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TMI Blog1981 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... unal was correct in holding that there was no receipt of fees by the non-resident company in India for the assessment years 1967-68 to 1969-70 ? 3. Whether, on the facts and in the circumstances of the case and on a proper interpretation of the agreement between the non-resident company and Indian Aluminium Company Ltd., the Tribunal was correct in holding that no part of the services was rendered by the non-resident company in India and in that view holding that no income accrued or arose to the non-resident company in India for the assessment years 1967-68 to 1969-70 ? 4. Whether, on the facts and in the circumstances of the case and on a correct interpretation of the agreement between the non-resident company and Indian Aluminium Company Ltd., the Tribunal was correct in holding that there was no business connection in India between the said two companies within the meaning of section 9(1) of the Income-tax Act, 1961, and in that view holding that no income could be deemed to accrue or arise to the non-resident company in India for the assessment years 1967-68 to 1969-70 ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain facts relating to this claim which we shall set out below as contained in a separate statement filed by the assessee : Units : Rs. (1) Hirakud No. II 6,74,307 (2) Alupuram Extrusion No. II 3,30,841 (3) Belur No. II 10,03,553 (4) Muri No. II 12,38,386 --------- &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te on double digestion process as against the single digestion process under the existing facilities. The entire project cost was about Rs. 28 million. Confirmation that the new unit was not formed by splitting up or by reconstruction of the existing unit was filed. The buildings or machinery for the unit were all new. The new unit was financed by additional capital. BELUR-II Industrial Licence No. L/IB(C)/H-44/50, dated 10th November, 1950, was received from the Govt of India for the production of another 1,500 tonnes per annum of fabricated products at Belur. For giving effect to this increased production a new 4 feet high mill was installed at a separate building. The cost of these facilities amounted to approximately Rs. 38 million. Initial capacity was for 9,000 tonnes per annum. Also confirmed that the new unit was not formed by splitting up or by reconstruction of the existing unit. Also submitted that the buildings or machinery used for the new unit were absolutely new and not used previously. Also confirmed financed by additional capital, 4. From the above facts and in view of the Calcutta High Court decision in this very case (CIT v. Indian Aluminium Co. Ltd. [1973] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olution to these problems. It would, therefore, appear that the service has actually been done by the non-resident' company in Canada itself. They have not sent their expert to India. Neither is their know-how applied under their guidance when such service, are done. It has been held that the income arises only at the place where the, service is done. The Bombay High Court in the case of Kathiawar Coal Distributing Co. v. CIT [1958] 34 ITR 182, had considered the service done by a commission agent under similar circumstances and had held that since every item of the services were rendered in non-taxable territories (Saurashtra), the income accrued outside the taxable territories. 11. We also find that the agreement providing for the services were not entered into between the two companies at Montreal in Canada. Therefore, the ratio of the cases like CIT v. Anamallais Timber Trust [1950] 18 ITR 333 (Mad) and CIT v. A. S. T. F. Rodriguez & Co. [1951] 20 ITR 247 (Mad), would-not apply and no income accrues on the basis of the status of the contract. There is also one other point to be considered before we finally decide about the accrual of income. The facts as given by the assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmative and in favour of the assessee. Next question, viz., question No. 5 challenges the finding of fact as to whether the assessee was entitled to depreciation on roads, fences, and culverts within the factory compound at the rate applicable to first class factory building for the assessment years 1966-67 to 1969-70. In view of the decision of this court in the case of the present assessee, Indian Aluminium Co. Ltd. v. CIT [1980] 122 ITR 660, this question must also be answered in the affirmative and in favour of the assessee. So far as questions Nos. 6 & 7 are concerned, which have been referred at the instance of the assessee that they are inter-connected. In this connection reference may be made to the observations of the Tribunal at paras. 5 to 12 of the order of the Tribunal and in that background the Tribunal further observed, inter alia, as follows : " 16. We agree with the Appellate Assistant Commissioner's view in the matter that the several decisions relied upon by the assessee's counsel to prove that relief should be extended to various forms of aluiminium sold in forms acceptable to different classes of customers cannot be further extended to the production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case. Furthermore, as we have mentioned before, the Division Bench of this court, as indicated before, was concerned with the identical question. Following the ratio of the said Division Bench decision of this court, we must answer both the questions, viz., questions Nos. 6 & 7, in the affirmative and in favour of the Revenue. Next question that requires consideration is No. 8, that is to say, whether the assessee was entitled to depreciation on the storage tanks and, if so, at what rate. The Tribunal accepted the position that the assessee was entitled to depreciation on the storage tanks being part of the plant and machinery at the rate of 7 per cent. as provided in Appx. I of Pt. I of the I.T. Rules, 1962. But the assessee was contending that the storage tanks being part of the aluminium factory it was entitled to a special rebate at 10 per cent. under the said Schedule. The Tribunal on this aspect observed as follows : " In our opinion, the storage tanks can only be allowed depreciation at the rate applicable to general machinery and plant and not to the specialised plant and machinery on which 10% is given as they do not form part of specialised plant and machinery in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsured. In this connection, the assessee received the insurance money which was offered for taxation as income by the assessee. The assessee, however, received a further additional sum of Rs. 55,546 on account of devaluation of the rupee. The question then arises whether this additional sum of Rs. 55,546 which the assessee received as a result of devaluation of currency in which the insurance claim was paid was assessable to tax. There is no dispute that the amount was received in respect of the stock-in-trade. The cargo was stock-in-trade. Now, the nature of the receipt of the insurance money would be clear from the observations of the Court of Appeal in England in the case of Green v. J. Gliksten & Son Ltd. [1928] 14 TC 364, where dealing with this aspect, Lord Hanworth M.R. observed at pp. 378-379 of the decision as follows: " Messrs. Gliksten & Son Ltd. were traders in timber; it was their business to buy and sell timber, and it was a part of their business-ancillary, perhaps to take steps to insure their trade from the mischances which can be insured against, such as perils of the sea and perils of the land. They had a certain amount of fixed capital in their business, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was the stock-in-trade which was lost. The loss might be the act of a sovereign State or of any hostility. But the net effect was the deprivation of the stock-in-trade and in order to cover this danger of the deprivation of the stock-in-trade that the insurance policy was taken out and in settlement of those dues the payment of money was received. Indeed this principle would also receive support from the observations of the Supreme Court in the case of Sutlej Cotton Mills Ltd. v. CIT[1979] 116 ITR 1. In this connection reliance may be placed on the observations of the Division Bench of the Madras High Court in the case of CIT v. Universal Radiators [1979] 120 ITR 906. As it was contended by learned advocate for the assessee before us that the views of the Division Bench of the Madras High Court ran counter to the observations of the Supreme Court in the case of CIT v. Canara Bank Ltd. [1967] 63 ITR 328, it would not be inappropriate to refer to the observations of Mr. justice Sethuraman at pp. 909, 910, of the report dealing with the identical contention as follows: " However, the learned counsel for the assessee relies strongly on decision of the Supreme Court in CIT v. Canara ..... X X X X Extracts X X X X X X X X Extracts X X X X
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