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TMI Blog2014 (8) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... the various agreements entered into between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd in great detail and thereafter come to the conclusion that the payments made in the financial year were by way of fees for technical services. Exemption from tax - Whether these payments by way of fees for technical services were exempt from tax – Held that:- All the agreements between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd. were entered into prior to 1st April 1976 - clearly the proviso to section 9(1)(vii) of the Act was attracted - CIT(A) as well as the Tribunal after holding that that the payments received by the Assessee Company from FCI, IPCC and J.K. Synthetics Ltd. under the various agreements were in the nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts set out hereafter, it will be clear that the order of the ITAT did not give rise to any question of law. However, since the above question has been referred to us, we have answered the same later in this judgement. 3. The facts stated briefly are that the Assessee Company is a nonresident Company incorporated in India. One M/s Techniment was a subsidiary Company of the Assessee Company and was merged with it on 4th October 1978. M/s Techniment had entered into agreements with certain public sector undertakings and J.K. Synthetics Ltd. for the supply of technical know-how and for rendering technical services. By virtue of the merger all the rights and liabilities of M/s Techniment were taken over by the Assessee Company. 4. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greements for the persons deputed to India, and accepted the claim of the Assessee Company that all payments related to contracts entered into prior to 1st April 1976 and therefore were not taxable under the proviso to section 9(1)(vii) of the Act. The CIT (Appeals) came to the aforesaid conclusion after carefully considering and going through various clauses of the agreements entered into between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd. On a harmonious construction of all the clauses in the agreements, the CIT (Appeals) held that the payments received by the Assessee Company during the year were in the nature of technical service fees covered under section 9(1)(vii) of the Act and ought to be excluded from taxation in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilised 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) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. Explanation 1. For the purposes of the foregoing proviso, an agreement made on or after the 1st day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates that nothing in sub-clause (vii) to section 9(1) shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. 9. In the present case, the CIT (Appeals) as well as the ITAT have analysed and interpreted the various agreements entered into between the Assessee Company and FCI, IPCC and J.K. Synthetics Ltd in great detail and thereafter come to the conclusion that the payments made thereunder in the financial year in question were by way of fees for technical services. We ourselves, with the assistance of the learned counsel for both sides, have gone through the various clauses in the agreements. On going ..... X X X X Extracts X X X X X X X X Extracts X X X X
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