9911796707
TMI Blog2007 (10) TMI 453X X X X Extracts X X X X X X X X Extracts X X X X ..... ectively. Assessee is a non-resident company incorporated in State of California, USA. 4. During the assessment year 1998-99 assessee has shown royalty and fees for included services. Assessee entered into agreements with Hindalco and Indian Aluminium Company (Indal) to execute the following: (1)Transfer of upgraded Celtrol Control Technology agreement and technical services agreement with Hindalco. (2)Feasibility study for Indal s aluminium smelter at Hirakud in Orissa. 5. Assessing Officer found, from the execution of the above agreements, the following fees accrued to the assessee : (1)Hindalco USD 401,900 (2)Indal and United States Trade and Development Agency USD 115,000 Assessing Officer held, the above fees received from the Indian companies are taxable under article 12 of the Indo-USA Treaty. Assessee-company claimed that it does not have Permanent Establishment during the year under consideration. 6. Before the Assessing Officer, assessee submitted a note along with the computation of income to the following effect: "Taxes amounting to Rs. 11,14,623 have been borne by Indalco. An exemption has been claimed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meters. As a result of liberalization sought to be brought about by the Statement of Industrial Policy, 1991, two distinct routes for approval emerged in respect of foreign technical collaboration agreements, which are reproduced below: "Agreements covered by the automatic route did not require a specific approval from the Ministry of Industry. Indian companies entering into such agreements were only required to approach the Reserve Bank of India ( RBI ) for approving the remittance of the technical know-how fees, envisaged under the agreements, to foreign collaborators. Agreements falling outside the purview of the automatic route required a specific approval from the Ministry of Industry. In addition to the approval granted by the Ministry of Industry, the Indian companies were also required to approach the RBI for seeking approval for remittance of the technical know-how fees to the foreign collaborator. As per the liberalized procedures, consequent to the new industrial policy, proposals envisaging lump sum payment of technical know-how fee, where such payment did not exceed Rs. 1 crore, were covered by the automatic route . Proposals envisaging lump sum payments in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his order, observing as under: "3. I have considered the submission of the appellant counsel carefully and the material produced/submitted during the course of proceedings and found that the agreement entered by the appellant as well as Indal is covered by the automatic route and as per the Statement of Industrial Policy, 1991 which did not require a specific approval from the Ministry of Industry. The section 10(6A) read as where in the case of a foreign company deriving income by way of royalty or fees for technical services received from the Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or Indian concern after 31st day of March, 1976 and, ( a )where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy; and ( b )...................................................... the tax on such income is payable, under the terms of the agreement, by the Government or the Indian concern to the Central Government, the tax so paid. 3.1 From the assessment order it is clear that the payment has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulative because otherwise there was no meaning in using the words "in any other case" in sub-section ( b ) of section 10(6A). Hence, assessee s representative submitted that the order of the CIT(A) may be upheld. 15. We heard the rival submissions, gone through the orders of the revenue authorities and the Circular and Press Note relied upon by the contending parties. We are of the view that the order of the learned first appellate authority is liable to be upheld. The Statement on Industrial Policy dated 24-7-1991 by the Ministry of Industry, Government of India, has specified certain areas in which the Government has decided to take a series of initiatives and the one we are concerned is Foreign Technology Agreements. Paras 27 and 28 of the Statement on Industrial Policy are relevant, which read as under: "C. FOREIGN TECHNOLOGY AGREEMENT 27. There is a great need for promoting an industrial environment where the acquisition of technological capability receives priority. In the fast changing world of technology the relationship between the suppliers and users of technology must be a continuous one. Such a relationship becomes difficult to achieve when the approval process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appreciate the view canvassed by the learned DR. This section reads as under: "10(6A) where in the case of a foreign company deriving 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 the Indian concern after the 31st day of March, 1976 but before the 1st day of June, 2002 and, - ( a )where the agreement relates to a matter included in the industrial policy, for the time being in force, of the Government of India, such agreement is in accordance with that policy; and ( b )in any other case, the agreement is approved by the Central Government, the tax on such income is payable, under the terms of the agreement, by Government or the Indian concern to the Central Government, the tax so paid. Explanation - .........................." Reading of sub-section ( a ) to section 10(6A) makes it clear that where the agreement relates to a matter, which is included in the industrial policy, for the time being in force, of the Government of India, such agreement, is in accordance with that policy then while computing the total income of a previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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