Sujan Luxury Hospitality Pvt. Ltd Vs ACIT (ITAT Delhi)
ITAT Delhi held that fees for providing Spa Consultancy falls under the category of ‘Independent Personal Service’ and hence was not taxable in India and therefore assessee was not required to deduct TDS. Thus, disallowance u/s. 40(a)(ia) deleted.
Facts- The appeal is against disallowances i.e. 9,65,000/- paid to Rosamond Freeman-Attwood, a resident of Srilanka for the alleged non-deduction of tax at source on the said payment. AO further considered the above payment as “Fee for Technical Services” and held that the same was liable for TDS u/s 40(a)(i) of the Act and in view of the failure of the assessee to do so, the Assessing Officer disallowed the above payments.
CIT(A) confirmed the order of the Assessing Officer and held that the payments were in the nature of FTS and were not in the nature of independent personal services. Being aggrieved, the present appeal is filed.
Conclusion- Held that rendering of services by Rosamond Freeman-Attwood during the material period will be covered by “Independent Personal Services” as it is similar to the nature of services mentioned therein. These services as referred in Article 14 of India Srilanka Tax Treaty and Article 16 of India Kenya Tax Treaty are those in which out of special field of knowledge and learning a person develops an expertise to which he adds her/his exclusivity and thus becomes eligible to convert special knowledge into a special services. Thus, there is sufficient justification to accept the services availed by the assessee to be from Independent Personal Services. Then assessee has submitted a copy of declaration dated 20.07.2012 made by Rosamond Freeman Attwood as appearing at page no. 114 of the paper book declaring that stay in India during the relevant financial year did not exist the threshold of 120 days. Further, in case of India Sri Lanka DTAA there was no provision for taxing the “Fees for Technical Services” during the said period and since a non-resident had no PE in India, the payment could not be taxable in India.
