Limited remand limits reassessment: tax authority cannot shift from royalty to fees for technical services.

In a limited remand, the Assessing Officer was bound to confine the enquiry to the royalty issue identified by the appellate directions and could not broaden the assessment to treat the same receipts as fees for technical services. The Tribunal held that the remand was not an open remand and did not authorise a fresh examination of a different head of income. By travelling beyond the scope of the remand and introducing a new basis of taxation not carried in appeal, the Assessing Officer acted without jurisdiction. The addition was therefore deleted, and the assessee succeeded on the jurisdictional objection.

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Issues: Whether, in proceedings pursuant to a limited remand, the Assessing Officer could travel beyond the remand directions and assess the receipts as fees for technical services instead of confining the enquiry to the royalty issue.

Analysis: The remand order was directed to re-examine the taxability of the receipts in the light of the Supreme Court decision dealing with royalty under the Act and the treaty. The Tribunal held that the earlier controversy before it was confined to royalty and that the remand was not an open remand authorising a fresh enquiry into a different head of income. Once the Assessing Officer proceeded to examine and tax the same receipts as fees for technical services, he exceeded the limited mandate of the remand. On settled principles governing remand proceedings, the Assessing Officer must act within the confines of the appellate directions and cannot enlarge the scope of assessment on issues not carried before the appellate forum.

Conclusion: The addition was deleted on the ground that the Assessing Officer had acted beyond the scope of the remand and the assessee succeeded on the jurisdictional objection.

Ratio Decidendi: In a limited remand, the Assessing Officer is bound by the appellate directions and cannot introduce and decide a new basis of taxation that was not the subject matter of the appeal.

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