ThynkTax /Tax Reference /Case Laws /GE India - Royalty vs business profits

GE India - Royalty vs business profits

Supreme Court of India·2017·TDS
Facts

GE India making payments to foreign affiliates for technology and management.

Issue

Royalty/FTS vs business profits classification under DTAAs.

Held

Classification turns on the nature of the right transferred - use of equipment vs sale of standard service.

Ratio

Royalty requires a transfer of right to use; if right is not transferred, payment is business profit, taxable only where PE exists.

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