9911796707
TMI Blog2004 (9) TMI 305X X X X Extracts X X X X X X X X Extracts X X X X ..... d together with this appeal. In the said appeal, we have reached the following conclusion: "6. The adjudicate on this appeal, however, it is not even really necessary to deal with various aspects of the matter so strenuously argued by the distinguished representatives. It is sufficient to take note of the fact that there was a double taxation avoidance agreement entered into between India and Austria on 5th April, 1965 [(1965) 56 ITR (St) 15], which was in force at the relevant point of time. We find that it is an unambiguous legal position that by the virtue of s. 90(2) of the Act, where the Central Government has entered into an agreement with the Government of any country outside India under sub-s. (1) for granting relief to tax, or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation avoidance agreements which have been entered into by the Central Government under s. 90 of the IT Act, 1961, also provide that the laws in force in either country will continue to govern the assessment and taxation of income in the respective country except where provisions to the contrary have been made in the agreement. Thus, where a double taxation avoidance agreement provided for a particular mode of computation of income, the same should be followed irrespective of the provisions in the IT Act. Where there is no specific provision in the agreement, it is the basic law, i.e., the IT Act, that will govern the taxation of income. In our view, the circular reflected the correct legal position inasmuch as the convention or agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us clear that in terms of the applicable Indo-Austrian DTAA, the taxability of fees for technical services was on net basis and confined to only such fees which are attributable to the work actually performed in the other State. Barring this exception, the fees for technical services were only taxable in the country of fiscal domicile. In view of the fact that there is not an iota of evidence to suggest, leave aside establish, that technical services, even if any, were rendered in India, the very foundation of this case is wholly unsustainable in law. The question of taxability of fees for technical services in the country of which an enterprise is resident, in cases in which the old Indo-Austrian DTAA [it is since replaced by the DTAA dt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent disregard to the well-settled legal position, cannot meet approval by any judicial authority. We disapprove this action of the authorities below. 8. The next question then is whether it is taxable at all under the provisions of the Indo-Austrian DTAA. On an appreciation of the facts of this case, we find that the receipt in question is in the nature of a export proceeds in the hands of the appellant. It is received in consideration of import of goods, though made to order and as per specifications of the SCL, and just because the goods are made as per specification, the character of transaction does not change. In this view of the matter, the profit embedded in the impugned receipts is in nature of 'industrial or commercial profits' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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