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| The Tax Publishers2020 TaxPub(DT) 1398 (Visakhapatnam-Trib) INCOME TAX ACT, 1961
Section 9(1)(vii)
There is no dispute that there is no article in Indo Philippines DTAA for taxing FTS separately. Therefore, payment made to non-resident was required to be taxed under article 7 under the head 'business profits'. Since AO made no case of non-resident having PE in India, therefore, payment made to non resident could not be taxed in India as business profits also .Accordingly, AO erred in taxing FTS separately under section 9(1)(vii) because once income chargeable to tax as per DTAA was categorized by excluding FTS, then scope of taxing said income could not be expended by importing said provision from IT Act.
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Income deemed to accrue or arise in India - Under section 9(1)(vii) - Fee for technical services (FTS) - No article in concerned DTAA for taxing FTS separately
Assessee based at Philippines received fee for technical services (FTS) from Indian entity. AO taxed the same under section 9(1)(vii). Assessee challenged this.Held: There is no dispute that there is no article in Indo Philippines DTAA for taxing FTS separately. Therefore, payment made to non-resident was required to be taxed under article 7 under the head 'business profits'. Since AO made no case of non-resident having PE in India, therefore, payment made to non resident could not be taxed in India as business profits also .Accordingly, AO erred in taxing FTS separately under section 9(1)(vii) because once income chargeable to tax as per DTAA was categorized by excluding FTS, then scope of taxing said income could not be expended by importing said provision from Income Tax Act.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, VISAKHAPATNAM BENCH
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