TaxTMI 
TaxTMI 
2020 (5) TMI 491
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....he said abroad company of 2000 pounds per month for the service to be rendered abroad and utilised by the petitioner company abroad. 4. Therefore, the petitioner had sent a letter dated 24.05.2011 to the 2nd respondent for waiver of interest from deducting tax at source for the payments made to the said non-resident company under Section 195 of the Income Tax Act, 1961. 5. By an order dated 01.08.2011, the 2nd respondent ordered deducting of tax at the source of payment at 20% under the Double Taxation Avoidance Agreement (hereinafter referred as DTAA) entered between the Government of India and the Government of UK. The operative portion of the said order reads as under:- As per Article 13(2) of the India - U.K. DTAA also the proposed payments for availing consultancy services are taxable in India as "fees for technical services". Therefore as per the India - UK DTAA also, the proposed payments are taxable in India, subject to certain tax rates:- In this case the Non-resident (deductee) is not having a Permanent Account Number (PAN), as mandated under Section 206AA of the I.T. Act, 1961 and such payments effected to the Non-resident not having a PA....
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....r sum as aforesaid is credited to any account, whether called "Interest payable account" or "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly. Explanation 2.-For the removal of doubts, it is hereby clarified that the obligation to comply with sub-section (1) and to make deduction thereunder applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non-resident person has- (i) a residence or place of business or business connection in India; or (ii) any other presence in any manner whatsoever in India. (2) Where the person responsible for paying any such sum chargeable under this Act (other than salary) to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application 48[in such form and manner to the Assessing Officer, to determine in such manner, as may be prescri....
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.... under subsection (1) on that proportion of the sum which is so chargeable. 22. As per decision of the Hon'ble Supreme Court in G.V.K.Industries Ltd., Vs. Income Tax Officer, (2015) 11 SCC 734, Section 9(1)(vii)(b) of the Income Tax Act, 1961 carves out an exception. The exception carved out in the latter part of sub-clause (b) applies to a situation when fee is payable in respect of services utilised for business or profession carried out by an Indian payer outside India or for the purpose of making or earning of income by the Indian assessee i.e. the payer, for the purpose of making or earning any income from a source outside India. On a studied scrutiny of the said clause, it becomes clear that it lays down the principle what is basically known as the "source rule", that is, income of the recipient to be charged or chargeable in the country where the source of payment is located, to clarify, where the payer is located. The clause further mandates and requires that the services should be utilised in India. 23. Thus, to attract exception under Section 9(1)(vii)(b) of the Income Tax Act, 1961, the service should be utilized in India. Any payment by way of fees....
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....nt of discretion and independent judgment in managing its affairs. C-level management. (2001) Collectively, the officers of an organization holding titles prefixed by "chief"; the upper tier of top management <she promoted from senior vice president to the c-level> - Also termed cboard. Middle management. (1941) Company employees who exercise some discretion and independent judgment in carrying out top management's directives. Top management. (1937) A high level of company management at which major policy decisions and long-term business plans are made. - Also termed upper management. 2. The act or system of controlling and making decisions for a business, department, etc. line management. A system of management in which information and instructions are passed from one person to someone immediately higher or lower in rank and to no one else. 27. The expression "Technical Service" and "Consultancy Service" also have not been defined in the Act. The "Technical Service" would include any service in connection with the "engineering service" as it is associated with the service provided by the person technically qualified in the field of engineering. The "Consultan....
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....open for the petitioner to state that the said service fell within exception provided in Section 9(1)(vii)(b) of the Income Tax Act, 1961 or outside the Explanation 2 to said Section. 35. If the service utilized by the petitioner abroad was for pre-existing business in Indonesia, the petitioner could have legitimately stated that the service provided was utilized for a business of profession carried out outside India or for the purpose of making or earning any income from any source from outside India. There is no source that is existing in Indonesia. 36. In this case, there was a mere proposal for acquiring the insurance business in privately or Indonesian Insurance Policy. The service of the said law firm was sought for a range of service which are approval consultancy service. 37. In the light of the above discussion, I am of the view, decision impugned in this Writ Petition, cannot be assailed. During the period in dispute, the Double Taxation Avoidance Agreement as notified vide Notification No.GSR 77 (E), dated 04.02.1988, was in force. However, what was produced before me is the notification notifying the agreement signed on 27th July, 2012 and not....
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.... its operation from a territory, whose Government has entered into a Double Taxation Avoidance Agreement with India, the rate of taxation would be as dictated by the provisions of the treaty. 39. Therefore, the issue as to whether the petitioner was entitled to the benefit of any Clause in the said Double Taxation Avoidance Agreement as notified in Notification No.GSR 77(E), dated 04.02.1988, is left open. It is for the petitioner to file appropriate application before the 2nd respondent within a period of thirty days from the date of receipt of a copy of this order. 40. Accordingly, the Writ Petition is dismissed with the above observations. No cost. Consequently, connected Miscellaneous Petition is closed. 9. The agreement entered into by the petitioner with M/s. MD IN Services Pvt. Ltd. in United Kingdom is for the following services:- i. Evaluation, development of risk management and insurance products for the renewable energy sector for various overseas ventures of Shriram. ii. Insurance and pricing considerations for SME & specialist insurances e.g. Bankers Indemnity, Jewellers Block etc. iii. Co-ordination for RI placements inc....