TaxTMI 
TaxTMI 
2014 (8) TMI 355
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.... that the payments received by the assessee - company from Fertilizer Corporation of India, Indian Petro Chemicals Corporation and J.K. Synthetics Ltd. under the various contracts are in the nature of technical service fees covered by the proviso to section 9(1)(vii) and are, therefore, exempt from tax ?" 2. At the outset, we find that this Income Tax Reference is wholly misconceived. Whether payments received by the Assessee Company from Fertilizer Corporation of India (FCI), Indian Petro Chemicals Corporation (IPCC), and J.K. Synthetics Ltd under various agreements, were in the nature of "technical service fees" or "royalty", are questions of fact arrived at after interpreting various clauses of the said agreements. From the facts set ou....
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....ndia although the payments were received by the Assessee outside India. On the interpretation of the various terms and conditions of the agreements between the Assessee Company and the parties referred to hereinabove, the Income Tax Officer came to the conclusion that the payments received by the Assessee Company fell within the definition of the term "Royalty" given in explanation 2 of section 9(1)(vi) of the Income Tax Act, 1961. 5. Being dissatisfied, the Assessee Company took the matter in Appeal to the Commissioner of Income Tax (Appeals). The CIT (Appeals) came to a finding of fact that in the assessment years under Appeal, the Assessee had only received technical assistance fees as provided in the service agreements for the persons ....
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....er agreed with the findings of the CIT (Appeals). Thereafter, at the instance of the Revenue, the ITAT has referred the question of law reproduced above for the consideration of this Court. 7. Before we answer the question posed for our consideration, it would be necessary to analyze Section 9(1)(vii) of the Act. It reads as under :- 9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India- (i) ............ (ii) ............ (iii) ............ (iv) ............ (v) ............ (vi) ............ (vii) income by way of fees for technical services payable by- (a) the Government; or (b) a person who is a resident, except where the fees are payable in respect of services util....
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....ccrue or arise in India. Sub-clause (vii)(b) of section 9(1) of the Act, as applicable to the facts of the present case, inter alia provides that income by way of fees for technical services payable by a person who is a resident, would be income deemed to accrue or arise in India, except where (i) the fees are payable in respect of service utilised in a business or profession carried on by such person outside India; or (ii) for the purposes of making or earning any income from any source outside India. In the present case, FCI, IPCC and J.K. Synthetics Ltd are all residents of India. Hence payments made by them to the Assessee Company would fall within sub-clause (vii) (b) of section 9(1) of the Act. However, the proviso stipulates that not....