9911796707
TMI Blog2016 (7) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed as managerial or technical services so as to be governed by Article 13 of India-Ireland DTAA as contended by Revenue. In our view, they are clearly in the nature of independent personal services coming within the purview of Article-14 of the India-Ireland DTAA and therefore in the absence of any fixed place of business of the recipient, the said payments/income is not exigible to tax in India. In this view of the matter, we are of the considered view that the assessee is not liable to deduct tax on the aforesaid payment made to the non-resident entity in Ireland for the provisions of section 40(a)(i) of the Act to be invoked With respect to the payment made by the assessee to Siddharta Siddharta and Widjaja, Indonesia for rendering of audit services the assessee is not liable to deduct tax at source on the aforesaid non-resident entity in Indonesia for the provisions of section 40(a)(i) of the Act to be evoked. We, therefore, uphold the finding of the learned CIT(A) on this issue which has not been controverted before us by the Revenue. - Decided against revenue - ITA No. 2843/Mum/2014 - - - Dated:- 8-7-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sakt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 40(a)(i) of the Act - Rs. 78,21,340/- 4.1 From a perusal of the grounds raised it is seen that Revenue has raised the single issue arising from the action of the learned CIT(A) in holding that the Assessing Officer (AO) was not justified in disallowing a sum of ₹ 78,21,340/- under section 40(a)(i) of the Act. 4.2 The facts of the matter as emanate from the record are that the assessee is a firm of Chartered Accountants. In the course of assessment proceedings the AO observed that the assessee had made payments to various entities on account of professional fees outside India without deducting tax at source thereon. On being required to show cause by the AO as to why the aforesaid payments of professional fees outside India should not be disallowed under section 40(a)(i) of the Act, the assessee, in its reply dated 16.12.2010, explained that the payments were made to various non-residents and these payments were not in the nature of income chargeable to tax in India and therefore it was not required to deduct tax at source thereon in terms of section 195 of the Act. The AO, however, did not accept the explanations put forth by the assessee and proceeded to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount 1 2(A) and (B) KPMG LLP USA Firm of individuals Taxation and audit services 50,67,431 2 2(c) Mr. Nihal Dalvi USA Individual Taxation services 8,86,240 3 2(e) and (f) KPMG LLP UK Limited liability partnership of individuals Taxation 2,76,540 4 2(g) Nelsons Solicitors UK Limited liability partnership of individuals Taxation 81,300 5 2(d) KPMG IFRG Ltd. UK Company Response to query on accounting matters 1,39,562 6 2(h) KPMG Ireland Partnership firm of individuals Taxation services 5,60,800 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking, 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 of Article- 12 of Indo-US Double Taxation Avoidance Agreement. It is also an established fact that such non-resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article-15 of the Indo-US Double 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. 4.6.2 Following the aforesaid decision of the Coordinate Bench of this Tribunal in the assessee s own case for A.Y. 2009-10 (supra), we hold that, in the factual circumstances of the case as discussed above, the amounts paid by the assessee to non resident parties in USA for rendering of professional services cannot be held to be exigible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 13 of India-Ireland DTAA as contended by Revenue. In our view, they are clearly in the nature of independent personal services coming within the purview of Article-14 of the India-Ireland DTAA and therefore in the absence of any fixed place of business of the recipient, the said payments/income is not exigible to tax in India. In this view of the matter, we are of the considered view that the assessee is not liable to deduct tax on the aforesaid payment made to the non-resident entity in Ireland for the provisions of section 40(a)(i) of the Act to be invoked. We, therefore, uphold the finding of the learned CIT(A) on this issue which has not been controverted before us by the Revenue. 4.9 With respect to the payment made by the assessee to Siddharta Siddharta and Widjaja, Indonesia for rendering of audit services, it is seen by the learned CIT(A) that the India-Indonesia DTAA does not have any Article defining FTS and that the services were rendered in respect of audit and taxation matters. In these factual circumstances the learned CIT(A) was of the view that since the payment made by the assessee for such services fall within the scope of Article-14 of the India-Indonesia ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
