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2008 (8) TMI 395 - AT - Income TaxDouble Taxation Relief - business of providing consultancy for infrastructure projects - fees received from National Highway Authority of India (NHAI) - Whether the "fees for technical services" received within the meaning of Expln. 2 to s. 9(1)(vii) can be treated as "fees for included services" within the meaning of art. 12 - DTAA between India and Canada - HELD THAT:- From the scope of services, it is clear that the assessee was required to furnish project report so as to cover detailed design for rehabilitation/strengthening of the existing carriageways and design new carriageways and required structures. Assessee made suitable proposal for further widening the highways and strengthening of the carriageways. Because of such drawings and designs, NHAI was capable of carrying out the desired work. There is no dispute to the fact that the same falls within the meaning of "fees for technical services" as defined in Expln. 2 below s. 9(1)(vii) of the Act. The second limb in cl. (b) of sub-art. (4) of art. 12 of DTAA can be invoked when the amount is paid in consideration for rendering of any technical or consultancy services and if such services consist of the development and transfer of a technical plan or a technical design also. In a way, the condition of making available technical knowledge is not, sine qua non for considering the question as to whether the amount is fees for included services or not particularly when the payment is only where the technical or consultancy services consist of development and transfer of a technical plan or technical design only. This will be considered as "fees for included services" within the meaning of art. 12(4) of the Act (sic-DTAA) and hence, in terms of art. 12(2), tax rate should be charged. The Tribunal, in the case of Gentex Merchants (P) Ltd. [2005 (2) TMI 450 - ITAT CALCUTTA-A] interpreting art. 12 of DTAA between India and USA (which is identically worded in Indo-Canada treaty) held that ''The term transfer as used in art. 12(4) does not refer to the absolute transfer of rights of ownership. It refers to the transfer of technical drawings or designs to be effected by the resident of one State to the resident of other State which is to be used by or for the benefit of resident of other State. Even where the technical design or plan is transferred for the purpose of mere use of such design or plan by the person of other Contracting State and for which payment is to be made, art. 12(4)(b) will be attracted." Therefore, we hold that the payment received by assessee is in the nature of "fees for included services" and hence, to be taxed as such at the rate prescribed in art. 12(2) to the treaty between India and Canada. Interest charged u/s. 234B - AO assessed the income as returned but applied the rate of tax of 20 per cent as per s. 115A - This resulted into excess tax payable - CIT(A) held that since the payments made to the assessee are subject to deduction of tax at source u/s. 195 and the tax has been deducted by the payer @ 15 per cent, the assessee was not liable to pay any advance tax. HELD THAT:- The precondition for levy of interest u/s. 234B is the liability to pay advance tax u/s. 208. Under s. 208, advance tax shall be payable where the amount of such advance tax payable as computed in accordance with provisions of Chapter XVII is Rs. 5,000 or more. The advance tax will be computed u/s 209. Under s. 209, the assessee is to estimate his current income and find out the tax payable therein as per sub-cl. (1) of s. 209(1). Under cl. (d) of sub-s. (1) of s. 209, the income-tax calculated under cl. (a) is to be reduced by amount of income-tax, which would be deductible at source during the said financial year. Thus, the assessee can take credit of the tax deductible at source. Whether the tax is deductible @ 15 per cent or 20 per cent is to be decided by the payer and not the payee i.e. the assessee. Therefore, the tax payable by the assessee does not exceed the tax deductible at source. In such a situation, the assessee is not required to pay any advance tax. In that view of the matter, interest u/s. 234B is not chargeable. Sec. 191 only requires that if the tax is not deducted at source, such income-tax shall be payable by the assessee directly. Sec. 191 only requires the assessee to pay the tax. Thus, the liability, which extends to payment of tax u/s. 191 does not extend to payment of interest u/s. 234B. In that view of the situation, the conclusion arrived at by ld CIT(A) is just. We, therefore, uphold the order of learned CIT(A). In the result, the appeal of assessee is allowed and that of Revenue is dismissed.
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