TMI Blog2011 (4) TMI 1297X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the amount of DM 7,15,000 received by the assessee from M/s. Madras Fertilizers Ltd., on account of outright supply of technical documentation is raised in ground Nos. 1 2 of this appeal, which read as under: 1. The learned CIT(A) erred in law and on facts in not accepting the assessee s contention that the amount of DM 7,15,000 received from M/s. Madras Fertilizers Ltd., on account of outright supply of technical documentation from outside India on FOB and principal to principal bases, and connected with and forming an integral part of the equipment supplied, is not taxable. 2. The learned CIT(A) erred on facts and in law in holding that the said amount of DM 7,15,000 was taxable as covered by the definition of royalty in section 9 of the I.T. Act and in ignoring the definition of royalty in Article 13 of the Agreement for the Avoidance of Double Taxation of Income with Denmark which has an overriding effect. 4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that a similar issue had come up for consideration in assessee s own case for earlier years and vide its common order dated 25.5.2006 passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between India and Denmark. We find that the alleged payments for S-200 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 the settled proposition we are required to examine these payment within the limited scope of royalty provided within the DTAT but when such payments does not come in the ambit of wiser scope of royalty then we do not deem it necessary to discuss the scope of expression royalty provided in DTAT. Therefore, we allow the ground raised by the revenue. In other words, even 10% of these receipts treated by the ld. CIT(A) as taxable would not be sustainable. The A.O. is directed not to tax the receipts received by the assessee on supply of S.200 Converters in all the three years. 5. As the issue involved in the year under consideration as well as all the material facts relevant thereto are admittedly similar to that of the earlier years, the appeals of which have been decided by the Tribunal vide its order dated 29.05.2006 (supra), we respectfully follow the said order of the Tribunal and delete the addition of DM 7,15,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 84 holding that there could not be any question of invoking Rule 115 of the Income-tax Rules , 1962 in respect of sale proceeds of the goods exported by the assessee credited to its bank account in Indian rupees. Respectfully following the said decision of the Hon ble Supreme Court, we uphold the impugned order of the learned CIT(A) giving relief to the assessee on this issue and dismiss ground No. 1 of the revenue s appeal. 10. In ground No. 2, the revenue has challenged the action of the learned CIT(A) in holding that the amount of DM 13,30,000 received by the assessee from Madras Fertilizers Ltd. for the equipments and spare-parts was not in the nature of royalty as defined in section 9 of the Income-tax Act. 11. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that this issue has been decided by the learned CIT(A) in favor of the assessee for the following reasons given in para 6 of his impugned order: I have carefully considered the above quoted submissions of the A.R. as well as the reasons recorded by the A.O. A copy of submissions has been also sent for the comments to the present A.O. who has concurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1991-92, we uphold the impugned order of the learned CIT(A) giving relief to the assessee on this issue in the year under consideration i.e. assessment year 1992-93 and dismiss ground No. 1 of the revenue s appeal. 15. In ground No.2, the revenue has challenged the action of the learned CIT(A) in holding that interest u/s.234A should be on the basis of income determined in the intimation under section 143(1)(a) of the Act and not on the basis of income determined in the assessment completed under section 143(3) read with section 147. 16. At the time of hearing before us, the learned counsel for the assessee has submitted that the entire additions made in the assessment completed u/s.143(3) read with section 147 have been finally deleted and therefore, the grievance projected by the revenue in this ground no more survives. This ground raised by the revenue thus has become infructuous as agreed even by the learned Departmental Representative and the same is accordingly dismissed. 17. Now we shall take up the appeal of the revenue for the assessment year 1993-94, which is directed against the order of the learned CIT(A)-XVII, Mumbai, dated 23.5.1997. 18. After consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical services and procurement services being part of commercial activities represented business profits and thus cannot be taxed in India thereby erred in holding that amount of ₹ 8,28,30,293/- cannot be included in the total income of assessee taxable in India. 3. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in applying ratio of decisions in case of M/s. Linde A/G vs. ITO (59 TTJ 169) of Hon. I.T.A.T, Mumbai without appreciating that facts of the instant case are materially different from that of M/s. Linde A.G. vs. ITO. 23. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that a similar issue had come up for consideration before the Tribunal in the assessee s own case in the earlier years and vide order dated 21.8.2002, passed in ITA Nos.6852 to 6854/Bom/90 for the assessment years 1985-86 to 1987-88, the Tribunal decided the same in favour of the assessee for the following reasons given in para Nos. 12 to 16 of its order. Procurement services: 12. The last issue pertains to the allegation of the department that the learned CIT(A) erred in dele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rience. The facts, therefore, would not be in the nature of royalty. The Assessing Officer, therefore, was not right in holding the same to be in the nature of royalty. By making purchase for the Indian concern no consultancy service was provided as no advice was given to them. It was a simple procurement of equipments by the assessee for them. It was also not a technical service in the sense that technical education was concerned with teaching applies science or special training in applied science, technical procedures and skills required for the practice of trade or profession, especially those involving the use of machinery or scientific equipment. If the information was given for the use of the machinery or scientific equipment, it would partake of the character of fees for technical services but when it was only for the procurement pf the scientific equipments, it could be a simple service of commercial and industrial nature. It, therefore, could not be termed as a technical service for which the procurement fees charged by the assessee could not be a consideration for technical services. In making the stray purchase, it could not be said that the assessee has been managing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in assessment year 1991-92 and uphold the impugned order of the learned CIT(A) giving relief to the assessee on this issue. Ground Nos . 4 and 5 of the revenue s appeal are accordingly dismissed. 26. As regards ground No.6, it is observed that the issue involved therein relating to the taxability of the amount of DM 1,57,500 received by the assessee on account of outright supply of technical documents is similar to the one involved in ground No.1 of the assessee s appeal which has been decided by it in the foregoing paragraph of this order. Following our conclusion in the assessment year 1991-92, we uphold the impugned order of the learned CIT(A) on this issue and dismiss the appeal of the revenue for Assessment Year 1996-97. Following our conclusion drawn on for the assessment year 1991-92, we uphold the impugned order of the learned CIT(A) and dismiss ground No. 6 of the revenue s appeal. 27. In the result, the assessee s appeal for the assessment year 1991-92 is partly allowed and the revenue s appeals for the assessment years 1991-92, 1992- 93, 1993-94, 1994-95 and 1996-97 are dismissed. Order pronounced in the open court on this 27th day of April, 2011. - - TaxT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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