Decision of the Madras High Court in the case of Carborandum Co.

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....75 (Instruction No. *885) and F.No. 495/1/76-FTD, dated 11-2-1976 (Instruction No. **920) issued in the context of the decision of the Madras High Court in the case of Carborandum Co. (92 ITR 411). 2. On appeal filed by the assessee company, the Supreme Court in its judgment dated 11-4-1977 (108 ITR 335) has reversed the decision of the Madras High Court and has held that :- "The High Court ....

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....chnical services fees by the American company and the affairs of the Indian company, yet no part of the activity or operation could be said to have been carried on by the American company in India and in the absence of such sustainable finding by the High Court, the provisions of section 42 either of sub-section (1) of sub-section (3) were not attracted at all. 3. The Hon'ble Court has further ....

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....a result of the business connection, should not be followed. It was also clarified in para 6 that the existing departmental practice of taxing the non-resident only on that portion of the profit which can reasonably be attributed to the operations carried out in India, should continue to be followed until revised instruction in this regard are issued by the Board. 5. The above instruction may p....