TMI Blog2015 (2) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... - Held that:- As admitted by both the parties that this issue is no longer res-integra in view of the decision of Hon'ble jurisdictional High Court in the case of DIT v. NGC Network Asia LLC [2009 (1) TMI 174 - BOMBAY HIGH COURT].- Decided in favour of assessee. Interest u/s 234D - Held that:- This matter is restored back to the file of the AO, as the assessee has claimed in its ground of appeal that no refund has been granted to the assessee. This fact needs to be verified by the AO and appropriate relief may be given, if admissible in law. - Decided in favour of assessee for statistical purposes. - ITA No. 5452/Mum/2014 - - - Dated:- 13-2-2015 - N.K. BILLAIYA,AND Amit Shukla ,JJ. For the Appellant : Porus Kaka and Divesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Article 27 of the India- US Double Taxation Avoidance Agreement (India-US Tax Treaty') in the case of the Appellant's group companies for prior years wherein it has been held that income from borrowed services should not be taxable in India in the hands of the Appellant. The Appellant prays that the principles underlying the said order ought to have been applied and pray accordingly. 5. The learned AO has erred in levying interest under Section 234D of the Act, since no refund of ₹ 8,120 has been granted to the Appellant till date. 6. The learned AO has erred in charging interest under Section 234B of the Act. 7. The learned AO has erred in initiating penalty proceedings under Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP, the assessee raised objections that, India-Greece DTAA does not have specific article for taxation of services which are in the nature of strategic/management/consultancy services. In absence of specific article for taxation of fees for such services in the DTAA, the income in the nature of fees for services rendered by the assessee will be liable to be taxed under Article 3 as business profits. It was also brought to the notice before the DRP that ITAT Mumbai Bench, in similar cases of assessee's group companies for past years it has been held that borrowed service charge received by the assessee cannot be considered as 'fees for technical services'. The DRP held that the income will taxable under XVII (1) of the Indo-Greec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. Since, assessee does not have any permanent establishment, then it cannot be taxed in India. He specifically drew our attention to the decision of ITAT Mumbai Bench in the case of McKinsey and company (Thailand), ITA No. 7624/Mum/2010, order dated 10.07.2013. Thus, the issue involved is squarely covered in favour of the assessee. 5. On the other hand Ld. DR strongly relied upon the order of the DRP as well as order of the AO. 6. We have heard the rival submissions and also the relevant findings given in the impugned order. The sole issue arising in this appeal is, whether the fees for borrowed services rendered by the assessee is taxable in India as FTS or not. The assessee's case is that in absence of FTS clause in the Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income would remain under Article 7, unless specifically dealt by other Articles. The case of the AO is that Article 12 is applicable. We have noticed that such Article deals only with 'Royalties' and riot 'Fees for included services'. Obviously, the application of Article 12 is ruled out. In that view of the matter, such income would remain included under Article 7 and will not move in the lap of Article 22, which deals with items of income not expressly dealt with in the other Articles of the DTAA. As the nature of the extant income is such which is otherwise specifically covered under Article 7, it cannot be considered in the residual provision of Article 22. 8. Once there is an income in the nature of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed territory outside India, as the case may be, under sub-section (1) for granting relief of tax, or as the case may be, avoidance of double taxation, then, in relation to the assessee to whom such agreement applies, the provisions of this Act shall apply to the extent they are more beneficial to that assessee. In other words if a particular item of income is taxable under the Income-tax Act, 1961, then it shall cease to be taxable in India, if the DTAA provides exemption in respect of such income. The core of the matter is that the DTAA overrides the regular provisions of the Act, in so far as it is more beneficial to the assessee. If the DT A provides for a more liberal mode of computation of income, then it is this mode of computation, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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