TMI Blog2005 (8) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... n India is not a person in legal terminology. The person is the Corporate Body-ABN Amro Bank NV and not its Branch or the PE. This is also evident from the fact that assessment in this case is made on the Corporate Body ABN Amro Bank NV and not on its Branch or PE. We, therefore, find force in the assessee's contention that the provisions dealing with deduction of tax at source u/s 195 presupposes the existence of two distinct and separate entities which is absent in the present case. On both the grounds therefore section 40(a)(i) does not come into play. Disallowance of interest on this by invoking the provisions of this section would not be justified. We also find force in the submission of the assessee that the interest paid being not the income of the assessee on the ground that no income does arise from self and consequently interest paid by PE to head office is not chargeable under the provisions of this Act which is a condition precedent for invoking the provisions of section 195 and also on the ground that payment by PE is cancelled by the receipt by the Head office of the assessee-enterprise, in case if the PE is considered as a separate entity than the Head Office of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of tax at source u/s 195 of the Act. Consequently, section 40(a)(i) shall not apply entailing no disallowance of interest allowable under Article 7 of DTAA. In case interest is allowable deduction, the second part of the question therefore is to be held in favour of the assessee. We find that clauses 1,2,5,6 and 7 of Article 7 of the Japanese DTAA are similarly worded as clauses 1, 2, 4, 5 and 6 of Netherlands DTAA. Clause 3 of the Japanese DTAA merely incorporates the first part of clause 3(a) of Netherlands DTAA and the proviso placing a restriction by the law of the State in which PE is situate are not incorporated. Again, clause 3(b) of Netherlands DTAA which prohibits allowance of certain expenditure is also missing in Japanese DTAA. There is no other material difference between the two treaties. As pointed out by the learned counsel of the assessee, there are no restrictive covenants in Article 7 for allowance of expenses incurred for the purposes of PE either by the prefix of the words in accordance with the provisions of the law of that State or by the suffix words and subject to limitations of taxation laws of that State . This may be one of the other alternate reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepting deposits, giving loans, discounting/collection of bills issue of letter of credit/guarantees, executing forward transactions in foreign currencies for importers and exporters, money market lending borrowings, etc. in terms of the existing rules and regulations governing such transactions. As per the Double Taxation Avoidance Agreement between India and Netherlands (DTAA in short), the assessee-company is having a Permanent Establishment (PE for short) in India and consequently, it is liable to tax in respect of its income attributable to such PE. It had been paying interest to the head office and/or other branches from year to year and in the two years under consideration, it paid a sum of Rs. 55,03,000 (in assessment year 1997-98) and Rs. 62,73,106 (in assessment year 1998-99). The payment of interest to head office was claimed as a deduction. The assessee has also been receiving interest from head office and other branches located outside India and that was credited to profit and loss account and was offered to tax. 4. In the assessment proceedings, the Assessing Officer formed an opinion that the assessee has not made any tax deducted at source as per provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self. According to him, interest paid to the head office, etc., constitutes income chargeable to tax under section 9 of the Act and since no deduction of tax at source on the interest so paid as required under section 195 has been made, no deduction can be allowed in respect of such interest payment in computing the total income of the assessee in view of the express provisions of section 40(a)(i) of the Act. The assessee is in appeal. 7. The matter came up for hearing before the Division Bench wherein an order of the Tribunal in the case of Bank of Tokyo Mitsubishi Ltd. [IT Appeal No. 899 (Kol.) of 2002] was relied upon wherein it was held that interest debited to Indian permanent establishment of a foreign bank by way of corresponding credit of their head office account was not an allowable deduction unless tax is deducted at source from the same. There was also a difference of opinion between the two Members who heard the impugned appeals and, therefore, the matter was referred to the Special Bench to resolve the controversy. 8. The contention of the ld. counsel of the assessee Sh. F.V. Irani is that the question referred to has two limbs, namely (i) interest paid by the Branch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted that section 195 has no application to interest paid by PE to head office because such interest is not 'chargeable under the provisions of this Act' which is a condition precedent for invoking the provisions of section 195. This is because there is no provision in the Act providing for taxation of interest received by the head office of a bank from its branches, in the hands of the head office. It is further submitted that there is also no provision in the DTAA providing for taxation of interest received by head office of a bank from its branches in the hands of the head office. The provisions dealing with deduction of tax at source, it is submitted, presupposes the existence of two distinct and separate entities which is absent in the present case and that is also the requirement of section 40(a)(i) of the Act. Reliance is placed on the decision of Bombay High Court in the case of CIT v. Premier Tyres Ltd. [1982] 134 ITR 17 and of Calcutta High Court in the case of Bunge Co. Ltd. v. ITO [1971] 79 ITR 93 wherein it is held that if the assessee is agent of the non-resident, provisions of section 195 are not applicable. It is also submitted that wherever the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as required under section 195 has not been made, hence in view of the express provisions of section 40(a)(i) of Income-tax Act, no deduction can be allowed in respect of such interest of Rs. 55,03,300 in assessment year 1997-98 and of Rs. 62,73,106 in assessment year 1998-99 in computing the total income. In the instant case, assessee has claimed payment of interest to non-resident ABN Amro Bank, NV situated in Netherlands and being a company incorporated in Netherlands, is a resident of Netherlands for the purpose of income-tax and, therefore, comes under the category of Non-resident for the purpose of assessee which is its permanent establishment carrying on banking business in India. Therefore, the payee in this case is a non-resident and the amounts remitted are subject to income-tax in its hands in India. It is further submitted that the Central Board of Direct Taxes vide its Circular No. 740 (F. No. 500/99/94-FTD) dated 17-4-1996 has also clarified the position in this regard. The said Circular reads as under:- Subject: Taxability of interest remitted by branches of banks to the head office situated abroad, under the Foreign Currency Packing Credit Scheme of Reserve Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India constitute a separate taxable entity and head office and other branches located abroad are different entities as far as taxation is concerned. Therefore, the payee in this case is a non-resident and thus the amounts remitted are subject to income-tax in its hands in India; (c) It is also well settled law that in the absence of any express provisions in the Treaty, contrary to the general provisions of the Act, the general provisions of the Act will prevail; (d) Moreover, the assessee by its own conduct has established that payment was not to self. By claiming the deduction in respect of interest paid to head office, etc. situated abroad the assessed has established that it was not simply payment to self i.e., transfer of funds from branch i.e., assessee to head office, etc. but was a business expenditure of assessee permanent establishment which was necessarily incurred for earning income. The payment of interest by assessee will certainly form part of income in the hands of ABN Amro Bank NV and not merely receipt of payment on capital account; and (e) Since all the conditions of section 40(a)(i) being met, the assessee having not deducted tax at source under section 195, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer of a capital asset situate in India. Explanation 1 provides for the purposes of this clause that in a case of a business of which all the operations are not carried out in India, the income of the business is deemed under this clause to accrue or arise in India shall be the only such part of the income as is reasonably attributable to the operations carried out in India. Explanation 2 declares that the business connection shall include any business activity carried out through a person who, acting on behalf of the non-resident, - (a) has and habitually exercises in India, an authority to conclude contracts on behalf of the non-resident, unless these activities are limited to the purchase of goods or merchandise for the non-resident; or (b) has no such authority, but habitually maintains in India a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the non-resident; or (c) habitually secures order in India, mainly for wholly for the non-resident for that non-resident and other non-residents controlling, controlled by, or subject to same common control, as that non-resident. Clause (v) of section 9(1) provides for deeming in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State carries on business in the other State through a permanent establishment situated therein, there shall in each State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is permanent establishment. In any case, where the correct amount of profits attributable to a permanent establishment is incapable of determination or the determination thereof presents exceptional difficulties, the profits attributable to the permanent establishment may be estimated on the basis of an apportionment of the total profits of the enterprise to its various parts, provided, however, that the result shall be in accordance with the principles contained in this Article. 3.(a) In determining the profits of a permanent establishment there-shall be allowed as deductions, expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to the contrary. 6. Where the profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article. 14. The DTAA also contains an article dealing with interest income and it states that interest arising in one of the States and paid to the residents of the other State may be taxed in that other State. Article 11 deals with interest income and it reads as under:- Article 11. Interest. (1) Interest arising in one of the States and paid to a resident of the other State may be taxed in that other State. (2) However, such interest may also be taxed in the Contracting State in which it arises and according to laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of gross amount of the interest. (3) Notwithstanding the provisions of paragraph 2: (a) the Government of one of the States shall be exempt from tax in the other State in respect of interest derived directly or indirectly by that Government from that other State; (b) interest arising in one of the States and paid in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a case the provisions of Article 7 or Article 14, as the case may be, shall apply. (8) Interest shall be deemed to arise in one of the States when the payer is that State itself, a political sub-division, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of one of the States or not, has in one of the States a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated. (9) Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such a case, the excess part of the payments shall remain taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess as aforesaid, the profits of the enterprise may be taxed, in the other State but only so much of them as is attributable to that permanent establishment. The assessee ABN Amro Bank is an enterprise of Netherlands and carries on business in India through a PE situated herein. Therefore so much of profit as is attributable to the PE is to be taxed in India. By clause 2 the profit in each State is to be attributed to that PE which it might be expected to make as if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is PE. In computing profits of a PE, clause 3 of Article 7 provides for allowance of deduction of expenses which are incurred for the purposes of the PE. Such expenses to be deductible are including executive and general administrative expenses whether incurred in the country in which the PE situates or elsewhere. This deduction is however, in accordance with the provisions of and subject to the limitations of the taxation laws of that country. Sub-clause (b) of clause 3 however, denies any such deduction for the amounts, if any, paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest is paid was incurred, and such interest is borne by such PE or fixed base, then such interest shall be deemed to arise in the country in which the PE or fixed base is situated. 18. The proposition of law is well settled that nobody can make profit out of self nor can trade with self nor earn from self. In 1953, the issue came up before the Supreme Court in the case of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 where the assessee, a dealer in silver and shares, withdrew some silver bars and shares from the business and settled them on certain trust in which he was the managing trustee. In his books, the assessee credited the business with cost price of the bars and shares so withdrawn. The income-tax authorities held that the assessee derived income from the stock-in-trade thus transferred and assessed him on a certain sum being the difference between the cost price of the silver bars and shares and their market value at the date of their withdrawal from the business. The Supreme Court by majority decision held that no income arose to the assessee as a result of withdrawal of shares and silver bars. It observed at page 509 of the Report as under:- It is well recognized tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of books he keeps only one? How can he be said to have made an income personally or his business a profit, because he uses ten bags out of his godown for a feast for the marriage of his daughter? How can it make any difference whether the bags are shifted directly from the godown to the kitchen or from the godown to the shop and from the shop to the kitchen, or from the shop back to the godown and from there, to the kitchen? And yet, when the reasoning of the learned Attorney-General is pushed to its logical conclusion, the form of the transaction is of its essence and it is taxable or not according to the route the rice takes from the godown to the wedding feast. In our opinion, it would make no difference if the man instead of giving the feast himself hands over the rice to his daughter as a gift for the marriage festivities of her son . 19. This was the case where the person was in India and the transactions were within India. There are also cases where transactions by a nonresident were beyond Indian territory but with a PE within India and in those cases also the courts have held that neither the income from self can be assessed nor any expenditure for the payment to self can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs. 43,000 could he be said to have made a profit of Rs. 3,000 or was he to be said to-have incurred a loss of Rs. 2,000. The answer of course was that he had made a profit of Rs. 3,000. 23. In the case Mitsui Bank Ltd. v. IAC [1989] 35 TTJ (Bom.) 426, the assessee a Japanese Bank had established a branch office in India. The Indian PE had to pay certain funds to the head office. The assessee had claimed a deduction for interest on such balance payable to the head office. The Tribunal rejected the claim of the assessee on the basis that the Indian branch and the head office in Japan cannot be treated as separate legal entities and deduction cannot be allowed to the branch in India for such notional interest. 24. The Tribunal decision in the case of Citibank [IT Appeal No. 1487 (Bom.) of 1981 for assessment year 1976-77, dated 28-8-1982] and in the case of British Bank of Middle East [IT Appeal No. 4514 (Bom.) of 1985, dated 21-7-1989] and a reference there against was rejected vide order in RA No. 2057/Bom./1989, dated 7-8-1990. The decisions in the case of British Bank of Middle East [IT Appeal No. 8031 (Bom.) of 1992, dated 28-7-2003]. In the case of Societe Generate [IT Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranch in India to the head office is to be seen by looking to other provisions of the treaty or the local law. The payment of such interest may be included in the expenses allowable including executive and general expenses by virtue of provisions contained in Article 7.3(a) of DTAA. The Article 7.3(a) provide that in determining the profits of a PE there shall be allowed as deductions, expenses which are incurred for the purposes of the PE, including executive and general administrative expenses so incurred whether in the State in which the PE is situated or elsewhere in accordance with the provisions of and subject to the limitations of the taxation laws of that State. Interest is not specifically included in the expenses to be allowed in determining the income of the PE. Even if it is included within its purview, then the deductibility has to be in accordance with the provisions of local laws and subject to the limitations provided therein, like as provided in section 44C etc. It has to be judged from the point of view of local laws. Looked at from that point of view we are of the opinion that law and even as per the Id. counsel of the assessee the local law does not allow any de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,- (A) outside India; or (B) in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of section 200: Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been pare?. 30. The assessee in this case is the corporate body and its branches are paying interest to its Head office and other offshore Branches i.e., the payment is by one wing of the assessee to its other wing or so to say by one hand to another. The tax is to be deductible under Chapter XVII-B of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 to 163 and the group of sections from sections 195 to 201 of the Act are mutually exclusive and operate on different fields. 32. The Bombay High Court in the case of Premier Tyres Ltd., examined the issue in an analogous circumstances. In this case the assessee, an Indian company, was held as an agent of the non-resident American company in terms of the provisions of section 163 of the ITA. It was obtaining technical services from that American company. The assessee was liable to pay tax liability of the American company as an Agent. The assessee had however not deducted tax under section 195 from payments to the American company. The tax authorities invoked the provisions of section 201 of the ITA. The High Court observed that once the assessee was treated as an agent under section 163, it is not necessary for such agent to deduct tax under section 195 from payments to nonresidents. Although the High Court has not specifically mentioned that no tax is required to be deducted from payment to self , the analysis of the decision gives an impression because the agent is required to discharge the tax liability of the non-resident and is also required to pay advance tax on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace after the cessation of the business, the surplus must be deemed to be the profits of the year previous to the year in which the sale took place and for the purpose of the proviso, the business must also be deemed to have been conducted by the assessee during the said previous year. By fiction, the argument proceeded, all the necessary conditions to the exigibility of tax are introduced though in fact none exists and in that connection, the Supreme Court observed that though the surplus contemplated by the proviso is not in the technical sense of the term profits of the previous year, it is deemed to be the profits of the previous year. It is a limited fiction for a specific purpose. What are not profits in commercial practice are treated as profits for the purpose of the proviso. The contention was that the fiction introduced in the proviso is wide in its scope and if fully worked out, all the conditions laid down in the proviso would be satisfied. If by invoking the fiction, there must be deemed to have been a business during the year preceding the assessment year, by the same fiction, the buildings must be deemed to have been used in that business during that year. For enlar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be extended beyond that legitimate field. 37. In the case of CIT v. Vadilal Lallubhai [1972] 86 ITR 2, the Supreme Court again reiterated that legal fictions are only for a definite purpose, they are limited to the purpose for which they are created and should not be extended beyond their legitimate field. The Supreme Court was dealing with the assets distributed whether to constitute income and held that where the assessee had transferred his share in certain controlled companies and the companies went into voluntary liquidation and distributed their assets, the assets so distributed, which were deemed to be dividends within the meaning of section 2(6A)(c), were not 'income' for the purposes of section 44F and were also not capable of being deemed to accrue from day-to-day and, therefore, no portion of the assets go distributed and received by the transferees could be assessed in the hands of the assessee under section 44F. 38. In CIT v. Hindustan Petroleum Corpn. Ltd. [1991] 187 ITR 1, the Bombay High Court dealing with Explanation 3 to section 43 held that unabsorbed depreciation of the amalgamating company with the assessee-company cannot be deducted in computing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est to non-resident ABN Amro Bank, NV situated in Netherlands and being a company incorporated in Netherlands, is a resident of Netherlands for the purpose of income-tax and, therefore, comes under the category of Non-resident for the purpose of assessee which is its PE carrying on banking business in India. Therefore, the payee in this case is a non-resident and the amounts remitted are subject to income-tax in its hands in India. The interest paid to the head office etc. may constitute income chargeable to tax under section 5(2)/9 of the Income-tax Act, 1961 but no deduction of tax at source on the interest so paid is required under section 195 as PE of the assessee and head office being same person and hence, the provisions of section 40(a)(i) of I.T. Act cannot be invoked for disallowing such interest of Rs. 55,03,300 in assessment year 1997-98 and of Rs. 62,73,106 in assessment year 1998-99 in computing the total income. 43. The Circular dated 17-4-1996 opines in the first part that the branch of a foreign company/concern in India is a separate entity for the purposes of taxation. Interest paid/payable by such branch to its head office or any branch located abroad would be lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected by the Assessing Officer by stating that the argument is misconceived and that TDS is to be made under section 195 of the Act and in the said provision there is no mention of chargeability. The provision of section 195 is applicable on payment of interest and any other sum. The reliance of the assessee on Articles 7.1 and 7.2 of the DTAA between India and Japan are held to be of no help as in this case neither the head office nor the foreign branches are PEs (PE for short) in India as defined in the DTAA. On the other hand, Article 11 is specifically dealing with the taxability of interest income in cases where such interest is paid to any companies located in Japan was applicable and according to clause (2)(a) of Article 11, the gross amount of interest would be taxed in India @10 per cent and on this amount, the assessee, according to him, should have deducted tax. The Assessing Officer also held that TDS on payment to head office was deductible at the rate of 10 per cent whereas the payment of interest to other branches was deductible at the rate of 65 per cent and surcharge at the rate of 15 per cent on such tax. The CIT(A) cancelled the order of the Assessing Officer pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee is assessed in India in the status of non-resident by virtue of carrying on banking business through its branches in India which constitute PE. Such PE does not by itself render it a distinct entity separate from the main company. The taxable entity is a non-resident incorporated in Japan and the subject-matter of tax in India is the income earned in India through the business carried out in India by the PE and, therefore, when the branch situated in India pays interest to its head office situated in Japan and also to other branches situated in India partake of the character of payments made to self and, therefore, does not have any insignia of income which presupposes a receipt from one person to another person. The Supreme Court decision in the case of CIT v. Bai Shirinbai K. Kooka [1962] 46 ITR 86 is relied upon wherein by following its earlier decision in the case of Sir Kikabhai Premchand v. CIT [1953] 24 ITR 506 (SC) it was held that a man cannot trade with himself nor can he make any profit or loss out of transactions with himself. It is, therefore, submitted that when the assessee remitted the interest to its counterparts outside India, there was no requirement of wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in that other Contracting State but only so much of them as is directly or indirectly attributable to that Permanent establishment. 2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment. 3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment including executive and general administrative expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission-division or a local authority thereof, the Central Bank of that other Contracting State or any financial institution wholly owned by that Government shall be exempt from tax in the first mentioned Contracting State. 4. For the purposes of paragraph 3, the terms 'the Central Bank' and 'financial institution wholly owned by the Government' means: (a) in the case of Japan: (i) the Bank of Japan; (ii) the Export-Import Bank of Japan; (iii) the Overseas Economic Co-operation Fund; (iv) the Japan International Co-operation Agency; and (v) such other financial institution the capital of which is wholly owned by the Government of Japan as may be agreed from time to time between the Government of the two Contracting States; (b) in the case of India: (i) the Reserve Bank of India; (ii) the Export-Import Bank of India; (iii) such other financial institution the capital of which is wholly owned by the Government of India as may be agreed upon from time to time between the Government of the two Contracting States. 5. The term 'interest' as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting State unless he has a fixed base regularly-regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State for a period or periods amounting to or exceeding in the aggregate 183 days during any taxable year or 'previous year' as the case may be. If he has such a fixed base or remains in that other Contracting State for the aforesaid period or periods, the income may be taxed in that other Contracting State but only so much of it as is attributable to that fixed base or is derived in that other Contracting State during the aforesaid period or periods. (2) The term 'professional services' includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. 50. On a close reading of these provisions, we find that clauses 1,2,5,6 and 7 of Article 7 of the Japanese DTAA are similarly worded as clauses 1, 2, 4, 5 and 6 of Netherlands DTAA. Clause 3 of the Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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