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2013 (10) TMI 748 - AT - Income TaxUtilization of services of non-residents outside India - Whether the fee for technical services paid to divers by the assessee was covered by the exception provided in section 9(1)(vii)(b) of the Act - Therefore, there was no requirement for the assessee to deduct tax at source at the time of payment made to the divers and hence, no disallowance can be made by invoking the provisions of section 40(a)(i) of the Act - The assessee is in the business of providing underwater diving services in Saudi Arabia under a contract with M/s Mashhor Covus SDB BHD, Brunei and M/s Khalifa A Algosaibi Diving and Marine Services Co., and paid divers fees outside India – Held that:- Assessee has paid fee for technical services to non-residents of Rs. 74,63,768/- during the year under consideration - Assessee is a resident in India - Except in two circumstances, firstly, where the fee is paid in respect of services utilized in a business carried on by the assessee outside India or secondly, fee is paid for the purposes of earning any income from any source outside India, in all other circumstances, the assessee is liable to deduct tax on the amount of technical fee paid to non-residents – Section 9(1)(vii)(b) itself provides the exception. If the Resident-assessee utilizes the services of the Non-resident, in its business outside India, it is covered under the exception given in the section itself and the payment received by the non-resident cannot be deemed to accrue or arise in India - Assessee company, utilized the services of two non-resident in its business outside India, i.e. in Nigeria - Services were provided by the assessee outside India and for this business the services of non-residents were utilized to whom technical fee in question was paid – Following the decision of the Hon’ble Tribunal in the Assessee’s own case for the year 2007-08, it is held that the services of non-residents to whom the technical fee of Rs. 74,63,768/- was paid by the assessee were utilized for the business which was carried out outside India for earning income from a source outside India – Appeal allowed – Decided in favor of Assessee.
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