CIT Vs. SWETA ESTATES PVT LTD

JUDGEMENT

(1.) HAVING heard learned counsel for the parties in this appeal, which pertains to the assessment year 2005-06, we frame the following substantial question of law:-

(2.) BEFORE examining the aforesaid issue, we record that the Revenue has raised another issue/aspect, which relates to failure of the assessee to deduct tax at source on payment of US $ 86250 (Rs.75,90,001/-) on two occasions to M/s. HOK International (Beijing) Limited for the architectural work undertaken by them.

(3.) IN view of the said factual findings, which are not under challenge, we do not think that any substantial question of law arises on the said aspect. Article 14 of the Double Taxation Avoidance Agreement between INdia and China is squarely applicable. The situs or the place of residence of the recipient who renders and performs professional services determines the place/country where the said income is taxable. IN the present case, M/s. HOK INternational (Beijing) Limited was a China based company and had rendered "professional services" from there. No amount therefore will be taxable in INdia. The assessee was not liable to deduct tax at source on the said services and the tribunal has rightly held that Section 40(a)(ia) is not attracted.