The The assessee is law form assessed to tax in status of\u00a0 a partnership. \u00a0The Assessing\u00a0 held that the\u00a0 assessee is not entitle to foreign tax credit . Which was affirmed by CIT (A) . On appeal to Tribunal\u00a0\u00a0 allowing the appeal, the Tribunal held hat article 23(2)(a) of the Double Taxation Avoidance Agreement states that when any income of an Indian resident was taxed in Japan in accordance with the provisions thereof, the Indian resident would be allowed deduction of the taxes paid by the assessee in Japan in the computation of his tax liability. The phrase \u201cin accordance with\u201d means \u201cbeing in agreement or harmony with ; in conformity to\u201d. The question therefore was whether the assessee could reasonably be said to be taxable in Japan under article 12 of the Double Taxation Avoidance Agreement, in respect of the professional income earned in Japan. Only when this was so, could question of the grant of credit in respect of taxes paid abroad be considered, in the hands of the assessee. There were overlapping areas in the definition of fees for technical services under article 12(4), which covered \u201ctechnical, management and consultancy services\u201d vis-\u00e0-vis the definition of professional services income which would be taxed under article 14 as \u201cincome from independent personal services\u201d. The exclusion clause under article 12(4) proceeds on the basis that article 14 applies to individuals alone. Therefore, article 14 holds the field for the individuals only, particularly in the light of the exclusion clause under article 12(4) being restricted to payment of fees for professional services to individuals alone. As a corollary, the payments in question were rightly subjected to tax withholding in Japan under article 12. The Assessing Officer was directed to grant the tax credit to the assessee. So far as determination of question whether or not the taxation had been done in the source country \u201cin accordance with the provisions of this convention\u201d is concerned, one had to decide whether the view adopted by the source jurisdiction was a reasonable and bona fide view, which may or may not be the same as the legal position in the residence jurisdiction. While it was desirable that there should be uniformity in tax treaty interpretations, it may not always be possible to do so in view of a large variety of variations, such as the sovereignty of judicial systems, domestic law overrides on the treaty provisions, etc. In a situation in which a transaction by resident of one of the Contracting States was to be examined in both the treaty partner jurisdictions, different treatments being given by the treaty partner jurisdictions would result in incongruity and undue hardship assessee.( AY.2014-15)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 90 :Double taxation relief \u2013 Tax credit \u2013 Law firm- Independent Personal Services applies only to individuals \u2014 Tax Credit Allowed – The legal fees paid to a partnership firm of lawyers can indeed subjected to levy of tax under article 12 as exclusion clause under article 12(4) does not get triggered for payments to persons other than individuals , and the provisions of article 14 are required to be read in harmony with the provisions of article – DTAA -India -Japan [ Art , 12, 14 , 23 (2)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-18671","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-4R9","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/18671","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=18671"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/18671\/revisions"}],"predecessor-version":[{"id":20706,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/18671\/revisions\/20706"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=18671"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=18671"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=18671"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}