TMI Blog2019 (4) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether multiple counting of employees on a single day is permissible - India UK Tax Treaty - HELD THAT:- multiple counting of employee in a single day, as was done by the Departmental Authorities, is impermissible under Article 5(2)(k)(i) of India UK Tax Treaty. The aforesaid view has been expressed by the Tribunal in case of Clifford Chance [ 2001 (9) TMI 1141 - ITAT MUMBAI] . In fact, in the remand report dated 27th February 2006, a copy of which is at Page 110 of the paper book, the Assessing Officer has accepted the aforesaid legal position in Para 9. Thus, if the period during which Shri Narayan Iyar was on leave is excluded and the multiple counting of employees in a single day is avoided, the aggregate period of stay of assessee s employees in India during the period from 1st April 2001 to 31st March 2002, is 87 days as per the statement placed. Therefore, there was no PE of the assessee in India during the impugned assessment year. That being the case, the fees received by the assessee from legal consultancy services rendered in India is not taxable in India. The addition made, therefore, deserves to be deleted. This ground is allowed. - ITA no.3250/Mum./2006, ITA no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee have rendered services in India for more than 90 days during the period from 1st April 2002 to 31st March 2001, hence, the assessee had a PE in India in terms of Article 5(2)(k)(i) of India UK Double Taxation Avoidance Agreement (DTAA). In this context, the Assessing Officer relied upon certain judicial precedents and ultimately held that since the assessee had a PE in India during the relevant previous year, the income earned from rendering legal consultancy services in India is taxable in India. Accordingly, he proceeded to compute the income of the assessee at ₹ 20,45,02,707, after making certain disallowances. Being aggrieved with the aforesaid decision of the Assessing Officer, assessee preferred appeal before the first appellate authority. 4. In the course of hearing before learned Commissioner (Appeals), the assessee furnished various evidences including additional evidences to justify its claim that there is no PE in terms of Article 5(2)(k)(i) of India UK Tax Treaty. It was specifically submitted by the assessee that the employees/personnel of the assessee have not stayed in India for rendering services exceeding the period of 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J.D. Mistry, appearing for the assessee submitted, the expression any 12 month period as used in Article 5(2)(k)(i) of India UK Tax Treaty is the relevant financial year has been accepted by the Assessing Officer. He submitted, the Assessing Officer has also concluded that assessee has rendered services which are not in the nature of royalty and fees for technical services in terms of Article 5(2)(k)(i) of India UK Tax Treaty. He submitted, the only fact which requires examination is, whether the employees/partners of the assessee have rendered services in India for a period aggregating more than 90 days within the financial year relevant to the assessment year under dispute. Drawing our attention to a statement showing the total number of days the employees of the assessee stayed in India during the financial year 1st April 2001 to 31st March 2002, a copy of which is placed at Page 100 of the paper book, he submitted, if the vacation period of Shri Narayan Iyar, from 17th April 2001 to 4th May 2001 is excluded and multiple counting is avoided, the total number of days the employees of the assessee stayed in India for rendering services is 87 days. Hence, condition of Article 5( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing decisions: i) Clifford Chance v/s DCIT, [2002] 82 ITD 106 (Mum.); ii) ADIT v/s Valentine Maritime(Mauritius) Ltd. [2011] 45 SOT 34 (Mum); and iii) J Ray McDermott Eastern Hemisphere Ltd. v/s JCIT, [2010] 39 SOT 240 (Mum.); 7. The learned Departmental Representative submitted, neither before the Assessing Officer nor before learned Commissioner (Appeals), the assessee has furnished proper documentary evidences to prove that Shri Narayan Iyar has not rendered any services in India during the alleged period of his vacation. He submitted, absence of necessary and required details relating to the concerned employee prevented the Departmental Authorities from coming to a proper conclusion regarding the claim of the assessee that the concerned employee was on vacation for a particular period. Thus, he submitted, the issue may be restored to the Assessing Officer for verifying assessee s claim. 8. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. From the orders of the Departmental Authorities as well as oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4th May 2001, hence, has not rendered any service to the assessee s client in India. It is observed, the concerned employee has also confirmed the aforesaid fact through confirmation dated 7th December 2005, a copy of which is placed at Page 66 of the paper book. Further, the daily log kept by the assessee in respect of Shri Narayan Iyar, copy of which is placed at Pages 67 to 99 of the paper book, also show that during the period from 17th April 2001 to 4th May 2001, Shri Narayan Iyar has been shown to be on leave and no chargeable hours have been shown. Further, the statement showing amounts invoiced during the period from 1st April 2001 to31st March 2002, a copy of which is placed at Page 25 of the paper book, clearly demonstrates that Invoice no.SN 200460/2001, dated 27th April 2001 raised on Enron International, as referred to by the learned Commissioner (Appeals), clearly demonstrate that the said bill entirely relates to services rendered outside India. Even a perusal of the said bill, a copy of which is placed at Page 29 of the paper book, clearly shows that in the heading of the said bill it has been mentioned as offshore . However, while des ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of employee in a single day, as was done by the Departmental Authorities, is impermissible under Article 5(2)(k)(i) of India UK Tax Treaty. The aforesaid view has been expressed by the Tribunal in case of Clifford Chance (supra). In fact, in the remand report dated 27th February 2006, a copy of which is at Page 110 of the paper book, the Assessing Officer has accepted the aforesaid legal position in Para 9. Thus, if the period during which Shri Narayan Iyar was on leave is excluded and the multiple counting of employees in a single day is avoided, the aggregate period of stay of assessee s employees in India during the period from 1st April 2001 to 31st March 2002, is 87 days as per the statement placed at Page 100 of the paper book. Therefore, there was no PE of the assessee in India during the impugned assessment year. That being the case, the fees received by the assessee from legal consultancy services rendered in India is not taxable in India. The addition made, therefore, deserves to be deleted. This ground is allowed. 10. In view of our aforesaid decision, grounds no.4 to 14 raised by the assessee on computational aspect and other issues have become acade ..... 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