TaxTMI 
TaxTMI 
2016 (7) TMI 567
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....s/disallowances: - i) On account of AIR information Rs. 81,72,444/- ii) Disallowance under section 40(a)(i) Rs. 78,21,340/- 2.2 Aggrieved by the order of assessment for A.Y. 2008-09 dated 31.12.2011, the assessee preferred an appeal before the learned CIT(A)-3, Mumbai. The learned CIT(A) disposed the appeal vide the impugned order dated 26.02.2014 allowing the assessee partial relief, by upholding the disallowance of Rs. 84,72,444 listed at (i) in para 2.1 (supra) to the extent of only Rs. 7,38,553/- and deleted the disallowance under section 40(a)(i) listed at para 2.1 (supra). 3. Aggrieved by the order of the learned CIT(A) dated 26.02.2014 for A.Y. 2008-09, the Revenue has preferred this appeal before the Tribunal raising the following grounds: - "1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) was justified in deleting the disallowance of Rs. 78,21,340/- u/s. 40(a)(i) being professional fees paid outside India without deduction of tax at source. 2. The appellant prays that the order of the CIT (Appeals) on the above grounds be set aside and that of the Assessing Officer be restored. 3. The appell....
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....been considered in the assessee's own case for A.Y. 2009-10 and held in favour of the assessee by a Coordinate Bench of this Tribunal in its order in ITA No. 1917/Mum/2013 dated 06.05.2016. The learned A.R. prays that in view of the above, the order of the learned CIT(A) ought to be upheld and Revenue's appeal dismissed. 4.5.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record, including the judicial pronouncement cited and placed reliance upon. The issue before us revolves around the payments made by the assessee to certain non resident entities for professional services rendered by them outside India which were availed in the course of execution of engagements of the assessee firm. The AO invoked the provisions of section 40(a)(i) of the Act and disallowed this expenditure, since the assessee did not deduct tax at source on such payments to the non resident entities. The details of the entities along with the amounts paid, nature of services rendered, etc. find place at para 2.9 of the impugned order and the same are extracted hereunder for clarity: - Sr. No. Ground No. Name of the payee Resident of ....
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.... under: - "5. ...... In so far as the payments that are made to KPMG LLP, USA and KPMG LLP, Canada are concerned, the same has been made on account of professional services rendered in relation to taxation and transfer pricing. Undisputedly, the professional services have been rendered by the aforesaid entities outside India. The stand of the Revenue is that such services are in the nature of 'fee for technical services' and, therefore, tax was liable to be deducted at source in India. Factually speaking, the aforesaid stand of the Revenue is devoid of any support because there is no material to establish that any technical knowledge, skill, etc. has been made available to the assessee so as to consider it as falling within the purview of Article- 12 of Indo-US Double Taxation Avoidance Agreement. It is also an established fact that such non-resident recipients do not have permanent establishment in India and, therefore, in the said background the same can, at best, be treated as independent personal services covered by Article-15 of the Indo-US Double Taxation Avoidance Agreement. As a consequence and in the absence of any fixed base in India, such income cannot be held chargea....
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....sional services cannot be held to be exigible to tax in India, so as to require deduction of tax at source thereon and therefore invoking of provisions of section 40(a)(i) of the Act to disallow the aforesaid payments is not sustainable. 4.8 In respect of the payment made by the assessee to KPMG, Ireland for audit services, it is not in dispute that the said services have been rendered outside India and the same cannot be construed as managerial or technical services so as to be governed by Article 13 of India-Ireland DTAA as contended by Revenue. In our view, they are clearly in the nature of independent personal services coming within the purview of Article-14 of the India-Ireland DTAA and therefore in the absence of any fixed place of business of the recipient, the said payments/income is not exigible to tax in India. In this view of the matter, we are of the considered view that the assessee is not liable to deduct tax on the aforesaid payment made to the non-resident entity in Ireland for the provisions of section 40(a)(i) of the Act to be invoked. We, therefore, uphold the finding of the learned CIT(A) on this issue which has not been controverted before us by the Revenue.....