The DCIT (International Taxation)-2, Ahmedabad V. Hydrosult INC., Chhattisgarh

ITA 1504/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5552 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 06-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Assessee Lawyers: BHAGYASHREE JAIN
• Keywords: Double taxation relief; Permanent establishment
• Section: 143(3); 40(a)(ia); 37(1)

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SMT. MADHUMITA ROY, JUDICIAL MEMEBR ./ I.T.A. NO. 1504/AHD/2016 ( ASSESSMENT YEAR : 2011-12) THE DEPUTY COMMISSIONER OF INCOME- TAX (INTERNATIONAL TAXATION)-2 207, 2 ND FLOOR, NAVJEEVAN TRUST BUILDING, B/H GUJARAT VIDYAPITH, ASHRAM ROAD, AHMEDABAD - 380014 / VS. HYDROSULT INC. C/O. MR. BHUSHAN CHAUDHARI (SNC-LAVALIN ENGINEERING INDIA PVT. LTD.) TRADE STAR, 2 ND FLOOR, A WING, J. B. NAGAR, ANDHERI-KURLA ROAD, ANDHERI (EAST). MUMBAI 400059, MAHARASHTRA, INDIA ./ ./ PAN/GIR NO. : AABCH7899G ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI LALIT P. JAIN, SR. D.R. / RESPONDENT BY : SHRI ARIJIT CHAKRAVARTY & SMT. BHAGYASHREE JAIN, A.R. DATE OF HEARING 14/11/2018 !'# / DATE OF PRONOUNCEMENT 31/01/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF IN COME TAX (APPEALS)-13, AHMEDABAD (CIT(A) IN SHORT), DATED 03.03.2016 ARISING IN THE ASSESSMENT ORDER DATED 27.03.2014 PA SSED BY THE ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 2 - ASSESSING OFFICER (AO) UNDER S. 143(3) RWS 144(C) O F THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING ASSESSMENT YEAR 2011-12. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N ACCEPTING ASSESSEES CONTENTION THAT REMITTANCES OF RS.76,456 /- WAS ACTUALLY REIMBURSEMENT OF EXPENSE, WHEREAS ACTUALLY THIS AMO UNT REPRESENTED INTEREST PAYMENT DISALLOWED U/S 37(1) AS WELL AS SE CTION 40(A)(IA) OF THE ACT AS NO TAX WAS DEDUCTED THEREON. (2) THE CIT(A) HAS ERRED IN LAW AND ON FACTS BY HOL DING THAT THE ASSESSEE WAS NOT REQUIRED TO WITHHOLD TAX AT SOURCE ON CONSULTANCY FEES PAID TO THE EXTENT OF RS.52,05,121/- TREATING THE S AME AS INDEPENDENT PERSONAL SERVICES. 3. WHEN THE MATTER WAS CALLED FOR HEARING, THE LEAR NED AR FOR THE ASSESSEE FAIRLY SUBMITTED WITH REFERENCE TO GROUND NO.1 THAT HE DOES NOT INTEND TO CONTEST THE ISSUE MAINLY ON ACCO UNT OF THE SMALLNESS OF AMOUNT. APART FROM THE CONSENT READIL Y GIVEN, WE FIND FORCE IN THE OBSERVATIONS MADE BY THE AO THAT THE I NTEREST EXPENDITURE INCURRED IS SUSCEPTIBLE TO TAX ON GROSS BASIS AS PER THE INDIA-CANADA TAX TREATY. THE AFORESAID EXPENDITURE TOWARDS INTEREST IN NOT IN THE NATURE OF MERE REIMBURSEMENT AS THE INTEREST HAS BEEN CLAIMED BY THE ASSESSEE AS DEDUCTIBLE EXPE NDITURE. THE REIMBURSEMENT IS ONLY INDIRECT PAYMENT THROUGH THE HEAD OFFICE AT CANADA AND NOT REIMBURSEMENT OF EXPENDITURE PER SE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ORDER OF THE AO IS RESTORED ON ISSUE. 4. IN THE RESULT, GROUND NO.1 OF THE REVENUES APPE AL IS ALLOWED. 5. GROUND NO.2 CONCERNS REVERSAL OF DISALLOWANCE OF CONSULTANCY FEES AMOUNTING TO RS.52,05,121/-. ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 3 - 5.1 BRIEFLY STATED, THE ASSESSEE IS A FOREIGN COMPA NY INCORPORATED IN CANADA AND IS ENGAGED IN PROVIDING TECHNICAL CON SULTANCY FOR DEVELOPMENT OF IRRIGATION AND WATER RESOURCES IN IN DIA IN THE STATE OF CHHATTISGARH AND ORISSA. THE ASSESSEE WAS AWARD ED CONTRACT BY CHHATTISGARH GOVERNMENT FOR PROVIDING CONSULTANCY S ERVICES UNDER THE CHHATTISGARH IRRIGATION DEVELOPMENT PROJECT. T HE ASSESSEE HAS ITS PERMANENT ESTABLISHMENT AT RAIPUR, INDIA. IN T HE COURSE OF SCRUTINY ASSESSMENT, THE AO OBSERVED THAT THE ASSES SEE HAS CLAIMED CONSULTANCY EXPENSES OF RS.52,05,121/- ON WHICH THE ASSESSEE HAS NOT DEDUCTED WITHHOLDING TAX. IN RESPONSE, THE ASS ESSEE CONTENDED BEFORE THE AO THAT THE CONSULTANCY FEES WERE PAID T O SEVERAL INDEPENDENT PROFESSIONALS OF FOREIGN ORIGIN HIRED F OR TECHNICAL SERVICES AND THE SERVICES ARE IN THE NATURE OF INDE PENDENT PERSONAL SERVICES GOVERNED BY ARTICLE 14 OF THE RESPECTIVE T REATIES. IT WAS CONTENDED THAT INDEPENDENT PERSONAL SERVICE (IPS) ARE DIFFERENT FROM FEES FOR TECHNICAL SERVICES (FTS). IT WAS A RGUED THAT THE INCOME OF THE AFORESAID CONSULTANTS BEING IPS WERE NOT SUSCEPTIBLE TO TAX IN INDIA IN VIEW OF EXCEPTIONS PROVIDED IN T HE TREATIES IN THIS REGARD. IN ELABORATION, IT WAS SUBMITTED THAT THE PROFESSIONALS RENDERING SERVICES HAVE NEITHER FIXED BASE IN INDIA (SOURCE COUNTRY) NOR HAVE ANY OF THE PROFESSIONALS STAYED IN INDIA M ORE THAN THE THRESHOLD LIMIT IN TERMS OF NUMBER OF DAYS (AGGREGA TE 90/183 DAYS) OF STAY PROVIDED IN THE RESPECTIVE DTAA. THE ASSES SEE ACCORDINGLY SUBMITTED THAT IN THE ABSENCE OF CHARGEABILITY OF S UCH INCOME IN INDIA HAVING REGARD TO BENEFICIAL PROVISIONS OF RES PECTIVE TREATIES, THERE WAS NO OBLIGATION ON THE ASSESSEE TO DEDUCT T DS/WITHHOLD TAX ON SUCH REMITTANCES. 5.2 THE AO HOWEVER OBSERVED THAT THE SERVICES RENDE RED WERE ADMITTEDLY TECHNICAL/CONSULTANCY SERVICES BY THE PR OFESSIONALS WHO ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 4 - ARE STATED TO BE SPECIALISTS IN THEIR RESPECTIVE DO MAINS AND THEREFORE, THE SERVICES WERE IN THE NATURE OF TECHNICAL AND CO NSULTANCY SERVICES AND WOULD THUS FALL IN THE ARTICLE RELATED TO FTS I N CONTRAST TO THE ARTICLE CONCERNING IPS. THE AO FURTHER OBSERVED THA T THE PROFESSIONALS RENDERING CONSULTANCY SERVICES WERE N OT INDEPENDENT PER SE AND THEIR SCOPE OF WORK AND ACTIVITIES WERE REGULATED BY CONTRACTUAL OBLIGATIONS OR OTHER FORM OF EMPLOYMENT . THE SERVICES RENDERED BY SUCH PROFESSIONALS UNDER CONTRACT WERE THUS ALLEGED TO BE RELATABLE TO FTS AND NOT IPS. THE AO ACCORDINGL Y CONCLUDED THAT IN THE ABSENCE OF INDEPENDENCE OF SUCH SERVICE S, THE ASSESSEE IS ENTITLED TO BENEFIT UNDER IPS CLAUSE OF TREATY AND CONSEQUENTLY WAS UNDER OBLIGATION TO DEDUCT TDS AND FAILING TO DO SO WOULD INVITE AUTOMATIC DISALLOWANCE UNDER S.40(A)(I) OF THE ACT. 6. AGGRIEVED, THE ASSESSEE PREFERRED THE APPEAL BEF ORE THE CIT(A). IT WAS REITERATED BY THE ASSESSEE BEFORE TH E CIT(A) THAT CONSULTANCY FEES PAID TO THE NON-RESIDENT INDIVIDUA LS IS IN THE NATURE OF IPS IN THE INSTANT CASE AS PER DTAA BETWEEN INDI A AND COUNTRY OF RESIDENCE OF THE RESPECTIVE NON-RESIDENT INDIVIDUAL S. IT WAS FURTHER CONTENDED BY THE ASSESSEE THAT SIMILAR PAYMENTS WER E MADE IN FY 2006-07 AS WELL WHICH WAS DULY ACCEPTED BY THE DEPA RTMENT TO BE IN THE NATURE OF IPS. 7. THE CIT(A) OBSERVED THAT THE ESSENTIAL CONTROVER SY RAISED IN THE INSTANT CASE BY THE ASSESSEE IS THAT THE CONSUL TANTS RENDERING SERVICES WERE NOT ALLEGEDLY INDEPENDENT AND ARE UND ER CONTRACTUAL OBLIGATIONS TO PERFORM THE ACTIVITIES AS PROVIDED I N THE AGREEMENT ENTERED WITH THE RESPECTIVE CONSULTANT WHICH OBLIGA TIONS ARE ALLEGED TO EXCLUDE THE SERVICES FROM THE BRACKET OF EXPRESS ION INDEPENDENT. THE CIT(A) REVISITED THE TERMS OF T HE AGREEMENT AS ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 5 - WELL AS THE JUDICIAL PRECEDENTS CITED IN THIS REGAR D AS REPRODUCED IN THE ORDER OF THE CIT(A). ON RE-EXAMINATION OF THE AGREEMENT AND OTHER RELEVANT FACTS, THE CIT(A) FOUND THAT INDEPEN DENCE OF THE NON- RESIDENT CONSULTANTS TOWARDS RENDITION OF SERVICES REMAINED INTACT AND THE EMPLOYER-EMPLOYEE RELATIONSHIP WAS ABSENT. THE CONTRACTUAL RELATIONSHIP WAS TOWARDS CONTRACT FOR EMPLOYMENT AND NOT CONTRACT OF EMPLOYMENT. THE CIT(A) ALSO TOOK NOTE OF THE CONFIRMATORY LETTERS OF ALL THE CONSULTANTS TO CONC LUDE THAT SERVICES WERE RENDERED TO THE ASSESSEE COMPANY BY INDEPENDEN T CONSULTANTS. THE CIT(A) ACCORDINGLY FOUND MERIT IN THE PLEA OF T HE ASSESSEE FOR THE SERVICES TO BE IN THE NATURE OF INDEPENDENT PE RSONAL SERVICE AND THUS NOT CHARGEABLE TO TAX UNDER INDIAN LAWS OW ING TO THE CONDITIONS DULY FULFILLED FOR AVAILING BENEFIT AS L AID DOWN BY RESPECTIVE DTAA. 8. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER FOR READY REFERENCE: 23. I HAVE GONE THROUGH THE ASSESSMENT ORDERS AND OBSERVATIONS OF THE LD AO. I HAVE ALSO GONE THROUGH THE SUBMISSION OF T HE APPELLANT AND ALSO PERUSED AGREEMENTS ENTERED INTO WITH THE CONSULTANT S BY THE APPELLANT SUBMITTED ON PAGE NOS 345 TO 394 OF PAPER BOOK. I H AVE ALSO GONE THROUGH THE AGREEMENT ENTERED WITH DEPARTMENT OF WATER RESO URCES (DOWR), GOVERNMENT OF ORISSA FOR CONSULTING SERVICES AS CON TAINED IN PAGE NO.65 TO 168 OF THE PAPER BOOK. THE LD AO HAS DISALLOWED CONSULTING FEES ON THE GROUND THAT THE CONSULTANTS ARE NOT INDEPENDENT AND THEREFORE, THE ARTICLE ON IPS OF RELEVANT DTAA IS NOT APPLICABLE. IN OTHER WORDS, THE LD AO HAS ON PERUSAL OF VARIOUS CLAUSES AND IN VIEW OF LEGAL COMMENTARY HELD THAT PERSONNEL ENGAGED BY THE APPELLANT ARE DEPENDENTS/E MPLOYEES. IN THE GIVEN CONTEXT, THE APPELLANT VIDE ITS ABOVE SUBMISS ION HAS CONTENDED THAT THE LD AO HAS FAILED TO APPRECIATE THE DIFFERENCE B ETWEEN 'CONTRACT OF EMPLOYMENT' I.E. EMPLOYER-EMPLOYEE RELATIONSHIP AND 'CONTRACT FOR EMPLOYMENT' I.E. OWNER-CONSULTANT RELATIONSHIP TO N EGATE THE OBSERVATIONS OF THE LD AO THAT THE CONSULTANTS HIRE D BY THE APPELLANT' ARE UNDER CONTRACTUAL OBLIGATION TO PERFORM THE ACTIVIT IES AND THEY ARE CONTRACTUALLY LIABLE TO WORK PERFORMED WHICH IS EVI DENT FROM SCOPE OF WORK PERFORMED BY THEM AS PROVIDED IN THE AGREEMENT ENTERED WITH THEM. 24. IN THE GIVEN BACKDROP, I HAVE VERIFIED CONSULTI NG AGREEMENT DATED 26TH AUGUST, 2009 ENTERED INTO BY THE APPELLANT WITH MR OLAF VERHEIJEN. (SAME ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 6 - PERSON REFERRED BY THE LD AO IN THE ASSESSMENT ORDE R) . I HAVE FOUND THAT THE TITLE OF THE AGREEMENT IS 'CONSULTING AGREEMENT ' AND MR OLAF VERHEIJEN IS REFERRED AS 'A CONSULTANT OF NETHERLAN DS'. THE TOTAL ASSIGNMENT PERIOD MENTIONED IN CLAUSE A2 IN THE AGR EEMENT IS 30 MONTHS OVER 7 TO 10 MISSIONS I.E. IN PHASED MANNER. FURTHE R, CLAUSE GC-3 IN ANNEXURE-A OF THE AGREEMENT STATES THAT THE CONSULT ANT SHALL NOT ASSIGN THE CONTRACT TO ANY OTHER CONSULTANT' WITHOUT FORM AL PRIOR AGREEMENT WITH THE APPELLANT. THE MOST SIGNIFICANT ASPECT WH ICH PROVES INDEPENDENCE OF THE SAID PERSON VIS A VIS THE APPEL LANT IS THAT DUE TO FAILURE TO EXERCISE REASONABLE SKILL, CARE AND DILI GENCE IN DISCHARGING THE TERMS OF REFERENCE, THE CONSULTANT CAUSES LOSS OR D AMAGE TO THE APPELLANT WHICH THE CONSULTANT SHALL BE LIABLE TOWARDS THE AP PELLANT TO MAKE GOOD BY MAKING PAYMENT NOT EXCEEDING CONSULTING FEES. TH IS CLAUSE CLEARLY DISTINGUISHES THE RELATIONSHIP BETWEEN THE APPELLAN T AND THE CONSULTANT FROM 'EMPLOYER - EMPLOYEE RELATIONSHIP' TO THAT OF AN INDEPENDENT CONTRACT BETWEEN TWO INDEPENDENT PERSONS. FURTHER, CLAUSE GC-6 STATES THAT THE CONSULTANT SHALL PERFORM ITS SERVICES AS P ER GENERALLY ACCEPTED PROFESSIONAL STANDARDS. I HAVE FOUND THAT NO WHERE IN THE SAID CLAUSE GC- 6 IT IS MENTIONED THAT THE SERVICES TO BE PERFORMED BY THE APPELLANT WOULD BE UNDER THE SUPERVISION OF THE APPELLANT. THE CLAU SE GC-7 STATES THAT THE CONSULTANT SHALL MAINTAIN INSURANCE ON HIS OWN DURI NG THE PERIOD OF ASSIGNMENT WHICH COULD NOT BE A CASE IN EMPLOYER-EM PLOYEE RELATIONSHIP. THE ABOVE CLAUSES IN THE AGREEMENT WITH CONSULTANT ARE STANDARD CLAUSES IN ALL CONTRACTS ENTERED WITH CONSULTANTS WHICH PRO VE BEYOND DOUBT THAT THE CONTRACTS BETWEEN THE APPELLANT AND THE CONSULT ANTS ARE INDEED 'CONTRACT FOR EMPLOYMENT' BETWEEN INDEPENDENT PARTI ES AND NOT 'CONTRACT OF EMPLOYMENT' BETWEEN EMPLOYER AND EMPLOYEE. ADDIT IONALLY, THE APPELLANT HAS DRAWN MY ATTENTION THE CONFIRMATORY L ETTERS OF ALL THE CONSULTANTS WHEREIN THE CONSULTANTS HAVE CONFIRMED WORKING AS INDEPENDENT CONSULTANTS FOR OTHER PARTIES IN THE SA ME YEAR IN WHICH SERVICES WERE RENDERED TO THE APPELLANT. 25. ACCORDINGLY, I AGREE WITH THE CONTENTIONS OF TH E APPELLANT THAT NO TAX WAS REQUIRED TO BE DEDUCTED AT THE TIME OF MAKING P AYMENT OF CONSULTING FEES TO THE CONSULTANTS AS PER ARTICLE ON IPS OF RE LEVANT DTAA BEING PAYMENT TO INDEPENDENT CONSULTANTS. HENCE, I DECIDE THIS GROUND OF APPEAL NO 8 IN THE FAVOUR OF THE APPELLANT AND THEREBY, DE LETE THE DISALLOWANCE MADE BY THE LD AO. 9. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE T RIBUNAL ON THE ISSUE. 10 THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO. 11. THE LEARNED AR FOR THE ASSESSEE, ON THE OTHER H AND, RELIED UPON THE ORDER OF THE CIT(A). IN FURTHERANCE, THE LEARNED AR ALSO ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 7 - REFERRED TO THE CONTRACTUAL AGREEMENT ENTERED INTO WITH ONE OF THE CONSULTANTS NAMELY MR. OLAF VERHEIJEN (OV) A RESIDE NT OF NETHERLANDS AS SPECIMEN CONTRACT. THE LEARNED AR S UBMITTED THAT THE CONSULTANCY WAS RENDERED TO THE ASSESSEE AS ADV ISOR SUBJECT TO CERTAIN TERMS AND CONDITIONS IN THE ORDINARY COURSE IN ANY CONTRACT. TO DEMONSTRATE THE NATURE OF CONTRACT, THE LEARNED AR SUBMITTED THAT MR. OV WAS RECOGNIZED AS CONSULTANT AND THE TERMS OF THE CONTRACT WOULD SUGGEST THAT IT WAS IN THE NATURE OF CONTRACT FOR EMPLOYMENT. FOR INSTANCE, CLAUSE GC3 SAYS THAT THE CONTRACT CANNOT BE ASSIGNED NOR THE SERVICES OF THE CONSULTANT CAN BE ASSIGNED BY HIM UNLIKE EMPLOYMENT IN ORDINARY COURSE. THE CONS ULTANTS WAS ALSO MADE LIABLE FOR CERTAIN LOSSES OR DAMAGE AS PE R CLAUSE GC4 WHICH IS ORDINARILY NOT THERE IN CONTRACT OF EMPLOY MENT. THE LEARNED AR SUBMITTED THAT THE CIT(A) HAS RIGHTLY APPRECIATE D THE SERVICES RENDERED BY THE CONSULTANCY TO BE IPS AND NO INTERF ERENCE THEREWITH IS CALLED FOR. 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. THE CONTROVERSY REVOLVES AROUND CHARGEABILITY OF CONSUL TANCY PAYMENTS REMITTED TO NON-RESIDENT INDIAN BY THE ASSESSEE COM PANY. THE INCIDENTAL ISSUE THAT ARISES FOR CONSIDERATION IS W HETHER THE SERVICES RENDERED BY THE NON-RESIDENTS ARE IN THE NATURE OF IPS OR IN THE NATURE OF FEE FOR TECHNICAL SERVICES. IT IS THE CA SE OF THE ASSESSEE THAT PAYMENTS MADE TO THE NON RESIDENT CONSULTANTS WERE IN THE NATURE OF IPS AND THEREFORE, NOT CHARGEABLE TO TAX IN VIEW OF THE SHELTER AVAILABLE UNDER THE RESPECTIVE DTAA AS THE NONE OF THE NON RESIDENT INDIAN HAVE EITHER FIXED BASE OR THEIR AGG REGATE PERIOD OF STAY HAS EXCEEDED STIPULATED PERIOD PROVIDED IN THE RESPECTIVE DTAA. IT IS FURTHER CASE OF THE ASSESSEE THAT IN T HE ABSENCE OF CHARGEABILITY OF REMITTANCE BEING IPS, THE OBLIGATI ON TO DEDUCT TDS ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 8 - DID NOT ARISE AT ALL AND THEREFORE, THERE WAS NO WA RRANT FOR THE AO TO DISALLOW THE CONSULTANCY EXPENSES BY INVOKING SECTI ON 40(A)(I) OF THE ACT. THE AO ON THE OTHER HAND HAS HELD THAT TH E BASIC CONDITION FOR APPLICABILITY OF ARTICLE OF IPS OF RELEVANT DTA A IS THAT THE CONSULTANT SHOULD BE INDEPENDENT AND IN THE ASSESSE ES CASE, THE CONSULTANTS ARE ALLEGED TO BE NOT INDEPENDENT AND H ENCE, THE ARTICLE ON FEE FOR TECHNICAL SERVICES OF THE RELEVANT DTAA IS SQUAREL Y APPLICABLE REQUIRING DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE. 13. TO APPRECIATE THE FACTS IN PERSPECTIVE, AVAILIN G SERVICES IN SOURCE COUNTRY, IT WILL BE RELEVANT TO REPRODUCE TH E RELEVANT DETAILS OF NON RESIDENT CONSULTANTS AND THEREFORE RESPECTIV E PERIOD OF STAY AS TABULATED BELOW: NAME OF CONSULTANTS CITIZENSHIP WORKED FOR HYDROSULT NO OF DAYS FROM TO DAYS TOTAL DAYS 01 MR. OLAF VERHEIJEN NETHERLANDS FIXED BASE OR 183 DAYS RULE L-APR-2010 24-APR-2010 24 24 02 MR. GEOFFREY LEONARD WRIGHT AUSTRALIA FIXED BASE OR 183 DAYS RULE 16-MAY-2010 29- MAY- 2010 14 32 30-0CT-2010 7-NOV-2010 9 23- MAR- 2011 31-MAR-2011 9 03 MR. JOHAN ALBERT WORMGOOR NETHERLANDS FIXED BASE OR 183 DAYS RULE L-APR-2010 10-APR-2010 10 35 6-MAR-2011 30-MAR-2011 25 04 MR. JOSE ALFONSO GALVEZ PHILIPPINES FIXED BASE OR 183 DAYS RULE L-APR-2010 27-APR-2010 27 27 05 MR. JOHN WILLIAM DUNN UK FIXED BASE OR 90 DAYS RULE 22-AUG-2010 3 MOV-2010 74 74 ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 9 - 06 MR. C M WIJAYARATNA NEWZEALAND FIXED BASE OR 183 DAYS RULE 20-0CT-2010 20-NOV-2010 32 61 4-FEB-2011 23-FEB-2011 20 23-MAR-2011 31-MAR-2011 9 14. IT IS THE CASE OF THE ASSESSEE THAT THE RESPECTIVE NON-RESIDENT INDIVIDUALS HAVE RENDERED PROFESSIONALS SERVICES OF INDEPENDENT CHARACTER AND THEREFORE LIABLE TO BE TAXED, IF ANY, ONLY IN THE CONTRACTING STATE OF RESIDENCE SINCE NONE OF SUCH I NDIVIDUALS HAVE A FIXED BASE AVAILABLE TO THEM IN INDIA FOR THE PURPO SES OF PERFORMING THEIR RESPECTIVE ACTIVITIES AND SECONDLY, NONE OF T HE NON-RESIDENTS HAVE STAYED IN INDIA FOR A PERIOD EXCEEDING AGGREGA TE 183 DAYS IN THE ASSESSMENT YEAR CONCERNED AS CAN BE SEEN FROM T HE ABOVE TABULATION. IT IS THUS THE CASE OF THE ASSESSEE TH AT SERVICES RENDERED BY THE ABOVE TABULATED NON-RESIDENTS ARE COVERED BY ARTICLE 14 OF DTAA WITH THE RESPECTIVE COUNTRY WHERE THE RESPECTI VE NON- RESIDENTS ARE RESIDENTS OF. 15. WE FIND MERIT IN THE CASE OF THE ASSESSEE FOR E LIGIBILITY OF DTAA BENEFIT UNDER ARTICLE RELATING TO IPS IN VIEW OF THE UNDISPUTED FACTS TOWARDS ABSENCE OF FIXED BASE AND PERIOD OF STAY BELOW THRESHOLD. WE NOW TURN TO THE ANOTHER OBJECT ION ON BEHALF OF THE REVENUE THAT THE SERVICES RENDERED ARE NOT INDE PENDENT IN CHARACTER. IN THIS REGARD, A BARE LOOK AT THE SPEC IMEN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND ONE OF THE CO NSULTANTS NAMELY MR. OV OF NETHERLANDS GIVES AN UNMISTAKABLE IMPRESS ION THAT AS PER THE AGREEMENT, THE NON-RESIDENT WAS TO PROVIDE CONS ULTING SERVICES RELATED TO THE PROJECT TO THE ASSESSEE. THE NON-RE SIDENT HAS BEEN CONTRACTED AS AN ADVISOR FOR THE PURPOSES OF IMPL EMENTING HIS ADVISORY SERVICES. THE RESPONSIBILITY OR THE RISK FOR THE RESULTS IS ITA NO. 1504/AHD/16 [DCIT (INR. TAX.) VS. HYDROSULT INC.] A.Y. 2011-12 - 10 - WITH NON-RESIDENT TO A GREATER DEGREE. NOTICEABLY, THE OBLIGATIONS ARISING FROM THE CONTRACT CANNOT BE ASSIGNED TO SOM E OTHER PERSONS UNLIKE IN THE CASE OF AN EMPLOYER. IN THE CIRCUMST ANCES, IT IS DIFFICULT TO READ SUCH CONTRACT TO BE LACKING OF IN DEPENDENCE. IN VIEW OF RISK FASTENED WITH THE NON-RESIDENTS FOR TH EIR SERVICES, IT IS CLEAR THAT THE SERVICES ARE OF INDEPENDENT NATURE. WE DO NOT SEE ANY TRAPPINGS OF ALLEGED DEPENDENCE IN THE CONTRACT. T HE CIT(A), IN OUR VIEW, HAS EXAMINED THE ISSUE IN RIGHT PERSPECTIVE A ND HAS COME TO A RIGHTFUL CONCLUSION. WE THUS DECLINE TO INTERFERE. 16. IN THE RESULT, GROUND NO.2 OF THE REVENUES APP EAL IS DISMISSED. 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. SD/- SD/- (MADHUMITA ROY) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 31/01/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 31/01/2 019