TMI Blog2002 (2) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. Some of the aircrafts, run by it, are owned by it whereas the others are taken by it on lease from various non-residents. The assessee had taken two aircrafts on lease for a period of 6 years from ILFC and separate agreements were entered into in respect of each aircraft. The terms and conditions of these agreements are identical. According to Article 1.6 read with Article 5.3 of the agreement, the assessee was required to pay the lease rent @ US $ 2,40,000 per month w.e.f. 31-12-1995 and US $ 2,41,000 per month w.e.f. 1-1-1995. According to Article 1.7 read with Article 5.4, the assessee was also required to pay supplemental rent in the form of reserves @ US $ 234 per flight hour. According to Article 5.4, the supplemental rent is based on the use of the aircraft by the lessee during the lease term. These reserves have been categorised as "airfreight reserves", "engine reserves" and "landing gear reserves". These reserves are created to meet the cost of expenditure incurred by the lessee in respect of the deficiencies and work specified in Articles 13.1 13.2. According to Article 13.3, the assessee is entitled to reimbursement from such reserves after the work is completed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try, it is a common practice to provide for such reserves in the agreement. An aircraft is required to undergo some statutory checks after running particular number of flight hours, 'C' check and 'D' check are two such mandatory checks. The aircraft will not be provided with necessary air worthiness certificate by aviation authorities of respective country if such checks are not carried out. These checks are quite expensive, especially, 'D' check. The lessor wants to ensure that the lessee will carry out such check on its aircraft when it falls due. In order to avoid any default by the lessee, the lessor creates a separate reserve, charges some amount from lessee on per flight hour basis and keeps depositing this amount in that reserve. Whenever a mandatory check falls due, the lessee is required to get the respective check done and claim, as reimbursement, the amount spent by the lessee on such check. The reimbursement is limited upto a maximum of the amounts lying in that reserve. If the lessee defaults in getting any check carried out in time, then the lessor can call back the aircraft and get the respective check done out of the reserves lying with the lessor. The same is the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reated the assessee in default as per the provisions of section 201(1) of the Act and raised the demand of tax by grossing up the rate of tax as under: -------------------------------------------------------------------------------------- F.Y. US$ Rate INR Rate of Short of tax tax Deduction -------------------------------------------------------------------------------------- 1996-97 967015 38 3,67,46,570 55% (122.2% after 4,49,11,658 grossing up) 1997-98 887838 40 3,55,13,520 48% (92.3% after 3,27,78,979 grossing up) 1998-99 925455 43 3,97,94,505 -do- 3,67,30,384 -------------------------------------------------------------------------------------- The above action of Assessing Officer has been confirmed by the CIT(A). 6. The learned Sr. Counsel for the assessee, Mr. Dastur has vehemently assailed the orders of the CIT(A) as well as the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, conceded by him that payments made after31-3-96for spares, facilities or services in connection with the operation of the leased aircraft became chargeable to tax in computing the total income of non-resident and consequently, the payer would be liable to deduct tax at source against such payments. But it was strongly contended by him that payments under the agreement as supplemental rent did not fall within the exclusionary provisions of section 10(15A) of the Act. He took us through the relevant clauses of the agreement and contended that it was the total responsibility of the lessee to keep the leased aircraft in good running condition and the lessor was not required either to provide for spares or to provide any facility or service in connection with the operation of leased aircraft. According to him, a reserve was created only to ensure that lessee keeps the aircraft in good airworthy condition. Therefore, it was pleaded that the payment was in fact the connection with the acquisition of the leased aircraft and, therefore, Assessing Officer was not justified in holding that such payment was not connected with acquisition of the aircraft on lease but only for running/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature of the payment. He drew support from the decision of the Supreme Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801. According to him, if the expenditure falls within the ambit of exclusionary portion of section 10(15A) of the Act, then it is immaterial whether the payment is made directly by the lessee or it is reimbursed by the lessor from the reserves. He also drew our attention to the decision of the Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 for the proposition that in interpreting the provisions of a statute, the speech of the mover of the bill is relevant and, therefore, the speech of the Finance Minister would be relevant in finding out the mischief which was taken care of while substituting the provisions of section 10(15A) of the Act. In this regard, he also took us through the notes explaining the provisions of Finance Bill, 1995. It was further submitted by him that the words "facility or service" have very wide connotations and would include the expenditure incurred on the operation of the aircrafts. According to him, the creation of reserve was merely a devise to circumvent the provisions of section 10(15A) of the Act. He drew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the rival parties as well as the material placed before us have been considered carefully. A bare reading of section 201(1) of the Act clearly shows that a person can be said to be an assessee in default if such person does not deduct the tax at source or after deducting fails to pay such tax as required by or under the Act. The provisions for deducting the tax at source are incorporated in Chapter XVIII of the Act. In the present case, we are concerned only with the provisions of section 195 of the Act, relevant portion of which, for the benefit of this order, is being reproduced as under: "195(1) Any person responsible for paying to a non-resident, not being a company, or to a foreign company, any interest (not being interest on securities) or any other sum chargeable under the provisions of this Act (not being income chargeable under the head "Salaries") shall, at the time of the credit of such income to the account of the payee or at the time of payment thereof in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force. (2) Where the person responsible for paying any such sum chargeable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government in this behalf. Expln: For the purpose of this clause, Expln: For the purposes of this clause, "foreign enterprise" means a person the expression 'foreign enterprise' who is a non-resident. means a person who is a non-resident. -------------------------------------------------------------------------------------- A comparative study of the above provisions shows that payments made for acquisition of an aircraft or an aircraft engine on lease, prior to 1-4-1996, were exempt from taxation but from 1-4-1996, the Legislature has excluded the payments made for providing spares, facilities or services in connection with the operation of the leased aircraft from the ambit of section 10(15A) of the Act. If the facts of the case are to be brought within the exclusionary provisions of section 10(15A) of the Act, then it must be shown that payments are not only in connection with the operation of the aircraft but also such payments relate to the supply of spares or provisions of facility or service provided by the lessor. In our considered opinion, there must exist inextricable link between the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying performed during the calendar month prior to payment. All Reserves for flying preformed during the month in which the Termination Date occurs will be paid on the Termination Date, unless otherwise agreed by the parties. 5.4-3 No interest will accrue or be paid at any time to Lessee on such Reserves and, subject to Lessor's obligations under Article 13, Lessor will have complete and unrestricted use of the Reserves (including earning of interest thereon for Lessor's account). 5.5 Increased Rent for Hour/Cycle Ratio: In the event in any calendar month of the Lease Term the Aircraft is operated at an hour/cycle ratio less than 3 hours to 1 cycle, Lessee will pay Lessor US$ 55 for each cycle the Aircraft operated during such month in excess of 3 hours to 1 cycle. Such additional Rent will be due and payable by Lessee on the date on which the next Reserve payment is due (in accordance with Article 5.4-2) following such hour/cycle calculation period. 8.6 No Lessor Liability for Losses: Lessee agrees that Lessor will not be liable to Lessee, any sub lessee or any Person, whether in contract or tort and however arising, for any unavailability, loss of use or service, cost, loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with Para 121 of the FARs (except during those periods when the Aircraft is undergoing maintenance or repairs as required by this Lease and except to the extent that the Aircraft was delivered to Lessee deficient in this regard) and (iv) in the same manner and with the same care as used by Lessee with respect to similar aircraft and engines operated by Lessee and without in any way discriminating against the Aircraft. 12.2 Specific Obligations: Without limiting Article 12.1, Lessee agrees that such maintenance and repairs will include but will not be limited to each of the, following specific items: (a) Performance in accordance with the Maintenance Program of all routine and non-routine maintenance work, including on line maintenance on the Aircraft. (b) Incorporation in the Aircraft of all airworthiness directives of the FAA and the Aviation Authority and all alert service bulletins of manufacture, Engine manufacturer and other vendors or manufacturers of parts incorporated on the Aircraft. (c) Incorporation in the Aircraft of all other service bulletins of Manufacturer, the Engine manufacturer and other vendors which Lessee schedules to adopt within the Lease ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rests (except Permitted Liens) of any kind or description, (ii) be in airworthy condition and of at least equivalent model and modification status and have a value and utility at least equal to the Parts replaced, assuming such replaced Parts were in the condition and repair required to be maintained by the terms thereof and (iii) have a current "serviceable tag" of the manufacturer or maintenance facility providing such items to Lessee, indicating that such parts are new, serviceable or overhauled. So long as a substitution meets the requirements of the Maintenance Program and Aviation Authority, Lessee may substitute for any part a part that does not meet the requirement of the foregoing sentence if a complying part cannot be procured or installed within the available ground time of the Aircraft and as soon as practicable the non-complying part is removed and replaced by a complying part. 12.3-2 All parts removed from the Airframe or any Engine will remain the property of Lessor and subject to this Lease no matter where located until such time as such parts have been replaced by Parts (which have been incorporated or installed in or attached to the Airframe or such Engine) whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essor will reimburse Lessee within forty-five (45) days of receipt of all necessary information. 13.4 Reimbursement Adjustment: By way of example, among the exclusions from reimbursement are those items resulting from repairs covered by Lessee's or a third party's insurance, (deductibles being for the account of Lessee) or required as a result of an airworthiness directive, manufacturer's service, bulletin, non-routine or non-scheduled maintenance, faulty maintenance or installation, improper operations, misuse, neglect, accident, ingestion or other accidental cause. Reimbursement from the Reserves will not be available for the APU, thrust reversers, landing gear or any of their associated components. It is also the intent of the parties that all invoices subject to reimbursement from Lessor will be reduced (by adjustment between Lessee and Lessor retroactively if necessary) by the actual amounts received by Lessee on account of such work from other sources, including but not limited to insurance proceeds, manufacturer's warranties, guarantees and concessions or any other responsible third parties. 13.5 Costs in Excess of Reserves: Lessee will be responsible for payment of all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the period of use of the aircraft and the right of reimbursement is only limited to the extent of reserve only. If the cost of repair exceeds the reserve, then such liability has to be borne by the assessee only. 11. In view of the above discussion, it is clear that the supplemental rent was paid and kept in the form of reserves only for meeting the expenditure which was to be incurred by the lessee to keep the aircraft in airworthy condition. Therefore, we are in agreement with the contention of the ld.Sr. DRthat the payment by the lessee by way of supplemental rent was in connection with the operation of the leased aircraft. But that is not enough for holding that such payment fall within the exclusionary provisions of section 10(15A) of the Act. In order to fall within the ambit of such exclusionary provisions, there must exist the inextricable link between the expenditure regarding supply of spares or for use of any facility or for rendering of any service by the lessor and operation of the leased aircraft. Article 13 of the agreement does not provide for utilisation of reserve either for the supply of any spare parts or for utilisation of any facilities or for rendering of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were receiving payments in consideration of facilities or services provided/rendered by the lessors such as training to the pilots or other crew men, providing technicians etc. in the guise of leased rent. It is this mischief which was suppressed by the substitution of section 10(15A) w.e.f.1-4-1996. This is manifest from the memo explaining the proposed Finance Bill, 1995. Restricting the scope of Income-tax exemption on payments to foreign enterprises for acquiring aircraft on lease. Under the existing provisions of clause (15A) of section 10 of the Income-tax Act, Income-tax exemption is provided on any payment made by an Indian company, engaged in the business of operation of aircraft, to acquire an aircraft on lease from the Government of a foreign State or a foreign enterprise under an agreement approved by the Central Government in this behalf. The provisions of clause (15A) of section 10, as at present, are being used for obtaining income-tax exemption not only on payments in respect of lease rental of the aircraft but also on payments for maintenance of leased aircraft, supply of spares therefor, provision of the services of pilots and other members of the crew along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents continued to be exempt under section 10(15A) of the Act. Consequently, the same was not chargeable to tax and, therefore, there was no obligation on the assessee to deduct the tax at source under section 195 of the Act. The question of holding the assessee as an assessee in default under section 201(1) of the Act, therefore, does not arise. Accordingly, we set aside the orders of CIT(A) on this issue and delete the demands raised for financial years 1996-97 to 1998-99 with reference to the payments made to ILFC. 14. Before parting with this issue, we may like to mention that the learned counsel for the assessee has also advanced arguments to the effect (i) that even assuming that payments to ILFC were chargeable to tax, no tax was payable in view of the provisions of Double Taxation Avoidance Agreement (in short DTAA) between India and USA; (ii) that even assuming that the payment on account of supplemental rent was not exempt under the provisions of DTAA, no demand could be raised against the assessee since the Assessing Officer himself had issued. NOC under section 195(2) and permitted the assessee to remit the payment without deducting the tax at source; and (iii) that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to M/s. AAR Aviation for lease of spare parts. The assessee had made two payments of US $ 1,99,370 each on22-4-1994and14-11-1994to it as lease rent under the terms of the lease agreement dated24-8-1993appearing at page No. 325 of the paper book. The assessee had not deducted the tax at source from the above two payments though it had deducted the tax at source against the payments made by it subsequently. The assessee was asked by the Assessing Officer to explain as to why the tax was not deducted on these payments vide office letter dated22-9-1999. The assessee vide reply dated 15-10-1999 submitted that no tax was deducted in respect of these two amounts on the basis of the NOC issued by the Income-tax Department. This explanation was not accepted by Assessing Officer for the following reasons: (a) The jurisdiction to issue NOCs lies with TDS Officers inDelhi. However, it is seen that these NOCs were obtained by the assessee from his respective "Assessing Officer" and not from the "TDS Officer". Since they were obtained from an officer who had no jurisdiction over the matter, hence, these NOCs are null and void ab initio. (b) The format of such NOC, as produced before me, by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first contention is that no objection certificates (NOCs) were issued by the Assessing Officer, who had the jurisdiction over the non-resident assessees. Our attention was invited to the copy of such certificate appearing at page 345 of the paper book. Therefore, it has been contended that assessee could not be treated as an assessee in default under section 201(1) of the Act. We are unable to accept this contention of the learned counsel for the assessee for the reason that the NOCs issued by the Assessing Officer cannot be considered as an order under section 195(2) of the Act as such certificates are entirely different from the certificates issued with reference to the payments made to ILFC in as much as in that case a specific order was passed under section 195 of the Act and the assessee was allowed to remit the money after deducting the tax at source at nil rate. But in the present case, no such order was passed by the Assessing Officer. The perusal of the NOC simply shows that the Assessing Officer had declared to the effect that no liability was outstanding against AAR Aviation under any of the Acts mentioned therein on the date of the payment and, therefore, he had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely because at the end of the lease period, the option is given to the lessee to purchase the same. In the present case, the perusal of the agreement clearly shows that intention of the parties was to enter into an agreement of lease only. As per clause 4C, the lessee cannot even repair the parts without prior permission of the lessor. According to clause 8B, if during the warranty period, any defect is found, the lessor is required to replace or repair the same. It is also not the case of the assessee that the lease rental paid by the assessee was considered as capital expenditure. There is nothing to indicate that parties intended to treat it as transaction of sale. The option to purchase at the and of the lease period can be exercised only after paying a quite substantial amount i.e., US $ 50,000 which appears to have been fixed considering the price of the spares at the end of the lease term. Merely because the assessee exercised the option, the agreement, in our opinion, cannot be considered as hire purchase agreement. It was not necessary for assessee to exercise such option and could even refuse to exercise such option since it involved huge amount. In our considered opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exchange Rate INR Short ----------------- ----------------- Deduction (@ USD GBP USD GBP 25% i.e. 20% grossed up) -------------------------------------------------------------------------------------- 1994-95 21346 112644 38 70 8696228 2174057 1995-96 - 83202 38 70 5824140 1456035 1996-97 - 55324 38 70 3872680 968170 1997-98 - 42727 40 70 2990890 747723 1998-99 - 25368 43 70 1775760 443940 -------------------------------------------------------------------------------------- The CIT(A) has confirmed the order of the Assessing Officer after observing as under: "The submissions of the appellant are considered the payment in question was incurred for providing training to the crew of the appellant. As per the protocol to the DTAA with USA referred to by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the definition of fee for technical services in Article 13 of DTAA withU.K.Since such definition is restricted in its scope than the definition in section 9(1)(vii) of the Act. According to him, Article 13(4)(c) is applicable which includes making available of technical knowledge, experience, skill, know-how or process etc. Since only use of simulator was allowed, no technical knowledge was made available to assessee's personnel. Proceeding further, it was submitted that if such payment does not fall within Article 13(4) of DTAA then it cannot be taxed even under the treaty in view of the Calcutta High Court decision reported as CIT v. Davy Ashmore India Ltd. [1991] 190 ITR 626. Further if it cannot be taxed as fee for technical services, then it can be considered only as business profits under section 9(1)(i) and consequently, such business profits cannot be taxed unless the payee has permanent establishment inIndia. It was pleaded by him that none of theU.K.parties had any permanent establishment inIndiaand, therefore, these payments were not chargeable to tax. Finally, it was pleaded that Assessing Officer was not justified in grossing up the rate of tax. 22. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, on this account also, it would fall within the definition of technical services as provided in Article 13 of DTAA with U.K. in as much as it not only includes making available of technical knowledge but also the experience. Therefore, it is held that the agreement was for providing of training to assessee's personnels and consequently, the payment for the same was fee for technical services and, therefore, chargeable to tax in the hands of the recipient under section 9(1)(vii) of the Act as well as under the provisions of DTAA with U.K. 24. As far as issue of grossing up the rate of tax is concerned, we have already expressed our comments on this issue in the operative part of our order while disposing of the issue regarding the payments to ILFC. In view of the same, it is held that Assessing Officer, was not justified in grossing up the rate of tax. 25. In view of the above discussion, orders of CIT(A) for all the financial years i.e., 1994-95 to 1998-99 are modified and Assessing Officer is directed to recompute the tax liability by applying the rate of tax at 20 per cent. 26. Now we take up the issue relating to payments made to Sochata of France. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is difficult to exclude the payment from the ambit of fee for technical services as provided in Explanation 2 to section 9(1)(vii). The ITAT Hyderabad judgment in the case of Mannesmann Demag 26 ITD (Hyd.) 198 is on almost identical facts and would be applicable to the case of the appellant. Appeal on these grounds are dismissed." 27. The learned counsel for the assessee has assailed the order of the CIT(A) by submitting that since the agreement is for repair and replacement of parts, the price component for supply of parts for replacement cannot fall within the ambit of technical services. According to him, the definition of fee for technical services in section 9(1)(vii) includes any consideration for pure services and not services coupled with any other obligation. He also drew our attention to the copy of invoice to point out that the consideration consisted of not only for repairs but also for spare parts. He also referred to page 624 of the commentary on Income-tax law by Pithisaria and Chaturvedi, 5th edition Volume I. So in any case, it would only include charges for repairs only. Accordingly, the payment for spares would fall within the provisions of section 9(1)(i) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quipment in the course of Repair pursuant to this Agreement. 2. Provide as available, Parts or Exchange Shop Modules or Modules in Exchange forSAHARA's trade-in Parts or Shop Modules or Modules, during the Repair of Engines to meet the Turn around times specified in Article VIII. C. Keep and maintain current files on all published CFM56 Engineering specifications, applicable Repair and refurnishment and modification documents, as well as service bulletin data and their application and introduction. D. Provide warehousing and inventory control forSAHARAinventory generated at SOCHATA facilities during the performance of this Agreement. E. Reserve the right to subcontract any Part of the Repair of the Equipment normally subcontracted to a source outside SOCHATA. Any such subcontract Repair shall be controlled to the requirement of applicable JAA/FAA directives. F. Provide historical Part Repair, configuration tracking and management ofSAHARA's Life Limited Parts Equipment located at SOCHATA's facilities for configuration changes resulting from workscope performance. G. Provide transportation coordination forSAHARA's Equipment from/toSAHARA's facilities to/from SOCHATA faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pare parts. In our considered view, the agreement was only for repair of engine and other equipments. Further, considering the nature of services involved, we are also of the view that consideration for such job amounted to fee for technical services as defined in section 9(1)(vii). This view is fortified by the decision of the Tribunal, Hyderabad Bench in the case of Mannesmann Demag, Lauchhammer wherein it has been held that payment for repair job whether small work or large construction work amounts to fee for technical services liable to tax under section 9(1)(vii). Accordingly, the contention of the assessee's counsel that value of the parts supplied in execution of the contract should be excluded, cannot be accepted. In our view, the entire amount paid by the assessee amounts to fee for technical services under section 9(1)(vii). The view taken by us is also fortified by the decision of the Hon'ble Supreme Court in the case of Hindustan Aeronautics Ltd. v. State ofKarnataka AIR1984 SC 744 wherein it has been held that the nature of the contract has to be determined with reference to the pre-dominant or primary intention of the parties. If the intention of the parties is to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the other of sale and purchase of materials to be used in the course of executing the work or performing the service. But, then in such cases the transaction would not be one and indivisible, but would fall into two separate agreements, one of work or service and the other of sale." The perusal of the above observations clearly shows that if the primary intention of the parties is to carry out a job work and any spare part is supplied or used in execution of the contract then it will be a contract of work and not involving transaction of any purchase or sale. 32. Similar issue also arose before the Hon'ble Supreme Court in the case of Asstt. STO v. B.C. Kame [1977] 39 STC 237. In that case, the assessee was a photographer who undertook to develop the negative or do other photographic work and thereafter supply the prints to his clients. The question was whether the contract was the contract of work or contract for sale of the goods. Their Lordships held that the contract was for use of the skill and labour and did not involve the sale of goods. 33. In view of the above discussion, we are of the view that in the present case, the Agreement entered into by the assessee with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the spare part as is apparent from para 17 of the letter dated 29-12-1999 issued to the assessee, which is being reproduced as under: "You have been making payments to various parties on account of exchange of parts. Under this mechanism you give your defective part to the foreign party and in return the foreign party gives back an overhauled/repaired old part back to you. This is an international practice and it is resorted to avoid time lag on account of time that would have occurred, if in normal course, the part would have been given for repair. Hence, the exchange price paid to the foreign party on account of exchange of part is nothing but meant for repair of the same. This is nothing but 'Fee for Technical Services'." 36. The reply of the assessee dated14-1-2000was to the effect that the payments represented the price of the parts and did not represent fee for technical services as alleged by the Assessing Officer. Consequently, the assessee was not required to deduct the tax at source. It has been observed by the Assessing Officer in para 71 that the purported invoices were never filed by the assessee despite reminders. Finally, it was held by him that the payments was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s payment for royalty. According to the CIT(A), the payment made by the assessee for procurement of navigational data was payment for information of industrial and commercial experience and, therefore, it was difficult to exclude the same from the ambit of taxation either under the Income-tax Act or under the provisions of DTAA withGermany. Accordingly, the contention of the assessee that payment was for purchase was rejected. However, the Assessing Officer was directed to adopt the correct rate of exchange as prevailing at that time when the payment was made. Aggrieved by the same, the assessee is in appeal before the Tribunal. 41. The ld. counsel for the assessee has submitted that payment made by assessee was for acquiring the information by way of purchases and there was no obligation to return the same. According to him, the payments were made outsideIndiain each year for updating and not for the same material. Reference was made to page 390 of the paper book (Article VIB read with Article IIIA-1). However, it was admitted by the ld. counsel for the assessee that this aspect of the matter though raised before the CIT(A) has not been dealt with by him and, therefore, the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Act, 1922 corresponding to section 201 of the Act can be passed at any time. However, the said decision is contrary to the decision of the Supreme Court in the case of S.B. Gurbaksh Singh v. Union of India AIR 1976 SC 1115 wherein it has been held that the revisional authority should initiate proceedings within the reasonable time even in the absence of a time limit for initiation of revisional proceedings in the statute. Relying on this decision of the Supreme Court, the Tribunal has held in the case of Raymond Woollen Mills Ltd. that the orders under section 201 of the Act should be passed within a period of 4 years from the end of assessment year. Accordingly, we would prefer the decision of the Tribunal since it has been delivered after taking into consideration the aforesaid decision of the Supreme Court. Respectfully following the same, it is held that order under section 201 of the Act must be passed within a period of 4 years from the end of the assessment year. In the present case all the orders have been passed on10-5-2000. Four years from the end of assessment year means 5 years from the end of financial year. In the present case, the orders have been passed with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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