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TMI Blog1991 (4) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the circumstances of the case, and more particularly in view of the fact that, before the assessments for the assessment years 1964-65, 1965-66 and 1966-67 were finalised, the Government had fixed a lower percentage of royalty, the Tribunal had erred in holding that the amount of royalty higher than what was actually allowed to be remitted was to be deducted in computing the total income ? (2) For the assessment year 1967-68: Whether, on the facts and in the circumstances of the case, the Tribunal erred in law in treating the sum of Rs. 36,571 being the difference between the original liability and the revised liability of royalty brought by way of credit in the books, as the income of the assessee in the assessment year 1967-68 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1964-65, 1965-66 and 1966-67, with licence fee calculated at the rate of 4 1/2 pence per pound of rubber used, for the calendar year 1966, relevant for the assessment year 1967-68, it took the view that the amount of licence fee/royalty was actually payable by it at the rate of 1 1/2 pence per pound only and, accordingly, wrote off the amount debited as licence fee to the profit and loss account in the earlier three years in excess of 1 1/2 pence per pound. However, at the time of assessment, the assessee claimed that its actual liability in respect of licence fee/royalty payable to the foreign company was only 1 1/2 pence per pound of rubber used and the deduction should be allowed to it to that extent only. The Income-tax Officer, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttention to the fact that when negotiations at the instance of the foreign company through the Trade Commissioner failed, the assessee and the foreign company eventually entered into another agreement in the year 1969, in terms of which licence fee/royalty was agreed to be paid at the rate of 1 1/2 pence per pound of rubber used with retrospective effect from October 1, 1961. Accordingly, it was his submission that the assessee was entitled to the deduction in respect of licence fee/royalty at that rate only right from the year 1961. If the licence fee/royalty was allowed at the rate of 1 1/2 pence per pound of rubber used, there will be no question of remission in the calendar year 1966 relevant for the assessment year 1967-68. Dr. Balas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the year 1965 only, there is no justification whatsoever in the assessee's claim that, in the calendar years 1963 and 1964, which are relevant for the assessment years 1964-65 and 1965-66, deduction should be allowed on the basis of rates sanctioned by the Government and not on the basis of rates agreed upon. So far as the calendar year 1965 is concerned, however, we are in agreement with Shri Dalvi that the Government of India's letter having been received during that year, the assessee could not possibly claim deduction at a higher rate than the rate sanctioned by the Government of India. Accordingly, we answer the first question in so far as it relates to the assessment years 1964-65 and 1965-66 in the negative and in favour of the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in their efforts for obtaining a revision in the rate of royalty payable. It is now found that the Government of India is not inclined to consider any revision of the rate of royalty already sanctioned. They had not so far given this in writing to the Trade Commissioner of the U. K. in New Delhi but the officers concerned had expressed this view. One of the reasons put forward by the Government in turning down the request was that the concessionaries for the Tyresoles (Overseas) Ltd., London, in the rest of India have been authorised to pay the royalty only at the rate of 1 1/2 pence and they cannot consider a separate rate of royalty to Goa which is now a part of India. It is now certain that the Government of India shall not sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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