TaxTMI 
TaxTMI 
1976 (11) TMI 38
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....ompany for the purposes of such assessments. During the previous years it was also assessed as a non-resident. We are concerned in this reference with certain payments received by the assessee-company under an agreement dated 30th June, 1958, entered into between the assessee and an Indian company called Amar Dye Chem Ltd. Under the said agreement the assessee was, inter alia, entitled to receive a fee called "technical service fee"; this was under clause (3) of the agreement. The fee provided under the agreement, to which we shall make a detailed reference subsequently, was Rs. 25,000 annually. In the assessment year 1959-60, the assessee received the proportionate amount of Rs. 18,750. However, in the two succeeding years of assessment ....
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.... fees received by the assessee could, in the circumstances, be deemed to be income accrued or received within the taxable territories. It may be mentioned here that before the Tribunal there was no dispute about the receipt being of an income nature or about the apportionment made by the departmental authorities in regard to the amounts held to be assessable in the taxable territories. This was 40% of the amounts paid to the assessee under clause (3), i.e., Rs. 7,500, Rs. 10,000 and Rs. 10,000, for the three assessment years respectively. Thereafter, at the instance of the assessee a reference has been made to this court under section 66(1) of Indian Income-tax. Act, 1922. The question which has been referred to us for our opinion is as f....
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....nd chemicals stated in paragraph (1) above. All such information supplied by A.C.N.A. to Amar will be used by Amar without any restriction or objection by A.C.N.A even after the agreement period, but shall not be disclosed to any third party. (3) In consideration of A.C.N.A.'s disclosure and supply of the secret processes as referred to in paragraphs (1) and (2) above, Amar shall pay to A.C.N.A. an annual technical service fee of Rs. 25,000 net free from income-tax in Italian lire at Italian lire 130 per Re. 1, subject to any exchange restrictions as may be for the time being in force. This fee shall not include payments for A.C.N.A.'s technicians sent to India, as laid down in paragraph (6) below...... (5) The annual amount of technica....
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....00 per annum was entirely for services rendered in Italy, i.e., outside India. Under these circumstances, it was submitted, the question of taxing any part of the income on the basis of accrual or on the basis of receipt in the hands of the assessee did not arise. It was further submitted that the obligation contained in clause (3) of the said agreement, for which payment had to be made, had to be considered separately and it would not be proper to consider the agreement as a general obligation of the respective parties therein contained as another link. We are unable to subscribe to this view. It is impossible in our opinion to read the obligations undertaken by the parties under the agreement as divorced from one another. It is true tha....