DY. DIRECTOR OF INCOME TAX (INT. TAX.)-4(1), MUMBAI vs. M/S. ZEE TELEFILMS LTD.AS AGENT OF MLLBANK TWEED HADLEY & MCCLOY, MUMBAI

The following grounds have been raised by the Revenue: “1) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in allowing the benefit of DTTA to the assessee by holding that Partnership firm is a tax resident of UK.;

On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding Article-15 of the Indo-UK Treaty will be applicable as against the taxability of the receipts as per domestic law of India since the Partnership is not a person as per Article 3(f) of the Indo-UK Treaty;

The appellant prays that the order of the ld. CIT(A), Mumbai on the above grounds be set aside and the order of the AO be restored”

A careful perusal of the above said grounds would show that the revenue is aggrieved by the decision of the ld.CIT(A) in allowing the benefit of Indo-UK DTAA to the assessee herein.

We heard the parties and perused the record. The facts relating to the case are that the assessee filed return of income as representative assessee of a Firm of Solicitor based in UK, named “Millbank Tweed Hadley and Mccloy”. M/s Zee Telefilms Ltd had engaged the above said Solicitor for its proposed ADR offering. M/s Zee Telefilms Ltd paid fees to the Solicitors and deduced tax at source of Rs.70.16 lakhs. Later it filed return of income as a representative of the above said solicitor firm declaring the total income as NIL. Accordingly, the entire amount of TDS deducted by M/s Zee Telefilms Ltd was claimed as refund. The AO noticed that a partnership firm is not liable for taxation in the UK and hence it is not a taxable entity under the laws of UK. The AO took the view that the benefits of Indo – UK tax treaty could be availed only if the solicitor firm can be considered as tax resident of UK. Since the solicitor firm is not a taxable entity, the AO took the view that it cannot claim the benefit of Indo-UK Treaty. The AO further took the view that the fee received by the Solicitor firm is in the nature of “Fee for technical services”. Accordingly, the AO computed the income of the assessee at Rs.2.85 crores.

In the appellate proceedings, the ld. CIT(A) held that the fees received by the assessee Solicitor Firm does not fall in the category of fee for technical services, but it would fall under the category of fee of Independent personal services. Since the period of stay of the Lawyers, who visited India was less than 90 days, the ld.CIT(A) held that the 3 assessee does not have fixed base in India and accordingly held that fee received by the assessee-Solicitor is not taxable in India. Thus, the Ld CIT(A) granted relief by considering the provisions of Indo-UK DTAA. The Revenue is aggrieved by the decision of ld. CIT(A) in granting the benefit of Indo-UK Treaty to the assessee.

Before us, the ld. AR placed reliance on the decision rendered by the Hon’ble Calcutta High Court in P & O Nedlloyd Ltd. & Ors vs Assistant Director Of Income Tax (International Taxation-II, Kolkata) on 7 November, 2014 in W.P. No. 457 of 2005 and W.P. No.458 of 2008 and submitted that the Hon’ble High Court has held that the benefit of Indo –UK Treaty is available to the partnership firms formed in UK also. The ld.AR further submitted that the Co-ordinate Bench of the Tribunal, vide its order dated 16.7.2010 rendered in the case of Linklaters LLP V/s Income Tax Officer (International Taxation)-1(1)(2)) in ITA No.4896/Mum/2003 relating to AY-1995-96, has also taken an identical view. Accordingly, the ld. AR submitted that the appeal filed by the revenue is liable to be dismissed.

The ld. DR could not bring to our notice any contrary decision.

We notice that the Hon’ble Calcutta High Court has expressed the view that the benefit of Indo –UK Treaty is available to the Partnership firm registered in UK even though the firm is not recognized as taxable entity under the taxation provisions of UK. For the sake of convenience, we extract bellow the relevant discussion made by the Hon’ble High Court of Calcutta in the above said case: “It is the other objection regarding attempt on the part of the Revenue to subject the petitioners to double taxation on the ground its income was not saved from the charge of income tax by the 4 India-UK Treaty, that the Revenue has not been able to overcome. In dealing with such objection it is necessary to reproduce below. Certain clauses, relevant for the purpose, of the India-UK Treaty notified on 11th February, 1944. "Article 1 - Scope of the Convention

The provisions of this Article shall apply also to income derived from participation in a pool a joint business or an international operating agency."

By respectfully following the decision of the Hon’ble High Court, we hold that the assessee is entitled to Indo-UK DTAA benefits and accordingly dismiss the appeal filed by the Revenue.

In the result, the appeal filed by the revenue is dismissed. Pronounced accordingly on 9th October, 2015. घोषणध खुरे न्मधमधरम भें ददनधंकः 9th October, 2015 को की गई । (PAWAN SINGH) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER भुंफई Mumbai: 9th October, 2015. व.नन.स./ SRL , Sr. PS

DR, ITAT, Mumbai concerned गधर्ा पधईर / Guard file. 6. आदेशधनुसधय/ BY ORDER,सहधमक ऩंजीकधय (Asstt.