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2005 (11) TMI 365 - AT - Income TaxDTAA between India and United Kingdom - Construction supervisory services - fees for technical services Or Not - Carry forward of the loss for set off against profits in subsequent years - Foreign companies - computation of income by way of royalty, etc. - limitation on deduction for expenses as set out in section 44D - HELD THAT:- It is an admitted position that the terms of Article 7 of the DTAA between India and UK is similar to the terms of Article 7 of the DTAA between India and Singapore considered by the Tribunal in the case of Boston Consulting Group P. Ltd.[2005 (2) TMI 771 - ITAT MUMBAI]. In that case, the assessee was receiving income through its permanent establishment in India by providing strategy consultancy services such as marketing and sales strategy, business strategy and portfolio strategy, etc. to its clients in India and abroad. The Tribunal, after discussing the terms of Article 7 of the DTAA and referring to the provisions of sections 44D and 115A of the Income-tax Act, has held that such services clearly rule out the applicability of clauses (a) and (c) to Article 12(4) of the DTAA. As regards clause (b) of Article 12(4) the Tribunal held that only such services as are technical in nature are covered which may enable the recipient of services to apply the technology and not consultancy services. In case receipts through permanent establishment in respect of which profits are computed under Article 7(3) of the DTAA are not fee for technical services, section 44D is not to be applied for purposes of deduction of expenses. Tribunal held that receipts by assessee-Singapore-company through its permanent establishment in India chargeable to tax under Article 7(3) of the DTAA between India and Singapore, being from strategy consultancy services, were not from technical services as referred to in Article 12(4)(d) of the DTAA. Hence section 44D, and for that matter, Explanation 2 to section 9(1)(vii) did not apply and, therefore, the limitation for deduction under section 44D was not attracted. The Tribunal also held that even if a contrary view was possible the one favourable to the assessee has to be preferred. Similar is the view taken by the Tribunal in the case of Raymond Ltd.[2002 (4) TMI 891 - ITAT MUMBAI]. Facts and circumstances being similar following the detailed discussions contained in the order of the Boston Consulting Group Pte. Ltd., we are of the opinion that the CIT(A) has come to a right conclusion and his order does not call for any inference. It is accordingly upheld and the revenue’s grounds are rejected. In the result, the appeal is dismissed.
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