The Delhi bench of the Income Tax Appellate Tribunal (ITAT), while allowing the plea of a lawyer, held that the payments made by him towards filing for World Intellectual Property and Trade Fair Services are not in the nature of “Fee for Technical Services” and therefore, no TDS under section 195 of the Income Tax Act, 1961 is applicable on the same.
The assessee is a resident individual and an advocate. The assessee’s core area of practice is Intellectual Property laws, which is carried out through his proprietary concern “Lall and Sethi, Advocates”. For the assessment year under dispute, the assessing officer found that an amount of Rs.17,41,450/- was paid as professional fee to non-resident attorneys for various professional services rendered by them in the respective foreign jurisdictions. Therefore, the Assessing Officer held that these payments attract the provisions of section 195 of the Income Tax Act.
While considering the second appeal filed by the assessee, the two-member bench comprising Judicial Member Mr. Saktijith Dey and Accountant Member B R R Kumar observed that the payment of Rs.10,68,995/- to Eli Lilly and company, New Zealand, is towards remittance of amount recovered in court proceeding on behalf of the client in litigation. Further, a payment of Rs.2,56,973/- was made to World Intellectual Property, Switzerland, towards official fee for international application. Similarly, amount of Rs.4,15,484/- was paid to two entities in United Kingdom and Maldives for publication and trade fair services.
“In our considered view, these payments being in the nature of reimbursement and payment made for official purpose and trade fair services cannot come within the purview of either professional or technical services. Therefore, such payments aggregating to Rs.17,41,450/- not being in the nature of income chargeable to tax in India in terms of section 195 of the Act, there was no obligation on the assessee to deduct tax at source on such payment. Therefore, we delete the disallowance of the aforesaid amount,” the bench concluded.
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