TaxTMI 
TaxTMI 
1981 (9) TMI 97
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....Metal Co. Ltd. of England) to the assessee-company actually accrued in India for the assessment years 1963-64 to 1968-69 ? " We are concerned with the assessment years 1963-64 to 1968-69. The assessee-company, Kirloskar Oil Engines Ltd. (hereinafter referred to as ' KOEL'), is the statutory agent of a non-resident U.K. Company, Glacier Metal Ltd. (hereinafter referred to as 'Glacier'). KOEL had been manufacturing bearings in India. However, in order to develop their business and to manufacture better quality bearings and for furthering their business, KOEL entered into a collaboration agreement with Glacier on 9th September, 1957. The said agreement provided, under cl. 5 thereof, for the sale of certain materials by Glacier to KOEL. The ....
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....mated and taxed. The assessee in their letter dated 15th March, 1968, urged before the ITO that no profit accrued to the foreign collaborator taxable in India on the sale of material. The ITO rejected the contention of the assessee relying on the decision of the Tribunal dated 27th May, 1965, in the assessee's own case for the assessment years 1958-59 to 1962-63, wherein the Tribunal had held that on the sale of bearings by the Glacier a net profit of 2 1/2% should be assessed as arising in India to Glacier. The assessee appealed to the AAC. There were two such appeals, one was filed in respect of the order for the assessment year 1963-64, and the other was for the assessment years 1964-65 to 1968-69. It was contended on behalf of the....
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....ncipal and Kirloskar Oil Engines Ltd. do have a business connection with this party because of their collaboration agreement. In the, other appeal for the assessment years 1964-65 to 1968-69, another AAC also passed similar orders after going through the relevant material and adopting the observations of the AAC mentioned above in the earlier order. From the said orders of the AAC, the revenue appealed to the Tribunal. The Tribunal found that, earlier, another Tribunal in its decision had held that (1) Glacier had business connection in India, and (2) profit of 2 1/2% on sales should be attributed to selling operations and charged to tax in India. Subsequently, the assessee had filed a miscellaneous application before the same Trib....
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.... the Tribunal observed: " So it is necessary for us only to deal with the department's submission that the situs of the sale contract was in India. In making this submission, the department has urged that clause 5 of the agreement of 9-9-1957 was an independent sale contract, accepted by KOEL in India. Such a submission has not even the merit of being a farfetched argument. It is a completely wrong proposition to say that a collaboration agreement for rendering technical service, of which one clause casts an obligation on the manufacturer in India to buy raw material from the non-resident in certain circumstances, operates as a contract of sale of raw material by the non-resident to the resident manufacturer, accepted in India. The opera....