Engineering fee in nature of royalty u/s 9(1).

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..... tain diesel engines by the Indian company. In consideration of the services to be rendered, the non-resident company was to receive engineering fees from the Indian company. For the assessment years 1960-61 to 1965-66, the ITO had held that 75% of the engineering fees received by the foreign company related to services rendered in India and hence taxable. The AAC in appeal held that only 25% of th .....

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..... not arise on the frame of the question referred to the High court. It was therefore not open to the department to contend at that stage that the entire engineering fees was assessable to tax in India. It has been decided in consultation with the Ministry of Law that the High court rightly decline to consider the question that the entire payment was really, in the nature of royalty income, as this .....

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..... ion 9(1)(vii) which provides that nothing contained in sec.9(1)(vii) shall apply if the fees is paid in pursuance of an agreement before 1-4-76 and approved by the Government. In such cases the law applicable would be as it existed before the amendments introduced by the Finance Act 1976. It is therefore necessary that in such cases as well proper care is taken to give a definite finding whether t .....

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