TMI Blog1986 (7) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... of technical know-how, drawings and documentation. In pursuance of the proposals approved by the Central Government as per the Government letter dated 28-2-1976, the assessee had made initial payment of $ 35,000 to the foreign company though the agreement was itself executed subsequently on 3-7-1976. On 23-11-1976, the assessee remitted the first instalment of $ 35,000 equivalent to Rs. 3,18,181 to the foreign company. The ITO passed an order under section 163 of the Income-tax Act, 1961 ('the Act') on 22-2-1979 treating the assessee as the agent of the non-resident company. Against this there was no appeal. A notice dated 22-2-1979 under section 148 of the Act was issued by the ITO which was received by the assessee on 6-3-1979. In respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... $ 35,000 remitted to the foreign company could not be considered as income of that company accruing or arising in India. He held that the option under Explanation 1 to section 9(1)(vi) was not exercised by the non-resident company and so the proviso to section 9(1)(vi) will not be applicable. The concerned payment is in the nature of royalty payment falling within the term 'royalty' as per Explanation 1 to section 9(1)(vi). The relevant agreement dated 3-7-1976 was executed long after 1-4-1976 and so section 9(1)(vi) is squarely applicable. The ITO was justified in treating the remittance of $ 35,000 as the income of the foreign company accruing or arising in India. Against the above order, the present appeal is preferred. 2. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79 was not appealed against. In view of that order, which has become final, the assessee cannot say that it cannot be treated as an agent of the non-resident. In the letter dated 22-10-1979 of the ITO column (h) was not struck of by mistake as it was only a stereotyped notice and on that account the assessee cannot plead that there was no subsisting order under section 163. He further urged that the assessment has been reopened under section 147(a) and it is within time. Thus, the reassessment order is valid. 4. We have considered the rival submissions. The ITO passed an order on 22-2-1979 under section 163 treating the assessee-company as agent of the non-resident company. Against this order no appeal was preferred by the assessee. Havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the agreement is approved by the Central Government. Explanation 1 which is relevant for our purpose reads as under: "For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date ; so, however, that, where the recipient of the income by way of royalty is a foreign company, the agreement shall not be deemed to have been made before that date unless, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for the assessment year c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontention that the assessment is time barred. Since the non-resident did not file a return, notice under section 148 of the Act was issued. The assessment is reopened under section 147(a) and not under section 147(b). As per section 153(2)(a) the assessment could be made within four years from the end of the assessment year in which 148 notice was served. In the instant case notice under section 148 was served on 6-3-1979 during the year ending 31-3-1979 and assessment could be made on or before 31-3-1983. The assessment order was passed on 26-3-1983. Hence, it is within the time limit. Thus, the reassessment order is valid. Thus, we uphold the order of the Commissioner (Appeals). 7. In the result, the appeal fails and is dismissed. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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