1991 (1) TMI 1

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.... the foreign collaborators would grant to the Indian company during the term of the agreement (a) the exclusive right to manufacture the licensed equipment in India, (b) the exclusive right to sell the licensed equipment in India under the trade name "Wesman Ruppmann" and such sale to be effected by the agency agreed upon, (c) permit licensees to export the licensed equipment freely outside India, except to countries where the licensors have similar licence arrangements. Clause 5 of the agreement provided for payment to the licensors of the following sums: "(a) A payment of 5 per cent. towards the cost of detailed working drawings in terms of clause 3(b). The payment for these drawings shall be admissible in those cases where new drawings are supplied by the licensors abroad, i.e., from their or their associated works, design offices at Stuttgart or elsewhere in Europe. This payment shall not be admissible for minor modification of drawings and designs which have already been purchased from the licensors and paid for by the licensees nor on repeat orders executed by the licensees. This fee shall be calculated on the ex-factory selling price of the licensed prod....

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....stant Commissioner. It did not dispute the assessability of the royalty at 5% mentioned in clause 5(b) of the agreement aforesaid. It, however, challenged that the whole of the sum of 5% specified in clause 5(a) was not chargeable to income-tax in India. In regard to the same, the assessee submitted that there was no liability to deduct tax in terms of the order of the Income-tax Officer as, in its opinion, (a) the services, if any, enumerated under clause 5(a) of the agreement were performed outside India and the payments were also being made outside India so that the amount paid was not chargeable to tax under the Indian statute, (b) there was a bar to assessment under the Income-tax Act, 1961, in terms of the Agreement for Avoidance of Double Taxation between India and the Federal German Republic referred to above, and (c) in the alternative, since the cost of the work drawings to the foreign collaborators exceeds the remuneration, the same was not taxable. The Appellate Assistant Commissioner did not accept the first two of the aforesaid contentions of the assessee. With regard to the third contention, however, the Appellate Assistant Commissioner came to the conclusion that....

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.... the Agreement. The assessee's cross-objection was thus partly allowed. At the instance of the Commissioner of Income-tax, West Bengal-I, the Tribunal referred the abovementioned question for the opinion of the High Court. The High Court followed its earlier judgment dated August 12, 1970, in Income-tax Reference No. 31 of 1970 (CIT v. Beni Ltd.) and answered the said question in the affirmative and in favour of the assessee by order dated February 10, 1976. The Department filed an application for leave to appeal to the Supreme Court and the High Court, by order dated September 8,1977, certified it to be a fit case for appeal to the Supreme under section 261 of the Income-tax Act, 1961, and issued a certificate accordingly. We have heard Mr. S. C. Manchanda, Senior Advocate for the appellant, but nobody appeared for the respondent. The High Court, in answering the reference, placed reliance on its earlier judgment dated August 12, 1970, but the copy of the said judgment has not been supplied in the paper book and as such we were deprived of the opportunity going through the reasoning given by the High Court in answering the reference in the affirmative and in favour of the as....

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.... Commissioner was wrong in holding that the quantum of income could be determined in an appeal under section 248. It was also argued that the Appellate Assistant Commissioner was also wrong in allowing the expenses at 75 per cent. of the remittance. It would be proper to reproduce section 248 of the Act which reads as under : "248. Appeal by person denying liability to deduct tax. -Any person having in accordance with the provisions of sections 195 and 200 deducted and paid tax in respect of any sum chargeable under this Act, other than interest, who denies his liability to make such deduction, may appeal to the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) to be declared not liable to make such deduction." It was argued by Mr. Manchanda that, under section 248, a person could deny his liability to make such deduction but there was no power to determine the quantum and to say as to what extent the said remittance will be taxed. We find no force in the above contention. Section 248 makes a mention of sections 195 and 200 and it does not speak of the sub-sections either (1) or (2) of section 195. When once an appeal has been preferred to the A....