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TMI Blog1993 (12) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioning of a batch process copper sulphate plant on turnkey basis. The petitioner-company has agreed to receive by way of consultant's fee a sum of Rs. 2 lakhs for rendering the following technical services: "In consideration of the fees to be received by the consultants as per clause III(1) of this agreement, the consultants shall render the following technical services for the setting up of a copper sulphate plant, working on batch process and capable of producing three metric tonnes per day of 24 hours of technical grade copper sulphate starting from copper scrap consisting of mixture of burnt motor winding coils, copper strips, cut pieces of sheets, etc., having minimum of 98 per cent. copper content and size not more than 2.5 mm thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner, treating the entire sum of Rs. 2 lakhs as fees agreed to be paid for the technical know-how/services, applied to the respondent under section 80MM of the Income-tax Act for approval. The respondent, by its first order dated January 28, 1981, held that the fee of Rs. 2 lakhs payable under the agreement covers provision of commercial data relating to price of raw materials, demand for product, etc., procurement assistance, erection, supervision involving managerial services and, therefore, the agreement can be granted only partial approval. Accordingly, the respondent had given approval to the agreement only to the extent of 25 per cent. of the fee of Rs. 2 lakhs receivable under the agreement. On receipt of the order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the following decisions : Simon Carves India Ltd. v. CBDT [1979] 120 ITR 172 (Delhi), R. G. Sales Pvt. Ltd. v. ITO [1983] 140 ITR 466 (Cal), Gannon Dunkerley and Co. Ltd. v. CBDT [1986] 159 ITR 162 (Bom) and Simon Carves India Ltd. v. ITO [1986] 159 ITR 167 (Cal). Mr. N.V. Balasubramanian, learned counsel appearing for the Revenue, contending contra, submitted, that a fair reading of the clauses in the agreement will clearly show that all the services to be rendered under the agreement for the consideration of Rs. 2 lakhs (enumerated above) will not fall under section 80MM(2) of the Income-tax Act as some of the items will fall outside that. For example, he invited my attention to certain items mentioned in annexure "E" to the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure in India and present selling price in India, all coming under the head "commercial data" do not appear to come strictly under "technical know-how/services". However, learned counsel for the petitioner argued that inasmuch as the petitioner has given a performance guarantee, it is necessary to look into the matters coming under "commercial data" and "raw materials" and, therefore, that must be treated as coming under "technical know-how/ services". Learned counsel also submitted that the petitioner is not doing any erection, supervision involving managerial services under the agreement, to deny the full claim. Regarding the services rendered under "commercial data", learned counsel submitted that the work relating to furnishing those dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Co. Ltd. v. CBDT [1986] 159 ITR 162, learned single judge of the Bombay High Court has considered a case under section 80-0 of the Income-tax Act, which is not directly on the point. In Simon Carves India Ltd. v. ITO [1986] 159 ITR 167 (Cal) is again a case dealing with section 80-O of the Income-tax Act and, therefore, it is also not helpful to the petitioner. In Holtec Engineers P. Ltd. v. CBDT [1979] 120 ITR 696 on facts, Division Bench of the Delhi High Court held that it is implicit in the said section (section 80MM) that the provision of technical know-how must directly assist in the manufacture or processing of goods or material or in the installation or erection of machinery or plant for such manufacture or processing or in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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