Dy. DIT (Int. Tax.)-II, Pune V. Sparsh Infratech, Pune

ITA 2509/PUN/2012

• Counselvise Citation: 250924514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Business income; Double taxation relief; Charitable institution; Permanent establishment; Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.2509/PN/2012 (ASSESSMENT YEAR : 2009-10) DY. DIRECTOR OF INCOME TAX (I.T.)-II, PUNE. . APPELLANT VS. SPARSH INFRATECH, C/O RESIDENCY CLUB, 3 QUEEN CLUB GARDEN, PUNE 411 009. PAN : ABNFS1713Q . RESPONDENT ITA NOS.1047 TO 1056/PN/2014 (ASSESSMENT YEAR : 2009-10) DY. DIRECTOR OF INCOME TAX (I.T.)-II, PUNE. . APPELLANT VS. SPARSH INFRATECH, C/O RESIDENCY CLUB, 3 QUEEN CLUB GARDEN, PUNE 411 009. PAN : ABNFS1713Q . RESPONDENT DEPARTMENT BY : MRS. M. S. VERMA, CIT ASSESSEE BY : MR. KISHORE PHADKE DATE OF HEARING : 13-06-2014 DATE OF PRONOUNCEMENT : 28-08-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST AN ORDER OF THE CIT(A) DATED 03.10.2012 PASSED U/S 248 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AND RELATES TO THE ASSESS MENT YEAR 2009-10. 2. THE RESPONDENT-ASSESSEE HAD DEDUCTED TAX AT SOUR CE ON CERTAIN PAYMENTS MADE TO NON-RESIDENT PAYEES, AND DEPOSITED THE SAME IN THE STATE EXCHEQUER. THE ASSESSEE APPROACHED THE CIT(A) U/S 248 OF THE ACT CLAIMING ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 THAT ON THE PAYMENTS MADE TO THREE NON-RESIDENT PAY EES, NO TAX WAS REQUIRED TO BE DEDUCTED AT SOURCE. THE CIT(A) HAS CONSIDERE D THE PLEAS OF THE ASSESSEE AND HAS ACCEPTED THE SAME AND HAS ACCORDIN GLY HELD THAT NO TAX WAS DEDUCTIBLE AT SOURCE ON THE PAYMENTS SO MADE BY THE ASSESSEE. PRESENTLY, REVENUE IS IN APPEAL BEFORE US ASSAILING THE AFORESAID DECISION OF THE CIT(A). 3. BEFORE THE CIT(A), ASSESSEE FILED TEN APPEALS CA NVASSING THAT PAYMENTS MADE TO THE THREE NON-RESIDENT PARTIES, AS DETAILED IN PARA 1.8 OF THE IMPUGNED ORDER, WERE NOT REQUIRED TO BE SUBJECTED T O TAX DEDUCTION AT SOURCE. ASSESSEE HAD DEDUCTED AND DULY DEPOSITED THE TAX AT SOURCE ON SUCH PAYMENTS AFTER GROSSING UP THE TDS AMOUNT, TO THE C REDIT OF THE CENTRAL GOVERNMENT. BEFORE THE CIT(A), ASSESSEE FILED TEN APPEALS, FOR EACH OF THE TEN PAYMENTS MADE, IN TERMS OF SECTION 248 OF THE A CT. THE CIT(A) HAS PASSED A CONSOLIDATED ORDER DATED 03.10.2012 DISPOS ING OF THE TEN APPEALS, WHICH IS THE SUBJECT-MATTER OF THE CAPTIONED PROCEE DINGS. INITIALLY, REVENUE FILED A SINGLE APPEAL BY WAY OF ITA NO.2509/PN/2012 BEFORE THE TRIBUNAL CHALLENGING THE CONSOLIDATED ORDER OF THE CIT(A). SUBSEQUENTLY, THE REVENUE HAS RECTIFIED THE SITUATION AND FILED TEN SEPARATE APPEALS VIDE ITA NOS.1047 TO 1056/PN/2014, RAISING IDENTICAL GROUNDS OF APPEAL I N ALL THE APPEALS. THIS HAS RESULTED IN A DELAY IN FILING OF APPEALS BY THE REVENUE. THE DELAY IN FILING OF THE TEN APPEALS BY THE REVENUE VIDE ITA NOS.1047 TO 1056/PN/2014 IS CONDONED IN VIEW OF THE ABOVE CIRCUMSTANCES AND ALS O IN THE ABSENCE OF ANY OBJECTION FROM SIDE OF THE ASSESSEE. IN THIS BACKG ROUND, THE INITIAL APPEAL FILED BY THE REVENUE VIDE ITA NO.2509/PN/2012 IS RENDERED INFRUCTUOUS BECAUSE REVENUE HAS RECTIFIED THE SITUATION AND FILED SEPAR ATE APPEALS CORRESPONDING TO THE APPEALS DISPOSED-OFF BY THE CIT(A) IN THE IM PUGNED CONSOLIDATED ORDER. ACCORDINGLY, ITA NO.2509/PN/2012 IS DISMISSED AS IN FRUCTUOUS. ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 4. NOW, WE MAY CONSIDER FOR ADJUDICATION THE APPEAL S FILED BY THE REVENUE VIDE ITA NOS.1047 TO 1056/PN/2014, WHEREIN THE ISSUE IS COMMON AND THE FOLLOWING IDENTICAL GROUNDS OF APPEAL HAVE BEEN RAISED :- 1. THE LEARNED CIT(A) ERRED IN CONDONING THE DELAY IN FILING APPEAL U/S. 248 EXTENDING UPTO 933 DAYS AND ERRED I N CONCLUDING THAT THERE IS SUFFICIENT CAUSE FOR NOT FILING THE APPEAL IN TIME. 2. THE LEARNED CIT(A) ERRED IN NOT GRANTING OPPORTU NITY TO ASSESSING OFFICER DURING THE APPELLATE PROCEEDINGS AND NOT NOTING THAT NO EVIDENCE WAS FILED THAT ANY APPLICATION U/S. 195 OR 197 OF THE IT ACT WAS FILED BY THE ASSESSEE EVEN SUBSEQUENTLY WHILE MAKING THE PAYMENTS TO THESE COMPANIES, VIZ. STUDIO FIFTY- FOUR CO. LTD., THAILA ND AND LIGHT WISE & ASSOCIATES CO. LTD., THAILAND AT THE SUBSEQUENT STA GES OF THE CONTRACT. 3. THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX ON PAYMENT MADE TO THAIL AND PARTIES AS THESE ARE NOT TAXABLE IN INDIA AS PER DTAA BETWEEN INDIA AND THAILAND BY ONLY CONSIDERING THAT THERE IS NO SEPARATE ARTICLE DEALI NG WITH FEES FOR TECHNICAL SERVICES AND THEREBY NOT CONSIDERING ARTICLE 22 OF THE DTAA. 4. THE LEARNED CIT(A) ERRED IN CONCLUDING THAT THE APPELLANT WAS NOT REQUIRED TO DEDUCT TAX ON PAYMENT MADE TO THAIL AND PARTIES BY HOLDING THAT THESE ARE NOT TAXABLE IN INDIA AS PER DTAA BET WEEN INDIA AND THAILAND BY ONLY CONSIDERING THAT AS PER ARTICLE 14 OF DTAA, TH E RECIPIENT WAS NOT PRESENT IN INDIA FOR MORE THAN 183 DAYS, WITHOUT APPRECIATI NG THAT THE RECIPIENT IS A COMPANY AND NOT INDIVIDUAL AND THAT ARTICLE 1 4 DEALING WITH INDEPENDENT PERSONAL SERVICES IS NOT APPLICABLE TO THE CASE HER E. 5. THE LEARNED CIT(A) DID NOT EXAMINE THE FACTS AS TO WHETHER PROVISION OF CONSULTANCY SERVICES BY THE RECIPIENT CONSTITUTED PERMANENT ESTABLISHMENT UNDER ARTICLE 5(2)(J) OF THE DTAA BET WEEN INDIA AND THAILAND AND ALSO DID NOT CONSIDER THE DURATION OF SERVICES AS PER THE AGREEMENTS COVERING VARIOUS STAGES STARTING FROM PRELIMIN ARY STUDY, TO CONCEPTUAL DESIGN STAGE, CONCEPTUAL BUILDING DESIGN FOR GOVERN MENT SUBMISSION STAGE, SCHEMATIC DESIGN STAGE, PROJECT MARKETING MA TERIALS STAGE, DESIGN DEVELOPMENT STAGE, CONSTRUCTION OBSERVATION STAGE E TC. WHICH SHOWED THAT THE INVOLVEMENT OF THE THESE COMPANIES IS EXTENSIVE AND INVOLVES MEETINGS, VISITS BY PERSONNEL OF THE VENDOR TO THE ASSESSEE'S SITE AND OFFICE IN INDIA OVER THE VARIOUS STAGES AND DURATION MAY BE MORE THAN 18 3 DAYS IN AGGREGATE. 6. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE TAXABILITY OF INCOME FROM CONSULTANCY SERVICES AS BUSINESS INCOME AS PER ARTICLE 7 OR AS TECHNICAL SERVICES AS OTHER INCOME AS PER ARTICLE 2 2 OF THE DTAA BETWEEN INDIA AND THAILAND. 5. THE RESPONDENT-ASSESSEE IS INVOLVED IN THE DEVEL OPMENT AND CONSTRUCTION OF A RESORT NAME, SPARSH HOLISTIC HEAL TH & SPA RESORT, PUNE. WITH A VIEW TO OBTAIN PROFESSIONAL SERVICES FOR DES IGNING AND DEVELOPMENT OF THE RESORT, ASSESSEE ENTERED INTO AGREEMENTS WITH T HREE NON-RESIDENT CONCERNS BASED IN THAILAND, NAMELY, (I) KTGY INTER- ASSOCIATES LTD.; (II) LIGHT WISE & ASSOCIATES CO. LTD.; AND, (III) STUDIO FIFTY -FOUR CO. LTD. . IN TERMS OF THE ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 AGREEMENT WITH KTGY INTER-ASSOCIATES LTD., ASSESSEE OBTAINED SERVICES FOR MASTER PLANNING AND ARCHITECTURAL DESIGN FOR THE RE SORT; SIMILARLY, FROM M/S LIGHT WISE & ASSOCIATES CO. LTD., ASSESSEE OBTAINED PROFESSIONAL LIGHTENING RELATED DESIGN SERVICES; AND, FROM M/S STUDIO FIFTY -FOUR CO. LTD., ASSESSEE OBTAINED INTERIOR DESIGN SERVICES. ASSESSEE MADE T HE FOLLOWING PAYMENTS TO THE SAID CONCERNS DURING THE YEAR UNDER CONSIDERATI ON AFTER GROSSING-UP THE TDS AMOUNTS, WHICH WERE DULY REMITTED TO THE CREDIT OF THE CENTRAL GOVERNMENT :- SL. NO. NAME OF THE PAYEE AMOUNT (RS.) DATE OF PAYMENT OF TDS 1 KTGY INTER-ASSOCIATES LTD, THAILAND 7,78,260 08.12.2008 2 KTGY INTER-ASSOCIATES LTD, THAILAND 7,82,160 08.12.2008 3 KTGY INTER-ASSOCIATES LTD, THAILAND 22,16,700 19.03.2009 4 KTGY INTER-ASSOCIATES LTD, THAILAND 15,96,360 08.12.2008 5 KTGY INTER-ASSOCIATES LTD, THAILAND 26,73,000 18.12.2008 6 LIGHT WISE & ASSOCIATES CO. LTD., THAILAND 2,02,8 80 18.12.2008 7 LIGHT WISE & ASSOCIATES CO. LTD., THAILAND 2,98,8 66 13.04.2009 8 STUDIO FIFTY-FOUR CO. LTD., THAILAND 6,93,440 08.12.2008 9 STUDIO FIFTY-FOUR CO. LTD., THAILAND 16,58,880 13.04.2009 10 STUDIO FIFTY-FOUR CO. LTD., THAILAND 7,90,383 08.12.2008 6. FOR EACH OF THE PAYMENTS, ASSESSEE GROSSED UP TH E AMOUNT OF THE TDS AND THE REMITTANCES TO THE FOREIGN CONCERNS HAVE BE EN MADE OF THE INVOICED AMOUNTS. THE CORRESPONDING AMOUNT OF TAX DEDUCTED A T SOURCE WAS ALSO GROSSED-UP AND DEPOSITED TO THE CREDIT OF THE CENTR AL GOVERNMENT ON VARIOUS DATES INDICATED IN THE ABOVE TABULATION. SUBSEQUEN TLY, THE ASSESSEE REALIZED THAT THE PAYMENTS MADE TO THE AFORESAID NON-RESIDEN T CONCERNS, WHO ARE RESIDENTS OF THAILAND, DID NOT REQUIRE DEDUCTION OF TAX AT SOURCE BECAUSE SUCH INCOME IS NOT LIABLE TO BE TAXED IN INDIA HAVING RE GARD TO THE PROVISIONS OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (I.E. DTAA) BET WEEN THE GOVERNMENT OF INDIA AND THE GOVERNMENT OF THE KINGDOM OF THAIL AND. THUS, IT APPROACHED THE CIT(A) IN TERMS OF SECTION 248 OF THE ACT REQUI RING THE CIT(A) DO DECLARE THAT NO TAX WAS INDEED DEDUCTIBLE ON SUCH REMITTANC ES TO THE FOREIGN CONCERNS. IT WAS ALSO ASSERTED BEFORE THE CIT(A) THAT THE PAY EES HAVE NOT CLAIMED ANY TAX CREDIT IN THEIR COUNTRY, I.E. THAILAND, BECAUSE ASSESSEE DID NOT ISSUE THE ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 REQUISITE TDS CERTIFICATE TO THE PAYEES. THUS, ASS ESSEE CONTENDED THAT THE TAX DEPOSITED BY IT TO THE CREDIT OF THE CENTRAL GO VERNMENT BE REFUNDED BECAUSE SUCH TAX WAS NOT PAYABLE ON THE IMPUGNED PA YMENTS. THE CIT(A) HAS ACCEPTED THE AFORESAID PLEA, AGAINST WHICH REVE NUE IS IN APPEAL BEFORE US, AS PER THE AFORESTATED GROUNDS OF APPEAL. 7. THE FIRST AND FOREMOST OBJECTION OF THE REVENUE IS THAT THE APPEALS FILED BY THE ASSESSEE BEFORE THE CIT(A) WERE BELATED, AND THE CIT(A) HAS WRONGLY CONDONED THE DELAY. THE LEARNED CIT-DR APPEARING F OR THE REVENUE REFERRED TO THE TABULATION CONTAINED IN PARA 1.4 OF THE ORDE R OF THE CIT(A) WHEREIN THE DELAY IN FILING OF THE APPEALS HAS BEEN ENUMERATED. ACCORDING TO HER, THE DELAY RANGED FROM 832 TO 933 DAYS WHICH ACCORDING T O HER IS AN EXTRAORDINARY DELAY AND THE SAME HAS BEEN CONDONED BY THE CIT(A) ON INSUFFICIENT GROUNDS. 8. ON THIS ASPECT, THE LEARNED COUNSEL FOR THE RESP ONDENT-ASSESSEE VEHEMENTLY SUBMITTED THAT THERE WAS NO NEGLIGENCE O N THE PART OF THE ASSESSEE FOR THE DELAY, BUT THE APPEALS WERE FILED BELATEDLY BECAUSE OF THE FAULT OF THE THEN COUNSEL OF THE ASSESSEE, WHO REND ERED INCORRECT ADVICE REGARDING THE TAXABILITY OF THE IMPUGNED AMOUNTS IN INDIA. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN PARAS1.5 AND 1.6 OF THE IMPUGNED ORDER, THE CIT(A) HAS BROUGHT O UT THE REASONS CANVASSED BY THE ASSESSEE TO EXPLAIN THE DELAY IN FILING OF A PPEALS BEFORE HIM. OSTENSIBLY, ASSESSEE CANVASSED BEFORE THE CIT(A) TH AT IT WAS INCORRECTLY ADVISED EARLIER THAT THE IMPUGNED REMITTANCES TO FO REIGN CONCERNS WOULD REQUIRE TAX DEDUCTION AT SOURCE U/S 195 OF THE ACT @ 10% PLUS SURCHARGE, ETC.. ONLY SUBSEQUENTLY, ASSESSEE WAS ADVISED BY NEW CONS ULTANTS THAT NO TAX DEDUCTION AT SOURCE WAS REQUIRED ON SUCH PAYMENTS A S THE CORRESPONDING INCOME WAS NOT TAXABLE IN INDIA AS PER THE PROVISIO NS OF INDO-THAILAND DTAA. THEREAFTER, ASSESSEE FILED APPEALS BEFORE THE CIT(A ). THE INCORRECT ADVICE ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 RECEIVED BY THE ASSESSEE FROM ITS COUNSEL HAS BEEN ACCEPTED BY THE CIT(A) AS A SUFFICIENT CAUSE FOR THE DELAY IN FILING OF AP PEALS. THE CIT(A) HAS FOLLOWED THE RATIO OF THE JUDGEMENT OF THE HONBLE SUPREME C OURT IN THE CASE OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI AND OTH ERS, 167 ITR 471 (SC) AS WELL AS THE FOLLOWING JUDGEMENTS : (I) ALL INDIA PRIMARY TEACHERS ASSOCIATION VS. DIT, 140 TAXMANN 50 ITAT DELHI; (II) BHARAT AUTO CENTER VS. CIT, 282 ITR 366 ALLAH ABAD HC; (III) DINESH NAGIN DAS SHAH VS. CIT, 273 ITR 229 (G UJ HC); (IV) PREMCHAND BANSAL & SONS VS. ITO, 237 ITR 65 (H C DEL); (V) BOMBAY MERCANTILE CO-OP BANK VS. CBDT, WRIT PET ITION OF 1544 OF 2010 BOM. HC; (VI) PAY & ACCOUNTS OFFICER VS. ITO, 316 ITR 197 MA D HC; (VII) SHREENIVAS CHARITABLE TRUST VS. DCIT, 280 ITR 357 MAD HC; (VIII) CIT VS. RAM KISHAN GUPTA, 295 ITR 578 ALLAHA BAD HC; (IX) CIT VS. SANJAY K SARAWAGI, 301 ITR 232 BOM. HC ; (X) CIT VS. SANMAC MOTOR FINANCE LTD, 322 ITR 309 M AD HC; (XI) CIT VS. BEST BENGAL INFRASTRUCTURE LIMITED, AP PEAL NO.10462 OF 2010 SC; (XII) CONCORD OF INDIA INSURANCE COMPANY LIMITED VS . NIRMALA DEVI, 118 ITR 507 SC. IN CONDONING THE DELAY IN FILING OF THE APPEALS. I N OUR CONSIDERED OPINION, THOUGH REVENUE HAS CHALLENGED THE ACTION OF THE CIT (A) IN CONDONING THE DELAY, BUT NOTHING HAS BEEN BROUGHT ON RECORD TO SU GGEST THAT THE REASONS ADVANCED BY THE ASSESSEE BEFORE THE CIT(A) WERE LAC KING IN BONA-FIDES. THEREFORE, THE CONCLUSION OF THE CIT(A) TO CONDONE THE DELAY CANNOT BE FAULTED. 10. APART FROM THE AFORESAID, CIT(A) HAS OBSERVED T HAT SECTION 248 OF THE ACT SEEKS TO PROVIDE RELIEF TO TAXPAYERS FROM UNJUS T ENRICHMENT, AND THUS A LIBERAL YARDSTICK IS TO BE ADOPTED FOR JUDGING THE SUFFICIENT CAUSE IN SUCH CASES. SECTION 248 OF THE ACT PRIMARILY DEALS WITH A SITUATION WHERE A PERSON HAS DEDUCTED AND PAID TAX TO THE GOVERNMENT, BUT TH EREAFTER DENIES HIS LIABILITY TO DEDUCT SUCH TAX. THUS, AN APPEAL U/S 248 OF THE ACT IS PREFERRED BY A PERSON ONLY AFTER HE HAS ACTUALLY PAID THE TAX TO THE CREDIT OF THE CENTRAL GOVERNMENT, WHOSE LIABILITY HE SEEKS TO DENY. IN S UCH A SITUATION, WHERE THE ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 BONAFIDES OF THE ASSESSEE ARE NOT IN CHALLENGE, THE REASONS ADVANCED FOR THE DELAY OUGHT TO BE CONSTRUED LIBERALLY. IN CONCLUSI ON, WE HEREBY AFFIRM THE ACTION OF THE CIT(A) CONDONING THE DELAY IN FILING OF THE APPEALS BEFORE HIM. THUS, REVENUE FAILS ON THIS ASPECT. 11. NOW, WE MAY ADDRESS THE MERITS OF THE CONTROVER SY BEFORE US. IN THIS CONTEXT, WE FIND THAT THE CIT(A) IN PARA 2.1 OF HIS ORDER HAS TABULATED THE SERVICES PROVIDED BY THE THREE PAYEES TO THE ASSESS EE. IN THE COURSE OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE HAS FURNI SHED COPIES OF AGREEMENTS WITH THE RESPECTIVE FOREIGN CONCERNS AS ALSO THE IN VOICES RAISED BY THE SAID CONCERNS ON ACCOUNT OF THE SERVICES RENDERED TO THE ASSESSEE. THE INFERENCE DRAWN BY THE CIT(A) IS THAT THE SERVICES RENDERED B Y THE RECIPIENT FOREIGN CONCERNS ARE TAXABLE AS FEES FOR TECHNICAL SERVICES U/S 9(1)(VII)(B) OF THE ACT. IN THE CONTEXT OF THE ABOVE FINDING OF THE CIT(A), WE HAVE PERUSED THE SCOPE OF WORK UNDERTAKEN BY THE THREE RECIPIENT CONCERNS AS PER THE RESPECTIVE AGREEMENTS, WHOSE COPIES HAVE BEEN PLACED IN THE PA PER BOOK. IT IS QUITE EVIDENT FROM THE PERUSAL OF THE AGREEMENTS AS ALSO THE SCOPE OF WORK ENUMERATED BY THE CIT(A) IN PARA 2.1 OF HIS ORDER T HAT IT INVOLVED PROVISION OF ARCHITECTURAL, DESIGNS AND DRAWINGS SERVICES. FACT UALLY SPEAKING, THE AFORESAID FINDING OF THE CIT(A) THAT THE SERVICES R ENDERED BY THE RECIPIENT CONCERNS TO THE ASSESSEE COMPANY IN INDIA FALL FOR CONSIDERATION AS FEE FOR TECHNICAL SERVICES U/S 9(1)(VII)(B) OF THE ACT IS NOT IN DISPUTE, AND THEREFORE, WE DO NOT DWELL AT LENGTH ON THIS ASPECT OF THE MATTER . IN ANY CASE, WE ARE IN AGREEMENT WITH THE ABOVE FINDINGS OF THE CIT(A), HA VING REGARD TO THE SCOPE OF WORK ENVISAGED IN THE RESPECTIVE AGREEMENTS WITH TH E RECIPIENT CONCERNS. 12. ON THE BASIS OF THE AFORESAID, THE CIT(A) TOOK NOTE OF ASSESSEES PLEA THAT HAVING REGARD TO THE PROVISIONS OF INDO-THAILA ND DTAA, THE TAXABILITY OF SUCH INCOMES IS TO BE GOVERNED BY THE TERMS OF DTAA BETWEEN INDIA AND THAILAND BECAUSE THE SAME WAS FAVOURABLE AND ENVISA GED NO TAX LIABILITY IN ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 COMPARISON TO THE NORMAL PROVISIONS OF THE ACT. TH E CIT(A) FOUND THAT THE IMPUGNED PAYMENTS WERE NOT TAXABLE IN TERMS OF INDO -THAILAND DTAA AS THE SAID DTAA DID NOT HAVE ANY PROVISION FOR TAXING FEE FOR TECHNICAL SERVICES . THE AFORESAID CONCLUSION OF THE CIT(A), IN OUR CONS IDERED OPINION, IS IN ACCORD WITH THE PROVISIONS OF SECTION 90(2) OF THE ACT. S ECTION 90(2) PROVIDES THAT WHERE CENTRAL GOVERNMENT HAS ENTERED INTO AN AGREEM ENT WITH THE GOVERNMENT OF ANY COUNTRY OUTSIDE INDIA FOR GRANTIN G RELIEF OF TAX, OR AS THE CASE MAY BE AVOIDANCE OF DOUBLE TAXATION, THEN, IN RELATION TO THE ASSESSEE TO WHOM SUCH AGREEMENT APPLIES, THE PROVISIONS OF THE ACT SHALL APPLY TO THE EXTENT THEY ARE MORE BENEFICIAL TO THAT ASSESSEE. SINCE THE INDO-THAILAND DTAA DOES NOT PROVIDE FOR TAXABILITY OF FEE FOR TECHNICAL SERVICES IN THE CASE OF THE THREE RECIPIENTS, WHO ARE RESIDENTS OF THAIL AND, THE BENEFICIAL PROVISIONS OF THE DTAA SHALL PREVAIL. IN-FACT, BEFORE US THIS ASPECT OF THE MATTER IS ALSO NOT IN DISPUTE. 13. HOWEVER, REVENUE HAS CONTENDED THAT THE CIT(A) ERRED IN CONSIDERING THAT THERE IS NO SEPARATE ARTICLE IN THE DTAA TO DE AL WITH FEE FOR TECHNICAL SERVICES . AS PER THE REVENUE, CIT(A) OUGHT TO HAVE CONSIDE RED ARTICLE 22 OF THE DTAA WHICH WAS A RESIDUAL CLAUSE AND THAT SUCH CLAUSE COVERED THE TAXABILITY OF THE IMPUGNED SUMS. IN OUR CONSIDERED OPINION, THE AFORESAID PLEA OF THE REVENUE IS NOT JUSTIFIED. IN SITUATIONS LIK E THE PRESENT, IT CANNOT BE SAID THAT THE IMPUGNED INCOME IS A MISCELLANEOUS INCOME SO AS TO JUSTIFY INVOKING OF ARTICLE 22 OF THE DTAA. THE JUDGEMENT OF THE HO NBLE MADRAS HIGH COURT IN THE CASE OF BANGKOK GLASS INDUSTRY CO. LTD. VS. ACI T, (2013) 34 TAXMANN.COM 77 (MADRAS), WHICH HAS BEEN RENDERED IN THE CONTEXT OF INDO-THAILAND DTAA, SUPPORTS THE ABOVE PROPOSITION. ACCORDING TO THE H ONBLE HIGH COURT, FEE FOR TECHNICAL SERVICES CANNOT BE TAXED UNDER RESIDUAL ARTICLE 22 OF INDO- THAILAND DTAA. ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 14. FURTHER, AS PER THE REVENUE, CIT(A) ERRED IN NO T APPRECIATING ARTICLE 14 OF THE DTAA WHICH PROVIDES FOR TAXATION OF INCOME O N ACCOUNT OF PROFESSIONAL SERVICES. IN THIS CONTEXT, IT IS TO BE APPRECIATED THAT THE ARTICLE PRESCRIBES FOR TAXATION OF PROFESSIONAL SERVICES ONLY IN A CASE WH ERE THE RECIPIENT IS PRESENT IN INDIA FOR MORE THAN 183 DAYS OR IT MAINTAINS A F IXED BASE/PERMANENT ESTABLISHMENT IN INDIA. IN THE PRESENT CASE, THERE IS NO MATERIAL TO SUGGEST THAT THE RECIPIENT CONCERNS HAVE A PERMANENT ESTABL ISHMENT IN INDIA OR THAT THEY WERE PRESENT IN INDIA FOR A PERIOD EXCEEDING 1 83 DAYS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDER ATION. IN THIS CONTEXT, LEARNED COUNSEL FOR THE ASSESSEE FURNISHED APPROPRI ATE CERTIFICATES FROM THE THREE RECIPIENT CONCERNS TABULATING THE PERIOD FOR WHICH THEIR REPRESENTATIVES WERE PRESENT IN INDIA DURING THE RELEVANT PERIOD WH ICH SHOW THAT THE PRESENCE IN INDIA WAS FOR LESS THAN 183 DAYS. THEREFORE, ON THIS ASPECT ALSO, WE FIND NO MERIT IN THE PLEA OF THE REVENUE AND THE DISCUSSION MADE BY THE CIT(A) IN PARA 3.8 OF HIS ORDER IN THIS CONTEXT IS HEREBY AFF IRMED. 15. SIMILARLY, REVENUE HAS RAISED A PLEA THAT THE C IT(A) HAS NOT CONSIDERED THE TAXABILITY OF THE IMPUGNED INCOME AS BUSINESS INCOME UNDER ARTICLE 7 OF THE DTAA. ARTICLE 7 OF THE DTAA DEALS WITH BUSINES S PROFITS TO BE CONSIDERED FOR TAXATION. THE SAID ARTICLE STATES THAT THE INC OME OR PROFITS OF THE ENTERPRISE OF A CONTRACTING STATE SHALL BE TAXABLE ONLY IN THA T STATE UNLESS THE ENTERPRISE CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE THROUGH A PERMANENT ESTABLISHMENT (PE) SITUATED THEREIN. THE TAXABILIT Y IS ONLY OF SO MUCH INCOME AS IS ATTRIBUTABLE TO THAT PE FOR THE SALES IN THAT OTHER STATE OF THE GOODS OR MERCHANDISE. IN THIS CONTEXT, HAVING REGARD TO THE DEFINITION OF PE PROVIDED IN ARTICLE 5(2)(J) OF THE INDO-THAILAND DTAA, WE FIND THAT THE THREE RECIPIENT CONCERNS CANNOT BE SAID TO HAVE ANY PE IN INDIA SO AS TO BRING THE IMPUGNED INCOME TO TAX AS BUSINESS PROFITS IN INDIA AS PER A RTICLE 7 OF THE DTAA. THEREFORE, ON THIS COUNT ALSO WE FIND NO REASON TO INTERFERE WITH THE CONCLUSION ITA NO.2509/PN/2012 ITA NOS.1047 TO 1056/PN/2014 OF THE CIT(A) TO THE EFFECT THAT ASSESSEE WAS NOT R EQUIRED TO DEDUCT TAX ON THE IMPUGNED PAYMENTS TO THE THREE RECIPIENT CONCERNS. 16. IN THE RESULT, THE ORDER OF THE CIT(A) IS HEREB Y AFFIRMED AND ACCORDINGLY, REVENUE FAILS IN THE CAPTIONED APPEALS. 17. RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE R EVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUGUST, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH AUGUST, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-IT/TP, PUNE; 4) THE CIT-IT/TP, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE