It was held by the Agra Bench of the Income-tax Appellate Tribunal of India that leather testing charges were taxable as “fees for technical services” under the India-Germany income tax treaty. The treaty allows the source state the right to tax up to a specified rate, though the treaty uses the expression “may be taxed.”

In addition, the tribunal held that when the payment was made prior to the date of a retroactive change to the tax law, the payment was not taxable in India.