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TMI Blog2017 (3) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... India under India - U.K. DTAA - Held that:- On appraisal of the Article 17 we are of the view that the same is nowhere applicable in the present case being Mr. Arnold Allen nowhere received the said amount in the capacity as a member of Board of Director of the company. He received the said amount on account of service rendered by him which is professional in nature. There is no iota of evidence on record to which it can be assumed that Mr. Arnold Allen was having fixed place in India. No doubt the said payment falls in view of Article 15 of the Double Taxation Avoidance Agreement and accordingly, this payment is not liable to be taxed in India. Accordingly, this issue is decided in favour of the assessee against the revenue. - I.T.A. No. 5808/Mum/2013 & I.T.A. No.6468/Mum/2014 - - - Dated:- 23-3-2017 - SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM Assessee by: Shri Surinder Mehra Revenue by: Shri Rajguru M. V. ORDER Per Amarjit Singh, JM The assessee has filed the above mentioned appeals against the order dated 16.08.2013 and 14.07.2014 passed by the Commissioner of Income Tax (Appeals)-4, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, therefore the assessee filed an appeal before the CIT(A), who confirmed the said addition, therefore the assessee has filed the present appeal before us. ISSUE NO.1:- 4. Under this issue, the assessee has challenged the addition of amount of ₹ 11,98,339/- after allowing depreciation of ₹ 2,11,471/-. Infact, the assessee has shown the repair and maintenance of the asset to the tune of ₹ 14,09,811/- but the Assessing Officer dealt the same as capital in nature. The learned representative of the assessee has argued that the assessee claimed repair and maintenance expenses in total to the tune of ₹ 27,99,980/- which includes repair of plant and machinery of ₹ 3,44,539/-, building ₹ 9,00,992 and others ₹ 15,54,449/-. Out of these said expense a sum of ₹ 14,09,811/- was paid to M/s. Romi Interior for Mumbai office which includes repairing of sliding window, painting wall and ceiling, fixing roll blind on glass window, removing wooden flooring, providing and fixing new flooring, scrapping the existing floor and skirting, flooring and skirting in PUT Coating etc. and the said expenses are revenue in nature except the expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional fees to the tune of ₹ 3,90,025/- u/s.40(a)(ia) of the Act. The learned representative of the assessee has argued that in view of the Article 15 of the Double Taxation Agreement between India and U.K. the professional fees is not taxable in India, therefore, the professional fees to the tune of ₹ 3,90,025/- is liable to be allowable. The assessee company has paid an amount of ₹ 3,90,025/- to Mr. Arnold Allen who was an independent Director of the company. The professional fees was paid to him. No TDS was deducted. The learned representative of the assessee has argued that the assessee company has paid an amount of ₹ 3,90,025/- as technical fees to Mr. Arnold Allen who was an independent Director of the company which is not taxable in India in view of the section 15 of the Double Taxation Agreement and Mr. Arnold Allen did not stay in India more than 60 days and in this regard the copy of Chartered Accountant is on record, therefore, in the said circumstances the said amount is not taxable in India and this matter of controversy has also been decided in favour of the assessee in view of the decision of the Hon ble ITAT, Chandigarh bench in the case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State. On appraisal of the Article 17 we are of the view that the same is nowhere applicable in the present case being Mr. Arnold Allen nowhere received the said amount in the capacity as a member of Board of Director of the company. He received the said amount on account of service rendered by him which is professional in nature. No doubt the said payment falls in view of Article 15 of the Double Taxation Avoidance Agreement. However, in this regard it is also cleared by the Hon ble Supreme Court of India in case of CIT Vs. P.V.A.L. Kulandagan Chettiar 267 ITR 654 (SC) in which it is specifically held that the provision of Double Taxation Avoidance Agreement was having the overriding fact over normal provisions of the Act. The payment was certified by the Chartered Accountant by issuance of certificate to Mr. Arnold Allen, on account of his professional services. In this regard we found support of case decided by the Hon ble ITAT, Chandigarh bench in the case of M/s. IDS Infotech Ltd. Vs. DCIT, Circle 4(1), Chandigarh in ITA No.52/Chd/2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h NLC and MNBCEL (pg. 46 of the PB). It is also a fact the in tow of the contracts no supervisory charges were booked by the assessee for the year under appeal, that the assessee had offered its income under the head FTS in its return. Article 12(4) deals with FTS and talks of services of managerial, technical or consultancy nature. Considering the above, we are of the opinion that payments received by the assessee should be assessed as per the provisions of Article 12 and not as per Article 7 of the Indo-German DTAA. There is one more aspect to the PE. Protocol to the DTAA has provided as under: With reference to Article 7 a. . b. Income derived from a resident of a Contracting State from planning, project construction or research activities as well as income from technical services exercised in that State in connection with a permanent establishment situated in the other Contracting State, shall not be attributed to that permanent establishment So, even if it is assumed that the assessee had PE in India for the year under consideration, it will not be governed by Article 7 of the tax treaty. We have gone through the order of Birla Corporation Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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