9911796707
TMI Blog1991 (2) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of fees for technical services. It was assessed as such and advance payments/monthly payments treated as consideration paid during the period relevant to assessment year 1984-85 and was considered as total income. The stand of the assessee was that the income was not taxable in India and further that the assessee-company has actually incurred loss ; and the nature of the assignment as per the agreement was only collection and study of relevant information, documentation and processing the information so collected was for preparation of the project report, which was carried on in London ; that the assessee-company has no permanent establishment in India. Reliance was placed on assessee's letter dated 11-4-1985 enclosed with the return. Assessee's stand stood negatived and assessment having been completed, the assessee appealed. The learned first appellate authority, in paras 2 to 17 of the impugned order, held the receipts to be fees for technical services. The rate of taxation was restricted to 30% instead of 40% as held by the Assessing Officer. The learned first appellate authority discussed the issue in an elaborate manner. The assessee is still aggrieved and we have hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental Representative contended that drawings form part of feasibility report and submission of report is technical services. N.V. Philips v. CIT [1988] 172 ITR 521 (Cal.), at pages 538 and 539 was relied upon along with section 9(1)(vii) of the Act. Reliance was also placed on assessee's arguments given before the learned first appellate authority by way of written submissions as have been placed on our file as pages 14 to 45 of the assessee's paper book and particular reliance was placed on page 25. There, on page 25, the entry, which was emphasized, reads, ' fees received pound 121,562.00 '. The learned Sr. Departmental Representative, as such, pleaded that in terms of the agreement, what the assessee has rendered is the consultancy services, which were of technical nature inasmuch as Government of Maharashtra has constituted a Steering Group for Bombay Mainland Link Project and the assessee was engaged to give feasibility report, which amounts to technical services, since the subject matter entrusted to the assessee was technical. 4. Section 9 deals with the topic, ' Income deemed to accrue or arise in India '. Section 9(1)(vii) reads as under :---- ' 9. (1) The following inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made at the times and in the manner set forth herein and in the Schedules to this agreement, the consultants shall upon and subject to the conditions contained herein and in the Schedules hereto undertake and perform the services and duties mentioned herein and in the Schedules hereto within the period agreed upon as set out herein and in the Schedules hereto, which Schedules are as follows :---- ' Schedule 1 : Terms of reference dated 1st July, 1981 for consultancy on transharbour communication link between Bombay and Mainland issued by the Steering Group for Bombay Mainland Link Project along with letter of clarification dated 11-8-1981. Schedule 2 : Letter dated 28th August, 1981 from Peter Frankel & Partners to the Member Secretary Steering Group BMLP Technical Cell with its annexures viz. technical proposals. Schedule 3 : Letter dated 28th August, 1981 from Peter Frankel & Partners to the Member Secretary, Steering Group BMLP Technical Cell being Financial Proposal for Consultancy Services. Schedule 4 : Letter dated 18th January, 1982 from Peter Frankel & Partners to the Member Secretary, Steering Group BMLP Technical Cell. Schedule 5 : Letter from Peter Frankel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. We hold accordingly. 9. So far so good, now comes the taxability of the total income. The Assessing Officer has taken the advance payments/monthly payments treated as consideration paid during the period relevant to assessment year 1984-85 as total income, which is not correct in law inasmuch as the charge has to be on not on the gross receipts but the total income within the meaning of section 2(45) of the Income-tax Act, 1961. ' Income ' has been defined under section 2(24), whereas ' total income ' has been defined under section 2(45) of the Act and within the meaning of section 4 -- the charging section -- and section 5, which defines ' scope of total income ', the charge of tax has to be on total income and not advance payments/monthly payments treated as consideration. Section 9 deals with the topic, ' income deemed to accrue or arise in India '. Since under sections 2(24) and 2(45) of the Act, ' income ' and ' total income ' have been defined, within the meaning of section 9(1)(vii), Explanation 2, the amount received by the assessee has to be taken as ' income ' and not ' total income '. In converting the ' income ' into ' total income ', which can be subjected to taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
