ITAT rules no TDS required on World Intellectual Property

ITAT rules no TDS required on World Intellectual Property

Payments made by the lawyer, not in the nature of 'Fee for Technical Services'

The Delhi bench of the Income Tax Appellate Tribunal (ITAT), while allowing the plea of a lawyer, has held that the payments made by him towards filing for World Intellectual Property and Trade Fair Services were not in the nature of "Fee for Technical Services." Therefore, no tax deducted at source (TDS) under the Income Tax Act, 1961, was applicable on the same.

The assessee is a resident individual and an advocate whose core area of practice is Intellectual Property Laws, which is carried out through his proprietary concern Lall and Sethi Advocates.

For the assessment year, the assessing officer (AO) found that an amount of Rs.17,41,450 was paid as a professional fee to non-resident attorneys for various professional services rendered by them in the respective foreign jurisdictions. Therefore, the AO held that those payments attracted the provisions of the Income Tax Act.

While considering the second appeal filed by the assessee, the two-member bench comprising judicial member 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, was towards remittance of the amount recovered in the court proceedings on behalf of the client in litigation.

Furthermore, a payment of Rs.2,56,973 was made to the World Intellectual Property, Switzerland, towards the official fee for international application. Similarly, an amount of Rs.4,15,484 was paid to two entities in the United Kingdom and the Maldives for publication and trade fair services.

The bench ruled, "These payments being in the nature of reimbursement and made for official purpose and trade fair services cannot come within the purview of either professional or technical services. Therefore, payments aggregating to Rs.17,41,450 were not chargeable to tax in India under the IT Act. There was no obligation on the assessee to deduct TDS on such payment."