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TMI Blog1992 (10) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... t the rate of 350 U. S. dollars per man-day of time spent by the experts of the seller is the subject-matter of dispute. The Income-tax Officer has held the remittance to be "fees for technical services" and has required the petitioner to deduct tax at the prescribed percentage before remittance. The petitioners contention, however, is that the remittance thus made would be chargeable under the head "Salaries" or, alternatively, it would come within the exclusion part of section 9(1)(vii) of the Act and, therefore, no tax is liable to be paid on the same. By the impugned order, the Income-tax Officer having rejected the stand of the petitioner and having come to the conclusion that the payment is in the nature of income by way of fees for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant by providing technical assistance for sixty man-months in transit or in India by representatives of the foreign company on mutual consultation with the Indian company. No fees would be charged for work done by the technical personnel in India concerning design and up to placing of orders for plant and machinery, but the Indian company would, however, pay for air travel and provide boarding and lodging for the technical personnel in India. The said agreement also provided that the foreign company shall train the employees of the Indian company in U. S. A. Payments to be made by the Indian company, the buyer, are enumerated in article VI of the agreement and under clause 1 of article VI, the total consideration was fixed at 29,50,000 U.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration, therefore, is as to what is the nature of payment thus made. Dr. Pal appearing for the petitioner argues with vehemence that the payment in question must be held to be "salary" of those technical experts who are sent by the seller, namely, Messrs. Chemtex Fibre Inc., U. S. A., and the Income-tax Officer committed an error in rejecting the said contention solely on the ground that there is no relationship of master and servant between Messrs. Chemtex and those technical experts. Learned standing counsel appearing for the Income-tax Department, on the other hand, contends that, if the terms and conditions of the agreement with regard to the aforesaid payment are examined, by no stretch of imagination, it can be held to be "salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technicians who are not citizens of India for services rendered by them as technicians in the business which is obviously carried on in India and, therefore, it would be chargeable under the head "Salary". If the agreement in question is examined, it appears that the payment is made to the seller and not to the non-resident technicians who come to India to render some technical advice. It is not known as to what is the term of the contract between the seller and those non-resident technicians who come for some days to render some technical advice. The payment of 350 U. S. dollars per man-day spent by the experts of the seller including days off while away from the home base is in consideration of the assistance which the seller is required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for the period indicated therein and, therefore, the payment made to those technicians having been exempted from payment of tax by virtue of the authority granting the approval, the Income-tax Officer committed an error in ignoring the same and directing payment of tax. We are unable to accept this submission of Dr. Pal appearing for the petitioner. The approval was sought for by the buyer in respect of specific individual foreign technicians and column 10 of the said application indicated the details of salary, allowances, etcetera chargeable under the head "Salary" proposed to be given to the said employees in India. Pursuant to such application, the Government of India has accorded approval, but the payment sought to be made for Which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 9(1)(vii) and, accordingly, he has directed deduction of tax on the same. Explanation 2 to section, 9(1)(vii) clearly provides that, for the purposes of clause (vii), "fees for technical services" means any consideration for the rendering of managerial, technical or consultancy services, but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". We have already held that the income is not chargeable under the head "Salary". Dr. Pal, however, argues with emphasis that a bare reading of clauses V and VI of the agreement would unequivocally indicate that the payment of 350 U. S. d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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