Composite project receipts and consistency in tax treatment govern foreign collaborator payments in a nuclear power project.

Composite agreements for a nuclear power project must be read holistically when characterising payments to a foreign collaborator; on that footing, the receipts were treated as project-related under section 44BBB rather than as fees for technical services or royalty. Where the material facts remained unchanged across assessment years, consistency required the Revenue to follow the view already accepted in earlier years, absent any distinguishing feature or new factual basis. The earlier approach was therefore followed and the contrary position rejected.

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Issues: (i) Whether the payments made to the foreign collaborator for work connected with the nuclear power project were covered by section 44BBB of the Income-tax Act, 1961, or were liable to be treated as fees for technical services or royalty. (ii) Whether, in the absence of any change in facts, the Revenue could depart from the view consistently taken in earlier assessment years.

Issue (i): Whether the payments made to the foreign collaborator for work connected with the nuclear power project were covered by section 44BBB of the Income-tax Act, 1961, or were liable to be treated as fees for technical services or royalty.

Analysis: The agreements had to be read together with the inter-governmental arrangement, as they formed part of a single composite transaction for setting up the nuclear power station. The foreign collaborator was not confined to supplying designs or drawings but was involved in the project in an end-to-end manner, including assistance, supervision, documentation, deputation of specialists and project-related work. On that factual foundation, the character of the receipts could not be restricted to fees for technical services or royalty in the manner suggested by the Revenue.

Conclusion: The payments were held to fall within the project-related framework accepted by section 44BBB, and the Revenue's contrary view was rejected.

Issue (ii): Whether, in the absence of any change in facts, the Revenue could depart from the view consistently taken in earlier assessment years.

Analysis: The principle of res judicata does not strictly apply to income-tax proceedings, but where a fundamental factual position remains unchanged, consistency and certainty require the same view to be followed unless there is a material distinguishing feature. Earlier orders had accepted the assessee's stand, no new facts were shown, and no sufficient reason existed to adopt a contrary approach in the later years.

Conclusion: The earlier consistent view was to be followed, and the Revenue was not justified in deviating from it.

Final Conclusion: The orders in favour of the assessee were restored for the later years, and the Revenue's appeal failed while the assessee's appeals succeeded.

Ratio Decidendi: In income-tax matters, where the material facts remain identical across assessment years, a consistently accepted view should not be departed from without a material change in circumstances, and composite project agreements must be construed holistically to determine the true character of the receipts.

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