2006 (1) TMI 96

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....resented by M/s. Lakshmi Machine Works Limited. The assessee filed a return of income on December 16, 1993, offering technical know-how fees of Rs. 37,97,980 for the assessment year 1993-94 and on November 29, 1994, admitting its income at Rs. 1,14,43,800 for the assessment year 1994-95. As per the collaboration agreement entered into between the two companies, relating to manufacture of high speed draw frames, namely, RSB 851, down payments were made in three instalments. Though there is no dispute regarding the quantum of income chargeable to tax, the only dispute raised is regarding the rate of tax applicable. The contention of the assessee is that these down payments are in the nature of technical know-how fees and therefore, to be t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s of the case, the Appellate Tribunal was right in holding that the lump sum payment made to the assessee foreign company was taxable at the rate of 20 per cent, relying on the exchange of notes of 1984 and not considering the terms of the Double Taxation Avoidance Agreement with Germany and especially, articles 12(3) and 12(4) of the said Agreement and the definition of 'royalty' under the Income-tax Act?" We have heard learned counsel appearing for the Revenue. On a perusal of the order of the Commissioner of Income-tax (Appeals) as well as the Tribunal, it is seen that both the Commissioner of Income-tax (Appeals) as well as the Tribunal concurrently found that the agreement executed by the German company clearly shows that what wa....