorporate “make available” clause, payments were taxable.
FACTS
The assessee is a global pharmaceutical company based in India. During the assessment year, the assessee had made payments to certain non-resident entities, comprising four entities tax residents in the USA, one entity tax resident in Canada and one entity tax resident in Mexico. The payments were made in consideration for the clinical trial services and consultancy services provided by them. The assessee did not withhold tax from the said payments.
According to the AO, the assessee was required to withhold tax u/s 195 of the Act from payments made to non-resident entities. Further, in respect of the fee paid to one entity in consideration fo
