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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 ..... - - Dated:- 14-6-2019 - SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER For The ASSESSEE : Shri P.C. Parwal, CA For The REVENUE : Shri Surender Pal, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Poddar Pigments Ltd. (hereinafter referred to as the assessee ) by filing the present appeal sought to set aside the impugned order dated 01.08.2016 passed by the Commissioner of Income-tax (Appeals)-7, New Delhi qua the assessment year 2013-14 on the grounds inter alia that :- 1. The Learned Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the action of the AO in making disallowance of ₹ 11,77,391/- and ₹ 10,16,330/- u/s 40(a)(i) by holding that payment to Dr. Werner Stibal and Hans Peter Meyer respectively is a payment towards 'fees for technical services' under Article 12 of DTAA with Swiss Confederation and thus liable for deduction of tax at source u/s 195. He has further erred in not accepting the contention of the assessee that payment is fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee being engaged in manufacturing of master batches and engineering plastic compounds made payment of ₹ 11,77,391 and ₹ 10,16,330/- to Dr. Werner Stibal and Hans Peter Meyer respectively, both scientists and non-resident Indians, residing in Switzerland. It is also not in dispute that services have been rendered by Dr. Werner Stibal and Hans Peter Meyer as per Agreements dated 01.06.2012 and 24.10.2012, , available at pages10 to 16 and 17 to 23 of the paper book. It is also not in dispute that the payment has been made to Dr. Werner Stibal and Hans Peter Meyer without deducting tax at source by taking shelter in the provisions contained under Article 14 of the DTAA of the Switzerland by the assessee as they are having no fixed Permanent Establishment (PE) in India nor their period of stay in India was 183 days or more. 7. AO/ld. CIT (A) by invoking the Explanation 2 to section 195 of the Act treated the payment made to Dr. Werner Stibal and Hans Peter Meyer as payment for technical services covered under Article 12 of DTAA and not under Article 14 of DTAA as contended by ld. AR for the assessee. 8. Coordinate Bench of the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A whereas Revenue is of the view that it falls under article 12 of the DTAA. 25. Article 14 of the India Swiss DTAA is as under :- ARTICLE 14 INDEPENDENT PERSONAL SERVICES 1. - Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State : ( a) if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other State; or ( b) if his stay in the other State is for a period or periods aggregating 183 days or more in any 12 month period commencing or ending in the fiscal year concerned; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State. 2. The term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees for technical services arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 7. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the royalties or fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties or fees for technical services was incurred, and such royalties or fees for technical services are borne by such permanent establishment or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual, or for that purpose a firm of individuals, resident in the United States of America, is found to be covered by the scope of expression independent personal services within meanings assigned in Article 15 of the Indo US DTAA, it is immaterial whether or not the same is covered by the scope of fees for included services , which in common parlance is known as fees for technical services , under Article 12(4) of the Indo US DTAA. In that eventuality, in view of the provisions of Article 12(5), if at all that amount is exigible to tax in India, it can only be taxable under Article 15 of the Indo US DTAA. To that extent, provisions of Article 12(4) and Article 15 are noncompeting and mutually exclusive. 28. There are also similar condition in Indo Swiss DTAA in article 12 (5) (b) excluding professional services under article 14 and 15 of that DTAA. Therefore, it is apparent that the services are covered under Article 14 of the DTAA and not under Article 12 of DTAA. Further it is not the case of the revenue that the services provided by the Swiss resident is not professional services as defined under Article 14(2) of DTAA. Further, it is not the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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