9911796707
TMI Blog1997 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... o Rs. 22,97,446) was taxable as income under the Income-tax Act, 1961 ?" The assessee is a foreign company incorporated in Canada. It had entered into an agreement dated April 15, 1981, with Mysore Paper Mills Limited (in short the " paper mill " only) for rendering certain services. The said agreement forms part of the statement of case at annexure " D ". We will be dealing with the nature of the services which was contemplated to be rendered by the assessee shortly hereinafter. The paper mill had earlier entered into an agreement dated May 26, 1977, with Beloit Welmsley, a United Kingdom company, for supply and commissioning of a newsprint plant at Bhadravathi. Pursuant to the said agreement, the plant came into existence and started ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said agreement, the assessing authority as well as the Commissioner (Appeals) being the first appellate authority as also the Tribunal held the view that the assessee had rendered only technical services and as such the expenses claimed by it out of the gross receipts as fees do not qualify for deduction under section 44D(b) of the Act read with Explanation 2 to section 9(1)(vii) thereof thus giving rise to the question referred to above. From the assessment order placed at annexure " A ", we find that out of the total fees received by the assessee during the year being a sum of Canadian $ 3,09,400 it had claimed an expenditure of Canadian $ 3,06,278, thus offering only Canadian $ 3,122 (Rs. 24,018) for levy of income-tax. Whereas if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or with the Indian concern after the 31st day of March, 1976 ... Explanation.---For the purposes of this section,--- (a) ' fees for technical services ' shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 ;" From the above provisions it is clear that no deduction can be available under section 44D in case the consideration received pursuant to the agreement is by way of fees for technical services as defined under Explanation 2 to clause (vii) of sub-section (1) of section 9 of the Act. In the present case, we have already referre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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