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2012 (12) TMI 763 - AT - Income TaxRe opening of assessment - BAH India as an agent of the USA entity - fees for technical services - Held that:- Although the amount payable by BAH India to the USA entity was debited by BAH India to the profit & loss account and was also claimed as expenses, no RBI approval was obtained for remitting the said amount in foreign exchange as required by relevant provisions of Foreign Exchange Regulation Act during the year under consideration. As claimed the said amount did not constitute income of the year under consideration for want of the RBI approval as no income chargeable to tax in India could be said to have accrued in the absence of the required approval from RBI reliance placed on the decision of in the case of Kirloskar Tractors Ltd. (1998 (2) TMI 117 - BOMBAY HIGH COURT) wherein held that the approval of RBI having been received in the subsequent years and the relevant amounts also having remitted during those years, liability could be said to accrue or arise in such subsequent years though the same pertained to the earlier years. Reliance has also been placed on another decision of Hon'ble Bombay High Court in the case of Dorr-Oliver (India) Ltd. v. CIT [1998 (1) TMI 42 - BOMBAY HIGH COURT] wherein it was held that collaboration agreement being subject to Government approval, deduction of sum paid as compensation and fees under collaboration agreement was allowable only upto the date till the agreement enjoyed approval by Government of India and not for any subsequent year. Thus the judicial pronouncements discussed above clearly support the stand of the assessee that income on account of the amount payable by BAH India to the USA entity could be said to have accrued to the said entity only on receipt of the required approval from RBI and there being no such approval received during the year under consideration, the same could not be taxed as income in that year. The decision of the Hon'ble Supreme Court in the case of LIC v. Escorts Ltd. (1985 (12) TMI 289 - SUPREME COURT OF INDIA) thus was rendered in a different context and in a different set of facts and the same cannot support the stand of the Revenue in the present case - delete the additions made on this count by the AO - in favour of assessee. Method of accounting - royalty and fees for technical services - Held that:- Keeping in view the language so employed in the case of Seamens Aktiengesellschaft (2012 (12) TMI 737 - BOMBAY HIGH COURT) & CSC Technology Singapore Pte. Ltd. (2012 (4) TMI 189 - ITAT DELHI) considering the relevant provisions of DTAA between India and Germany royalty and fees for technical services should be reckoned for taxation only when it is actually received by the assessee and not otherwise - royalty/FTS which had accrued as income to a foreign company, could not be taxed in the source country (being India) unless this amount had been received by the foreign company - thus the amount payable by BAH India to the USA entity could not be brought to tax in India during the year under consideration as fees for technical services as per the relevant provisions of the DTAAs since the same had not been paid to the said entity - in favour of assessee.
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