TaxTMI 
TaxTMI 
2026 (7) TMI 1972
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....pan. In so far as partners resident of UK is concerned there is no dispute. The share in income earned from India by the firm in so far as partners based in UK is concerned is not taxable in India under UK-India DTAA. The dispute is with regard to taxability of receipts in hands of assessee to the extent attributable to non-UK based partners of the firm. The Coordinate Bench of Tribunal in assessee's own case for preceding assessment years has decided this issue in ITA No. 2281/Del/2019 for AY 2015-16, ITA No.2352/Del/2022 for AY 2018-19 and ITA No. 3209/Del/2023 for AY 2021-22 vide common order dated 22.06.2026. 2.1 The ld. Counsel pointed that in ground no. 3 of appeal, the assessee has assailed in not granting credit of advance tax of Rs. 69,97,562/-claimed by the assessee in the return of income for the impugned assessment year. 2.2. He further submitted that in ground no. 4 of appeal, the assessee has assailed in not allowing TDS credit to the extent of Rs. 15,17,401/- claimed by the assessee in return of income for AY 202-23. The ld. Counsel prayed for restoring both these issues to the AO for verification. 3. Dr. Shalini Verma, representing the department strongly s....
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....tners of the firm based in the UK have share in profit to the extent of 82.121%, whereas non-UK partners have share in profit of 17.88% of the revenue earned by the assessee from Indian engagements. In so far as partners based in Germany having 3.627% share in the profits is concerned, the assessee has offered the same to tax in accordance with India-Germany DTAA and the same has been accepted by the AO. Further, the AO has accepted that the share of profit of partners based in the UK is also not liable to tax in India in accordance with the India-UK DTAA. The dispute is only with respect to the share of profit of the partners of the assessee firm from Australia, France, Belgium, China and Japan, which aggregates to 14.25% of the total receipts. During the period relevant to the assessment year under appeal, the assessee received revenue from provision of legal services on Indian engagements amounting to GBP 27,49,936. The AO made addition of Rs. 3,59,02,752/- i.e to the extent of 14.25% of the said receipts attributable to non- UK based partners (excluding Germany). According to the AO, the amount attributable to non- UK resident partners of the assessee firm is in the nature of F....
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.... to the extent of income of partnership firm is attributable to its partners in the UK. Thus, it is evident that the income of a partnership firm is taxable in the State of residence only to the extent of income derived by the partners in proportion to their share in the profits of the firm. To put it differently, the income of a partnership firm based in UK is taxed in the hands of the individual partners depending upon the residential status of each partner of the firm. Therefore, in our considered view that partners of the UK partnership firm who are not residents of UK would be subject to tax on their respective share of profits from partnership firm in the state of their residence. Accordingly, DTAA of each partners country of resident will have to be examined. 14. As pointed earlier, the AO has accepted that the share of profit of partners based in the UK is not taxable in India in light of the India-UK DTAA. The AO has also accepted the income offered by the assessee to tax with regard to the partners of the firm based in Germany in light of the India-Germany DTAA. Thus, the AO has himself accepted that taxability of each partner of the partnership firm has to be de....
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.... profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section; (b) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9." (emphasis supplied) 12. ITAs No.600/Del/2020, 9832/Del/2019 & 2134/Del/2018 In this context we are of considered view that the controversy can be best resolved by reference to provision of law u/s 44AA of the Act, which mandates for maintenance of accounts by certain persons carrying on profession or business. The relevant sub-section (1) is reproduced below; "44AA. (1) Every person carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other profession as is notified by the Board in the Official Gazette shall keep and maintain such books of account and other documents as may enable the Assessing Officer to compute his total income in accordance with the provisions of this Act." 13. Very apparently term 'technical co....
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....er draws its meaning from Explanation (a) to section 194J of the Act. Reliance in this regard is also placed on the decision in the case of NQA Quality Systems Registrar Ltd vs DCIT: 92 TTJ 946 (Del Trib.), wherein it was held as under: "17............ There is a marked difference between fees for technical services and fees for professional services. Professional services are a category distinct from technical services. Even under the provisions of section 194J of the Act requiring deduction of tax at source, the definition of professional services includes the legal, medical, engineering, accountancy, technical consultancy and interior decoration, whereas the expression 'fees for technical services as given in Expln. 2 to section 9(1)(vii) of the Act do not include within its fold the professional services as explained in section 194J of the Act............" (emphasis supplied) 15.4 Similarly, the Mumbai bench of the Tribunal in the case of Deloitte Haskins & Sells v. ACIT:[2017] 184 TTJ 801 (Mum Trib.) observed as under: "19......................................................................... ................ Separate definitions of "profe....
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....l of India. Lawyer, registered as an Advocate can practice in Indian courts, but for representing Indian clients his qualifications as an Advocate may not be sufficient to represent the Indian client in courts or proceedings abroad. Thus here in the case in hand the recipients of the income were individual lawyers or law firms. They were only competent to practice in respective jurisdiction of which they were residents. Their services were vital for Indian clients for protecting their IPRs in foreign jurisdictions. The role of assessee was to engage with these non-resident lawyers and law firm and to work with them, in ensuring necessary compliances and following regulatory framework in those jurisdictions for protection of IPRs of Indian customers. The services so rendered may be technical in sense that it needs expertise but expertise alone is not sufficient to deliver these services before statutory and regulatory authorities or courts in foreign jurisdictions, the professional status these lawyers and law firms hold to represent clients, is the most vital element and make them only eligible to deliver the professional services, but that does not give rise to FTS. 17.1 ....