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TMI Blog1988 (8) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in its appeal. 3. The first ground is regarding addition of Rs. 6,08,117 included in the total income by the ITO. It had been so included by the ITO, as according to him, the appellant-assessee had effected the sales of various auxiliary parts of 20 numbers of pump sets to Obra Thermal Power Station of U.P. State Electricity Board. The finding of the ITO was that whether the pumping set supply was complete and put into action was not relevant, as according to him, whatever parts were supplied were to be treated sales to that extent. His contention was that when the assessee had despatched the said auxiliary parts during the previous year to the site of Obra Thermal project and raised the invoice in respect of the same and collected major part of the price for the said parts or of consideration that the income in respect of the said despatch had arisen and it was on this basis that the ITO made an ultimate addition of Rs. 6,08,117, which is under challenge before us. 4. When the matter came before the CIT(A), he also rejected the contention of the appellant that in respect of supply of 20 pump sets to Obra Thermal project would only accrue after complete erection and comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He submitted that the pumping set as a whole became the property of the customer because the same were permanently embedded in the land belonging to the customer. In this connection he placed reliance on the Tribunal's order pertaining to asst. yr. 1978-79, a copy of which is placed by the assessee on its compilation, wherein this very issue had been adjudicated in favour of the assessee by the Tribunal. The final conclusion of the learned counsel of the assessee was that earlier Tribunal decision and his submissions made in respect of the issue are fully supported by Hon'ble Supreme Court decision in the case of Ram Singh 43 STC 195 (SC). 6. The learned Departmental Representative, on the other hand, though agreed that facts are identical and issue is covered by Tribunal decision, but he would make his attempt to persuade us to have a different view and in order to have a different decision from us in the background of the same facts and on interpretation of the same contract which is in vogue since 1975. He referred to different clauses of the said contract at length. According to him, the assessee was paid consideration at different stages. He submitted that 20 per cent were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought to our attention the order of the appellate authority and the Sales-tax Tribunal, wherein it was held that sales-tax is not leviable in respect of despatches made during the tenure of the contract and that the sale of the said pumping sets should be deemed to have completed after the same are finally installed at the site of the customer. 9. We have considered the rival submissions and gone thoroughly through the facts available on record and voluminous paper book. In our opinion, the contention of the assessee-appellant is to be accepted. The reading of the contract between the assessee and Obra Thermal Power Station clearly indicates that the appellant has not only to manufacture and supply the said pumps, but it is to erect and commission the same. Such erected pump sets has to be tested by the engineers of the customer and the same were to be taken over by him. The engineer would only issue such a certificate that the said pumping sets are satisfactorily erected, commissioned and satisfactorily made functional and put in operation on the site. The term of supply cannot be treated as mere sale of goods. When we go through s. 32 of Sale of Goods Act, 1930, we find it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,08,117 included in the total income of the appellant would stand deleted. We, however, direct the assessing officer that in case any pumping set has been commissioned during the previous year, relevant to the assessment year under appeal and taken over by the engineer of Obra Thermal Power Station, then the income in respect of the same would be included in the total income of the assessee-appellant. As per chart furnished by the appellant at page 119 of its paper book one pumping set bearing No. 9A has been commissioned during the previous year, the assessing officer would, however, verify the claim of the appellant in that regard and re-compute the income accordingly. 14. With regard to the other contract for the supply, erection and commissioning of 3 nos. of electricity motor driven dry weather Pumping sets, the appellant had entered into an agreement with the Corporation of Calcutta on12th Sept., 1973. This contract was, however, revoked unilaterally by the Corporation of Calcutta vide letter dt.11th March, 1977. After negotiation the earlier contract was renovated and was given effect to with certain modifications as per the Minutes of the Meeting held on4th Jan., 1979, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the expenses of research and development of Italian party. The consideration was, however, fixed in a lump sum of 10 million Italian Lires. 18. The learned Departmental Representative has, however, emphasised that as per cl. (8) of the agreement, the appellant was given freedom to sub-licence the technical know-how to any Italian party. He, therefore, submitted that the appellant had acquired technical know-how for the manufacture of butterfly valves. 19. The learned authorised representative of the assessee submitted that the terms and conditions of the contract considered in totality clearly provide that the assessee has obtained only licence rights for the use of technical know-how. It was also to get a continuous suggestions to get over any hurdles envisaged in the manufacture of butter fly valves. The sum paid is for the use of technical know-how as well as patents and also to reimburse the Italian company towards part of its research expenses in that country. For the proposition he relied on the Supreme Court decision in the case of CIT vs. CIBA of India Ltd. (1968) 69 ITR 692 (SC) and of Delhi High Court in the case of Shriram Refrigeration Industries Ltd. vs. CIT (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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