TaxTMI 
TaxTMI 
2001 (11) TMI 50
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.... are referred for the opinion of this court: "(1) Whether, the Income-tax Appellate Tribunal was right on the facts and circumstances of the case in holding that there was business connection between FACT and foreign collaborators, i.e., Societa-De-Prayon (formerly Engineering and Industrial Corporation) of Belgium, Davy Power Gas Inc., U.S.A. and Chemiebau Dr. A. Ziren GmbH and GOKG (now Davy Power Gas GmbH, West Germany) in the relative technical collaboration agreements entered into between FACT and the said companies? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that rendering of services by the technical personnel deputed under the agreements to FACT am....
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....ssessee in India. FACT Ltd. entered into collaboration agreement with three foreign companies. The agreement entered into by FACT with Engineering and Industrial Corporation of Luxumberg, Belgium (hereinafter referred to as "ETC") on February 6, 1968, provided for furnishing of information and assistance necessary to enable FACT to quote for and build phosphoric acid plants in India and to supply services. ETC agreed to supply to FACT the necessary staff for supervision of erection and for commissioning of the plant. FACT remitted amounts to ETC towards the payments agreed upon in the accounting years relevant to the three assessment years 1972-73, 1973-74 and 1974-75. FACT entered into a similar agreement with Davy Power Gas Inc. of USA fo....
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....technical personnel for services in India amounted to rendering services in India and that the income attributable to such services accrued to the non-resident in India. 15 per cent. of the total payments was treated as income accruing in India. As the payments were agreed to be made in India free of income-tax, the tax deductible at source from the income was on computation of "tax on tax basis". Accordingly, the Income-tax Officer proceeded under section 201(1) of the Act and treated FACT as an assessee in default in respect of the tax payable. Appropriate orders were passed on this basis. In appeal, the Appellate Assistant Commissioner held that the place of supply of the services was the foreign country, that no part of the income arose....
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....ns of law were referred to the High Court and the references were I.T.R. Nos. 446 to 451 of 1985. These references were disposed of by judgment dated March 27, 1990, and is reported in CIT v. Fertilisers and Chemicals Travancore Ltd. [1990] 185 ITR 398 (Ker). After considering the judgment and the various agreements, this court was of the view that the Appellate Tribunal failed to pose for consideration the appropriate question that arose before it and from an appropriate angle. This court further held that: "the approach or perspective in which the matter was viewed did not bring home the aspect or basis on which the Revenue based the order impugned, or assailed by the assessee. Under section 195(1) of the Income-tax Act, if any person is ....
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....stions referred to us in Income-tax References Nos. 446 to 451 of 1985 and at the same time direct the Income-tax Appellate Tribunal to restore the appeals (I. T. A. Nos. 243 to 248/Coch/1977-78) to the file and consider the matter afresh in accordance with law". Thus, the cases were remanded to the Appellate Tribunal. The appeals were restored and the Tribunal was directed to consider the matter afresh. Subsequently, the Tribunal decided the matter by a consolidated order dated August 30, 1991. The Tribunal went through the agreement executed between the assessee and the non-resident and after analysing the various clauses in the agreement, held as follows: "It is not as if the agreement evidences instances of stray transactions. It is ....
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....em. There is nothing in the agreement to show that the employees of the foreign company, who rendered services here had rendered services as employees of FACT. Clause 6.2 says thus: "The services of the necessary staff for supervision of erection if such supervision is desired by FACT and for commissioning of phosphoric acid plant as agreed by both parties". Regarding payments, clause 9 states as follows: "For the services of the supervising engineers referred to 6.2 in accordance with EIC's scale of daily rates current at the time and in accordance with standard EIC terms for the loan of such engineers set out in Schedule B to this agreement; provided that the rates may be varied from time to time by mutual agreement while taking into acco....