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TMI Blog2010 (6) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... the sake of convenience, both the appeals were heard together and are being decided by this common order. ITA NO. 1005/Mum./2004 2. The facts of the case, in brief, are that the assessee company entered into a Process Book Supply Agreement (No. 95/1674A) with Institut Francais Du Petrole, France (IFP), for acquiring the right to utilize the process technology for DHDS Project at Vishakh Refinery. The agreement was entered into to improve the characteristics of gas oil by catalytic hydro de-sulphurisation, thereby decreasing the sulphur content of the said gas oils. As per clause-IV of the agreement, M/s. IFP was to be paid an amount of FRF 3,309,600 on per diem basis. Out of the above amount, a sum of FRF 2,795,788 was paid and remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om all dues and taxes in the foreign territory also. The decision of the Tribunal in the case of Iraqi Airways v. IAC [1987] 23 ITD 115 (Delhi) was brought to the notice of CIT(A) for the proposition that in the case of an assessee who is an organization of a sovereign government, enjoying immunity from tax in the State to which it belongs, shall be exempt from tax in other territories also. Since the facts of the case are pari materia with those of the decision in the case of Iraqi Airways (supra), it was accordingly submitted that the agreement with IFP shall not be exigible for deduction of tax at source in India. The certificate issued by the Embassy of France dated 5-10-1995 was filed to substantiate that M/s. IFP, France, is under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any taxation or any requirement connected therewith, which is more burdensome than the taxation and connected requirements to which the nationals of the other Contracting State in the same circumstances are subjected and therefore the provisions of section 10(23A) should be applied, the CIT(A) held that the contention of the assessee is far fetched. He noted that the association or institution referred to in section 10(23A) of the Income-tax Act has to be an association or institution established in India and such association or institution has to be approved by the Central Government for this purpose. However, IFP is neither an institution or association referred to in section 10(23A) nor is approved by the Central Government for this pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision are clearly distinguishable and not applicable to the facts of the case of M/s. IFP. 7. The ld. Departmental Representative, on the other hand, strongly supported the order of the CIT(A). Referring to the decision of the Hon'ble Supreme Court in the case of CIT v. British Paints India Ltd. [1991] 188 ITR 44, he submitted that the Hon'ble Supreme Court in the said decision has held that it is incorrect to say that the Officer is bound to accept the system of accounting regularly employed by the assessee, the correctness of which had not been questioned in the past. There is no estoppel in these matters and the Officer is not bound by the method followed in the earlier years. Referring to the decision of the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment may specify. The Indian Institute of Technology, Bombay, performs the activities similar to IFP, France. In view of the above non-discrimination Article, IFP, France, cannot be subjected to a higher taxation in India and had to be taxed or exempted from on the basis of rates applicable to similar institution in India. The rate of tax for activities performed by IIT, Bombay, is Nil and hence the same should be applicable in the case of IFP, France. 9. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that M/s. HPCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax at source of the payment to be made to IFP. Further, IFP being under the control of the French Government, whose income is exempt from tax, therefore, the same should be treated at par with the IITs, the Institute of Industrial Engg., etc., and accordingly no tax is liable to be deducted on account of the payment being made to IFP. 9.1 We find the tax authorities of France vide their certificate, a copy of which is placed at paper book page 23, has stated that IFP is a professional establishment created by the Law of 17-11-1943 and is under the French Government control, that it has no permanent establishment in India and that IFP is not subject to taxation in France regarding income affected by Article 13 of the abovementioned Conv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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