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2. Payments for professional services 2.1 The learned Commissioner (Appeals) erred in confirming disallowance of Rs.2,90,580 under section 40(a)(i) in respect of payment of professional fees to Deloitte Touche Tohmatsu, Canada on the ground that tax ought to have been deducted;

2.2 The learned Commissioner (Appeals) ought to have appreciated that professional fee paid to Deloitte Touche Tohmatsu, Canada was not chargeable to tax in India in the absence of accrual or deemed accrual/receipt or deemed receipt thereof;

Similarly, Deloitte Touche Tohmatsu, Canada has rendered their professional services outside India. Therefore, payment of professional fees cannot be said to accrue or arise in India‖.

5. Apart from the above submissions, it was submitted that, since the relationship and dealing with the assessee and the said entities was on Principal to Principal basis, therefore, there was no „business connection‟ or any kind of continuing relationship between the business of the non-resident and their activity in India, therefore, such a transaction have not resulted into „business connection‟ in India in terms of section 9(1)(i). In support, various decisions were relied upon which has been noted by the AO assessment order. Lastly, it was also submitted that the said payment for „professional fees‟ will not fall within the ambit of fees for technical services under section 9(1)(vii), because, professional services cannot be reckoned as technical services and the definition of „professional services‟ has been specifically given in section 194J which is separate from definition of „fee for technical services‟. Another very important submissions which was made by the assessee with regard to payment made to DTT Switzerland was that, the said entity is an organization of the Members and it does not carry on any income earning activity of rendering professional services and it operates through contributions made by the Members, therefore, "principle of mutuality" is applicable and hence, on this score also there is no requirement for deducting TDS.

With regard to this payment also there is no specific finding by the AO or the CIT (Appeal) as to how it is taxable in India and under which provision of the Act. In this case also the learned CIT (A) has reckoned the payment as "fees for डेऱोआइट हासक िं स अँड सेल्लल्लस Delotte Haskins and Sells ITA No.: 5096/Mum/2011 ITA No.: 5097/Mum/2011 ITA No. : 5094/Mum/2011 technical services" without elaborating or elucidating the nature of payment. So far as the benefit under India-New Zealand DTAA, the payment of professional fee is not taxable under Article 14, which deals with "Independent personal services". The language of Article 14 is similar to the language of India-Canada DTAA which has been reproduced hereinabove. Here also DTT New Zealand neither has any fixed base/ PE nor had any of its employees/professionals stayed in India for the period exceeding 183 days in any consecutive twelve months period. Accordingly, under the DTAA the "professional fee" paid to DTT is not taxable in India. However, Article 12(4) of India-New Zealand DTAA dealing with "fees for technical services" imbibes same definition as has been given under the Income Tax Act. Our finding given on the issue of FTS under Section 9 (1) (vii) will apply mutatis mutandis here also. Therefore, in view of our finding given therein, the said payment cannot be held to be taxable in India either under Section 9 (1) (vii) or under Section 9 (1) (i). Accordingly, disallowance made by the AO u/s 40(a) (i) is directed to be deleted.

25. As regards second issue raised in ground No.2 the assessee has challenged the disallowance of Rs.1,16,693/- made u/s 40(a) (i) in respect of payment of professional fees made to DTT Australia on the ground that the assessee should have deducted TDS. Admittedly, here in this case also, the observation and finding of the AO as well as CIT(A) are exactly the same. Regarding rendering of professional services डेऱोआइट हासक िं स अँड सेल्लल्लस Delotte Haskins and Sells ITA No.: 5096/Mum/2011 ITA No.: 5097/Mum/2011 ITA No. : 5094/Mum/2011 by DTT Australia, it was submitted that the assessee had sought professional service in respect of „Sydney Strat. OS Service Centre‟ audit for one of the assessee‟s client namely, Vatico India (Mumbai) for the year ending 31st December, 2002. The entire professional services were rendered outside India. DTT Australia raised invoice for Rs.1,60,693/- which was remitted without deduction of tax at source based on certificate obtained from Chartered Accountant. Similar submission was made by the assessee with regard to this payment. Our finding given in respect of DTT Canada as well as DTT New Zealand will apply mutatis mutandis qua this payment also. In view of our finding given above, the payment of professional fee to DTT Australia is held not to be taxable u/s 9(1)(i) or 9(1)(vii) or in terms of Article 12(4) of DTAA, which has „make available clause‟ and is similar to India Canada DTAA. Thus, the disallowance made by the AO and as confirmed by the CIT (A) is directed to be deleted. Accordingly, ground No.2 is allowed.