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2023 (7) TMI 81 - ITAT MUMBAIAllowance of credit of taxes as withheld by the clients domiciled in Japan - legal services provided by the assessee to the Japanese residents - scope of Indo Japanese tax treaty - as per AO as the receipt is not taxable in Japan and thus, the tax was not required to be withheld, as it was in the nature of independent personal services - HELD THAT:- We find that the coordinate bench of the Tribunal in Amarchand and Mangaldas and Suresh A Shroff & Co.[2020 (12) TMI 776 - ITAT MUMBAI] we hold that, in the context of Indo Japan tax treaty, article 14 comes into play only for individuals, this proposition ceases to hold good in the present context. As a corollary to this legal position, and the exclusion clause under article 12(4) not being triggered on the facts of this case as such, it is indeed reasonably possible to hold that the payments in question were rightly subjected to tax withholding in Japan. The judicial precedents cited by the authorities below are in the context of the tax treaties other than Indo Japan tax treaty, and the provisions of the Indo Japan tax treaty are not in pari materia with the provisions of those tax treaties. On the facts of this case, the conclusions arrived at by the Japanese tax authorities, directing tax withholdings from the payments made to the assessee by its Japanese clients, cannot be said to unreasonable or incorrect. In the light of these discussions, as also bearing in mind entirety of the case, we hold that the assessee was wrongly declined tax credit on the facts of this case. These are the cases in which the treaty partner source jurisdiction has taken a reasonable bonafide view which is not manifestly erroneous- even though it is not the same as is the view taken by the residence jurisdiction. Decided against revenue.
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