TMI Blog2001 (1) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... o treat the ITO's letter No. 3077, dt. 18th March, 1985, as an order under s. 195(2) of the IT Act, 1961. Ground No. 2. In the facts and circumstances of the case, the CIT(A) erred in entertaining the appeal against the ITO's letter dt. 18th March, 1985. Ground No. 3. In the facts and circumstances of the case, the CIT(A) was not justified to hold that the amount paid by the assessee to foreign contractors did not represent the income in terms of s. 9(1) of the IT Act. 2. This appeal was originally filed before the Cuttack Bench of this Tribunal but by order, dt. 20th Dec, 1989, passed by the Hon'ble President under r. 4 of the Income-tax (Appellate Tribunal) Rules, 1963, this appeal was transferred to Calcutta Benches. We may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , name of the respondent be changed, from OMC Alloys Limited to Tata Iron Steel Co. Ltd. That's how Tata Iron Steel Co. Ltd. has come to be respondent in this case. We now turn to brief material facts leading to this litigation before us. 3. The assessee respondent had floated global tenders for supply of equipment and services, on turnkey basis, for setting up a charge chrome plant in Orissa. The successful bidder was a consortium consisting of Voest Alpine AG (Austria) and Outokumpu Oy of Finland, though separate agreements were entered into with both the members of the consortium on 24th July, 1981, at Linz, Austria. When the remittances, in pursuance to these agreements, were made by the assessee respondent, the income-tax implica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in every case in respect of interest, royalty and technical fees received abroad from an Indian resident for services or other consideration rendered wholly abroad, the only exception being the case where payment is made to the purpose of Indian resident's business, profession or source of income abroad. As regards assessee's submission that 40 per cent tax on payments made to the consortium being too high, the AO suo motu determined the 'tax liability at the ad hoc rate of 20 per cent on payments being made in India to the foreign consortium'. Accordingly, the assessee-respondent was directed to deduct tax at source @20 per cent from all such payments. Aggrieved, the assessee was in appeal before the CIT(A). In appeal, the CIT(A) held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided under sub-cl. (b) comes into play and entire payment becomes non-taxable. I would, accordingly, hold that the amount paid by OMC Alloys Ltd. to the foreign contractors did not represent income deemed to accrue in India in terms of s. 9(1) and, therefore, the company had no obligations to deduct income-tax in respect of such payment." Aggrieved by this decision of the learned CTT(A), the Revenue is in appeal before us. 4. We have heard Shri J.C. Mishra, learned senior Departmental Representative, and Shri Sanjay Bhattacharya, learned counsel for the respondent-assessee. We have also carefully perused orders of the authorities below, documents filed before us and both the related Double Taxation Avoidance Agreements as in force at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A). 6. While we are inclined to uphold, in principle, contention of the assessee, which is duly supported by the plain words and unambiguous provision of s. 248 of the IT Act, our perusal of records indicates that though the original demand raised on 18th March, 1985, was for an amount of Rs. 10,21,142, the assessee had paid only a sum of Rs. 6,00,000 vide bank challan No. C 189, dt. 25th March, 1985. It is therefore, clear that the assessee had not made full payment of Rs. 10,21,142, as directed by the AO, vide his impugned letter, dt. 18th March, 1985. It is one of the basic conditions for filing of appeal under s. 248 that the assessee must deduct the tax due from non-resident assessee and must also pay the same to the Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the tax, as directed by the AO, deposit the same with the Government, and then file an appeal before the CIT(A). The assessee's failure to pay the tax to the Government has vitiated his right to appeal under s. 248 of the IT Act. We, accordingly, hold that CIT(A)'s interference in the directions of the AO was inherently bad in law and we set aside the same. We are of the view that entire proceedings before the CIT(A) were nullity in law. In the result, we cancel the order of the CIT(A) and restore that of the AO. 8. Before parting with the matter, we may clarify that we have disposed of the Revenue's appeal on a technical ground per se, and that this disposal does not have any bearing on merits of the case which we had no occasion to re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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