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TMI Blog2016 (5) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... uble Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargeable to tax in India so as to require deduction of tax at source. Therefore, invoking of section 40(a)(i) of the Act to disallow such expenditure is not tenable. In the context of payments made to KPMG Tax Services Pvt. Ltd., Singapore, KPMG LLP, Singapore and KPMG Tax Advisor, Belgium, CIT(Appeals) made no mistake in holding that the payments are not 'fee for technical services'. The aforesaid services have been rightly held to be outside the purview of Article-12 and/or Article-13 of the respective tax treaties, and instead such income falls within the scope of Article-7 thereof i.e. in the nature of ‘busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration under Article-14 of Indo-Malaysia tax treaty and, therefore, in the absence of any fixed place of business of the recipient in India, the impugned income is not chargeable to tax in India. Therefore, in such a situation, assessee is not liable for deduction of tax at source - Decided in favour of assessee - ITA No. 1917/MUM/2013 - - - Dated:- 6-5-2016 - Shri G. S. Pannu, Accountant Member And Shri Pawan Singh, Judicial Member For the Appellant : Shri Vaibhav Jain For the Respondent : Shri Harsh Kapadia/ Paras Savla/Viraj Mehta ORDER Per G. S. Pannu, AM The captioned appeal filed by the Revenue pertaining to the A.Y. 2009-10 is directed against an order passed by Ld. CIT(A)-3, Mumbai dated 24/12/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esident entities was governed by the provisions of Double Taxation Avoidance Agreement (DTAA) with the respective countries, in terms of which such payments were not income chargeable to tax in India. The CIT(Appeals) has since upheld the stand of the assessee and did not find any merit in the stand of the Assessing Officer and accordingly, he deleted the disallowance made under section 40(a)(i) of the Act. 3. Before us, the Ld. Departmental Representative has primarily contended that the plea of the assessee that the payments could not be considered as fee for technical services was not justified as assessee had obtained professional services from the recipients. 4. At the time of hearing, Ld. Representative for the assessee has fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 different countries. In so far as the payments that are made to KPMG LLP, USA and KPMG LLP, Canada are concerned, the same has been made on account of professional services rendered in relation to taxation and transfer pricing. Undisputedly, the professional services have been rendered by the aforesaid entities outside India. The stand of the Revenue is that such services are in the nature of fee for technical services and, therefore, tax was liable to be deducted at source in India. Factually speaking, the aforesaid stand of the Revenue is devoid of any support because there is no material to establish that any technical knowledge, skill, etc. has been made available to the assessee so as to consider it as falling within the purview ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntries, who have rendered services outside India. Such services related to assistance in audit, taxation, information technology services, conducing background checks, etc. Considering the nature of the services rendered, which is not disputed by the Revenue, in our view, the CIT(Appeals) made no mistake in holding that the payments are not 'fee for technical services'. The aforesaid services have been rightly held to be outside the purview of Article-12 and/or Article-13 of the respective tax treaties, and instead such income falls within the scope of Article-7 thereof i.e. in the nature of business profits . It has also not been disputed that such entities do not have a permanent establishment in India, therefore, such incomes ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be governed by Article-13 of India-Malaysia tax treaty, as contended by the Revenue. Clearly, they are in the nature of independent personal services falling for consideration under Article-14 of Indo-Malaysia tax treaty and, therefore, in the absence of any fixed place of business of the recipient in India, the impugned income is not chargeable to tax in India. Therefore, in such a situation, assessee is not liable for deduction of tax at source in India so as to invoke the provisions of section 40(a)(i) of the Act. The stand of the CIT(Appeals) on this aspect is also affirmed by us on the basis of his findings, which have remained uncontroverted before us by the Revenue. 5.5 Apart therefrom, even if we were to accept, for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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