1989 (12) TMI 4

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.... of Rs. 22,50,000 received by the non-resident assessee-company from the Indian companies accrued or arose in India or was deemed to accrue or arise in India and was subject to tax ?" The assessment year involved is 1976-77 for which the previous year ended on December 31, 1975. The facts of this case are as follows : The assessee, a non-resident company, entered into an agreement with the West Bengal Industrial Development Corporation Ltd. for setting up a factory in West Bengal for production of automotive tyres and tubes. As per the terms of this agreement, the foreign company was to supply note and technical data for the construction of the factory in India as also to supply various items of plant and send technical personnel for ....

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....er of Income-tax (Appeals), the Revenue preferred an appeal before the Tribunal and the Tribunal upheld the order of the Commissioner of Income-tax (Appeals) and held as follows: " In the present case, as will be noted from the facts stated above, admittedly, no services whatsoever had been rendered by the assessee-company to the two Indian companies in India during the previous year under consideration. Therefore, even if the agreement constituted the bond between the assessee-company and the Indian companies which could be legitimately constituted as a business connection no part of the income flowing to the assessee-company through this business connection would be taxable in the hands of the assessee-company..." The findings of th....