9911796707
TMI Blog2002 (2) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... and modifying the order of the Asstt. CIT accordingly." 2. The appeal was fixed for hearing on14th Jan., 2002. The counsel of the assessee filed synopsis. Copy of the same was given to the learned Departmental Representative and the matter was adjourned for18th Jan., 2002. The appeal was heard partly on this date and the matter was again adjourned for21st Jan., 2002. On this date, the learned Departmental Representative fairly accepted that the facts narrated in the synopsis filed by the counsel of the assessee are correct. It was further submitted by the learned Departmental Representative that in reply the Department has filed a reply in writing, therefore, the same may be considered. Further, reliance was placed on the order of the AO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormations, product specifications, materials specifications and procedures for testing and controlling quality, all as evidenced in part by written documents, drawings, designs, or machines, equipment or parts thereof." 4.3 For effective implementation of the know-how under the said agreement,Corningwas to render technical assistance and services as defined in para 1.15 of the agreement. In consideration of the rights and privilges granted by Corning to Samcor, Samcor agreed to pay Corning royalty in respect of the contract products subject to Indian taxes (para 5.1 of the know-how contract). For the technical assistance pertaining to effective implementation of the know-how while erecting the plant, a separate payment was envisaged at ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4.5 Thus, under the supply contract,Corningwas responsible for not only manufacture, design but also of the performance of the machinery for which inspection/supervision need be carried out. However, no separate charges for such supervision were given, as it was included in the contract price. 4.6 Samcor, in order to remit the fee for technical services under the know-how contract, applied to the AO after payment of tax at 10 per cent under art. 12(4) of the Indo-US Double Tax Avoidance Agreement (hereinafter referred to as DTAA). According to the AO, since para (6) of art. 12 prescribed that the rates envisaged under sub-arts. (1) and (2) of art. 12 will not apply. IfCorninghas a permanent establishment inIndia, the rate applicable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal here before the Tribunal. 6. The case of the Department is that art. 12 and art. 7 of the DTAA are separate. Therefore, the contention raised by the learned counsel that by art. 7(7), whereby included services are excluded, is not correct because both the articles are indendent. Under art. 7, the business profits are to be considered and under art. 12, the included services are taken into consideration. It was further stated that under art. 12(6), the method of computation of tax and income-tax in respect of categories of royalty, fees for included services and for business profits are prescribed. It was further stated that services rendered byCorninginIndiaare more than 180 days, therefore, it clearly falls under provisions of art. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded services are attributable to such permanent establishment or fixed base. In such case, the provisions of art. 7 (business profits) or art. 15 (independent personal services) as the case may be, shall apply." 8. After perusing the submissions of both the sides and the provisions of DTTA, we find that there is no infirmity in the order of CIT(A). No doubt, the provisions of art. 5(2)(k) are in regard to permanent establishment, but in our considered view, art. 5(2)(k) is not applicable on the facts of the present case, becauseCorninghas not provided the services for supervision of construction of building and erection of plant. They have only provided services, just to assist the officials of Samcor, that whether the factory building ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, unless it has a permanent establishment in the other State. Undisputedly, M/sCorninghas not taken any permission to establish its permanent establishment inIndiabecauseCorningwas assisting to Samcor in regard to erection of plant and machinery that whether they are erected as per specifications supplied byCorning. There is no permanent establishment ofCorninginIndia. Accordingly, there is no question of taxing the income ofCorninginIndiaon a higher slab. Permanent establishment has already been defined in art. 5, whereby certain conditions are putforth, but there is no clause that on services in regard to assisting Samcor, the treatment of stay of officials falls under the definition of permanent establishment. 10. Therefore, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
