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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
“20.As to Revenue's contention that the provisions of Article 13 will be applicable in this case because these services, whether or not in the nature of 'professional services', are also covered by the scope of Article 13 being in the nature of 'managerial, technical or consultancy services', suffice to say that the provisions of Article 15 being specific provisions for professional services will override the relatively general provisions of Artcile 13 which apply to broader category of 'managerial, technical or consultancy services'. We may, in this regard, refer to the following observations by the Tribunal in the case of RPG Industries Ltd. v. Asstt. CIT (2003) 79 TTJ (Cal)(TM) 819 : (2003) 85 ITD 105 (Cal) (TM), relevant portion at pp. 115 and 116 wherein one of us observed as follows and those observations were specifically concurred with by the Third Member: "I find that the above provisions (of Section 72) are for 'carry forward and set off of business losses' in general, whereas Section 73, reproduced earlier in this order, deals specifically with 'losses in speculation business'. As to the question that which of these legal provisions will govern the principles regarding carry forward and set off of speculation losses, I find guidance from the principle 'generalia specialibus non derogant' which lays down that the general provisions will not override the specific provisions. In other words, provisions of Section 73, which specifically deal with speculation business, cannot be derogated by the provisions of Section 72 of the Act which deals with business losses in general. As observed by Hon'ble Supreme Court in the case of Union of India and Anr. v. India Fisheries (P) Ltd. (1965) 57 ITR 331 (SC). "If there is an apparent conflict between two independent provisions of law, the special provision must prevail". This principle is described in Sampat Iyengar's Commentary on Law of Income-tax (9th Edn., Vol. 1 p. 48) as follows: 'The general maxim is generalia specialibus non derogant, that is general things will not derogate from special things. The maxim is also otherwise expressed as generalibus specialia derogant. A special provision normally excludes the operation of the general provision.... It can be resorted to for deciding the competing claims of two provisions in the same enactment, one specific and other general with some overlapping between the two. The requisite conditions to attract this principle are: Firstly, both the general enactment and the particular enactment must be simultaneously operative, the general enactment covering larger filed and particular enactment covering a limited field out of the larger field covered by the general enactment and, secondly, there must be nothing contained in the general provisions indicating the legislative intent to overrule or set aside the particular provision.' ………
In this view of the matter, we are of the considered view that the provisions of Article 13 have to give way to more specific provisions of Article 15 which will hold field in the present case. In this view of the matter, we are unable to uphold the stand of the authorities below that Article 15 will govern the fact situation in this case. It is also not in dispute that in case Article 15 does not apply to this case, the payments to Freshfields will not be exigible to tax in India as, in view of the uncontroverted and unchallenged findings of the CIT(A), the condition of Article regarding stay in India are not satisfied. We are, therefore, of the considered view that the payment of fees for legal consultancy services to the UK based firm of solicitors is taxable only in United Kingdom and is not exigible to tax in India.”
Moreover, Article 15 applies not only to individual but to firms also as upheld by Special Bench of the Tribunal in the case of M/s Clifford Chance Vs. Asstt. DIT (IT)(supra). Therefore, in the absence of any business connection in India or permanent establishment of India and considering the fact that services are rendered outside India and no employee of the attorneys were present in India for more than 90 days, we are of the considered view that impugned payments are not taxable in India as per Treaty provisions Hence, the assessee was not liable for tax deduction at source from impugned payment. Accordingly, the appeal of the assessee is allowed. Order pronounced in the open court on 25th August, 2016.