29 May 2010
Fees for Technical Services, even if rendered outside India, are taxable Ashapura Minichem vs. ADIT (ITAT Mumbai) The assessee, an Indian company, entered into an agreement with a Chinese company for bauxite testing services in its laboratories (outside India) and for preparation of test reports. The assessee filed an application u/s 195(1) in which it argued that as the services were rendered outside India and the recipient did not have a permanent establishment in India, the payments were not chargeable to tax under the India-China DTAA and no tax was required to be withheld at source. The AO took the view that the payments constituted “fees for technical services” u/s 9(1)(vii) and Article 12 of the DTAA and tax was required to be withheld at 10%. This was upheld by the CIT (A). The assessee appealed to the Tribunal. HELD dismissing the appeal:
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