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TMI Blog2003 (12) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... 154 for recalling the earlier orders mentioning therein that inadvertently a mistake has been crept in the order, which is apparent from record, inasmuch as s. 248 of the IT Act specifically provides for an appeal by a person denying liability to deduct tax. The section prescribes that any person having in accordance with the provisions of s. 195 and s. 200 deducted and paid tax in respect of any sum chargeable under the IT Act, who denies his liability to make such deduction, may appeal to be declared not liable to make such deduction. During the course of hearing reliance was placed in the case of M.K. Venkaatachalam, ITO Anr. vs. Bombay Dyeing Mfg. Co. Ltd. (1958) 34 ITR 143 (SC), wherein it is held that a glaring and obvious mistake of law can be rectified under s. 35 (corresponding to s. 154 of the IT Act, 1961), as much as a mistake of fact apparent from the record. Reference was specifically made to the following observations of their Lordships at p. 150 of the case: "If a mistake of fact apparent from the record of the assessment order can be rectified under s. 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectified." 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Republic of Germany (hereinafter called "Lurgi") on18th Jan., 1991, which was approved by the Government of India, Ministry of Industry, Department of Industrial Development. Article 5.2 of the Agreement provided for payment by the appellant in respect of foreign technicians deputed inIndia. "Lurgi" raised invoices for their personnel, charging in accordance with the agreement, remittances of the following sums, which form the subject-matter of the five appeals: Total invoices raised 1. DM 10,000 2. DM 38,750 3. DM 1,13,532 4. DM 19,881 5. DM 1,20,614 7.1 Before making the remittances the appellant applied to the AO to issue no objection certificates for remitting the sums without deduction of tax. The AO did not accept the contention and directed in respect of the first two items that remittances be grossed up and tax be deducted on the grossed amount at the rate of 20 per cent. In the case of remaining three items, although the successor AO conceded that no grossing up was required to be done in view of s. 10(6A) of the Act, he directed that tax shall, nevertheless, be deducted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate from Lurgi, which was filed before the learned AO to the following effect: "This is to certify that the fees chargeable by us included under art. 5.2 of the Foreign Collaboration Agreement dt.18th Jan., 1991, is verified to be the reimbursement of the remuneration, benefits and other expenses payable towards the deputed foreign Technicians." It was stated that this certificate unequivocally clarified that payment as per art. 5.2 of the agreement with Lurgi was (i) in effect expenditure incurred by the assessee on own account, (ii) that it represented remuneration of the deputed foreign technicians, that (iii) Lurgi merely recovered it from the appellant to reimburse it to the deputed technicians and (iv) that it was income by way of salary in the hands of the recipient technicians. On these facts, it was stated that art. XII of ADT with FRG was clearly applicable and in view of cl. (3) of the said article no tax was liable to be deducted at source from the payment made because all the conditions set out in sub-cls. (a), (b), (c) and (d) were satisfied. 8.1 Reference was also invited to judgment of the Tribunal, Delhi Bench "C" in ITO vs. Vidogum Chemicals Ltd. (198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly on the issue and they were in favour of assessee. The findings of the CIT(A) are given in para 9 at pp. 8 and 9 of his order, which are as under: "9. I have carefully considered the submission made on behalf of the appellant. The orders passed by the AO are not speaking orders. He has not dealt with the specific contention of the appellant that in view of art. XII(3) the remuneration was not taxable inIndiaand accordingly no tax was required to be deducted at source. 9.1 It is a settled proposition that where a specific provision is made in the Double Taxation Avoidance Agreement, that provision will prevail over the general provisions contained in the IT Act, 1961. In fact, this is also clarified by the CBDT in their public Circular No. 333 dt.2nd April, 1982, (1982) 137 ITR 1 (St). Since in the present case, there exists an ADT with FRG, its provisions will prevail over the general provisions contained in the IT Act, 1961. 9.2 The thrust of the appellant s contention is that on facts art. XII of the ADT with FRG being applicable, no tax was liable to be deducted from the payments made in respect of deputed foreign technicians. The point for consideration, therefore, is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so because M/s "Lurgi" is not having any permanent establishment inIndiaas defined in art. II(h) of ADT with FRG.": 6.1 The Hon bleDelhiHigh Court in the case of CIT vs. Bharat Heavy Electricals also decided similar issue by which the order of the Tribunal was confirmed. The observations and findings of the Hon ble Delhi High Court are as under: "From the factual position we find that the two persons who came toIndiawere employees of the foreign concern, NEL. This is amply borne out from the observations of the CIT(A) on which learned counsel for the Revenue placed strong reliance. From the documents on records more particularly letter dt.13th April, 1977, from NEL, it is clear that the payment was made by the assessee to NEL for rendering services by two of its employees. In fact, in the letter of the Government of India, Ministry of Finance, Department of Heavy Industries there was approval of the Government to release foreign exchange in favour of the assessee to enable it to meet the expenses in connection with the visit of the two experts. The Tribunal, as a matter of fact, noted that the two experts were employees of the foreign concern which was not doing any business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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