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2005 (2) TMI 450 - ITAT CALCUTTA-ATax deductible at source - Payment To Non-Residents - services rendered for providing technical plan, design and finalizing construction of the water systems - DTAA between India and USA - Whether it was falling under article 7 or article 12 of DTAA - HELD THAT:- We are of the opinion that the payments effected under the agreement with the American company squarely fell within the definition of "fees for included services" and therefore the assessee was liable to deduct tax @ of 15% of the amount payable, under section 195 of the Act. In the case of Raymond Ltd. [2002 (4) TMI 891 - ITAT MUMBAI] the payment was effected by the assessee to a company, Resident of U.K. The nature of activities contemplated in the contract between the Indian company and the U.K. company were totally different as the question was whether the amount so paid were fees for technical services. In that case although Tribunal held that services rendered were technical services; due to specific clauses of DTAA between U.K and India, income was not taxable. Moreover, since there is a specific clause included in article 12(4) of DTAA with the USA which defines the term fees for included services and further since the payment made under the agreement in the present case falls within the said definition, the assessee cannot get benefit of the decision of the Mumbai Bench which was rendered in the context of DTAA between India and U.K. On the contrary we find that the substance of the present agreement envisaged that the American company shall not only advice the Indian company but in fact it will prepare all the designs and drawings necessary for implementing the Water Features and also assist the Indian company in actual erection and commissioning of water features. We thus find that from the very inception of preparing schematic designs and drawings till the actual implementation and commissioning of the water features the American company was intimately connected with the project and in fact the whole project was intended to be conducted at the behest direction and supervision of the American company. In the circumstances the decision of the Coordinate Bench in the case of CESE Ltd. [2003 (8) TMI 538 - ITAT KOLKATA] cannot be applied. We, therefore, agree with the view taken by the CIT(A) that the amounts payable to American company were "fees for included services" within the meaning of article 12(4)(b) of the DTAA with the USA and therefore liable for withholding of tax u/s 195 of the Act. Accordingly, we dismiss the appeal of the assessee. In the result, the appeal is dismissed.
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