9911796707
TMI Blog2005 (2) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... me of incorporation its name was British Aerospace Public Ltd. Company. The name was changed on5th May, 2000to BAE Systems Pic. It entered into agreement with the Government of India through the President of India who was represented by the Jt. Secretary, Department of Defence Production, Ministry of Defence,New Delhi, on12th April, 1979. This agreement has been classified as a secret document and, therefore, its only relevant portions thereof have been filed in the paper book filed by the assessee before us. Under the agreement, inter alia, the Government of India was to obtain a license of proprietary rights to manufacture and assemble and make Jaguar International Aircraft inIndiaand in other specified countries (para A(b) of the preambl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this letter is at p. 31 of the paper book. A certificate issued by the chief manager (finance) of HAL to the effect that as per the terms of the license agreement, the royalty is payable by HAL and the taxes on the royalties are paid on behalf of the Government of India by HAL is placed at p. 30 of the paper book. At p. 32, there is a letter dt.14th Aug., 2000written by the chief manager, finance of HAL to the vice president and general manager of the assessee-company. In both the letters dt.2nd Aug., 2000and14th Aug., 2000, there is reference to the fact that HAL while remitting the royalties, has deducted tax at source at 15 per cent as advised by the Government Audit and this has been accepted by the IT Department. It appears from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; and (ii) during subsequent years, 15 per cent of the gross amount of such royalties or fees for technical services; and" 5. It is to be seen that if the payer of the royalties is the Government of India tax has to be deducted at the rate of 15 per cent whereas in all other cases, the tax payable is 20 per cent of the gross amount of the royalties. The question before us is whether it is the Government of India which has paid the royalties. The IT authorities have taken the view that it is HAL which is paid the royalties and, therefore, tax should have been paid at the rate of 20 per cent of the gross' amount of royalties. In taking this view they have relied on the fact that under cl. 26.2 of the agreement between the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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