TaxTMI 
TaxTMI 
2001 (1) TMI 208
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....I, Bangalore, in respect of certain amounts received by it from M/s. United Glass Bottles Manufacturing Co., (UGBMCL), an Indian company. M/s. UGBMCL has been treated as the agent of the foreign company for the purpose of the said assessment for both the years under consideration. There was a contract between the two companies according to which the foreign company undertook to supply engineering designs and drawings and some equipments required for modernising and upgrading the regenerating furnace in the glass division of the Indian company. The foreign company also agreed for supervision, erection and Commissioning of the machinery by deputing its own personnel. The necessary approval of the Government of India for the import of designs ....
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....ssessee for both the years. 4. The learned DR, Shri K. Ramesh, supported the order of the Assessing Officer and relies on the following grounds of appeal preferred by the revenue before us: "1. The order of the CIT(A) is opposed to law and facts of the case. 2. The CIT(A) erred in deleting the assessee's income from royalty on the view that payment received was not 'Royalty' under clause (vi) of section 9(1). 3. The CIT(A) ought to have considered the fact that Explanation 2 to section 9(1)(vi) has defined Royalty as consideration for use of any patent, invention, model, design, secret formulator process or trade market or similar property. 4. The CIT(A) ought to have appreciated that fact that whether the design is issued fo....
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....ion 9(1)(vi): Income by way of royalty payable by-- (a) the Government; or (b) a person who is a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non-resident, where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India:' Explanation 1.-- ............................... ....
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....able in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India: Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. Explanation 1.-For the purposes of the foregoing proviso, an agreement mad....
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....s the assessee itself offered for taxation 4000 Pound sterlings being the charges for commissioning. The only dispute before us now pertains to the amount of pound 66,300 relating to Engineering and designs. On careful scrutiny of records, we find that the entire service for the designs and drawings was performed at U.K. and that no part of the services for preparing the designs and drawings was performed in India and, therefore, the cost of such designs and drawings was not taxable in India. A close perusal of the entire agreement reveals that some of the equipments required for the modification of the furnace which is termed as 'regenerative furnace' were imported from the foreign country and similarly, the designs and drawings required f....