TMI Blog1974 (11) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ebruary, 1947, by the National Rayon Corporation Ltd. when that company was registered in India. By clause 4 of the said agreement, it was, inter alia, provided : (a) that in consideration of the payments which were to be made to the foreign company pursuant to the terms of the said agreement, the foreign company would furnish to the Indian company technical skill, advice and knowledge regarding the selection of a plant site and the acquisition of the same, as well as the design, plan, layout and specifications for the machinery, equipments, etc. ; (b) that it would employ an American concern to assist and advise the Indian company in the preparation of the plans and specifications ; (c) that it would act in connection with the selection an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imum of 2,50,600 dollars, and would also pay at the rate of one-half per cent. per pound on each and every pound of the viscose filament rayon yarn manufactured by the new Indian company during a certain period subject to a minimum of not less than 25,000 dollars per annum. In this reference, the court is concerned only with the latter of the two payments which are to be computed at the rate of one-half per cent. as aforesaid. Pursuant to that agreement, the foreign company received at that rate the four amounts set out in paragraph 6 of the statement of the case for the four assessment years with which we are concerned in the present case. The Income-tax Officer treated them as royalties for the know-how which had accrued in India and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal processes to be good enough for its purposes. These were findings of fact arrived at by the Tribunal which are binding on us, and it is on the basis of these findings that this reference must be decided. The Tribunal's own conclusion from these findings was that where continuous knowledge based on experience was being gathered and furnished by one party to another, and where the manufacture in India was being carried on the basis of the experience gathered in the course of its manufacture abroad, it was necessary to attribute some portion of consideration to the activities abroad, and on that footing, taking all the factors into account, the Tribunal held that the profits liable to be taxed in India and abroad should be at the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument of Mr. Joshi is also fallacious in so far as the reference to production in the said clause 7(2) of the agreement is only for the purpose of computation, and even if the production in a particular year were, for any reason such as a strike or a lock-out, to be nil, the Indian company would still be bound to pay to the foreign company the minimum amount of 25,000 dollars for that year. The payments in question were, therefore, as the Tribunal has rightly held, payments made under the stipulation contained in the agreement and nothing else. In my opinion, on the findings of the Tribunal referred to above not only is there no evidence to show that all the operations of the foreign company relating to the agreement were carried out in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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