A recent ruling of the Authority of Advance Ruling (AAR) [2010-TIOL-06- ARA-IT]
"Fees received by a US company (US Co) for assigning contractual rights to an Indian Company is not taxable in India in the absence of a permanent establishment (PE) in India under the India-US tax treaty (Tax Treaty)"
The AAR held that the fee received by US Co from an Indian Company is in the nature of business profits of US Co. Further, the Indian company is not required to withhold taxes under the Indian Tax Law (ITL) while making remittance to US Co as it has not derived any income chargeable to tax in India.
