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TMI Blog1999 (4) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act. He observed that the payment of the amount in question by the assessee-company to the said foreign company was in respect of the Contract No. 05-022/30700 dated 17-9-1975 which contract had not been approved by the Central Government before 1-4-1976 and, as such, the proviso to clause (vii) of sub-section (1) of section 9 of the Act was not applicable in the case. Accordingly, he charged income-tax on the income of Rs. 1,96,960 for the assessment year 1978-79. 2. As for the assessment year 1979-80 the Assessing Officer determined the total income under section 143(3)/163(2)/251 at Rs. 28,69,460 and charged income-tax etc. on the same. This income was determined by him on the basis of the payments made by the assessee-company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 9(1)(vii) of the Act. 3.2 It was further submitted before the ld. CIT(A) that all the agreements had been signed by the Joint Secretary to the Government of India, Ministry of Energy, (Department of Coal), on behalf of the appellant which fact should also be considered as approval by the Central Government. 3.3 The ld. CIT(A) was 'not satisfied' and convinced with the aforesaid submissions. He observed that from the correspondence produced it was not clear whether the aforesaid agreements had been duly approved by the Central Government. In the absence of any specific approval mentioning the date of approval, the ld. CIT(A) did not accept the claim that the contracts had been approved by the Central Government before 1-4-1976. He, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant by the Joint Secretary to the Government of India, Ministry of Energy (Department of Coal) also established and proved the claim that the Government's approval of the contracts was there. 5.4 The ld. counsel further submitted that admittedly the payment was made by the Government of India by adjustment in the account maintained on behalf of the Russian Government. He contended that unless the contracts were approved, the payment would not have been possible. He argued that these facts coupled with the aforesaid letter of the Ministry and other surrounding facts and circumstances of the case, should have been considered as enough proof of the approval by the Central Government. 5.5 The ld. counsel submitted that even otherwise the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n decided by this Tribunal in this very case earlier. She further submitted that the decision in New Consolidated Gold Fields Ltd .'s case was not applicable in the case because there was no question of business connection in the present case. She further added that the Board Circular referred to above, was also not relevant in the case. 7.1 We have given careful consideration to the facts and circumstances of the case, the materials on the appeal file and the submissions and contentions of the rival parties. We are of the view that the Assessing Officer was not justified in taxing the payment of Rs. 1,96,960 in the assessment year 1978-79 in respect of Contract No. 05-022/30700 dated 17-9-1975. Admittedly, this contract was made before 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise in India. 9. (1) The following incomes shall be deemed to accrue or arise in India. (i) to (vii) income by way of fees for technical services payable by --- (a) to (c) Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government." 7.3 A close reading of the aforesaid proviso would show that the words "before 1st day of April, 1976" are placed after the words "in pursuance of' an agreement made" and before the words "and approved by the Central Government". If the words "before the 1st day of April, 1976" had been common both to the words "in pursuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . These two contracts should also be treated as approved by the Central Government in terms of the aforesaid letter of the Central Government and other relevant facts mentioned hereinbefore. 7.4-2 We, therefore, direct the Assessing Officer to delete the income taken under contract Nos. 05-022/60200 and 05-022/30300. 7.5 Now the only contract which remains for consideration in the assessment year 1979-80 is Contract, No. 05-022 /30801 which was executed on 19-5-1977, i.e., it was not made before 1-4-1976. The ld. counsel for the assessee, as mentioned above, argued before us that the proposal for this agreement was prior to 1-4-1976 and hence, it was covered under Explanation 1. This matter requires verification. Explanation 1 to clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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