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2020 (5) TMI 491 - HC - Income TaxRevision petition u/s 264 - waiver of interest from deducting tax at source for the payments made to the said non-resident company under Section 195 - 2nd respondent ordered deducting of tax at the source of payment at 20% under the Double Taxation Avoidance Agreement (hereinafter referred as DTAA) entered between the Government of India and the Government of UK HELD THAT:- From the reading of letter dated 01.01.2011 of the said MD IN Services Private Limited UK, the non-resident overseas company indicates that the service provided by them to the petitioner was in the nature of consultancy services - payments made by the petitioner to the said UK company would be an income deemed to accrue/arise in India within the meaning of Section 9(1)(vii)(b) of the Income Tax Act, 1961. Payments made by the petitioner to the said UK company cannot be said to be towards fees payable in respect of services utilised in a business or profession carried out by the petitioner outside India as no such business had been established at the time of such payment. Petitioner was merely prospecting such business and therefore engaged the services of the said UK company as a consultant. As the petitioner has not established any business, the payment would not come within the purview of the exception provided in the Section 9(1)(vii)(b). Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with United Kingdom of Great Britain and Northern Ireland also makes it clear that payments for fees towards technical services may also be taxed in the contracting state in which they arise and according to the law of that states. The expression fees for technical service has been defined in Article 13 Paragraph 4 to mean payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services offered technical or other personnel). Exception to the definition of fees for technical services in Paragraph 4 has been specified in Paragraph 5 to Article 13. It is to be noted that none of the exception provided in Paragraph 5 are attracted. W.P. dismissed.
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