1991 (2) TMI 208

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....981-82 were declared as "N.A.", the assessment for the asst. yr. 1982-83 resulted in the determination of chargeable profits at Rs. 1,59,168. Subsequently, this amount was revised to Rs. 1,49,454 on 10th Sept., 1985. 3. The CIT as per his order dt. 23rd March, 1987 passed under s. 16 of the Surtax Act, 1964 found that while computing the chargeable profits, royalties amounting to Rs. 39,223 for the asst. yr. 1980-81, Rs. 31,306 for the asst. yr. 1981-82 and Rs. 62,791 for the asst. yr. 1982-83 had been excluded in computing the chargeable profits under the provisions of cl. (ix)of r.1 of Schedule I to the Surtax Act. The CIT found that these amounts had been described by the assessee in the profits and loss account as "technical fees". H....

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....the termination of the agreement. Clause 4(A) of the agreement, which refers to "Technical Fees", is extracted below: "4. Technical Fees : 4(A) In consideration of the services to be rendered to Licensee pursuant to cl. 2 hereof, the Licensee shall pay to the Licensor a technical fee at the rate of 2 per cent calculated on the net invoiced value of each filter manufactured and sold by the Licensee during the term of this agreement. The net invoiced value of each filter shall for the purpose of this agreement mean invoiced ex factory selling price exclusive of taxes and duties, excise and other statutory levies." The assessee had also been accounting for these amounts received as "technical fees." 8. The ld. Deptl. Representative....

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....Court are similar to those of the assessee's case. The only difference appears to be that the assessee has not received any lump sum consideration, but only "technical fees" as per cl.4(A), computed as a percentage of the net invoiced value. Such "technical fees" can in no manner be different from "Royalty". We, therefore, hold on the facts of the case, that the amounts received by the assessee termed "Technical Fees" are nothing but "Royalties". The Assessing Officer is directed to reduce these receipts when computing the chargeable profits. 10. For the asst. yr. 1982-83, the assessee-company paid a sum of Rs. 27,987 on 15th May, 1981 and a further sum of Rs. 27,987 on 14th Sept., 1981 as advance surtax. It is not disputed that the asse....