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TMI Blog1997 (11) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... d as time barred. It was explained that the appeals were in time and the appeal fee of Rs. 250 was paid originally under the mistaken belief that it was the proper fee but on coming to know that the proper appeal fee was Rs. 1500 the balance amount was deposited. In the written petition it is contended that there was reasonable cause and the appeals should be considered in order and decided on merits. 3. After considering the petition and hearing both the parties the appeals are treated in order. 4. The assessee entered into an Agreement through its Holding Company, Coal India Limited, Calcutta, with M/s. Tsvetmetpromexport, Moscow, U.S.S.R., for rendering technical assistance in preparation of design, drawings and project report. In terms of the contract the assessee had to reimburse to the aforesaid foreign company expenses containing of sending of specialists and their salary. It was also required to make payments in connection with the training of the Indians in U.S.S.R. and payments in connection with the preparation of the Appraisal Report and the Project Report. The Assessing Officer observed that the aforesaid payments by the assessee to the non-resident company was cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... might not fall in the listed 4 categories yet he could be treated as agent in relation to the foreign company considering the facts of the case. 6. Regarding the objection of the assessee on the point of reasonableness of time within which a decision to consider the proceedings under section 163(1), the Assessing Officer observed that the objection was not tenable because there was no time limit for passing order treating the assessee as agent under section 163(2) of the I.T. Act. 7. As regards the third objection of the assessee mentioned above, the Assessing Officer observed that the objection was not tenable because as per provisions of section 9(1)(vii)(b) of the I.T. Act income by way of fees for technical services payable by a person who is resident in case of services utilised in business or profession carried on by the resident in India, is deemed to have accrued or arisen in India since the income by way of fees for technical services had been paid in pursuance to an agreement made after 31st March, 1976. 8. Regarding the quantum of income which had accrued or arisen to the non-resident company, the Assessing Officer observed that as per section 115 A of the I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign company, he was not justified in passing order under section 163(2) against the assessee. 14. He argued that the provisions of sections 9(1)(vii)(b), 163(1)(c), 115A and 44D, relied upon by the Assessing Officer, were not applicable to the facts of the present case. 15. The ld. counsel further submitted that the ld. CIT(A) was not justified in confirming the orders of the Assessing Officer merely relying on the order of his predecessor in appeal for the assessment years 1982-83, 1983-84, 1984-85 and 1985-86. He added that the ld. CIT(A) should have gone into the facts and merits of the case and decided the issue in a judicious manner giving speaking order. He added that no second appeals were filed against the orders of the ld. CIT(A) for the assessment years 1977-78 to 1980-81 because no tax liability was arising in those years even after the ld. CIT(A)'s orders. He, therefore, urged that the appeals for the assessment years in question should not be decided merely considering the fact that no second appeals were filed by the assessee for the assessment years 1977-78 to 1980-81. 16. The ld. counsel further submitted that the foreign company was a Russian Government Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned. She, therefore, contended that the argument of the ld. counsel that the Assessing Officer had to establish business connection between the assessee and the foreign company for considering the income under section 9(1)(vii)(b) was not correct and acceptable. She added that the judgments referred and relied upon by the ld. counsel pertained to the provisions of section 9(1)(i) and not to section 9(1)(vii)(b) and, as such, the decisions relied upon by the ld. counsel were not applicable to the facts of the present case. 20. The ld. D.R. further submitted that as per the provisions of section 163(1)(c) for the purposes of the Act an agent in relation to a non-resident included any person in India from or through whom the non-resident was in receipt of any income whether directly or indirectly. She added that the words 'any income' occurring in section 163(1)(c) had to be interpreted in the light of the provisions of section 44D of the I.T. Act. Section 44D gives special provision for computing income by way of royalty or fees for technical services, etc., in case of foreign companies. Section 115A provided for the income-tax payable by a foreign company on royalty or fees for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by- (a) (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) As will be seen from the above, there is no mention of the words 'business connection' under section 9(1)(vii)(b). Hence, there is no requirement for the Assessing Officer to establish the existence of business connection. Section 9(1)(i) is of general and wider connotation whereas section 9(1)(vii)(b) is applicable only to income by way of fees for technical services. Therefore, there is no mention of the words 'business connection' in section 9(1)(vii)(b). In the present case the nature of payment was undoubtedly of fees for technical services. Hence, the Assessing Officer was justified in considering the payments in question as falling under section 9(1)(vii)(b). The ld. D.R. is right in pointing out that the decisions cited and relied upon by the ld. counsel were not applicable to the present case because those decisions were based on the issue of the existence of business connection. In those decisions the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mined. These contentions of the ld. counsel are not satisfactory and convincing. The word any 'income' occurring in clause (c) of section 163(1) has to be understood in the light of the provisions of section 44D of the I.T. Act. In order to see the relevance of section 44D to section 163 it can be observed that section 44D gives a special provision for computing income by way of royalties or fees for technical services received from the Government or an Indian concern in pursuance of an agreement made by the foreign company with the Government or with the Indian concern before the 1st day of April, 1976. Section 44D provides as under: "44D. Notwithstanding anything to the contrary contained in sections 28 to 44C, in the case of an assessee, being a foreign company, - (a) the deductions admissible under the said sections in computing the income by way of royalty or fees for technical services received [from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern] before the 1st day of April, 1976, shall not exceed in the aggregate twenty per cent of the gross amount of such royalty or fees as reduced by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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