Cedrick Jorden Da Silva, Margao V. Income Tax Officer, (INT.TAX), Margao

ITA 61/PAN/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72026 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 06-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A M LOBO
• Assessee Lawyers: PRADIP KAKODKAR
• Keywords: Double taxation relief; Deemed to accrue or arise in india; Permanent establishment
• Section: 5(2); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 61/PNJ/2012 : (ASST. YEAR : 2011 - 12) CEDRICK JORDAN DA SILVA VENTURAS INTERNATIONAL TRAVEL NETWORKS, A - 18 & A - 19, RELIANCE TRADE CENTRE, MARGAO, SALCETE, GOA PAN : ALIPD3306P (APPELLANT) VS. INCOME TAX OFFICER (INTL. TAXATION) MARGAO (RESPONDENT) APPELLANT BY : PRADIP KAKODKAR, CA RESPONDENT BY : A.M. LOBO, DR DATE OF HEARING : 02/08/2013 DATE OF PRONOUNCEMENT : 08 /08/2013 O R D E R PER P.K. BANSAL : 1. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DT. 8 . 6 .201 2 . THE APPEAL WAS FILED ON 6.8.2012 BUT WHEN THE APPEAL WAS FIXED FOR HEARING , AT THE REQUEST OF THE LD. AR, THE APPEAL WAS ADJOURNED FROM TIME TO TIME AND ULTIMATELY THE REVISED GROUNDS OF APPEAL WERE FILED BY THE ASSESSEE. THE ONLY ISSUE INVOLVED IN THIS GROU ND IS THAT THE AO WAS NOT CORRECT IN LAW AND FACTS TO IMPOSE TAX AMOUNTING TO RS.15,79,937/ - U/S 201(1) AND INTEREST AMOUNTING TO RS.88,908/ - U/S 201(1A) ON THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF COLLECTING DOCUMENTS FROM THE CLIENTS IN INDIA AND SENDING IT TO ANA N CABANAS, ELENA NISTAL AND ELZA PIRRO C/O NISTAL & PIRRO ADVOGADOS IN CONNECTION WITH PORTUGUESE NATIONALITY WORK UNDERTAKEN BY THE 2 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) PORTUGUESE BENEFICIARIES WHO PROVID E LEGAL CONSULTANCY SERVICES IN CONNECTION WITH THE SAID PORTUGUESE NATIONALITY WORK AND CORRESPOND WITH PORTUGUESE AUTHORITIES IN PORTUGAL IN THIS REGARD. THE ASSESSEE COLLECTS AND REMITS THE FIXED CHARGES FOR DIFFERENT SERVICES FROM THE CLIENTS IN INDIA AS PER THE BILLS RAISED BY HIM, IN ACCORDANCE WITH THE AGREEMENT ENTERED BY HIM WITH PORTUGUESE BENEFICIARIES ON 8.7.2010. THIS MONEY ARE BEING TRANSFERRED FROM ASSESSEES PROPRIETORSHIP CONCERN THROUGH HDFC BANK ACCOUNT TO PORTUGUESE BENEFICIARIES ON DE MAND. AS PER THE INFORMATION AVAILABLE, THE AO NOTED FOLLOWING AMOUNTS WERE REMITTED TO THE BENEFICIARIES DURING THE CURRENT FINANCIAL YEAR. SL. NO. DATE OF TRANSACTION NAME OF THE BENEFICIARY AMOUNT IN INDIAN CURRENCY 1 26.05.10 ELENA NISTAL RS. 3,76,160.30 2 14.06.10 ELENA NISTAL RS. 1,41,732.50 3 18.08.10 ELENA NISTAL RS. 7,62,735.13 4 01.10.10 ELENA NISTAL RS. 7,74,987.23 5 22.10.10 ELENA NISTAL RS. 6,88,512.94 6 01.12.10 ELENA NISTAL RS. 12,20761.26 7 04.02.10 ELENA NISTAL RS. 11,48,182.81 TOTAL RS.51,13,072.17 THE AMOUNT WAS SENT WITHOUT TDS ON THE BASIS OF THE CERTIFICATE OF CHARTERED ACCOUNTANT. THE AO WAS OF THE VIEW THAT THE ASSESSEE HAS COLLECTED THE PAYMENTS ON BEHALF OF THE FOREIGN BENEFICIARIES IN INDIA AND TRANSFERRED IT TO THEM THROUGH HIS CONCERN, M/S. VENTURAS INTERNATIONAL TRAVEL NETWORKS THROUGH HDFC BANK ACCOUNT ON DEMAND. THUS, ACCORDING TO HIM, THE EARNINGS RECEIVED IN T HE TAXABLE TERRITORIES ON BEHALF OF THE NON - RESIDENT ARE TAXABLE U/S 5(2) OF THE INCOME TAX ACT AND THE ASSESSEE WAS LIABLE TO DEDUCT TDS U/S 195. TO THIS, THE ASSESSEE CONTENDED THAT IN VIEW OF ARTICLE 5 OF THE DTAA BETWEEN INDIA AND PORTUGAL, THE NON - RE SIDENT WAS NOT MAINTAINING ANY PERMANENT ESTABLISHMENT. EVEN HE CLAIMED THE FEES FOR SERVICES RENDERED BY THE SAID BENEFICIARIES TO BE FEES FOR TECHNICAL SERVICES/FEES FOR INCLUDED SERVICES UNDER 3 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) ARTICLE 12. THUS, SERVICE RENDERED TO INDIAN CLIENTS ARE A CTIVITIES OF COLLECTING DOCUMENTS FROM THEM IN INDIA AND SENDING IT TO PORTUGUESE BENEFICIARIES IN CONNECTION WITH PORTUGUESE NATIONALITY WORK UNDERTAKEN BY THE PORTUGUESE BENEFICIARIES, WHO PROVIDE LEGAL CONSULTANCY SERVICES IN CONNECTION WITH THE SAID PO RTUGUESE NATIONALITY WORK AND CORRESPOND WITH PORTUGUESE AUTHORITIES IN PORTUGAL. THE AO WAS OF THE VIEW THAT IT IS COVERED UNDER OTHER INCOME AS ENUMERATED UNDER ARTICLE 22. THEREFORE, THE AO TOOK THE VIEW THAT THE ASSESSEE WAS LIABLE TO DEDUCT TDS @ 30 .9% AND ACCORDINGLY, HE IMPOSED TAX U/S 201(1) AMOUNTING TO RS. 15,79,937/ - AND LEVIED INTEREST U/S 201(1A) AMOUNTING TO RS.88,908/ - . THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE INC OME WAS NOT CHARGEAB LE IN INDIA. SERVICES ARE GENERATED BY PROFESSIONAL OUTSIDE INDIA, RENDERED OUTSIDE INDIA AND FOR WHICH PAYMENT IS ALSO RECEIVED BY THEM OUTSIDE INDIA THROUGH BANKING CHANNELS. THE UTILITY OF THE SERVICES IS ALSO OUTSIDE INDIA AND THEREFORE, NO INCOME AC CRUES IN INDIA. RELIANCE WAS ALSO PLACED ON ARTICLE 14 OF THE DTAA BETWEEN INDIA AND PORTUGAL ACCORDING TO WHICH THE INCOME DERIVED BY A PERSON WHO IS AN INDIVIDUAL OR A FIRM OF INDIVIDUALS (OTHER THAN A COMPANY) WHO IS RESIDENT OF A CONTRACTING STATE FRO M THE PERFORMANCE IN OTHER CONTRACTING STATE OF PROFESSIONAL SERVICES OR OTHER INDEPENDENT ACTIVITIES OF A SIMILAR CHARACTER SHALL BE TAXABLE ONLY IN THE FIRST MENTIONED STATE EXCEPT IN THE CIRCUMSTANCES WHICH ARE GIVEN UNDER CLAUSE (A) AND (B). ACCORDING TO THE ASSESSEE, THE CASE DOES NOT FALL IN THE EXCEPTION AND THE INCOME WAS NOT CHARGEABLE TO TAX IN INDIA. CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER : 2.3 HAVING HEARD THE CONTENTION OF THE APPELLANT, THERE IS NO DISPUTE ON THE ISSUE THAT THE PROVISIONS OF SECTION 195 OF THE INCOME TAX ACT WILL APPLY ONLY IN THE CIRCUMSTANCES IF THE PAYMENT TO THE NON - RESIDENT HAVE AN ELEMENT OF INCOME CHARGEABLE TO TAX IN I NDIA AS HELD BY THE HONOURABLE SUPREME COURT OF INDIA IN THE CASE OF GE INDIA TECHNOLOGY CENTRE PVT LTD VS CIT ( 327 ITR 456). HOWEVER, THE CONTENTION OF THE APPELLANT THAT AS THE SERVICES ARE RENDERED OUTSIDE INDIA, 4 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) PAYMENT IS RECEIVED OUTSIDE INDIA AND S ERVICES ALSO UTILISED OUTSIDE INDIA, THE INCOME DOES NOT ACCRUE OR DEEMED TO ACCRUE IN INDIA AND THEREFORE, NOT CHARGEABLE TO TAX IN INDIA, IS NOT FOUND ACCEPTABLE, CONSIDERING THE EXPLANATION TO SUB - SECTION (2) OF SECTION 9 OF THE INCOME TAX ACT WHICH REA DS AS UNDER: FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT FOR THE PURPOSES OF THIS SECTION, INCOME OF A NON - RESIDENT SHALL BE DEEMED TO ACCRUE OR ARISE IN INDIA UNDER CLAUSE (V) OR CLAUSE (VI) OR CLAUSE (VII) OF SUB - SECTION (1) AND SHALL BE INCL UDED IN THE TOTAL INCOME OF THE NON - RESIDENT, WHETHER OR NOT (I) THE NON - RESIDENT HAS A RESIDENCE OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA; OR (II) THE NON RESIDENT HAS RENDERED SERVICES IN INDIA THE DECISION OF THE HONOURABLE SUPREME COURT IN THE CASE OF TOSHOKU LTD (125 ITR, 525 ), ON WHICH THE RELIANCE HAS BEEN PLACED BY THE APPELLANT, IS NOT APPLICABLE AS THE HONOURABLE SUPREME COURT WAS NOT HAVING ANY OCCASION TO CONSIDER THE ABOVE EXPLANATION WHICH WAS INSERTED BY THE FINANCE ACT 2010 WITH RE TROSPECTIVE EFFECT FROM 1.6.1976. THE NEXT ISSUE RAISED BY THE APPELLANT IS THAT AS HE IS DOING HIS OWN BUSINESS AND ON THAT ACCOUNT THE SERVICES HAVE BEEN RENDERED BY THE NON - RESIDENT OUTSIDE INDIA AND THEREFORE, THE FINDING OF THE AO THAT THE APPELLANT I S HABITUALLY EXERCISING CONTRACT ON BEHALF OF THE NON - RESIDENT IS FALSE IS CONCERNED, FROM THE PERUSAL OF THE AGREEMENT, IT IS EVIDENT THAT THE AGREEMENT IS ON THE LETTER HEAD OF THE NON - RESIDENT WHICH MAKES IT CLEAR THAT THE NON RESIDENT HAS PRESCRIBED TH E TERMS AND CONDITIONS FOR RENDERING SERVICES OUTSIDE INDIA IN REGARD TO LEGAL CONSULTANCY SERVICES WITH THE PORTUGUESE AUTHORITIES WITH RESPECT TO THE BUSINESS CARRIED OUT BY THE APPELLANT IN INDIA. IT IS NOT UNDER DISPUTE THAT THE NON RESIDENT PROVIDED T HE LEGAL CONSULTANCY SERVICES WHICH COMES UNDER THE PURVIEW OF ARTICLE 14 OF THE DTAA WITH PORTUGAL UNDER THE PROFESSIONAL SERVICES, AS PER THE ARTICLE 14 OF THE DTAA, THE INCOME DERIVED BY THE RESIDENT OF CONTRACTING STATE (PORTUGAL) FROM THE PERFORMANCE IN OTHER CONTRACTING STATE OF PROFESSIONAL SERVICES (INDIA), SHAL L BE TAXABLE ONLY IN PORTUGAL EXCEPT IN THE CASE WHERE SUCH PERSON HAS A FIXED BASE REGULARLY AVAILABLE TO HIM IN INDIA OR STAYED IN INDIA FOR THE PERIOD EXCEEDING 90 DAYS. IN THE LIGHT OF TH E ABOVE ARTICLE IF THE PAYMENTS MADE TO THE NON - RESIDENT AS INCOR PORATED IN PARAGRAPH 2. 1 OF THIS ORDER, IT IS EVIDENT THAT THE NON - RESIDENT WAS HAVING FIXED BASE OF THE INCOME FOR ENTIRE FINANCIAL YEAR AND THEREFORE, EVEN AS PER ARTICLE 14 OF DTAA WITH PO RTUGAL SUCH INCOME IS TAXABLE IN INDIA. MOREOVER, IT IS ALSO AN UNDISPUTED FACT THAT THE SERVICES RENDERED BY THE NON - RESIDENT ARE UTILISED BY THE APPELLANT IN THE BUSINESS CARRIED OUT BY HIM IN INDIA AND THEREFORE, THE INCOME DERIVED FROM SUCH PAYMENT IS CHARGEABLE TO TAX IN INDIA. THIS VIEW FINDS SUPPORT FROM THE DECISION OF THE HONOURABLE ITAT MUMB AI , IN THE CASE OF THE ADDITIONAL DIRECTOR OF INCOME TAX V. ESS VEE 5 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) INTELLECTUAL PROPERTY BUREAU (007 SOT 0038) IN THE SIMILAR CIRCUMSTANCES WHERE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSULTANCY IN RESPECT OF REGISTRATION AND ENFORCEMENT OF INTELLE CTUAL PROPERTY RIGHTS. FOR THAT PURPOSE, THE ASSESSEE AVAILED SERVICES OF THE ENTITIES BASED ABROAD. THE ASSESSEE, HOWEVER, DID NOT DEDUCT ANY TAX FROM THE PAYMENTS MADE TO SUCH FOREIGN ENTITIES . IT WAS CONTENDED BY THE ASSESSEE THAT SINCE THE PAYMENTS WER E MADE FOR THE PROFESSIONAL SERVICES, THE SAME CANNOT BE COVERED BY THE CONNOTATIONS OF THE EXPRESSION FEES FOR TECHNICAL SERVICES UNDER SECTION 9(1)(VII) OF THE INCOME TAX ACT. THE ASSESSEE THUS CONTENDED THAT THE PAYMENTS RECEIVED BY THE FOREIGN ENTITI ES ARE NOT TAXABLE UNDER SECTION 9(1)(VII) OF THE ACT AND THERE IS NO OTHER PROVISIONS OF THE ACT UNDER WHICH THESE RECEIPTS CAN BE TAXED. SINCE, ACCORDING TO THE ASSESSEE, THE SUMS OF PAID BY THE ASSESSEE WERE NOT TAXABLE IN INDIA, NO DEDUCTION OF TAX WAS WARRANTED UNDER SECTION 195 OF THE ACT. THE HONOURABLE 1TAT IN PARAGRAPH 5 HELD THAT UNLIKE THE SITUATIONS IN THE CASES OF TAX TREATIES, WHERE SPECIFIC PROVISIONS ARE INCORPORATED FOR THE PROFESSIONAL SERVICES AND DIFFERENT PARAMETERS ARE LAID DOWN FOR TAXABILITY THEREOF IN THE SOURCE COUNTRY, THE INCOME TAX ACT DOES NOT LAY DOWN ANY DIFFERENT TREATMENT FOR THE PROFESSIONAL SERVICES UNDER SECTION 9(1)(VII). THIS IS IN SHARP CONTRAST WITH THE PROVISIONS OF, E.G., INDO - US TREATY DEALT WITH BY A CO - ORDINAT E BENCH IN THE CASE OF GRAPHITE INDIA LTD V. DY . COMMISSIONER OF INCOME TAX (2003) 86 IT D 384 (KOL) OR INDO - UK TREATY DEALT WITH BY ANOTHER CO - ORDINATE BENCH IN THE CASE OF MAHARASHTRA STATE ELECTRICITY BOARD V. DY. COMMISSIONER OF INCOME TAX (2004) 90 I TD 793 (MUM) . THEREFORE, SO FAR AS THE PROVISIONS OF SECTION 9(1)(VII) ARE CONCERNED, MERELY BECAUSE A SERVICE CAN BE TERMED AS PROFESSIONAL SERVICE, THAT FACT PER SE DOES NOT TAKE FEES FOR SUCH A PROFESSIONAL SERVICE OUTSIDE THE AMBIT OF FEES FOR TECHNICAL SERVICES. WHEN ONE IS TO, THEREFORE, EXAMINE WHETHER OR NOT A PAYMENT TO FOREIGN ENTITY CAN BE TREATED AS FEES FOR TECHNICAL SERVICES ALL THAT IS TO BE EXAMINED IS WHETHER OR NOT SUCH A PAYMENT CAN BE SAID, SUBJECT TO EXCLUSION CLAUSES WHICH ARE NOT REL EVANT FOR THE PRESENT PURPOSES, TO BE PAYMENT FOR MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES . WHETHER THE SERVICES ARE PROFESSIONAL SERVICES OR NOT, OR LEGAL SERVICES OR NOT, WOULD NOT REALLY BE RELEVANT BECAUSE AS LONG AS THESE SERVICES CAN BE SAID T O BE TECHNICAL OR CONSULTANCY, OR EVEN MANAGERIAL, SERVICES, THE PROVISIONS OF SECTION 9( 1) (VII) WOULD STAND INVOKED. IN OUR VIEW, WHEN THE ASSESSEE AVAILS THE SERVICES FOR REGISTRATION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS ABOARD, THESE SERVICES CANNOT BUT BE TREATED AS TECHNICAL AND CONSULTANCY SERVICES. WE ARE UNABLE TO UNDERSTAND THE BASIS OF COMMISSIONER (APPEALS)S COMING TO THE CONCLUSION THAT THE SERVICES RENDERED BY THE FOREIGN PROFESSIONALS ARE NEITHER MANAGERIAL, TECHNICAL OR CONSULTANCY SERVICES AND THAT IT IS PURELY A CASE OF ACTUALLY RENDERING PROFESSIONAL SERVICES, WHICH ARE NEITHER TECHNICAL, NOR CONSULTANCY NOR MANAGERIAL IN NATURE. THERE ARE OVERLAPPING AR EAS IN .PROFESSIONAL SERVICES AND IN TECHNICAL, MANAGERIAL OR CONSULTANCY SERVICES INASMUCH A PROFESSIONAL SERVICE CAN BE RENDERED IN TECHNICAL MANAGERIAL OR CONSULTANCY FIELD. THEREFORE, A SERVICE BEING IN NATURE OF A PROFESSIONAL SERVICE, 6 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) IN THE CONTE XT OF SECTION 9(1)(VII), DOES NOT AFFECT THE TAXABILITY OF PAYMENT FOR THAT SERVICE. THE FEES IS PAID BY THE ASSESSEE, WHO IS A RESIDENT IN INDIA, AND IT IS NOT FOR THE PURPOSE OF MAKING A EARNING ANY INCOME OUTSIDE INDIA OR FOR THE PURPOSE OF CARRYING OUT ANY BUSINESS OUTSIDE INDIA . THE FEES IS, THEREFORE, TAXABLE IN INDIA UNDER SECTION 9(1)(VII)(B). IN OUR HUMBLE UNDERSTANDING, THEREFORE, THE COMMISSIONER (APPEALS) DID ERR IN HOLDING THAT THE PAYMENTS IN QUESTION WERE NOT TAXABLE IN INDIA UNDER THE PROVIS IONS OF THE INDIAN INCOME TAX ACT. THE DECISION OF THE HONOURABLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SIEMENS AKTION GESELLSCHAFT (SUPRA) O N WHICH THE RELIANCE HAS BEEN PLACED BY THE APPELLANT, IS NOT APPLICABLE TO THE FACT AND CIRCUMSTANCES OF THE CAS E AND T HEREFORE OF NO HELP TO THE APPELLANT. ACCORDINGLY , THE UNDERSIGNED DOES NOT FIND ANY IN FIRMITY IN THE CONCLUSION ARRIVED BY THE ASSESSING OFFICER THAT THE APPELLANT W A S LI A BLE TO DEDUCT THE TAX AT SOURCE AS R EQUIRED U/S.195 OF THE INCOME TAX ACT AND THEREBY IMPOSING THE TAX U /S. 201(1) AND INTEREST U/S 201(1A) OF THE INCOME TAX ACT, HENCE THE APPEAL IS DISMISSED. 2.1 BEFORE US, THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A) AND ALSO SUBMITTED PHOTOCOPY OF THE PASSPORT TO PROVE T HAT THE PERSON TO WHOM PAYMENT WAS MADE WAS A NON - RESIDENT AND HIS STAYING IN INDIA DID NOT EXCEED 90 DAYS. ACCORDING TO THE LD. A R, NEITHER THE CONSULTANT HAVE ANY FIXED BASE AVAILABLE IN INDIA NOR ITS PERIOD OF STAY EXCEEDED 90 DAYS AND IN VIEW OF THE A PPLICABILITY OF ARTICLE 14 OF THE DTAA BETWEEN INDIA AND PORTUGAL, THE INCOME WILL NOT BE CHARGEABLE TO TAX IN INDIA. IT WAS ALSO STATED THAT EVEN THE PROVISIONS OF SEC. 9(1)(VII) READ WITH EXPLANATION TO SEC. 9(2) OF THE INCOME TAX ACT WERE NOT APPLICABLE. 2.2 THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE TAX AUTHORITIES BELOW. 2.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE PERUSED THE MAT ERIAL ON RECORD ALONGWITH THE ORDER OF THE TAX AUTHORITIES BELOW. IT IS A SETTLED LAW THAT THE PROVISIONS OF SEC. 195 OF THE INCOME TAX ACT WILL APPLY ONLY IF THE PAYMENT MADE TO THE NON - RESIDENT HAS AN ELEMENT OF INCOME CHARGEABLE TO TAX IN INDIA. IF TH ERE IS A CONFLICT BETWEEN THE PROVISIONS OF THE INCOME TAX ACT AND THE DTAA ENTERED BY INDIA WITH THE OTHER 7 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) COUNTRY, THE PROVISIONS OF THE DTAA , IF BENEFICIAL TO THE ASSESSEE , SHALL PREVAIL. IN THIS CASE, IT IS NOT DISPUTED THAT THE LEGAL CONSULTANCY SERV ICES HAS BEEN PROVIDED BY THE NON - RESIDENT TO WHICH ARTICLE 14 OF THE DTAA BETWEEN INDIA AND PORTUGAL ARE APPLICABLE. ARTICLE 14 CLEARLY LAYS DOWN THAT INCOME DERIVED BY A PERSON WHO IS AN INDIVIDUAL OR A FIRM OF INDIVIDUALS (OTHER THAN A COMPANY) WHO IS RESIDENT OF A CONTRACTING STATE FROM THE PERFORMANCE IN OTHER CONTRACTING STATE OF PROFESSIONAL SERVICES OR OTHER INDEPENDENT ACTIVITIES OF SIMILAR CHARACTER SHALL BE TAXABLE ONLY IN THE FIRST MENTIONED STATE. IT FURTHER STATES THAT SUCH INCOME MAY ALSO B E TAXED IN THE OTHER CONTRACTING STATE UNDER THE FOLLOWING CIRCUMSTANCES : (A) IF SUCH PERSON HAS A FIXED BASE REGULARLY AVAILABLE TO HIM IN THE OTHER CONTRACTING STATE FOR THE PURPOSE OF PERFORMING HIS ACTIVITIES OR; (B) IF HE IS STAYING IN THE OTHER STATE FOR A PERIOD OR PERIODS EXCEEDING IN THE AGGREGATE 183 DAYS IN ANY 12 MONTHS PERIOD COMMENCING OR ENDING IN THE FISCAL YEAR CONCERNED . IN THAT CASE, ONLY SO MUCH OF THE INCOME AS IS DERIVED FROM HIS ACTIVITIES PERFORMED IN THE OTHER STATE MAY BE TAXED IN THAT STATE. THE NON - RESIDENT TO WHOM THE ASSESSEE HAS MADE THE PAYMENT DOES NOT HAVE ANY FIXED BASE REGULARLY AVAILABLE TO HIM FOR PERFORMING HIS DUTY. EVEN HE DOES NOT HAVE ANY PERMANENT ESTABLISHMENT. THAT IS NOT THE CASE OF THE REVENUE. FROM THE COPY OF THE PASSPORT ALSO IT IS APPARENT THAT THE PERSON, MS. ELENA NISTAL TO WHOM THE ASSESSEE HAS MADE THE PAYMENT WAS IN INDIA ONLY FOR 22 DAYS I.E. FROM 2.5.2010 TO 23.5.2010. SHE WAS NOT IN INDIA FOR A PERIOD EXCEEDING IN THE AGGREGATE 183 DAYS. THEREFORE, INCOME DERIVED FROM HER ACTIVITIES PERFORMED IN INDIA CANNOT BE TAXED IN INDIA. EVEN UNDER ARTICLE 15 ALSO, THE INCOME CANNOT BE SAID TO BE TAXABLE IN INDIA AS UNDER THIS ARTICLE, A PERSON HAS TO BE IN THE OTHER STATE FOR A PERIOD OR PERIODS AGGREGATING TO 90 DAYS IN THE RELEVANT FISCAL YEAR. IN THE CASE OF THE PERSON TO WHOM THE ASSESSEE MADE THE PAYMENT, THE PERSON HAD REMAINED 8 ITA NO. 61/PNJ/2012 (ASST. YEAR : 2011 - 12) IN INDIA ONLY FOR 22 DAYS. THEREFORE, THIS INCOME CANNOT BE TAXABLE. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SEC. 9(1)(VII) . EVEN IF THE PROVISIONS OF SEC. 9(1)(VII) ARE APPLICABLE, BUT DUE TO THE DTAA BETWEEN INDIA AND PORTUGAL IF THE INCOME IS NOT CHARGEABLE TO TAX , WE ARE OF THE FIRM VIEW THAT THE DTAA WILL PREVAIL AND THE INCOME WILL NOT BE CHARGEABLE TO TAX IN INDIA. SINCE THE INCOME IS NOT CHARGEABLE TO TAX IN INDIA, THE ASSESSEE WAS NOT UNDER AN OBLIGATION TO DEDUCT THE TDS. WE, ACCORDINGLY, SET ASIDE THE ORD ER OF CIT(A) AND QUASH THE ORDER PASSED U/S 201(1) AND 201(1A) OF THE INCOME TAX ACT. 3. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 4. ORDER PRONOUNCED IN THE OPEN COURT ON 08 /08/2013. SD/ - (D.T.GARASIA) JUDICIAL MEMBER SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 08 /08/ 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA