TaxTMI 
TaxTMI 
2019 (1) TMI 692
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.... the payment has admittedly been made to Grant Thornton LLP which is a Limited Liability Partnership firm and not an individual. iii) The CIT(A) has erred in deleting the addition without appreciating the fact that the latest explanation to Section 9 applicable to clause (vii) inserted from Finance Act. 2010 w.e.f. 01.06.1976 apply to the present case in the light of payments (Independent Personal Services) made to a non-resident entity. iv) The CIT(A) has erred in deleting the addition of Rs. 57.148/-. without appreciating the fact the interest paid for late deposit of service tax which is not allowable u/s 37( 1). v) The appellant craves leave to add, alter or amend any/ all the grounds of appeal before or during the course of hearing of appeal. 2. Briefly stated facts of the case are that the assessee, a partnership firm was engaged in providing international accountancy and advisory services to various clients in India and abroad. The assessee filed return of income on 12/10/2010 declaring total income of Rs. 6,46,22,387/-. The case was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (in short 'the Act') was issued....
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....n LLP USA 85,16,462 2. Grant Thornton UK LLP UK 33,15,747 3. Grant Thornton Societe 'D' Advocates France 14,55,655 4. Grant Thornton Amsterdam Netherlands 7,50,011 5. Arenthals Grant Thornton Accountants Netherlands 70,930 Total 1,41,08,805 2.2 The Assessing Officer also made disallowance of the interest for delayed deposit of service tax amounting to Rs. 57,148/- in terms of section 37(1) of the Act. 2.3 On further appeal, the Ld. CIT(A) analyzed the claim of the assessee of non-taxability of the payments in the hands of the non-resident in view of the Article 15 (Independent Personal Services) under respective DTAA's and concluded that income derived by an individual or a partnership firm by rendering professional services is taxable in the country of its residence. The Ld. CIT(A) also examined taxability of the professional fee paid under Article 13 of various DTAAs and concluded that no technical knowledge was made available and thus in view of the "make available" clause in DTAA(s), the payments were not in the nature of Fee for Technical Services. In support of the finding, he relied o....
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....ncials etc. We note that there is no dispute as far as the nature of services rendered. The only dispute which has been raised by the Revenue is that the benefit of Article 15 of relevant DTAAs can be availed by the individual nonresidents, whereas in the instant case the nonresident parties are limited liability partnership firms. We note that this objection of the Revenue has been analysed in detail by the Ld. CIT(A) after referring DTAA with UK, observing as under: "4.2.2 Thus, it can be seen from the above DTAAs that an income derived by an individual or a partnership firm by rendering of professional services is taxable in the Country / State of his / its residence. If DTAA of UK is considered for illustration, income of a UK firm for rendering professional services in UK will be taxable in UK. However, such income may also be taxable in India if the individual or any partner of the professional firm is present in India up to 90 days in a previous year or the person / firm has a fixed base regularly available to him / it in India for performing his / its activities. However, in this case, none of the members / employees of M/s Grant Thornton UK LLP came to India. It i....
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....firm or an LLP. 4.2.8 Accordingly, the only contention of the AO in refusing to accept the applicability of Article on 'Independent Personal Services' in respect of professional fee paid to various foreign parties by the appellant on the ground that it is applicable only if the recipient of income is an 'individual' and not a 'Limited Liability Partnership firm' has no legs to stand. 4.2.9 Moreover, in each of these DTAAs the term "professional services" includes the independent activities of 'lawyers' and 'accountants' amongst other such professional. The appellant is undisputedly engaged in rendering accounting and advisory services of international standards to various clients in India and abroad. Photocopies of the bills raised by the said parties towards rendering of services along with photocopies of form no. 15CA and 15CB filed are enclosed. Interestingly, the AO has also admitted vide para no. 5 at page 17 of the assessment order that "it is important to point out that the same 'professional fees' paid by the assessee within India is covered for deduction of tax u/s 194J of the Income-tax Act, 1961. Accordingly, the payment of professional fees made abroad....
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....ces of professionals. It is not a production or manufacturing concern where technical designs or processes are involved or required. Thus, there is question of 'transfer or development of any technical plan or technical design' being involved in this case. Even the AO has not mentioned about any such technical plan or design anywhere in the assessment order. Thus, the second limb of clause (c) above is not applicable in this case. 4.3.9 Now there remains only the first limb of clause (c) above as per which the technical knowledge, experience or skill should be made available in India. For this purpose it is necessary to examine the meaning and concept of "make available" in India. 4.3.10 "Make available" implies that the technical knowledge, skill, etc. remains with the person utilizing the services even after the particular transaction is over. In other words, it means that the technical knowledge, skills, etc. must remain with the person receiving the services even after the particular contract comes to an end. The recipient of service must be able to absorb and apply the technology on its own in its future activities. .............................." 3.7 The ....