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TMI Blog2017 (1) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 9(1)(vii)(b), the payment was liable for TDS and as no TDS was collected/deducted, such payment itself is disallowable u/s. 40(a)(ia). 3. Before the Ld. CIT(A), it was submitted that there was a copy of Services Contract Agreement dt. 18-01-2007 and the correspondence between Mr. Joe Mitchell, in the form of e-mails, documents and his presence in India on the site during the relevant financial year was submitted to AO along with copy of the passport. It was further submitted that DTA between India and USA overwrites the provisions of Income Tax Act, 1961 and the services rendered by Mr. Joe Mitchell, are independent, personal services and are covered by Article 16 of the DTAA. Since Mr. Joe Mitchell was not in India for more than 183 days, the amount received by him is not taxable in India. Alternately, it was also submitted that if Mr. Joe Mitchell and Precision Energy Associates, LLC, USA, to be considered as one and the same, then, it is the professional income covered under Article 7. In the absence of a permanent establishment, the same cannot be taxed in India. Looking at the either way, it was submitted that the provisions of Section 40(a)(ia) or S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests & Third Part Services were scrutinized and finalized by him. After technical evaluation of all the purchases and services by the site technical and commercial staff, Mr. Joe Mitchell evaluated the same and advised the best option to the Company. Such decisions were provided either in person during his visits to India or through emails. Whenever, he was in India, he participated in all the Technical meetings. He was in the interview panel for the Technical Staffs recruitment. During his visits to India, he used to take Interviews personally and decide on the selection process otherwise he used to conduct the interviews telephonically. Periodical Gas Turbines & Steam Turbine maintenance schedules planning were approved by him. Also the list of-Gas Turbine parts refurbishment items and new items procurement list were approved by him. Maintenance schedules and parts refurbishment periodicity is finalized by Mr. Joe Mitchell in consultation with OEM. He was involved in technical and commercial 'negotiations and he was finalizing the Work Orders' and Purchase Orders. After technical and commercial negotiations by site technical and commercial staff, Mr. Joe Mitchell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether he (nonresident) has any business connection in India or not. Further, payment made by a resident to non-resident Is still taxable even If the services were rendered outside India by non-resident. Whereas In the Instant case Mr.Joe Mitchell rendered his services In India at a place called Kakinada In Andhra Pradesh. Therefore, according to provisions of Sec.9(1)(vii)(b) the payment made to Mr.Joe Mitchell is clearly liable to tax in India. 5.6 Coming to the provisions of DTAA with USA, before determining taxability of income of Mr.Joe Mitchell, It is relevant to know his period of stay in India. The details are as under: Date of arrival Date of departure Days of stay 01-04-2008 10-04-2008 10 31-05-2008 11-06-2008 12 12-07-2008 24-07-2008 13 02-10-2008 28-10-2008 27 15-01-2009 22-01-2009 8 19-02-2009 20-02-2009 2 11-03-2009 31-03-2009 21 Total 93 The Article 15 of DTAA read as under: Independent Personal Services 1. Income derived by a person who is an individual or firm of individuals (other than a company) who is a resident of a Contracting State from, the performance in the other Contracting State of professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State. 3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operating in international traffic by an employee of a Contracting State may be taxed in that State. If Mr.Joe Mitchell is considered as employee of M/s.Precision Energy Associates, as the period of stay in India is less than 183 days, according to Article 16 such Income is not taxable. In view of the above discussion, the payment made to nonresident consultant towards technical services is liable to TDS u/s 195 of Income Tax Act as per Article 15 of DTAA with USA. As no TDS was made on such payment, the same cannot be allowed as deduction. 6. In result, the appeal is dismissed". 5. Assessee is aggrieved and preferred the grounds as under: "1. The CIT (A) erred in law and facts of the case in holding that section 9 (1)(vii)(b) of the Income Tax Act, 1961 are applicable ignoring the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of departure in computing the days of stay. If, for the seven visits made by Mr. Joe Mitchell seven days are excluded, then period of stay in India falls less than ninety days and his services are not taxable under Article 15 even. Considering the DTAA, it was submitted that the amount is not liable to tax in India and accordingly, the provisions of Section 40(a)(ia) are not applicable. 7. Ld. DR however, relied on the orders of the Ld. CIT(A) to submit that the amount is taxable as there is no dispute with reference to applicability of Section 9(1)(vii)(b). 8. We have considered the rival contentions and perused the details on record. While there is no dispute with reference to applicability of Section 9(1)(vii)(b), the issue as decided by the Ld. CIT(A) is with reference to Article 15 of the DTAA. Provisions of DTAA over write the provisions of IT Act as held by the Hon'ble Supreme Court in the case of Union of India Vs. Azadi Bachao Andolan (2003) [132 Taxman 373] (SC). If the services are considered as dependent personal services being given by the Executive Director of one man company M/s. Precision Energy Associates, LLC, USA, then it comes under Article 16 on which Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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