ELIZABETH SIMAPUTHRAN,CHENNAI vs. ITO, WARD-1(1) INTERNATIONAL TAXATION, CHENNAI

The Ld. AR advanced arguments and submitted that the assessee is a proprietrix of a law firm M/s Puthran & Associates. It availed certain services from outside India in the field of IPR, trademarks etc. The Ld. AR submitted that these services would fall under specific provisions of ‘Independent professional services’ as per Double Taxation Avoidance Agreement (DTAA) with respective countries. The Ld. AR submitted that though elaborate arguments, in this regard, were made before first appellate authority, the same were not considered by Ld. CIT(A). The Ld. Sr. DR, on the other hand, submitted that this plea was not taken by the assessee before Ld. AO. The Ld. Sr. DR also submitted that the services would fall under ‘Fees for Technical Services’. Having heard rival submissions and upon perusal of case records, the appeals are disposed-off as under.

From case records of ITA No.906/Chny/23, it emerges that the assessee paid an amount of Rs.59.83 Lacs to various non-residents without deduction of tax at source (TDS). The assessee submitted that foreign law firms had no permanent establishment in India and therefore no TDS was required on such payments. The assessee, in statement recorded on 18.01.2019, pleaded that the services rendered by foreign attorneys was legal services and not in the nature of technical services.

Proceeding further, applying the provisions of Sec. 9(1)(vii)(b), Ld. AO held that these services would be ‘fees for technical services’ which would attract TDS provisions. Finally, Ld. AO raised demand of Rs.3.42 Lacs u/s 201(1) against payment of Rs.34.22 Lacs and also levied interest u/s 201(1A) for Rs.1.81 Lacs. The aforesaid amount of Rs.34.22 Lacs excluded the remittance made to 3 countries viz. Bangladesh, Switzerland & Hong Kong where DTAA provided the clause of independent professional services which include legal services.

The Ld. CIT(A), without considering the plea of the assessee qua independent professional services, concurred with the stand of Ld. AO and upheld the demand. Aggrieved, the assessee is in further appeal before us.

The Ld. AR has tabulated each of the impugned payment of Rs.34.22 Lacs as made by the assessee to various payees. The Ld. AR submitted that these payments include reimbursements of expenses which do not require any TDS. The Ld. AR also submitted that all these payees are covered under DTAA which has independent professional service clause in their DTAA. In support, the extract from respective DTAAs has been placed in the paper-book. We find that Ld. AO has already allowed benefit of such clause with respect to three countries. Considering the plea of Ld. AR and keeping in mind the fact that the issues raised by the assessee, in this regard, were not addressed by Ld. CIT(A), we set-aside the impugned order and restore the issue back to the file of Ld. AO qua disallowance against impugned payment of Rs.34.22 Lacs. The Ld. AO is directed to consider this claim of the assessee and revise the TDS demand and interest u/s 201(1) / (1A), if required, after meeting the plea raised by Ld. AR. The assessee is directed to substantiate its case. The appeal in has been rendered infructuous. No other ground has been urged by Ld. AR before us.

In the result, ITA No.907/Chny/2023 is dismissed as infructuous. Order pronounced on 06th March, 2024. (MANOMOHAN DAS) (MANOJ KUMAR AGGARWAL) "ाियक सद# / JUDICIAL MEMBER लेखा सद# / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated : 06-03-2024 DS आदेशकीUितिलिपअ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ"/Appellant 2. " थ"/Respondent 3. आयकरआयु=/CIT 4. िवभागीय"ितिनिध/DR 5. गाडBफाईल/GF