Decided on March 05,2010

In Re: Real Resourcing Ltd. Appellant


- (1.) THE applicant -Real Resourcing Limited is a Company incorporated in United Kingdom and is said to be a tax -resident of UK. It is a subsidiary of S -Three Group Plc. In the application originally filed, the nature of services to be provided by the applicant in India are stated to be two -fold; (i) recruitment services where the applicant would place a candidate with an Indian company and receives payment for providing such service from the Indian company; (ii) referral services where the applicant would refer potential Indian clients to a third party based in India (likely to be another Indian -based recruitment agency) for which the payment will be received by applicant from the third party in India. Broadly, it is the contention of the applicant that the payments received in respect of these services are not chargeable to tax in India as it has no permanent establishment in India and, moreover, as per the India -UK Tax Treaty (DTAA), the provision relating to 'fees for technical services' is not attracted. Therefore, it is submitted that while making payments to the applicant, the Indian clients are not obliged under law to withhold the tax at source.
(2.) THE following question has been framed for consideration at the time of admitting the application: Whether the payments received by the applicant for the proposed recruitment services and referral services from the Indian clients is liable to tax withholding under section 195 of the Income -tax Act, 1961 read with Double Taxation Avoidance Agreement between India and UK' In the comments submitted by the designated Commissioner, it is pointed out that the applicant has not furnished full facts to establish that it has no permanent establishment in India while being engaged in recruitment related activities. Further, a stand has been taken that sub -article 4(a) of article 13 dealing with fees for technical services is attracted as the data -base maintained by the applicant for providing informations of suitable candidates for recruitment is a consultancy service and the applicant is making available the experience and skill of the candidates who seek recruitment.
(3.) THE applicant has not chosen to avail of the opportunity of personal hearing. However, the applicant in its communication dated 23 -11 -2009 gave more information regarding the referral services. It has been stated as follows: Real Resourcing Ltd. will be rendering services to an Indian based recruitment company. These services will include making referrals of potential Indian clients and Indian candidates to the Indian -based recruitment company for which Real Resourcing will be paid a referral fee by the Indian -based recruitment company. The Indian -based recruitment company will be providing the recruitment services to the Indian clients and placing the candidates with the clients. The Indian based recruitment company will get a fee for recruitment services from its Indian clients which were referred to the Indian based recruitment company by Real Resourcing.;

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