9911796707
TMI Blog2011 (3) TMI 446X X X X Extracts X X X X X X X X Extracts X X X X ..... as right in law in holding that payment of Daily Allowance by the assessee-company to the Japanese company and the expenses incurred by the assesseecompany on the Japanese engineers during their stay in India were not in the nature of fee I.T.R. No.162 of 1996 for technical services as contemplated in Explanation 2 to Section 9(1)(vii) of the Income Tax Act and were not taxable under section 115A(1) of the Act? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Double Taxation Avoidance Agreement between India and Japan overrides the provisions of the Income Tax Act?" 2. The assessee entered into technical assistance agreement dated 5.10.1984 with a Japanese compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, which treats income by way of royalty as income accrued in India. Explanation 2 under the said clause defines royalty as a consideration for the transfer of any rights in respect of a patent, invention, model, design, secret formula or trade mark or similar property. It is also said to be a consideration for the imparting of any information concerning the working of a patent, invention etc. Royalty is also a consideration for imparting of any information concerning technical, industrial commercial or scientific knowledge, experience or skill. Similarly, income by way of fees is also made taxable in clause (vii) of section 9(1) of the Income Tax Act. Here also, Explanation 2 defines "fees for technical services" as consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any, available in the hands of the Japanese firm could not be treated to be taxable income. Therefore, the assessee company was not required to deduct tax on such remittance. 11. The Ld. Counsel for the assessee has invited our attention to an order of the Tribunal (Bombay Bench) in the case of Siemens Aktiengesellschaft Vs ITO (Bom.) (SB), (22 ITD 87), for the proposition that the payments made by the assessee company did not fall under the term "royalty" as defined in Article IX of the Govt. Agreement. Our attention has also been drawn to another decision of the Tribunal (Delhi Bench) in the case of ITO V Vidogum & Chemicals Ltd. (23 ITD 235) in support of the plea that where a lump-sum payment was made to a foreign company fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents are made by the assessee to the Japanese Co. these were to meet out of pocket expenses of the Japanese engineers sent by the Japanese Co. for training the workers and technicians of the assessee company. Therefore, these payment did not partake the character of royalty or fees for technical services. There is no evidence on record to substantiate the assumption that be part of the remittance was retained by the Japanese Co. as a surplus which amounted to commercial profits. In the absence of any evidence on record, it would not be appropriate to assume that the entire money received from the assessee was not dispersed among the Japanese engineers. Even if there was some surplus left in the hands of the Japanese Co. that could not be su ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
