TaxTMI 
TaxTMI 
2002 (2) TMI 306
X X X X Extracts X X X X
X X X X Extracts X X X X
....ITC-TTD in continuous upgradation of the quality of the PRODUCTS to international standards as defined above. 1.2 to increase the productivity, all round efficiencies in production, and Cost effectiveness of the PRODUCTS to specified international standards. 1.3 that the CONSULTANT impart the expertise and transfer the technical know-how in respect of the manufacture of the PRODUCTS to ITC-TTD to achieve the standard parameters as specified in clauses 1.1 and 1.2 supra 1.4 that the CONSULTANT assist and enable ITC-TTD to develop Customers in international markets for the PRODUCTS." Under the terms of agreement dated 6-7-1994, the assessee-tax deduction was to pay 'as a consideration for the services rendered by the consultant and his associates', a sum of Deutshe Mark 2,000 (net of taxes) per person per day for each day of their stay, at works, In this background of facts, a bill dated 4-12-1995 was raised on the assessee tax deductor which, inter alia, stated as follows: "Technical services fees for research and evaluation in connection with your problems in the mill (1) Discussion with management of Scapa-Kern on November 28th, 1995 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s related to paper technology. Relevant Article is Article VII. Under this article, fee for technical services paid will be taxed in India, only if the activities are actually performed in India. In this case Mr. Seeberger has rendered the above services in Austria anda declaration from him to this effect is enclosed. We are also enclosing sample report Mr. Seeberger sent from Austria. We wish to bring to your notice that we had earlier applied to you vide our letter dated 20-6-1995 to issue a No objection Certificate in favour of the above party without deduction of tax at source on the same grounds. You had complied with our request and allowed us to remit the same by issuing a No Objection Certificate dated 23-6-1995. In view of the above provisions the fee of DM 10,000 payable to Mr. Seeberger is not chargeable to tax in India. We, therefore, request you to issue a No Objection Certificate for DM 10,000 without deduction of tax at source." 4. The Assessing Officer was, however, far from impressed. He rejected the assessee's contentions by way of a rather detailed order and directed the assessee tax deductor to withhold tax at the rate of 35 per cent from the payment to be made....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ew that "the services were provided outside India and the income does not accrue or arise in India or deemed to have accrued or arisen in India and hence not taxable in India within the meaning of Article 7 of ADTA with Austria". He also noted that since the consultant spent only seven days in India, the fees paid to him is also not taxable under Article XIV of the Indo Austrian Double Taxation Avoidance Agreement. Giving a categoric finding that, on the above facts, the consultant 'has not rendered the technical services in India', the CIT(A) held that no tax was required to be deducted from payments made to Mr. Seeberger. The Revenue is aggrieved and in appeal before us. 6. We have conscientiously heard Smt. Lakra, ld. Commissioner (D.R.) and Shri Rahul Mitra, ld. counsel for the assessee. We have carefully perused orders of the authorities below, as well as rather elaborate paper-book filed by the assessee, and a duly deliberated upon the applicable legal position as also the provisions contained in the applicable Indo-Austrian Double Taxation Avoidance Agreement. 7. In our view, there is no doubt about the fundamental legal position that by the virtue of section 90(2) of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ject to Austrian tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Indian tax. 3. An individual who is a resident of India shall not be taxed in Austria on profits or remuneration referred to in paragraph (1). If-- (a) he is temporarily present in Austria for a period or periods not exceeding in the aggregate 183 days during a taxable year, (b) the services are rendered for or on behalf of a resident of India, (c) the profits or remuneration are subject to Indian tax, and (d) the profits or remuneration are not deducted in computing the profits of an enterprise chargeable to Austrian tax. 4. Where an individual permanently or predominantly performs services on ships or aircraft operated by an enterprise of one of the territories, such services shall be deemed to be performed in that territory." 11. In view of the above provisions of the DTAA, where an amount is paid by an enterprise of one of the territories, for technical services furnished by an enterprise of another territory, the same shall not be taxed in the course of country, except to the extent services are attributable to the activities actually rende....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sional services'. In inter alia states as follows: "The Article is concerned with what are commonly known as professional services and with other activities of an independent character. This excludes industrial or commercial activities and also professional services performed in employment e.g., a physician serving as a medical officer in a factory...." In view of the Hon'ble Andhra Pradesh High Court's judgment in the case Of CIT v. Vishakhapatnam Port Trust 140 ITR 146 (sic), OECD Model Conventions and commentaries thereon constitutes international tax language and the meanings assigned by such Literature to various technical terms are to be given due weightage. In our considered view the views expressed by bodies like OECD, which has made major contribution towards development of the tax treaties between various countries, constitute 'contemporanea expositio' as much as the meanings indicated by various expressions in the tax treaties arc usual the meanings normally understood in, to use the words approved by Hon'ble Andhra Pradesh High Court, 'international tax language' developed by institutions like OECD. 17. In view of the above discussions, payments made by the assessee-....