9911796707
TMI Blog1984 (5) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments made by them towards technical assistance fees and royalty were exempt from tax and do not come under the purview of the provisions of section 9 of the Act. The ITO held that it was sufficient if the non-resident had received some income from or through the Indian company in order to attract the provisions of section 163 and so long as this fact was not in dispute HAL cannot escape its liability to be treated as an agent of the non-resident. He also held that the question regarding the liability of the non-resident to be assessed in India was separate from the liability of HAL being treated as an agent of the non-resident. In other words, what he meant was that once Dunlop Ltd. receives income through HAL, the latter can be appoi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded in the assessment." Regarding the assessee's claim to deduct expenditure at a flat rate of 50 per cent of the receipts as relatable to the business, the ITO allowed only 20 per cent. He, accordingly, allowed expenses of Rs. 2,406 out of the technical assistance fees of Rs. 12,038 and taxed the assessee on Rs. 9,632 in addition to the royalty of Rs. 43,811. 4. In appeal, the assessee relied upon the decision of the Supreme Court in the case of Carborandum Co. v. CIT [1977] 108 ITR 335. It contended that the fees did not accrue or arise in India nor could it be deemed to accrue or arise in India. Reliance was also placed on the decision of the Karnataka High Court in the case of VDO Tachometer Werke v. CIT [1979] 117 ITR 804. The mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accrued or arose to the assessee because of business connection. He held that there was a direct accrual of income in India to the non-resident. Technical know-how was the stock-in-trade of the non-resident. It was sold in India. The asset, viz., technical know-how possessed by the non-resident assessee was capable of continuously producing income and irrespective of the fact that the agreement was executed outside India, the asset was exploited in India. Thus, there was a direct accrual of income to the non-resident in India. He invited our attention to clauses 1(3), 2(1), and 4(1) of the agreement which, according to him, amply demonstrated that income accrued to the assessee in India. He also sought to meet the point raised on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession relating to the development by it and its subsidiaries of the licensed equipment including all information relating to the processes [as defined in clause 1(2)] which should enable the licensee to manufacture, assemble, modify, test, maintain, inspect, overhaul, dismantle and repair the licensed equipment. Such information and technical data (hereinafter collectively called 'The Technical Knowledge') shall include . . . ." Here also it is clear that the exploitation of the assets, designs, etc., was to be within the territory of India. Clause 4(1) reads as follows : "Dunlop hereby grants to the licensee the sole and the exclusive right to manufacture in the territory and to use or sell in the territory the licensed equipment so m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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