{"id":5085,"date":"2012-06-26T09:34:29","date_gmt":"2012-06-26T09:34:29","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=5085"},"modified":"2012-06-26T09:34:29","modified_gmt":"2012-06-26T09:34:29","slug":"dcit-vs-andaman-sea-food-pvt-ltd-itat-kolkata-consultancy-fees-if-not-taxable-as-fees-for-technical-services-is-not-taxable-as-other-income","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/dcit-vs-andaman-sea-food-pvt-ltd-itat-kolkata-consultancy-fees-if-not-taxable-as-fees-for-technical-services-is-not-taxable-as-other-income\/","title":{"rendered":"DCIT vs. Andaman Sea Food Pvt Ltd (ITAT Kolkata)"},"content":{"rendered":"\n\n
Click here to download the judgement (Andman_FTS_other_income.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nConsultancy fees, if not taxable as “fees for technical services”, is not taxable as “other income”
\n<\/strong><\/p>\n

The assessee paid consultancy fees to a Singapore company on which tax was not deducted at source. The AO held that the said consultancy fees were assessable as \u201cfees for technical services<\/em>\u201d u\/s 9(1)(vii) and that the failure to deduct TDS meant that the amount had to be disallowed u\/s 40(a)(ia). This was reversed by the CIT (A). On appeal by the department to the Tribunal, HELD dismissing the appeal:<\/p>\n

(i) While the consultancy fees may constitute \u201cfees for technical services<\/em>\u201d u\/s 9(1)(vii), it does not fall within the ambit of that term in the India-Singapore DTAA because it does not \u201cmake available any technical knowledge, experience, skill, know-how or processes, which enables the person acquiring the services to apply the technology contained therein<\/em>\u201d. The services were simply consultancy services which did not involve any transfer of technology<\/strong> and so were not assessable as \u201cfees for technical services\u201d (Guy Carpenter<\/a><\/strong> (Del) & De Beers<\/a><\/strong> (Kar) followed);<\/p>\n

(ii) The department\u2019s argument that if the sum is not assessable as \u201cfees for technical services<\/em>\u201d, it is assessable as \u201cother income<\/em>\u201d Article 23 of the DTAA is not acceptable<\/strong> because that Article applies only to \u201citems of income which are not expressly mentioned in the foregoing Articles of this Agreement<\/em>\u201d. Article 23 does not apply to items of income which can be classified under Articles 6-22<\/strong> whether or not taxable under these articles. Therefore, income from consultancy services, which cannot be taxed<\/strong> under articles 7, 12 or 14 because the conditions laid down therein are not satisfied, cannot be taxed<\/strong> under article 23 either. <\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The department\u2019s argument that if the sum is not assessable as \u201cfees for technical services<\/em>\u201d, it is assessable as \u201cother income<\/em>\u201d Article 23 of the DTAA is not acceptable<\/strong> because that Article applies only to \u201citems of income which are not expressly mentioned in the foregoing Articles of this Agreement<\/em>\u201d. Article 23 does not apply to items of income which can be classified under Articles 6-22<\/strong> whether or not taxable under these articles. Therefore, income from consultancy services, which cannot be taxed<\/strong> under articles 7, 12 or 14 because the conditions laid down therein are not satisfied, cannot be taxed<\/strong> under article 23 either<\/p>\n

Read more ›<\/a><\/div>\n

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