9911796707
TMI Blog1989 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... Total . . . 13,000 USdollars ----------------------------- The assessee stated before the Inspecting Asstt. Commissioner (Asst.) that Mr. Stephen Blash had been invited to deliver lectures in the Seminar and Workshop organised by the assessee on " Software Project Management and Control and Structures Systems Development " in the field of computer education fromAugust 16, 1985toSeptember 4, 1985(20 days). It was said that his visit as also the aforesaid programme had been cleared by the concerned Ministries namely, Ministry of External Affairs (Americas Division) and the Department of Electronics (Computer Development Division). According to the assessee, these payments were not taxable in view of section 10(6)(vi) of the Income-tax Act, 1961 as the conditions prescribed thereunder were satisfied. The IAC (Asst.) recorded an order under section 195(2) on5-12-1985. The IAC (Asst.) held that the provisions of section 10(6)(vi) were not applicable as the payment was being made to a foreign enterprise and not to an employee of a foreign enterprise for services rendered by him. It was held that Mr. Stephen Blash had not rendered any services in his individual capacity but on being de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it had been clarified in the approval accorded by the Department of Electronics that it was from the technical angle only. The assessee gave a detailed reply dated8-9-1986to the said notice. In the said reply it was said that the order of the learned IAC(Asst.) far from being prejudicial to the interests of revenue, was in fact highly prejudicial to the interests of the assessee company, for which reason it had filed a revision petition before the Commissioner under section 264. It was said that no deduction of tax at source was required to be made in relation to the abovementioned remittance. It was said that the said agreement was not acted upon between M/s. Yourdon Inc. USA and the assessee company and instead, the services in question were rendered by an employee of M/s. Yourdon Inc. USA namely by Mr. Stephen Blash. It was reiterated that section 10(6)(vi) was attracted. It was said that services were rendered to the assessee company by Mr. Stephen Blash and M/s. Yourdon Inc. USA was not to receive any payment in respect thereof. Reference was also made in this connection to the Telex massage dated 28-4-1986 from M/s. Yourdon Inc. USA and the certificate therewith to the effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. He submitted that Mr. Stephen Blash was an employee of M/s. Yourdon Inc.USAand that everything flowed from the said agreement. He reiterated that the approval if any, was applied for and taken only for the remittance of 13,000 US dollars to Mr. Stephen Blash. 5. We have considered the rival submissions as also the decisions referred to above. The question whether, in terms of section 263, the order passed by the assessing officer was erroneous in so far as it was prejudicial to the interests of revenue, has to be seen on the basis of the material which existed before such assessing officer. This being the position, it will not be permissible to the assessee to seek to rely on the telex message and the confirmation thereof made by M/s. Yourdon Inc. USA (copies at pages 23 and 28 of the assessee's paper book) received after the passing of the order dated 5-12-1985 of the IAC (Asst.) and during the pendency of the revision under section 264 filed by the assessee on 16-12-1985. The learned Departmental Representative is right in pointing out that there is no correspondence or agreement with Mr. Stephen Blash of the assessee company. The agreement which the assessee company had, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Approvals under the Ministry of Industry and the grant of approval by the concerned Administrative Ministry (which, in this case, was the Department of Electronics). On the other hand, the assessee's case was that the Secretariat of Industrial Approvals comes into the picture in the case of collaboration agreements with foreign enterprises. The learned Departmental Representative has not placed any material before us to support this observation made by the learned Commissioner. On the other hand, O.M. No. F. 1/85/EC/78 dated23-11-1982issued by the Department of Economic Affairs, Ministry of Finance, Government of India is to the effect that the Administrative Ministries would deal with all other cases of engagement of foreign technicians/experts up to 12 months. In fact the learned Commissioner himself held that the approval to the agreement was to be accorded by the Administrative Ministry i.e. the Department of Electronics. We find that on 27-5-1985 National Institute of Information Technology (NIIT) wrote to the Department of Electronics referring to the signing of the contract between M/s. Yourdon Inc. and the assessee company and the discussions which it had at the Ministr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursement of courseware charges. We have on the record another approval dated 10-4-1986 from the Department of Electronics addressed to NIIT for the conduct of seminars/workshops by Mr. Stephen Blash and Dr. D.N. Chorafas and for foreign exchange remittances to them for the durations mentioned therein. It was clarified in that letter that the words " No Objection " in that department's clearance letters in the case of the above two foreign nationals may be read as " Approval ", although it was further clarified that that approval was from the computer angle only and other clearances were to be secured by NIIT from other Ministries/Department of the Government under the laws applicable on the subject matter. We are therefore of the view that on the basis of the aforesaid material on the record, the learned Commissioner was not right in holding that no approval had been taken by the assessee in terms of section 115A(1)(b). However, he was right in holding that the claim made by the assessee that the payment made to Mr. Stephen Blash was exempt under section 10(6)(vi) was not tenable. In the result the order passed by the learned Commissioner has to be quashed. 6. The appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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