2005 (12) TMI 558

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....ed into a joint venture agreement with M/s. Power Gems Ltd., U.K., on 14-3-1997. In terms of this agreement, the respondents received technical know-how in the form of detailed plans, specifications, blueprints, drawings and other data/information from the foreign company for the manufacture of electronic items such as ballast converters, inverters etc., in India. As a consideration for this benefit, the foreign company was to be paid by the respondents an annual remuneration, which, for the first financial year, was 2.5% of the respondent's turnover within three months from the end of such financial year and, for the successive financial years, 5% of the turnover of the company within three months from the end of the relevant financial yea....

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....his provision to the original notice and, therefore, the above observation of the appellate authority is not factually correct. Referring to the provisions of the joint venture agreement, ld. SDR submits that 'technical assistance' and 'advice' were expressly mentioned therein as services to be rendered to the assessee by their foreign collaborator and, therefore, it could be reasonably inferred that the service contemplated under the above agreement was in the nature of a "Consulting Engineer's Service" as defined under Section 65(25) of the Finance Act, 1994. This submission is contested by ld. Counsel, who submits that, on a reading of the agreement in its totality, it would emerge that the benefit granted to the assessee by their foreig....

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....es of engineering". In order to place any person within the ambit of such "Consulting Engineer", the Revenue should, in the first instance, establish that he is a professionally qualified engineer. The Revenue has not established this. The original authority observed that such advice and technical assistance as contemplated under the above agreement cannot be rendered by anybody other than a professionally qualified engineer and, therefore, M/s. Power Gem Ltd., would come within the ambit of "Consulting Engineer" as defined under Section 65 of the Finance Act, 1994. This observation of the original authority is just a presumption. No tax could be levied on the basis of presumption. The above definition of "Consulting Engineer" called for a ....