Convention for Avoidance of Double Taxation between Pakistan and United States of America

Convention did not lay down any rule in respect of fees for technical services, and therefore, the provisions of the Convention could not override the provisions of S.12(5)(a) read with Ss.30(2) & 80-AA of the Income Tax Ordinance, 1979.

Income of non-resident company from the receipts in the form of technical assistance under an agreement with a Pakistan company

Technical assistance was necessary for business purpose of Pakistani company

Exemption-Held, there being agreement between non-resident company and Pakistani Company which was covered by Art. VIII of the Convention, claim by non-resident company for exemption was justified.

Term "Industrial or Commercial Profits", held, excludes royalties, or fees, or other remuneration derived by enterprises from management, control, or supervision of trade, business, or other activity of another enterprise or concern-Even otherwise payments made towards rendering services in respect of "factory administration" "training of technical staff", sending its own staff to Pakistan to advise Pakistan company on utilisation of its machinery and equipment and on processes of manufacture and production as well as conducting regular inspection of specialised products manufactured by foreign Company, held further, cannot be described as "industrial or commercial profits.".