2014 (2) TMI 1419 - HC - Income Tax

Income accrued in India - fee for technical services - receipts for supply of design and engineering drawings - Income taxability in India v/s Japan - HELD THAT - Tribunal, on fact, found that there has been no accrual of income in India and this accrual of income has taken place in Japan. As such, the Income Tax Act cannot be made applicable. We feel that the decision is legally correct and we do not find any element of law to be decided in this appeal. The appeal is accordingly dismissed.

Summary

Issues:
1. Interpretation of 'fee for technical services' under Section 9(1)(vii) of Income Tax Act.
2. Tax liability on fee for design and engineering drawings received by the respondent assessee.

Analysis:
1. The first issue raised in the appeal questions the finding of the Tribunal regarding whether the amounts received by the respondent assessee for design and engineering drawings fall under the definition of 'fee for technical services' as per Section 9(1)(vii) of the Income Tax Act. The High Court examined the Tribunal's decision and noted that the Tribunal had determined that the income did not accrue in India but in Japan. Consequently, the High Court upheld the Tribunal's decision, emphasizing that the Income Tax Act would not be applicable in this scenario. The Court found the Tribunal's conclusion legally sound and in alignment with the facts of the case, leading to the dismissal of the appeal.

2. The second issue pertains to the tax liability of the fee received by the respondent assessee for design and engineering drawings in India. The appellant contested the Tribunal's ruling, arguing that the income should be taxable in India. However, the High Court concurred with the Tribunal's assessment, highlighting that the income did not accrue within India but in Japan. The Court emphasized that the Tribunal's decision was based on factual considerations and did not warrant any legal intervention. Consequently, the High Court dismissed the appeal, affirming the Tribunal's decision regarding the tax liability on the fee for design and engineering drawings received by the respondent assessee.