TMI Blog2020 (5) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner outside India as no such business had been established at the time of such payment. Petitioner was merely prospecting such business and therefore engaged the services of the said UK company as a consultant. As the petitioner has not established any business, the payment would not come within the purview of the exception provided in the Section 9(1)(vii)(b). Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with United Kingdom of Great Britain and Northern Ireland also makes it clear that payments for fees towards technical services may also be taxed in the contracting state in which they arise and according to the law of that states. The expression fees for technical service has been defined in Article 13 Paragraph 4 to mean payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services offered technical or other personnel). Exception to the definition of fees for technical services in Paragraph 4 has been specified in Paragraph 5 to Article 13. It is to be noted that none of the exception provided in Paragraph 5 are attracted. W.P. dismissed. - W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2012 unless cancelled earlier under intimation to you. 6. Aggrieved by the said order of the 2nd respondent, the petitioner filed a revision petition under Section 264 of the Income Tax Act, 1961 before the 1st respondent. By the impugned order 24.11.2011, the 1st respondent has rejected the same. Against the same, the present Writ Petition has been filed to quash the impugned order. 7. Heard the learned counsel for the petitioner and the learned Standing Counsel for the respondents. 8. A similar arrangement was entered into by the petitioner with an Indonesian law firm for procuring services in Indonesia. The authorities had rejected the request of the petitioner, which was subject matter of W.P.No.4965 of 2011. The said Writ Petition was disposed on 13.03.2020. The operative portion of the said order reads as under:- 21. Section 195 of the Income Tax Act, 1961 reads as under:- Other sums. 195. (1) Any person responsible for paying to a nonresident, not being a company, or to a foreign company, any interest (not being interest referred to in section 194LB or section 194LC) or section 194LD or any other sum chargeable under the provisions of this Act (no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make an application in the prescribed form to the Assessing Officer for the grant of a certificate authorising him to receive such interest or other sum without deduction of tax under that subsection, and where any such certificate is granted, every person responsible for paying such interest or other sum to the person to whom such certificate is granted shall, so long as the certificate is in force, make payment of such interest or other sum without deducting tax thereon under sub-section (1). (4) A certificate granted under sub-section (3) shall remain in force till the expiry of the period specified therein or, if it is cancelled by the Assessing Officer before the expiry of such period, till such cancellation. (5) The Board may, having regard to the convenience of assessees and the interests of revenue, by notification in the Official Gazette, make rules specifying the cases in which, and the circumstances under which, an application may be made for the grant of a certificate under sub-section (3) and the conditions subject to which such certificate may be granted and providing for all other matters connected therewith. (6) The person responsible for paying to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition and no meaning other than that which is put in the definition can be assigned to the same [see: Bharat Coop. Bank (Mumbai) Ltd. Vs. Employees Union, (2007) 4 SCC 685 and P.Kasilingam Vs. P.S.G. College of Technology, AIR 1995 SC 1395 ]. In Bharat Coop. Bank (Mumbai) Ltd. Vs. Employees Union, (2007) 4 SCC 685, it was observed that it is trite to say that when in the definition clause given in any statute the word means is used, what follows is intended to speak exhaustively. When the word means is used in the definition, to borrow the words of Lord Esher, M.R. in Gough v. Gough, (1891) 2 QB 665, it is a hard-and-fast definition and no meaning other than that which is put in the definition can be assigned to the same. 25. The expression Managerial , Technical or Consultancy Service have not defined. The expression Management has been defined in Oxford Advanced Learner's Dictionary, New 9th Edition published by the Oxford University Press reads as follows:- Management: 1. the act of running and controlling a business or similar organization: a carrier in management, hotel/project management, a management training course. The report blames bad m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy 2. expert advice that a company or person is paid to provide on a particular subject: consultancy fees. 29. Thus, the expression Managerial , Technical or Consultancy Services are wide of import. 30. In fact, from the nature of work that was to be undertaken by the Indonesian firm was purely not that of work carried out by the law firms. These services provided by any person holding expertise in the relevant field. 31. Thus, if the service provided by the Indonesian law firm was for managerial, technical or consultancy service or provision of technical or other personnel, the petitioner would be liable to deduct tax at source under Section 195 of the Act, 1961. 32. The service provided by the Indonesian law firm is for the following:- (a) Share Purchase Agreement (SPA) with appropriate warranties and indemnities; (b) Notarial share transfer deed; (c) Assist in obtaining all necessary regulatory approvals for the acquisition including, but not limited to approval from the Ministry of Finance / Indonesian Insurance regulators. The scope of assistance will include advising on all legal aspects of the approval application and process, preparatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd., (2015) 68 SOT 254/56 taxmann.com 1 (Pune Trib.), discussed this very issue in some detail and stated, as follows: .......where section 90(2) of the Act provides that DTAAs override domestic law in cases where the provisions of DTAAs are more beneficial to the assessee and the same also overrides the charging sections 4 and 5 of the Act which, in turn, override the DTAAs provisions especially section 206AA of the Act which is the controversy before us. Therefore, in our view, where the tax has been deducted on the strength of the beneficial provisions of section DTAAs, the provisions of section 206AA of the Act cannot be invoked by the Assessing Officer to insist on the tax deduction @ 20%, having regard to the overriding nature of the provisions of section 90(2) of the Act. The CIT(A), in our view, correctly inferred that section 206AA of the Act does not override the provisions of section 90(2) of the Act and that in the impugned cases of payments made to non-residents, assessee correctly applied the rate of tax prescribed under the DTAAs and not as per section 206AA of the Act because the provisions of the DTAAs was more beneficial. Thus, we hereby affirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutual business development etc. 10. From the reading of letter dated 01.01.2011 of the said MD IN Services Private Limited UK, the non-resident overseas company indicates that the service provided by them to the petitioner was in the nature of consultancy services. Therefore, the payments made by the petitioner to the said UK company would be an income deemed to accrue/arise in India within the meaning of Section 9(1)(vii)(b) of the Income Tax Act, 1961. 11. The payments made by the petitioner to the said UK company cannot be said to be towards fees payable in respect of services utilised in a business or profession carried out by the petitioner outside India as no such business had been established at the time of such payment. Petitioner was merely prospecting such business and therefore engaged the services of the said UK company as a consultant. As the petitioner has not established any business, the payment would not come within the purview of the exception provided in the Section 9(1)(vii)(b) of the Income Tax Act, 1961. 12. The Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with United Kingdom of Great Britain and Northern Ireland also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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