TMI Blog2013 (8) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Portuguese beneficiaries who provide legal consultancy services in connection with the said Portuguese Nationality work and correspond with Portuguese authorities in Portugal in this regard. The Assessee collects and remits the fixed charges for different services from the clients in India as per the bills raised by him, in accordance with the agreement entered by him with Portuguese beneficiaries on 8.7.2010. This money are being transferred from Assessee's proprietorship concern through HDFC Bank account to Portuguese beneficiaries on demand. As per the information available, the AO noted following amounts were remitted to the beneficiaries during the current financial year. Sl. No. Date of transaction Name of the Beneficiary Amount in Indian currency 1 26.05.10 Elena Nistal ₹ 3,76,160.30 2 14.06.10 Elena Nistal ₹ 1,41,732.50 3 18.08.10 Elena Nistal ₹ 7,62,735.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the services is also outside India and therefore, no income accrues in India. Reliance was also placed on Article 14 of the DTAA between India and Portugal according to which the income derived by a person who is an individual or a firm of individuals (other than a company) who is resident of a Contracting State from the performance in other Contracting State of professional services or other independent activities of a similar character shall be taxable only in the first mentioned State except in the circumstances which are given under clause (a) and (b). According to the Assessee, the case does not fall in the exception and the income was not chargeable to tax in India. CIT(A) dismissed the appeal of the Assessee by holding as under : '2.3 Having heard the contention of the appellant, there is no dispute on the issue that the Provisions of Section 195 of the Income Tax Act will apply only in the circumstances if the payment to the non-resident have an element of income chargeable to tax in India as held by the Honourable Supreme Court of India in the case of GE India Technology Centre (P.) Ltd v. CIT [2010] 327 ITR 456/193 Taxman 234/7 taxmann.com 18. However, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia for the period exceeding 90 days. In the light of the above Article if the payments made to the non-resident as incorporated in Paragraph 2.1 of this Order, it is evident that the non-resident was having fixed base of the income for entire financial year and therefore, even as per Article 14 of DTAA with Portugal such income is taxable in India. Moreover, it is also an undisputed fact that the services rendered by the non-resident are utilised by the appellant in the business carried out by him in India and therefore, the income derived from such payment is chargeable to tax in India. This view finds support from the decision of the Honourable ITAT Mumbai, in the case of the Addl. DIT v. Ess VeeIntellectual Property Bureau [2006] 7 SOT 38 in the similar circumstances where the assessee was engaged in the business of consultancy in respect of registration and enforcement of intellectual property rights. For that purpose, the assessee availed services of the entities based abroad. The assessee, however, did not deduct any tax from the payments made to such foreign entities. It was contended by the assessee that since the payments were made for the professional services, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals)'s coming to the conclusion that the services rendered by the foreign professionals are neither managerial, technical or consultancy services and that it is purely a case of actually rendering professional services, which are neither technical, nor consultancy nor managerial in nature . There are overlapping areas in .professional services and in technical, managerial or consultancy services inasmuch a professional service can be rendered in technical managerial or consultancy field. Therefore, a service being in nature of a professional service, in the context of section 9(1)(vii), does not affect the taxability of payment for that service. The fees is paid by the assessee, who is a resident In India, and it is not for the purpose of making a earning any income outside India or for the purpose of carrying out any business outside India. The fees is, therefore, taxable in India under section 9(1)(vii)(b). In our humble understanding, therefore, the Commissioner (Appeals) did err in holding that the payments in question were not taxable in India under the provisions of the Indian Income Tax Act. The decision of the Honourable Bombay High Court in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other Contracting State under the following circumstances : (a) If such person has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities or; (b) If he is staying in the other State for a period or periods exceeding in the aggregate 183 days in any 12 months period commencing or ending in the fiscal year concerned. In that case, only so much of the income as is derived from his activities performed in the other State may be taxed in that State. The non-resident to whom the Assessee has made the payment does not have any fixed base regularly available to him for performing his duty. Even he does not have any permanent establishment. That is not the case of the Revenue. From the copy of the Passport also it is apparent that the person, Ms. Elena Nistal to whom the Assessee has made the payment was in India only for 22 days i.e. from 2.5.2010 to 23.5.2010. She was not in India for a period exceeding in the aggregate 183 days. Therefore, income derived from her activities performed in India cannot be taxed in India. Even under Article 15 also, the income cannot be said to be taxable in India as under this Art ..... X X X X Extracts X X X X X X X X Extracts X X X X
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