TaxTMI 
TaxTMI 
1982 (11) TMI 33
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....ion ? The fact relevant may briefly be stated: In pursuance of certain agreement entered into between the Govt, of India and the Govt. of Czechoslovakia, the Govt. of India formed a company, called "Bharat Heavy Plate & Vessels Ltd. ", a wholly Govt. of India-owned company, for manufacturing heavy plates and high pressure vessels. On February 27, 1968, an agreement was entered into between the "Bharat Heavy Plate & Vessels Ltd. ", (hereinafter referred to as " the company ") and the "Skoda Exports ", Praha (Czechoslovakia) , whereunder the Skoda agreed to render technical assistance and consultancy service to the company in erecting its plant and in putting it on stream. In this referred case, we are concerned with two assessment years, ....
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....fied chartered accountant in Czechoslovakia. It is thereupon that the assessee applied for and obtained this reference under s. 256(1) of the Act. Sri S. Parvatha Rao, learned counsel for the assessee, contended that, under the agreement dated February 27, 1968, the non-resident company, viz., Skoda, agreed to depute certain technical personnel to India to render technical assistance, guidance and advice, and the agreement also provided for payment of the salaries of such persons by the Indian company. The consultancy fee provided for under the agreement is not at all for anything done, or any activity carried on by, the non-resident company in India, but is on account of the training given to the deputed personnel in Czechoslovakia, and....
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....he Skoda will render consultancy service relating to the problems of construction and that, for that purpose, it shall depute group of designing experts to India. Article 5(1) says that the consultancy activity consists of granting of the expert technical advice, opinions, and/or recommendations in technical basic matters, according to the circumstances, by the supplier's experts to the corresponding experts of the customer, to the extent possible by the number of experts deputed by the supplier, and limited to their field of specialisation. It is further provided that the consultancy activity shall be only advisory, and shall not extend to performing of any individual task. It is not necessary to refer to arts. 6 to 8. Articles 9 and 10 de....
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....production in the plant according to a articles 9 arid 10 of this agreement. Enclosure 2 contains the number and nature of experts to be deputed, while enclosure 5 contains the terms and conditions upon which such experts shall serve in India. A reading of the above provisions makes it clear that Skoda, the nonresident company, is charging the Indian company for the technical assistance and consultancy service, rendered by it in two ways, viz., (i) payment of salaries of the personnel deputed by it to India; and (ii) consultancy fee for rendering technical assistance and consultancy services. It is clear that the consultancy service or technical assistance, which the Skoda was to render to the Indian company, was to be rendered only t....
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.... yet to be done. We are therefore, in agreement with the Tribunal that the consultancy fee earned by Skoda Must be deemed mainly to arise from its: activity carried on in India and is, accordingly taxable in the hands of its agents, i.e., Bharat Heavy Plate & Vessels Ltd.. Visakhapatnam. Mr. S. Parvatha Rao relied upon certain decisions in support of his contention that none of the consultancy services can be said to have been rendered in India to which a brief, reference" is necessary. However, before referring to those cases, we must say that, Whether any part of the activity is carried on in India or not, is essentially a question of fact, and the decided cases, would be relevant only for the principles underlying the decision The fir....