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2014 (9) TMI 352 - AT - Income TaxFees for technical services remitted to non-resident Applicability of Article 13(c) Indo-UK DTAA Effect of Explanation to section 9(1)(vii) w.e.f. 1.6.1976 Held that:- In the case of Diamond Services International (P.) Ltd. v. Union of India [2007 (12) TMI 182 - BOMBAY HIGH COURT] it has been held that the job of grading diamonds in the laboratory and furnishing a grading certificate did not amount to transferring of any technical skill or knowledge to the customer - the grading report by GIA is a statement of fact regarding the characteristics of a diamond - the payment received by GIA is not one for the right to use the experience - if the fruits of the services remained with the service provider then out of the ambits of the term 'make available' but after the fruits of the service rendered remained with the service recipient and the service recipient is able to perform similar activity, for which the services were sought, without the help or recourse of the service rendered then the technology can be said to be transferred or made available to the recipient - there are significant distinction between the definition as prescribed u/s.9 of IT Act of "fees for technical services" as compared with the definition prescribed in Article 13 of Indo-UK treaty. The provisions of DTAA overrides the provisions of IT Act in the matter of ascertainment of taxability under the Income Tax Act also in Union of India v. Azadi Bachao Andolan [2003 (10) TMI 5 - SUPREME Court] it has been held that there was no obligation for withholding the tax on any person making payment to a non-resident if the payment made to the non-resident is not chargeable under the provisions of IT Act - the issue is limited to the applicability of the provisions of Article 13 of DTAA between India and UK thus, the fees for technical services was not paid for making available the technical knowledge, experience, know-how to the assessee - the payment made by the assessee to the said resident is out of the ambits of the provisions of Section 195 of IT Act the order of the CIT(A) is upheld Decided against revenue.
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