TMI Blog2014 (7) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation so as to guide the Indian party to install the equipment at site and thereafter to use it - this is a mixed question and a finding of fact has been rendered considering the peculiar facts and circumstances. The payment was found to be made towards the supply of equipment and that too on 'principal to principal' basis – relying upon Commissioner of Income Tax v/s Gulf Oil (Great Britain) Ltd. [1975 (8) TMI 17 - BOMBAY High Court] – the order is not vitiated by any error of law apparent on the face of the record and/or suffering from any perversity enabling us to entertain the Appeal – thus, no substantial question of law arises for consideration and the order of the Tribunal is upheld – Decided against Revenue. - ITA 23 OF 2012, ITA NO.15 OF 2012, ITA NO.21 OF 2012, ITA NO.41 OF 2012, ITA NO.51 OF 2012 - - - Dated:- 16-6-2014 - S.C. DHARMADHIKARI AND B.P. COLABAWALLA, JJ. Mr Arvind Pinto for Appellant Mr P.J. Pardiwalla, Sr. Counsel with Mr A.K. Jasani for Respondent ORAL JUDGMENT (PER S.C. DHARMADHIKARI J.) : 1. These five Appeals at the instance of the Revenue challenge the order passed by the Income Tax Appellate Tribunal, Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular receipts either as royalty or something other than technical fees alongwith Royalty and Management charges @ 20 % of the gross amount. 6. Mr Pinto therefore submits that the Assessing Officer was right in his conclusion reached in the order dated 28 th February 1994. Mr Pinto has invited our attention to section 9(1)(vi) of the Income Tax Act 1961 together with the definition of the term 'royalty' for the purpose of clause (vi). Mr Pinto submits that the definition is too wide and broad and includes the services which have been rendered by the Assessee to the Indian resident. The payment received from the Indian resident in Doish Marks is also for transfer of rights, imparting of any information concerning the working or the use or the process or marketing of the property. In other words, according to Mr. Pinto, this is not a case of mere supply of equipments by a foreign party to an Indian resident for which the price is received and in the contract, there is a reference to a manual or a guide for installation and use of the buyer. He submits that the product may be specialised or the equipment may not have something to do with the business of the Indian Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights. The alleged information is as how to use S200 Converters. If we look the clauses of the contract as well as the payment received by the assessee in the light of authoritative pronouncements of the Hon'ble Courts discussed supra particularly keeping in mind the decision of Hon'ble Andhra Pradesh High Court, 262 ITR 110 wherein supplementary contracts for remittance made to the supervising staff deputed by the foreign company in India as well as paid towards other information were considered by the Hon'ble High Court as payments forming part of the main contract for setting up of the machinery and held that the supplementary contracts cannot be read in isolation and such payments cannot be treated within the ambit of expression 'Royalty'. It was also brought to our notice at the time of hearing that scope of royalty as provided in section 9(1)(vi) is much wider than the DTAT executed between India and Denmark. We find that the alleged payments for S200 Converters made to the assessee are even not covered within the expression 'royalty' provided u/s 9(1)(vi) of the Income Tax Act which is much wider than the one provided in DTAT. Otherwise as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of the transaction and the stipulations thereof. Such a finding of fact therefore is a possible one. There is no perversity or error of law apparent on the face of the record which would enable us to entertain the Appeal on Question No.1. 12. As far as Question No.2 is concerned, that is also referred to extensively by the Tribunal. The impugned payment of Doish Marks 13,30,000/was found to be made towards the supply of equipments and that too on 'principal to principal' basis. It is in these circumstances the finding recorded by the Commissioner of Income Tax (Appeals) in favour of the Assessee and based on the judgment of this Court in the case of Commissioner of Income Tax v/s Gulf Oil (Great Britain) Ltd., reported in 108 ITR 874 is not vitiated by any error of law apparent on the face of the record and/or suffering from any perversity enabling us to entertain the Appeal. Even on Question no.2, we are in agreement with the Tribunal that the finding recorded in paragraphs 11 and 12 of the Tribunal's order would show that the payment even in relation to the Question No.2 cannot be said to be falling within the provision of section 9(i) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the finding of fact does not suffer from any perversity or error of law apparent on the face of the record. INCOME TAX APPEAL NO.41 OF 2012 15. Heard Mr Pinto, learned counsel appearing on behalf of the Revenue and Mr Pardiwalla, learned counsel for the Respondent. The distinguishing feature in this Appeal according to Mr Pinto is that the payment of Doish Marks 1,34,046 received by the Respondent Assessee is not only on account of supply of the equipment but transfer of all rights including granting of a licence. In such circumstances, explanation 2(i) of clause (VI) of subsection (1) of section 9 of the said Act wholly applies and this Appeal therefore raises substantial question of law. 16. Mr Pinto invites our attention to paragraphs 6 and 7 of the order passed by the CIT (Appeals) stated to be in favour of the Assessee. He also invites our attention to the Tribunal's order impugned in this Appeal and upholding the view of the CIT (Appeals). Mr Pinto submits that both the Commissioner and the Tribunal have ignored the definition of the term 'royalty' and admitted facts and rendered a finding which is totally perverse. 17. Upon reading the two orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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