Case Law Details
RELEVANT EXTRACTS:
34. For the purpose of taxation the authorities under the Act have proceeded on the basis that the fees received by the Appellant was for the entire Indian Project as such chargeable to tax.
35. Two basic questions which, thus, arise for our consideration are : (A) Whether fees charged for composite activity is chargeable to tax? and (B) Whether the income attributable to the services rendered by the Assessee/Appellant outside India required to be excluded while computing the tax in India?
36. The resolution of the above question would depend upon the interpretation of Clause 15 of DTA read with of Section 9 of the Income Tax Act which clearly lays down that income derived by an individual whether in his own capacity or as a member of partnership, who is resident of contracting State in respect of professional Services or independent activities of similar character may be taxed in that State. Such income may also be taxed in the other ContractingState, if such services are performed in that State, and if he is present in that State for a period aggregating to 90 days in the relevant fiscal year. Now, the question is how much income is taxable. The answer is : only so much of the income as is attributable to those services.
37. Article 15 provides for the residence rule in relation to taxation of income of an individual, including members of a partnership, the exception being where such individual is present in the “other” state for a period aggregating 90 days or more in the relevant previous year. In the case of a partnership, where “an individual is a member of a partnership even if he is not present” but “another individual member of the partnership is so present and performs professional services”, then the presence of all such members is aggregated to ascertain their presence for 90 days.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Please also refer explanation added to section 9 by the Finance Act 2007