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| The Tax Publishers2019 TaxPub(DT) 5326 (Del-Trib) INCOME TAX ACT, 1961
Section 9(1)
Where assessee did not have any fixed PE in India and where Swiss scientists to whom assessee made payment, did not stay in India for 183 days or more, the services provided by such scientists would be covered under Article 14 of DTAA between India and Switzerland, which are independent scientific activities and as such, no tax was required to be deducted at source on such payment made by assessee.
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Income deemed to accrue or arise in India - Under section 9(1) - Agreement between India and Switzerland - Payment to non-resident scientists on account of scientific services
Assessee-company was engaged in manufacturing of master batches and engineering plastic compounds. It made payment to two non-resident scientists residing in Switzerland on account of scientific services availed from them. The said payment was made without deducting tax at source by taking shelter in the provisions contained under Article 14 of the DTAA of Switzerland. However, AO by invoking the Explanation 2 to section 195 treated such payment as payment for technical services covered under Article 12 of DTAA and not under Article 14 of DTAA. Held: Since assessee did not have any fixed PE in India and since the Swiss scientists to whom it made payment, did not stay in India for 183 days or more, the services provided by such scientists would be covered under Article 14 of DTAA between India and Switzerland, which are independent scientific activities and as such, no tax was required to be deducted at source on such payment made by assessee.
Distinguished:Centrica India Offshore (P.) Ltd. v. CIT (2014) 364 ITR 336 (Delhi): 2014 TaxPub(DT) 2335 (Del-HC)
REFERRED : Poddar Pigments Ltd. v. ACIT (2018) 97 taxmann.com 643 (Delhi-Trib.): 2018 TaxPub(DT) 5618 (Del-Trib) GVK Industries Ltd. v. ITO (2015) 371 ITR 453 (SC): 2015 TaxPub(DT) 0605 (SC) DIT v. Rio Tinto Technical Services (2012) 340 ITR 507 (Delhi): 2012 TaxPub(DT) 0258 (Del-HC)
FAVOUR : In assessee's favour
A.Y. : 2013-14
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