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TMI Blog2019 (8) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the assessee that payment is for' independent personal services' under Article 14 of the said DTAAs and thus not liable for deduction of tax at source u/s 195." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee company is in the business of manufacturing of master batches and engineering plastics compounds. AO noticed that the assessee has made payment of Rs. 21,93,721/- on account of technical fees to non-residents, namely, Dr. Werner Stibal and Hans Peter Meyer of Switzerland, both scientists. Declining the contentions raised by the assessee that the payment made to the scientists under the Article 14 of DTAA with Switzerland is a payment made purely on account of scientific activities relating to the existing business and by following the assessment order for AYs 2008-09 to 2012-13, AO proceeded to disallow an amount of Rs. 21,93,721/- and made addition thereof to the total income of the assessee. 3. Assessee carried the matter by way of an appeal before the ld. CIT (A) who has confirmed the addition made by the AO by dismissing the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able at pages 26 to 55 of the paper book, accepted the contention raised by the ld. AR for the assessee that the services rendered by Dr. Werner Stibal and Hans Peter Meyer are not covered by Article 12 of DTAA rather these are covered under Article 14 of the DTAA by returning following findings :- "21. We have considered the rival contentions and perused the orders of the lower authorities. The identical issue has been decided by us in the appeal of the assessee for Assessment Year 2008-09 wherein, we have held that such services are covered by the provision of section 9(1)(vii) of the Act and also by virtue of Article 14 of the DTAA such sum are chargeable to tax in Germany and hence, no tax is required to be withheld under section 195 of the Act. For the similar reasons, we direct the ld Assessing Officer to delete the disallowance of Rs. 268980/- u/s 40(a)(i) with respect to payment made to Dr. U Thiele. 22. The second issue involved in the same ground is with respect to disallowance u/s 40(a)(i) of Rs. 1082175/- made to Dr. Werner Stibal who is resident of Swiss Confederation who provided professional services to the assessee. The ld Assessing Officer noted that similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State. 2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State; but if the beneficial owner of the royalties or fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties or the fees for technical services. 3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent trademark, design or model, plan, secret formula or process, or for the use of, or the right to use, any industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4. For purposes of this Article the term "fees for technical servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other provisions of this Agreement. 27. According to Article 12 (5) (b) meaning of the Term fees For Technical Services specifically excludes income covered under Article 14 and 15 of the DTAA . Therefore, issue in this year is specifically covered in favour of the assessee by the decision of the coordinate bench in case of Graphite India [2003] 127 Taxman 90 (Kolkata)(MAG)/[2003] 86 ITD 384 (Kolkata)/[2003] 78 TTJ 418 (Kolkata) wherein identical issue with respect to Indo US DTAA was in question. The Coordinate bench held as under :- "7. The primary thrust of rival contentions before us has been in support of the assessee's contention that the impugned payment for consultancy fees is covered by the scope of expression independent personal services' within meanings of Article 15 of the Indo US DTAA, and, of course, in support of revenue's contention, that the impugned payment is covered by the scope of fees for technical services termed as 'fees for included services' within meanings of Article 12(4) of the same. On a careful analysis of the provisions of the Article 12, however, even this proposition seems to be somewhat fallacious inasmuch as in case the impugned paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stries Ltd. vs. ITO, Director of Income-tax vs. Rio Tinto Technical Services and Centrica India Offshore (P.) Ltd. (supra) relied upon by the ld. DR for the Revenue are not applicable to the facts and circumstances of the case as the services rendered in this case was independent scientific activity specifically covered under Articles 14 & 15 of the DTAA. 10. So, following the decision rendered by the coordinate Bench of the Tribunal in assessee's own case (supra), discussed in preceding paras, we are of the considered view that services rendered by Dr. Werner Stibal and Hans Peter Meyer are covered under Article 14 of the DTAA which are independent scientific activities. Moreover, finding on facts have been returned by the coordinate Bench of the Tribunal that the assessee has no fixed PE in India and it is undisputed case of the assessee that both Dr. Werner Stibal and Hans Peter Meyer have not stayed in India for 183 days or more and as such, no tax is required to be deducted at source, hence disallowance of Rs. 11,77,391 and Rs. 10,16,330/- to Dr. Werner Stibal and Hans Peter Meyer respectively made by the AO/confirmed by the ld. CIT (A) is ordered to be deleted. Consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X
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