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2015 (6) TMI 10 - HC - Income TaxTechnical service in terms of Second Explanation to Section 9 (1) (vii) read with Section 194J - payment incurred by the assessee to the UAE concerns - whether the non-resident was providing consultancy services? - Held that:- In the transaction between the assessee and Marble Arts & Crafts, the former (non-resident) acted as an agent of the assessee for the purposes of the latter”s dealings with the Works Department, Abu Dhabi, which included coordinating with the authorities in the said department and handling invoices for the assessee. As far as CGS International is concerned, it acts as a liaisoning agent for the assessee, and receives its remuneration from each client that it successfully solicits for the assessee. Facially, such services cannot be said to be included within the meaning of “consultancy services”, as that would amount to unduly expanding the scope of the term “consultancy”. Therefore, this Court does not accept the revenue”s contention that the services provided were in the nature of “consultancy services”. Consequently, the remittances made by the assessee would not come within the scope of the phrase “fees for technical services” as employed in Section 9(1)(vii) of the Act. - Decided in favour of the assesse. Whether the services provided by the UAE entities are in the nature of “independent personal services” defined in Article 14 of the DTAA? - Held that:- The two requirements for the applicability of Article 14, as applied in this case, are: a) income must be of a resident of the Contracting State (herein, UAE); and b) income must be in respect of professional services or other independent activities of a similar character. Article 4(1)(b) of the DTAA defines “resident of a contracting state” in the context of UAE to mean any person who under the laws of that State is liable to tax therein. Article 3(e) defines “person” to include a company. Therefore, the CIT(A) rightly rejected the revenue”s contention that Article 14 is inapplicable for the reason that the services in question were provided by companies, as opposed to individuals - Decided in favour of the assessee
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