9911796707
TMI Blog2002 (9) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ooring job of the floating dock at Port Blair was entrusted to the latter. The said company was incorporated at Nhara Sheva Port near Bombay. The said contract was entered into for at a lump sum price of U.S. dollars 1,73,500. However, in terms of clause 7 thereof, the work was to be completed within an estimated period of 16 days. Clause 6(C) of the said contract reads thus: Performance: (a) Smit Tak shall undertake to use their best endeavours to perform and complete the work within the shortest possible time as described in clause (3). (b) Escorts shall ensure that equipment and facilities shall be provided in time and shall render all possible assistance in the execution of this contract. (c) Escorts shall undertake to ensure also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as relied upon a letter of the said company dated September 3, 1987, which is in the following terms: The sum of US $ 24,375 is claimed from Escorts Limited, on account of the change orders work performed, in pursuant to the Mooring Contract of Escorts Limited floating dock "Escorts 1" at Port Blair, Andaman Islands, between May 17, 1987, and June 7, 1987. The sum of US $ 24,375 herewith claimed covered an additional work period beyond the stipulated work period of sixteen days, for which a lump sum of US $ 1,73,500 was separately specified in the contract. The additional work required and carried out with the concurrence of Escorts Limited, was due to unexpected technical deficiencies at the site and for rectifying these deficiencies, Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d length of chains for mooring purposes readily for the unexpected depth of sea at the site of mooring at Port Blair, and, secondly, because M/s. Smit Tak were not allowed to work on weekends by the Indian Navy. In support of the above we have already filed photocopies of the telex messages dated May 26,1987 (para. 2AAA), and May 28, 1987. From the above it is very apparent that the payment which is now being made to Smit Tak is in respect of the provision of services of technical personnel made available by them for a period longer than what was stipulated in the agreement with them for which payment was to be made in addition to the lump sum payment agreed for the mooring work. Thus, the payment under reference cannot be anything else tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals) and hence in terms of section 264(4)(c) of the Income-tax Act, the 'order' of the I.A.C.(A) cannot be revised. (iii) The petitioner-company had not made any application to the I.A.C. under section 195(2) either of the Income-tax Act. (iv) At any rate, the I.A.C.(A) cannot be directed to refund the tax to the petitioner-company at this stage since the action of the I.A.C.(A) is, if at all, prejudicial not to the petitioner-company but to the company to whom the amount has been remitted after deducting the tax. (v) As per the debit note dated June 16, 1987, of M/s. Smit Tak Towage and Salvage(s) Pte. Ltd., the payment represents the 'change orders (demurrage) charges incurred in Port Blair for the above work, amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel for the parties, we are of the opinion that respondents Nos. 2 and 3 have committed a jurisdictional error in so far as it failed to take into consideration the nature of the transaction as contended by the assessee. As noticed hereinbefore, the Singapore-based company also clarified in its aforementioned letter dated September 3, 1987, that the expression "demurrage" charges had been used, having regard to the provisions normally made in a marine contract although in effect and substance, the same comes within the purview of fee for technical services. "Fee for technical services" has been defined in Explanation 2 appended to section 9 of the Income-tax Act. Clause (vii) of the provision is in the following terms: "(vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration which would be income of the recipient chargeable under the head 'Salaries'." A bare perusal of the aforementioned provision will clarify and go to show that the same carries definite import. The transaction entered into by and between the petitioner and the aforementioned company was, therefore required to be considered in the light of the aforementioned provision. The question was not considered from this angle. As by reason of the impugned order, respondents Nos. 2 and 3 failed to exercise their jurisdiction vested therein by law, in our opinion, a jurisdictional error has been committed. By reason of the said orders, the said respondents had failed to perform their statutory duties which they were otherwise obliged to do. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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