LEGAL FEES TO UK SOLICITORS NOT TAXABLE

Where an Indian company engaged a UK based firm of Solicitors and the services were to be performed in London, ITAT held that pursuant to provisions of Article 15 of DTAA between UK and India, Indian company has no liability to withhold tax from payment made to solicitors, as such fee is not liable to tax in India. According to Article 15 which deals with Independent Professional Services, tax could be charged in India only if the solicitors or its partners were present in India for an aggregate period of 90 days in the relevant financial year, or the solicitors had a fixed base in India. Although, the recent amendment in Section 9 of I-T Act, no longer requiring the necessity to establish territorial nexus between the income and territory of India, will bring the fees paid to UK solicitors firm in tax net in India, yet, such fees will still not be liable to tax in India because the tax treaty over rides the I T Act.