The assessee engaged the services of a law firm in Indonesia to acquire an insurance business in Indonesia. The services provided by the Indonesian law firm to the assessee were assistance in connection with the ,share purchase agreement , notarial share transfer deed, obtaining all the necessary regulatory approvals  ,power of attorneys ,public announcements, forms in respect of share transfers and , amended articles of association of the target company etc . The assessee filed an application under S.  195 , before the ITO, for exemption from deducting tax on the payment to be made to the Indonesian law firm for the services rendered by it. The request of the assessee was rejected. The assessee filed a revision petition under S.  264 before the Director (IT). The Director (IT) held that the services of the foreign company were not rendered for the purpose of the business activities of the assessee abroad and had no nexus with the generation of income abroad by the assessee, and that since the assessee did not have any business activities in Indonesia and that there was no immediate possibility for the assessee to earn any income from outside India the place of utilisation of services was wholly in India only. He further held that it was also possible for the assessee to abandon the proposed acquisition of the insurance company in Indonesia, and that in such a situation, the payments made were not for the purpose to earn any income from outside India even on a future date. He rejected the revision petition on the grounds that in both these possible circumstances, the services were deemed to have been rendered in India, in terms of S. 9(1)(vii)(b) . On writ dismissing the petition the court held that  the Indonesian firm had provided “consultancy service” to the assessee and therefore did not fall within the exception provided in S.  9(1)(vii)(b) or outside Explanation 2 to the section. From the scope of work undertaken, it was evident that the Indonesian law firm had provided consultancy services. If the service utilised by the assessee abroad were for a pre-existing business in Indonesia, the assessee could have legitimately stated that the service provided was utilised for a business or profession carried out outside India or for the purpose of making or earning any income from any source from outside India. There was no source of income existing in Indonesia. There was a mere proposal for acquiring the insurance business privately or the Indonesian insurance policy. The services of the foreign law firm were sought for a range of services which were approved consultancy services. The nature of work to be undertaken by the Indonesian firm was not purely work carried out by the law firms. These services were provided by any person holding expertise in the relevant field. Thus, if the services provided by the Indonesian law firm were managerial, technical or consultancy services or provision of technical or other personnel, the assessee would be liable to deduct tax at source under section 195 . Court also observed that   during the period in dispute, the Double Taxation Avoidance Agreement as notified by Notification No. G. S. R. 77(E), dated February 4, 1988 ([1988] 171 ITR (St.) 27), was in force. However, Notification No. S.O. 1144(E) [No. 17/2016 (F. No. 503/4/2005-FTD-II)], dated March 16, 2016 ([2016] 6 ITR-OL (St.) 48) notifying the Agreement signed on July 27, 2012 was not relevant. It was open to the assessee to file an application before the ITO in respect of the issue on the question whether the assessee was entitled to the benefit of any clause in that Double Taxation Avoidance Agreement as notified in Notification No. G. S. R. 77(E), dated February 4, 1988.   ( W.P.No.4965 of 2011 and M.P. No. 1 of 2011 dt .13-5 2020 (SJ))  ( AY.2010-11)