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ITAT held that payments by the appellant to anonymous non-resident foreign attorneys/law firms constituted fees for professional services, not fees for technical services under section 9(1)(vii), and therefore were not taxable in India. The Tribunal found section 40(a)(i) contemplates deduction for sums chargeable under the Act and its Explanation defines FTS but omits "professional services"; the specific definition in section 194J governs such fees (lex specialis). Consequently the AO's recharacterisation of the payments as FTS and taxing them under section 9(1)(vii) was erroneous. Appeal allowed; impugned tax/deduction disaffirmed.
ITAT held that payments by the appellant to anonymous non-resident foreign attorneys/law firms constituted fees for professional services, not fees for technical services under section 9(1)(vii), and therefore were not taxable in India. The Tribunal found section 40(a)(i) contemplates deduction for sums chargeable under the Act and its Explanation defines FTS but omits "professional services"; the specific definition in section 194J governs such fees (lex specialis). Consequently the AO's recharacterisation of the payments as FTS and taxing them under section 9(1)(vii) was erroneous. Appeal allowed; impugned tax/deduction disaffirmed.
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