May 2019

Articles 12 and 14 of India-Uganda DTAA Where services provided by non-resident individuals outside India were covered under Article 14 (which is specific in nature), Article 12 (which is general in nature) could not apply; hence, the payments were not chargeable to tax in India

Geeta Jani | Dhishat B. Mehta
Chartered Accountants

7. TS-177-ITAT-2019 (Bang) Wifi Networks P. Ltd. vs. DCIT ITA No.: 943/Bang/2017 A.Y.: 2011-12 Dated: 5th April, 2019

 

Articles 12 and 14 of India-Uganda DTAA Where services provided by non-resident individuals outside India were covered under Article 14 (which is specific in nature), Article 12 (which is general in nature) could not apply; hence, the payments were not chargeable to tax in India

 

FACTS


The assessee, an Indian company, had engaged certain non-resident individuals for providing certain technical services outside India. The assessee had made payments to them without withholding tax from such payments.

The AO held that the payments were in the nature of Fee for Technical Services (FTS) under the Act. Since the assessee had not withheld tax u/s. 195, the AO disallowed the payments u/s. 40(a)(i) of the Act.

 

Aggrieved, the assessee appealed before the CIT(A) who upheld the order of the AO on the ground that the payments qualified as FTS under the Act as well as DTAA, and hence, tax should have been withheld from the payments. Thus, CIT(A) upheld the order of the AO.

 

Aggrieved, the assessee appealed before the Tribunal.

 

HELD


  •     Perusal of the order of CIT(A) shows that his conclusion is based only on Article 12 of the India-Uganda DTAA and section 9(1)(vii) of the Act. He had not considered Article 14 of the India-Uganda DTAA.
  •     Article 14 applies in case of professional services performed by independent individuals. Article 12(3)(b) of the

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