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The assessee earned income from professional services rendered...

ITAT Rules Income from Overseas Professional Services Taxable in India; Allows Deduction for Japanese Withholding Taxes.

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Income Tax November 22, 2024 Case Laws AT
The assessee earned income from professional services rendered in foreign countries like Japan, Nepal, and Singapore. The Income Tax Appellate Tribunal (ITAT) examined the provisions of Article 12 and Article 14 of the India-Japan Double Taxation Avoidance Agreement (DTAA) pertaining to Assessment Year 2017-18. It held that Article 12 of the DTAA provides that income from professional services or other independent activities would be taxable in the resident country, i.e., India. However, clause 4 of Article 12 excludes payments made to individuals for carrying out independent professional services referred to in Article 14 from the definition of 'fees for technical services.' The ITAT concluded that the Japanese tax authorities' decision to withhold taxes from payments made to the assessee by its Japanese clients cannot be considered unreasonable or incorrect. Consequently, the ITAT allowed the assessee's claim for deduction, deciding against the revenue authorities.

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Acts Income Tax