TaxTMI 
TaxTMI 
2015 (4) TMI 724
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....e also dismissed as not pressed. The only ground which remains for the adjudication is Ground No. 2 which is reads as under: 2. Disallowance of Payment made to Saba & Co. on account of non deduction of Tax at Source. The learned CIT(A) erred on facts and in law in upholding disallowance of payments of Rs. 22,31,018/- being legal & professional fees made to Saba & Co. on account of non deduction of Tax at Source. u/s 40(a)(i) of the Act. He failed to appreciate the fact that Saba & Co. had provided legal services for initiating the anti counterfeiting proceedings before the Tribunal of Commerce of Rabat and all the services are thus rendered outside India which does not attract deduction of Tax at Source as per DTAA with Morocco. The reasons assigned are wrong and untenable. 3. The precise facts pertain to the issue arising from above ground are as under. The assessee company is engaged in the business of licensing, protection and defense of trademark. For the A.Y. 2008-09, the assessee claimed the expenses paid to Saba and Co. of Rs. 22,31,018/- on account of legal consultancy fees. In the opinion of the Assessing Officer the assessee was required to deduct the tax at sour....
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....chnical or consultancy services, including the provisions of services by technical or other personnel. Saba & Co. IP is a leading intellectual property rights firm with a network of branch and representative offices across West Asia, North Africa and neighboring regions. It cannot be said that the services rendered by Saba & Co. relates to independent activities of lawyers, and thus covered under Article 14 of the India - Morocco DTAA. Under these facts and circumstances, it is held that Article 12 of the DTAA would apply. Thus, sec. 40(a)(ia) would be applicable to the payments made to Saba & Co. being in the nature of fees for technical services which are governed by clause 12 of the DTAA. Therefore, the Assessing Officer was right in disallowing Rs. 22,31,018/- u/s. 40(a)(ia) on account of non deduction of TDS on payments made to Saba & Co. Ground No. 2 is therefore, dismissed. Now, the assessee is in appeal before us. 5. Ld. AR submits that the Saba & Co. is involved in the litigation more particularly relating to trademark and patent protection. He referred to Page No. 2 of the Compilation where the letter dated 25th September, 2007 sent by Saba & Co. is placed. As per t....
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....hnical is correct one and accordingly, the assessee cannot take the stand that the payment made to Saba & Co. was not taxable in India. 7. We have heard the rival submissions of the parties and perused the record. The issue is in a narrow compass before us. The first issue is to be decided the nature of services. We have gone through the Compilation filed by the assessee. Saba & Co. has given certificate dated 4-10-2010 (Page No. 1 of the Compilation) certifying that the said firm does not have any permanent establishment in India. On Page No. 2 of the Compilation copy of letter dated 25th September, 2007 addressed to the assessee and contents of said letter are as under: "Anti-counterfeiting action against Nice Agricole for sale of "KARLOS*CAR" to clarify the nature of the services rendered by the Saba & Co. it will be helpful to reproduce the contents of the said communication. Dear Mr. Chitley, We revert to our email dated July 23, 2007. We have the pleasure to inform you that subsequent to the order issued by the president of the trade court based on our urgent petition, the process-server had undertaken the descriptive seizure coupled with interpellative summons....
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.... 9. Now, the next question is whether the said services are covered under Article 12 or Article 14 of the DTAA. The argument of Ld. AR is that as per the DTAA between India and Morocco, there is a specific reference in Article 14 in respect of the personal services which includes the services of lawyers. Article 14 of DTAA between India and Morocco (hereinafter referred to as the said Treaty) reads as under: "ARTICLE 14: Independent Personal Services - 1. Notwithstanding the provisions of the Article 12 relating to fees for technical services, income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that Contracting State except in the following circumstances: a. if he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; or b. if his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 183 days in the relevant fiscal year; In such case, only so much of the income as is attributable to that fixed base or as is derived from his activities per....
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....hall be deemed to be a resident only of the State in which he has an habitual abode; (c) if he has an habitual abode in both States or in neither of them, he shall be deemed to a resident only of the State of which he is a national; (d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. 3. Where, by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. 12. The definition of the Article 4 of the said Treaty is wide enough to cover any person who is liable to tax by reason of his domicile, residence, place of management etc. Article 4(3) provides in respect of a person other than an individual and condition is that income will be taxable where a place of effective management is situated. Certainly there is no ambiguity in respect of the term "resident" as used in Article 14 that it is not necessary that the independent personal services are confined to the individuals only. 13. In the case ....