Monday, September 15, 2008


In a recent judgment, the Tax Tribunal in New Delhi has held that revenue earned by a non-
resident company from services, which are in the nature of processing of seismic data for oil exploration / extraction project in India, cannot be taxed as fees for technical services as per the provisions of the Indo- Australian Tax Treaty. As per the relevant article of the treaty, if rendering of services results in making available technical knowledge, experience, skill etc. then the same are said to be in the nature of fees for technical services and may be taxed accordingly. Considering the
provisions of this article, the tribunal observed that the processing of seismic data provided by the Indian company to the Australian company, being area specific, cannot be made use of by the Indian company in future without referenced to the Australian company. Therefore, the provisions of said article of the treaty are not attracted and the receipts are not taxable as fees for technical services.


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