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TMI Blog1991 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... e-Chairman of Maharashtra State Road Transport Corporation, Shri P.G. Patankar, the President and Managing Director of Taj Group of Hotels, Shri Ajit Kerkar, the former Chairman of State Industrial Investment Corpn. of Maharashtra, Shri N.M. Wagle, and the Chief Engineer, Public Works Department, Government of Maharashtra, Shri N.V. Merani, as members. On scrutiny of the agreement with specific reference to clauses 2, 4 and 7, the Income-tax Officer concluded that the agreement gave clear-cut impression that the assessee had to carry out the work of surveying the land, preparing the designs and furnishing the technical know-how and about the finalisation of Bombay Mainland Link Project for which the assessee-company had to be paid fees for technical services/consultancy services rendered. On reading the agreement, according to him, one could easily form an opinion that the role of the assessee-company was of consultants for which they were paid fees. The assessee's claim that the fees earned by the assessee was not chargeable to income-tax in view of article III of the Avoidance of Double Taxation Agreement with Denmark (hereinafter referred to as 'AADT'), was not accepted and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that wherever the fees for technical services have been subject to a special treatment, they have been specifically excluded from the term "industrial and commercial profit". He referred to, in this connection, the Belgium Treaty - Article VII(6), French Treaty - Article III(5), The Japanese Treaty - Article III(6). As regards article XIV(1) applied by the departmental authorities, he submitted that the said article has no application to the facts of the case. That article, he submitted, applies to the profits or remuneration from professional services or services as an employee derived by an individual who is a resident of one of the territories. The assessee being a corporate entity is not an individual and, therefore, the said article has no application. He referred to sub-clauses (2) and (3) of the said article and submitted that the term 'individual' has been used only with respect to a living person and not to an artificial person like a company as the requirement of the presence of the individual in either of the countries for a period or periods not exceeding 183 days could not have been possible for a person other than individual. 5. He also referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise of the other territory unless profits are derived in the first-mentioned territory through a permanent establishment of the said enterprise situated in the first-mentioned territory. If profits are so derived, tax may be levied in the first-mentioned territory on the profits attributable to the said permanent establishment. (2) There shall be attributed to the permanent establishment of an enterprise of one of the territories situated in the other territory the industrial or commercial profits which it might be expected to derive in that other territory if it were an independent enterprise engaged in the same or similar activities under the same or similar conditions and dealing at arm's length with the enterprise of which it is a permanent establishment. In any case, where the correct amount of profits attributable to a permanent establishment is incapable of determination or the ascertainment thereof presents exceptional difficulties, the profits attributable to the establishment may be estimated on a reasonable basis. (3) For the purposes of this agreement the term "industrial or commercial profits" shall not include income in the form of rents, royalties, interest, di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, i.e. in preparing the project by conducting preliminary studies, collection and assimilation of data and finally preparing the feasibility report and, in this case, with regard to Trans-Harbour Communication Link between the Island city of Bombay and the Mainland. In the general sense of its meaning, it would be a part of the industrial and commercial profits and, therefore, it cannot be said that there is no specific provision for dealing with such kind of profit in AADT. The contention of the revenue that the provisions of section 9(1)(vii) are applicable is liable to be rejected. Furthermore, wherever the Governments of the two States have intended to deal separately with the fees for technical services, a specific provision has been made in the treaties entered into between the two countries. Say, for example, in a Belgium treaty, Article VII(6), which reads as under-- "(6) The term "industrial or commercial profits" means income derived by an enterprise from the conduct of a trade or business, but does not include income in the form of rents, royalties, fees for technical services, interest, dividends, capital gains, remuneration for labour or personal (including profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceeding in the aggregate 183 days during a taxable year, (b) the services are rendered for or on behalf of a resident of India, (c) the profits or remuneration are subject to Indian tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Danish tax. (3) An individual who is a resident of Denmark shall not be taxed in India on the profits or remuneration referred to in paragraph (1) if (a) he is temporarily present in India for a period or periods not exceeding in the aggregate 183 days during a relevant 'previous year'. (b) the services are rendered for or on behalf of a resident of Denmark, (c) the profits or remuneration are subject to Danish tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Indian tax. (4) Where an individual permanently or predominantly renders services on ships or aircraft operated by an enterprise of one of the territories such services shall be deemed to be rendered in that territory." On a bare reading of this Article, one could say that it applies only to the profits or remuneration derived by an individual who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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