TaxTMI 
TaxTMI 
2013 (8) TMI 942
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....e Nationality work undertaken by the Portuguese beneficiaries who provide legal consultancy services in connection with the said Portuguese Nationality work and correspond with Portuguese authorities in Portugal in this regard. The Assessee collects and remits the fixed charges for different services from the clients in India as per the bills raised by him, in accordance with the agreement entered by him with Portuguese beneficiaries on 8.7.2010. This money are being transferred from Assessee's proprietorship concern through HDFC Bank account to Portuguese beneficiaries on demand. As per the information available, the AO noted following amounts were remitted to the beneficiaries during the current financial year. Sl. No. Date of transaction Name of the Beneficiary Amount in Indian currency 1 26.05.10 Elena Nistal ₹ 3,76,160.30 2 14.06.10 Elena Nistal ₹ 1,41,732.50 3 18.08.10 Elena Nistal ₹ 7,62,735.13 4 01.10.10 Elena Nistal ₹ 7,74,987.23 5 22.10.10 Elena Nistal ₹ 6,88,512.94 6 01.12.10 Elena Nistal ₹ 12,20761.26 7 04.02.10 Elena Nistal ₹ 11,48,182.81 Total ₹ 51,13,072.17 The amount was sent with....
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....cording to the Assessee, the case does not fall in the exception and the income was not chargeable to tax in India. CIT(A) dismissed the appeal of the Assessee by holding as under : '2.3 Having heard the contention of the appellant, there is no dispute on the issue that the Provisions of Section 195 of the Income Tax Act will apply only in the circumstances if the payment to the non-resident have an element of income chargeable to tax in India as held by the Honourable Supreme Court of India in the case of GE India Technology Centre (P.) Ltd v. CIT [2010] 327 ITR 456/193 Taxman 234/7 taxmann.com 18. However, the contention of the appellant that as the services are rendered outside India, payment is received outside India and services also utilised outside India, the income does not accrue or deemed to accrue in India and therefore, not chargeable to tax in India, was not found acceptable, considering the explanation to sub-section (2) of Section 9 of the Income Tax Act which reads as under: "for the removal of doubts, it is hereby declared that for the purposes of this section, income of a non-resident shall be deemed to accrue or arise in India under clause (v) or cla....
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....eable to tax in India. This view finds support from the decision of the Honourable ITAT Mumbai, in the case of the Addl. DIT v. Ess VeeIntellectual Property Bureau [2006] 7 SOT 38 in the similar circumstances where the assessee was engaged in the business of consultancy in respect of registration and enforcement of intellectual property rights. For that purpose, the assessee availed services of the entities based abroad. The assessee, however, did not deduct any tax from the payments made to such foreign entities. It was contended by the assessee that since the payments were made for the professional services, the same cannot be covered by the connotations of the expression 'fees for technical services' under section 9(1)(vii) of the Income Tax Act. The assessee thus contended that the payments received by the foreign entities are not taxable under section 9(1)(vii) of the Act and there is no other provisions of the Act under which these receipts can be taxed. Since, according to the assessee, the sums of paid by the assessee were not taxable in India, no deduction of tax was warranted under section 195 of the Act. The Honourable ITAT in Paragraph 5 held that "Unlike t....
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....ing in nature of a professional service, in the context of section 9(1)(vii), does not affect the taxability of payment for that service. The fees is paid by the assessee, who is a resident In India, and it is not for the purpose of making a earning any income outside India or for the purpose of carrying out any business outside India. The fees is, therefore, taxable in India under section 9(1)(vii)(b). In our humble understanding, therefore, the Commissioner (Appeals) did err in holding that the payments in question were not taxable in India under the provisions of the Indian Income Tax Act." The decision of the Honourable Bombay High Court in the case of CIT v. Siemens Aktiongesellschaft (supra) on which the reliance has been placed by the appellant, is not applicable to the fact and circumstances of the case and therefore of no help to the appellant. Accordingly, the undersigned does not find any infirmity in the conclusion arrived by the Assessing Officer that the appellant was liable to deduct the tax at source as required u/s.195 of the Income Tax Act and thereby imposing the tax u/s. 201(1) and interest u/s 201(1A) of the Income Tax Act, hence the appeal is dismissed.&#....