AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
1992 (4) TMI 88
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....cing tools but also undertook the erection and commissioning of the said conveyor belt at the Project site. The particulars of the conveyor belt which is to be supplied are furnished in Annexure-I to the contract and its FOB Value was 25,70,400 DM. Under Clause 11 of the said contract NMDC has to pay a consolidated sum of 1,07,000 DM towards erection, supervision and commissioning charges. Para 11-B of the contract, it is stated that the NR shall also provide supervision, splicing, erection and commissioning by sending their erection team. NMDC shall pay a consolidated amount of 1,07,000 DM towards supervision, erection and commissioning charges. Para 11D states about travelling expenses which the NMDC has to meet or the NR is required to meet with reference to the technical or supervisory staff sent by the NR for purposes of erection and commissioning the conveyor belt. Further, at para 12 of the contract it is stated that the NR gave assurance for the guaranteed life of the conveyor belt till it conveys 75 million tonnes or 5 years of operation whichever is earlier. Under Para 11D it is stated inter alia that the NMDC shall arrange to supply necessary equipment and tools other th....
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....e sent for assessment years 1985-86 and 1986-87 to the NR viz., 72,522 DM and 17,833 DM respectively were not at all chargeable to income-tax since the technical services were rendered for arranging the conveyor belt in a Mining Project undertaken by the NR and hence the payment does not come within the definition of " fees for technical services ", given under Explanation to section 9(1)(vii). This contention of the assessee though was not dealt with by the ITO was accepted by the CIT(A) II, Hyderabad who followed an earlier decision of the CIT(A) II dated 30-9-1985 in the case of a similar payment made to the same NR by the NMDC for assessment year 1981-82. Following her predecessor's decision dated 30-9-1985, the learned CIT(A) held that the ITO's attempt to classify the services rendered by the NR as technical services is without substance and consequently she held that tax is not deductible at source on the remittances to be made to the NR by NMDC. The learned CIT(A) also ordered refund of tax deducted at source from the amount sought to be remitted to the NR for assessment years 1985-86 and 1986-87. Thus, by her separate orders, the learned CIT(A) passed in ITAs No. 494 and 4....
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....x Officer under section 195(2) on an application for determining the chargeable proportion of the sum to be remitted to a non-resident for the purpose of deduction of tax at source, the Appellate Assistant Commissioner is competent to pass an order with respect to the quantum of the amount on which tax is to be deducted or to revise the proportion of the amount chargeable under the provisions of the Act as determined by the Income-tax Officer. The right to appeal under section 248 is not restricted to total denial but covers even a partial denial with reference to a part of the payment subjected to deduction of tax at source. The language of section 248 is wide enough to cover any order passed under section 195. " We may also site the Tribunal's decision on this point which is in Dalmia Cement (Bharat) Ltd. v. ITO [1987] 20 ITD 76 (Delhi). In the head note of the decision at page 77, the following is what is stated : " In section 248 the crucial words are who denies his liability to make such deduction. ' In this clause the most crucial words are ' such deduction '. ' Such deduction ' would mean the deduction as required of him under the provisions of sections 195 and 200. If....
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.... were the following. 7. For that year, under the contract dated 10-11-1977, the NR agreed to sel and the NMDC agreed to purchase 18 sets of splicing belt. Under the contract there was no clause undertaking the responsibility of erection, commissioning or maintenance of the conveyor belt after it is being arranged at the Bailadila Project site. After the conveyor belt contracted for under the contract was delivered within a short time, there was some correspondence between the NMDC and the Government of India, regarding the erection of the conveyor belt. The Government of India wanted that NMDC Engineers should undertake the work of erection. However, the NMDC was of the opinion that it would be better if the technicians belonging to the NR are associated with the erection. The NMDC conducted negotiations with the NR and the NR by its letter dated 2-3-1978 agreed to undertake the work on payment of 33,000 DM. After receipt of that letter, the NMDC requested Government of India to release the required foreign exchange. On 18-3-1978, foreign exchange was released as required and on 28-3-1978, the NMDC accepted the offer put forward by the NR and afterwards the NR deputed two of its....
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....or consultancy services should not be for construction, assembly etc. According to the contract it is clear that the technicians are here only for supervising the erection of the conveyor belts. Two persons by themselves certainly cannot erect the conveyor belt. It is to be the work of many others. These two technicians are there only to supervise the erection and giving technical advice in connection with the erection. We agreed with the learned DR in that case that technical fee is for technical advice in connection with erection and the actual erection was done by others. Having thus found that the payment of technical fee was agreed upon on a separate, distinct and different contract from the original contract and the payment of technical fee is only for giving technical advice in connection with the erection and not for undertaking the erection by the NR, we disagreed with the CIT(A) that when she held that the amount payable was in connection with construction, assembly etc. 8. However, the facts relating to assessment years 1985-86 and 1986-87 are quite different. The agreement dated 17-1-1985 is an integrated contract under which the NR agreed not only to supply the conv....
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....o depute two of its technicians to supervise the erection. No such number was mentioned in the agreement dated 17-1-1985 for the obvious reason that NMDC is not concerned with their number since the erection of the conveyor belt is the complete responsibility of the NR. Therefore it is very clear that 1,07,000 DM is intended towards erection, commissioning and maintenance charges but not for merely tendering advice at the time of erection of the conveyor belt. Thus, there are material differences between the two types of contract entered, which this Tribunal considered while disposing of the appeals for 1981-82 and these two appeals relating to 1985-86 and 1986-87. Therefore, the ratio of the earlier Tribunal's decision should not automatically be applied to the facts of this case since they were quite different. The facts on hand are quite akin to the facts appreciated by the Honourable Andhra Pradesh High Court in CIT v. Hindustan Shipyard Ltd. [1977] 109 ITR 158. In that case Hindustan Shipyard Limited is a Government of India Undertaking entered into an agreement with a Polish company to supply diesel engines with accessories. The engines were agreed to be erected by the staff ....
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....of goods (conveyor belts and splicing tools) and supply of supervision by technicians were provided by two separate and distinct contracts for which considerations were different whereas the terms of the contract relevant for assessment years 1985-86 and 1986-87 is one integrated contract in which the NR is obliged to supply goods (conveyor belts and splicing tools) as well as it had undertaken erection of the conveyor belt, commissioning it and maintaining it for 5 long years. Simply because towards erection and commissioning charges a sum of 1,07,000 DM was agreed upon does not make the obligation to erect the conveyor belt a separate contract. In our opinion, it remains one of the terms of the integrated contract only. Now let us consider how far the payments towards erection charges come under the Explanation to section 9(1)(vii). In the appeal for assessment year 1981-82, we find specifically that the payment of the amount of 33,000 DM is towards rendering technical advice or for supervising the erection of the conveyor belt. The same cannot be said in the face of clear contractual terms in the contract dated 17-1-1985 relevant to assessment years 1985-86 and 1986-87. The cont....