No-deduction certificate for foreign remittance restored for fresh consideration amid disputed status of the French recipient

Entitlement to a no-deduction certificate for remittance to Institut Francais Du Petrole, France, turned on whether the recipient was a department of the French Government and whether it was carrying on commercial activity. The Tribunal noted earlier no-deduction certificates and supporting certificates from French tax authorities and the French Embassy stating that the recipient was under French Government control and not taxable in France on the relevant income, but found the record insufficient to conclusively establish those claims. The matter was restored to the Assessing Officer for fresh consideration after allowing the assessee an opportunity to file supporting evidence.

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Issues: Whether the assessee was entitled to a no-deduction certificate in respect of remittance to Institut Francais Du Petrole, France, and whether the matter required fresh adjudication on the assessee's claim that the recipient was a department of the French Government and not carrying on commercial activity.

Analysis: The Tribunal noted that the assessee had earlier obtained no-deduction certificates, and that the French tax authorities and the French Embassy had issued certificates stating that the recipient was under French Government control and not subject to taxation in France on the relevant income. It also noted that the revenue authorities had treated the remittance as royalty or fees for technical services, while the assessee relied on treaty non-discrimination and exemption-related contentions. However, the Tribunal found that no documentary material sufficient to conclusively establish that the recipient was a department of the French Government or that it was not carrying on commercial activity had been produced before it.

Conclusion: The matter was restored to the Assessing Officer for fresh consideration after granting the assessee an opportunity to produce supporting evidence. The assessee's appeals were allowed for statistical purposes.

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