TaxTMI 
TaxTMI 
1991 (1) TMI 134
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....pay U. S. dollars 14,950 to the non resident company ; on this, the income-tax payable has to be paid by the petitioner under section 195 of the Act. The petitioner requested the first respondent to determine the tax to be paid on remittance of the amount and to issue a no-objection certificate. The net amount payable in terms of Indian currency was stated as Rs. 1,64,738 and the gross amount as Rs. 2,74,563 ; on this the tax of Rs. 1,09,825 was demanded as per no objection certificate dated May 18, 1984. After paying the tax and remitting the amount, the petitioner sought refund of Rs. 45,930, pointing out that, as per section 10(6A) of the Act (which was inserted with effect from April 1, 1984), the grossing up could not be done. The tax ....
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.... respondent held that the proceedings under section 195 pertained to deduction of tax at source, while section 10(6A) was confined to the assessment of the foreign company ; these are two distinct and separate issues. Hence, two writ petitions, as two remittances under two sets of no objection certificates are involved. Section 10(6A) reads thus : "Section 10.-In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included : (6A) where in the case of a foreign company deriving income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the ....
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....l income of a foreign company. In other words, the contention seems to be that in case the foreign company has to face assessment proceedings, only then will section 10(6A) be attracted. Subject to certain exceptions which are not relevant here as per section 195, any person responsible for paying to a non-resident, etc., any sum chargeable under the Act, shall "at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force" (emphasis supplied). Therefore, the payment to the non-resident is actually the income of the foreign company ; section 195 recognises the pay....
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....serted in section 10 of the Income-tax Act to provide that where income is derived by a foreign company by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by the foreign company with Government or the Indian concern after 31st March, 1976, and tax on such income is payable, under the terms of such agreement, by Government or the Indian concern to the Central Government, the tax so paid will not be included in computing the total income of the foreign company. In other words, there will not be any 'grossing up' in respect of such tax. Where the relevant agreement is made by the foreign company with any State Government or Indian concern, the exemption under this pr....