1998 (3) TMI 49

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....w in holding that the royalty on exports sales receipts for engineering services and receipts for visit of experts were not taxable within the meaning of section 9(1)(vi) and also in the light of their earlier decision in ITA Nos. 1540 to 1543/Mds of 1985, dated May 23, 1987, in the case of Air Preheater Co., USA v. ITO, Trichy ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the assessee was entitled to 20 per cent. deduction, while computing the income from royalty on local sales ?" The assessee, Combustion Engineering Inc., USA., by agent Bharat Heavy Electricals Limited, Tiruchirappalli, is one and the same in all these actions. Tax Cases Petitions Nos. 53....

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.... 10, 1971. Section 9 of the Income-tax Act, 1961 (Act No. 43 of 1961-for short "the I. T. Act"), deals with a situation, when, income deemed to accrue or arise in India, So far as the instant cases are concerned, we are concerned with section 9(1)(vii) of the Income-tax Act, which reads as under : "9.(1) The following incomes shall be deemed to accrue or arise in India---... (vii) income by way of fees for technical services payable by--- (a) the Government, or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person ....

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....fer the questions stating that question No. (1) is not a referable question of law. So far as question No. 2 is concerned, the Tribunal recorded a finding, as below : "Since the royalty is received for supply of know-how, designs, drawings, information regarding secret processes, etc., expenditure to be allowed as a deduction would have to relate to paper work, courier and corresponding salaries of staff, etc., mainly because the information is already developed and available to the assessee. We consider that for such expenses, a deduction of 20 per cent. in respect of each amount, which we have held to be taxable, would be in order. The Revenue is not able to show any difference in the facts of the present case to avoid the applic....