« Top Headlines » Open DEMAT Account in 24 hrs  BackBack Income Tax Act amendment on cards on tax treatment of MSME dues  ITR-1, ITR-2, ITR-4 forms for FY 2023-24 available for e-filing. Check details here  Income tax slabs FY 2024-25: Experts share these 8 benefits for taxpayers in new income tax regime  How To File ITR Online - Step by Step Guide to Efile Income Tax Return, FY 2023-24 (AY 2024-25)  Old or new tax regime for TDS on salary? This post-election 2024 event will impact your tax planning  What Are 5 Heads Of Income Tax?  Income Tax Dept releases interim action plan for FY25 on tax collection, refund approvals   Income Tax Return: 5 lesser-known tax-saving tips from Section 80  Income Tax Return: 5 lesser-known tax-saving tips from Section 80  Why you need not rush to file your ITR immediately  Income tax returns: ITR-1, ITR-2, ITR-4 forms for FY 2023-24 available for e-filing «  Banks pay 38% higher advance tax in Q3... Advance warning, Tax mop-up dips 22%... » HC relief for foreign law firms on tax payment December, 27th 2008 In a significant order, a division bench of the Bombay high court has ruled that foreign law firms, even though working as solicitors for multinational corporations with operations in India, will pay tax only in those countries where they give legal advice and not in India . The order came after legal eagle Harish Salve argued that courts must consider the place where a solicitor gives professional advice and not the place of the project for which such advice is sought. "A legal professional has no stake or interest in the project, he is available at any time to the client for advice on all legal issues,'' Salve said. The appelant before court was Clifford Chance, a top-notch legal firm from London which acted as solicitors for several multinational corporations interested in four major power projects in India. The clients included big names such as GEC Alsthom Group, and Electricite de France. Clifford Chance told court that it billed its clients on an hourly basis and maintained detailed "time sheets'' that showed whether the legal advice was given in India or abroad. On that basis, the firm calculated that it had earned a little over Rs 5 crore from its India operations during 1996-97. Ispat Industries was the only Indian firm involved in one of the four power projects. On the contrary, the income tax department said that Clifford Chance had received more than Rs 17 crore in legal fee for acting as advisors on the four power projects and it was immaterial whether the advice was given in India, UK or any other country. It said that the whole income was taxable in India as the projects from which it was derived were in India. However, Salve argued that legal service given by a solicitor from his home country to a client who was overseas could be taxed only in the country of residence of the solicitor. Finally, justice S Radhakrishnan and V C Daga ruled that under statutory provisions, services which are to be taxed must be both "rendered in India'' and "utilized in India'' for them to fall under the income tax bracket. The court held that this was not the case with Clifford Chance's earnings which came from giving legal advice to its clients in other countries, even though the power projects were in India. Thus it said that tax could be levied only on Rs 5 crore that the solicitors had earned by giving legal advice to firms in India.