1980 (11) TMI 104

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....er 150 tonnes capacity Travelling Gantry Crane at the building dock of its yard. The assessee quoted for it. In para 54 of that quotation it was stated as follows: " Foreign Exchange for Procurement Materials and for Technical Know-how: We are in a position to design, manufacture, supply and erect the above crane without the assistance of any foreign collaborator. If you however, desire that we should have consultation with any foreign manufacturer, we can arrange to get the same from M/s. Panchco Alaneda, California, a well-known manufacturer of Gantry Cranes and container cranes. This will involve a foreign exchange of U.S. $75,000 which will be charged to you as extra. You also have to get us the necessary foreign exchange to remit thi....

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....already indicated in our original offer the extra cost involved on this account. Further as mentioned in the foregoing para we can also arrange with the same party for supervision of manufacture and erection. However, if we are to get our drawings and designs approved by our foreign collaborators, it will call for an extra time of three months more, that, 8 months instead of 6 months. However, the total delivery period of 24 months will not be effected on this account." In a letter written by the Chief Engineer of Cochin Shipyard, to the assessee before the purchase order was issued, it is again stated as follows: "...We very much welcome your collaborating with the PHB in the supply of 150 tonne Gantry Crane to us. We feel that since you....

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....te responsibility is borne by ASEA, Sweden. "It is mutually agreed that the arrangement is intended as limited to this particular crane only and not a standing contract M/s. Chitram and Phb/Jucho will process this contract, CHITRAM acting as General Contractor and Phb/Jucho as sub-supplier for the engineering and for the assignment of supervising staff for the fabrication in India as well as supervising of the fabrication in India does not relieve Chitram from its responsibility or the proper operation of the items supplied by them. Phb will be the central co-ordinator of the group Phb/Jucho". "Phb/Jucho undertake the responsibility for the correct design and calculation of the crane as well as for the correctness of their construction dr....

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..... The counsel for the assessee described it as a joint nature and illustrated it by saying that it is similar to a case where client told his lawyer that he must in conducting a particular case seek a guidance and assistance with a senior lawyer and that then only he will engage him and pay his fees. This, in our opinion, is a very appellant illustration, illustrating the real nature of collaboration between the assessee and the foreign company. The object with which the foreign collaboration was entered into was not to get any capital asset or any advantage of any benefit of an enduring nature. The object with which such collaboration was entered into was only to make the Cochin Shipyard accept its quotation and issue the purchase order. I....