eBay International AG v. ADIT (2013) 140 ITD 20/82 DTR 89 (Mum.) (Trib.)

S.9(1) (vii): Income deemed to accrue or arise in India – Fees for technical services- Dependent agent-Market

supportive services-DTAA –India- Switzerland-In the absence of Permanent Establishment, article 7

pertainingto business profits would cease to operate in assessee’s case hence not liable to tax.(S. 90,115A, Art.

5, 7 )

Assessee, a Swiss company, operated India specific websites. For this purpose, it entered into Marketing Support

Agreement with two group companies in India. Assessee claimed that though it earned revenue from its websites in India, same was not taxable as business profits as it did not have PE in India. The Indian group companies at no stage negotiated or entered into contract for or on behalf of assessee. They simply provided marketing services to assessee or making collection from customer and forwarding same to assessee. Indian group companies were not required to manufacture or process goods or merchandise on behalf of foreign assessee. Further goods or merchandize were delivered by seller to buyer directly who enter into contract through assessee's website. It was held that though group companies were dependent agents as per article 5(6) because they exclusively assisted assessee in carrying on business in India, they could not be considered as 'Dependent agent PE' because they did not perform any function specified in clauses (i) to (iii) of article 5(5). Thus, in absence of PE, article 7 pertaining to taxing business profits would cease to operate in assessee's case.