9911796707
TMI Blog1984 (1) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia. it also provided details of the development research made by it in Canada. Reliance was placed by it on a decision of the Supreme Court in M/s carborandum Co. vs. CIT for the proposition that this amount was not chargeable to tax. The ITO referred to the collaboration agreement and the detailed design and construction supervision agreement entered into between the assessee and the India company. According to the ITO the first agreement was for rendering of technical know how service outside India for setting up Kerala Newsprint Project of the Indian company and was not relevant to the issue under consideration. Under the second agreement the assessee company had agreed to render such technical assistance in the shape of supervision of detailed engineering, supervision of construction and creation and assistance in the shape of supervision of detailed engineering, supervision of the said Kerala Newsprint project of the Indian company. It appeared from Art. I of the said agreement that the assessee had agreed to render/furnish to the Indian company engineering management constancy and other assistance for the use and benefit of the said project. The assessee also deputed cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y it was held that there was a business connection between the Indian company and non-resident company within the meaning of s. 183 (1) (b) of the IT Act. The and Pradesh High Court sought to distinguish the said case from that of M/s. Corborandum Co. but it was argued on behalf of the assessee that the distinction drawn by their Lordships itself supported the assessee's contention. In the present case engineers and technicians in question had become the employees of the Indian company from the date of their arrival in India. This fact was corroborate by the letter of the Central Government approving the appointment of those technicians. The CIT (A) was of the opinion that the facts of the case were similar to that of M/s. Carborandum Co. and, therefore, the fees relating to the deputation of engineers as described in Art. I of the said agreement could not be taxable as the know-how in question was imparted outside India. He, therefore, directed the reoccupation of the assessee's income by excluding this amount. The Revenue has come up in second appeal before us. 3. We have heard the representative of the parties at legit in this appeal. On behalf of the Revenue reliance was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction and training of Indian personnel to replace foreign technical personnel as quickly possible. The ITO held that 5 per cent of the fee payable to the assessee, a non-resident was earned by it in India and was therefore taxable. The CIT however was of the opinion that at least 75 per cent of the fee had accrued or arisen in India because the information received by the Indian company. though supplied outside India, was but to use in Indian and the fee was mainly on account of such services rendered by the technical personnel furnished by the assessee in India. On an appeal the Tribunal restore the ITO's finding. But on a reference the High Court entertained the contention raised on behalf of the Department that the agreement established a business connection between the assessee and the Indian company and the technical fee had accrued or arisen to the assessee form the business connection and hence it was assessable to tax under s. 4(1) (a) r/w s. 42 of the IT Act, 1922. Accepting the contention that the fee received by the assessee should be taken to have accrued or arisen in India and taxable as such, the High Court restored the order of the CIT passed under s. 263. On appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deputation to assist the Hindustan Papre Corporation Ltd. in fulfilling the obligation of the assessee under the agreement, but otherwise the terms and conditions remained to be those as between them and the assessee and these terms and conditions were in turn accepted by the Indian company who issued separate letters of their appointments. To further support this contention the assessee's representative drew out attention to letter dt. 1st Sept., 1977 issued by the Government of India, Ministry of Industry. Department of Industrial Development by which the appointment of foreign roaring technicians had been approved for the purpose of exemption from payment of income-tax under s. 10 (6) (viia) of the IT Act. Now a perusal of the provisions of that section would show that it was intended to grant exemption for remuneration due or received by a technician in the employment of the Government or local authority or any Corporation set up under any special law or in any business carried on in India. What we mean to point out is that if the employees still continued to be the employees of the assessee ordinarily the question of applicability of thus clause to their salaries would not ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Bharat Heavy Plate and Vessels Ltd. has been again and again appreciated. Moreover the CIT (A) has decided the matter in favour of the assessee by pointing out that the facts of the case are on all fours with the case of Carborandum Co. and before we upset that conclusion we should be sure that the facts in the two cases are not similar. 6. We may also point out that a decision in IT proceedings is not res judicata and the mere fact that a view has been taken by the Tribunal earlier would not be conclusive for all times to come. If fresh facts are brought to the notice of the Tribunal in subsequent year, the matter can be reconsidered. It has been held by the Calcutta High Court in Namdang Tea Co. Ltd. vs. CIT West Bengal (1982) 138 ITR 326 (Cal) that the decision of the ITO or the Tribunal in a particular year does not operate as res judicata for a subsequent year. In this case the CIT had taken a different view in an earlier year. But there was no finding of the Tribunal for the subsequent years which according to the CIT was based on some different facts. Their Lordships refused to quash the order of the CIT on the ground that it was at variance with the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion that even though a similar agreement could be deemed to have taken place outside the country a combined reading of the two agreements in that case established that there was real and intimate connection between the assessee in that case and the non-resident within the taxable limits and this relationship amounted to a business connection through or from which income accrued or arose to the non-resident. According to the High Court it was not as if it was a stray or isolated transaction, there being an element of continuity between the business of the Indian company and the non-resident the technical fee was liable to law. Under Cl. (a) of the Explanation to s. 9 (1) (i) of the IT Act in case of business of which all the operations are not carried out in India the income of the business deemed (under this clause) to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India. It can be legitimately urged for the Department that a portion of the fee payable under this agreement is liable to be taxed India under this provision of law even if the whole of it is not. Therefore it will be open to the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
