TMI Blog2007 (8) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee being represented by their agent BHEL Trichy, they should also obtained COD clearance, especially when the assessee is not a Government department? 3. Whether on the facts and in the circumstances of the case, the Income Tax Tribunal is right in holding that COD clearance is necessary especially when the agent namely BHEL only represents the foreign collaborator?" 2. The material facts, which are necessary for resolution of the questions of law, are as follows:- 3. The assessee Combustion Engineering Inc.,U.S.A., entered into an agreement with Bharat Heavy Electricals Limited, Trichy for manufacture of high pressure boilers required for thermal power generation. M/s.Bharat Heavy Electricals Limited, a public sector undertaking representing the assessee 'foreign company being their collaborators filed return for the assessment year 1984-85 in the representative capacity on 30.06.1984 admitting an income of Rs.2,09,27,650/-. During the previous year, BHEL paid the assessee M/s.Combustion Engineering Incorporation (USA) Rs.1,24,29,628/- as payment for supply of technical documentation/know-how and other services rendered in USA. The assessing officer taxed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs dated 10.09.1998 initiated under section 154 of the Income Tax Act. Hence, it is beyond any iota of doubt that M/s.Combustion Engineering Incorporation (USA) is only an assessee and BHEL is a representative assessee of their collaborator. The treatment of the amount paid by BHEL to M/s.Combustion Engineering Incorporation (USA), is the dispute in issue in this case. Hence the Tribunal ought to have considered the issue on merits without shirking the responsibility on the ground that COD had not been obtained. The COD approval is essential only for a dispute between the Government of India undertaking as against the Government, etc. Here the dispute is not pertaining to the assessment order made of the agent BHEL. Hence, in respect of the dispute between M/s.Combustion Engineering Incorporation and the Revenue, the COD certificate is not essential. He relied on the following decisions. (1) Mahanagar Telephone Nigam Limited Vs. Chairman,Central Board, Direct Taxes and another (2004) 267 ITR 647 (SC) ; and (2) Union of India Through Central Organisation Railway Vs. Union of India Through Secretary, Ministry of Finance and others (2006) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sident, including a person who is treated as an agent under section 163 of the Act would be regarded as representative assessee. The agent in relation to non-resident includes any person in India, who has any business connection with the non-resident as per Section 163(1) of the Income-tax Act. 10. Thus, the Bharat Heavy Electricals Limited, Trichy, which is having a business connection with the assessee Combustion Engineering Inc. (USA), is only an agent to the non-resident assessee for the purpose of assessment under the Income-tax Act. To put it otherwise, in the case on hand, the assessee is M/s.Combustion Engineering Inc. (USA). The assessment and other proceedings have been made in the name of the assessee M/s.Combustion Engineering Inc. (USA). Appeals have been filed by the assessee represented by agent Bharat Heavy Electricals Limited. It is also pertinent to state here that the Income-tax Act defines public sector company to mean any corporation established by or under any Central, State or Provincial Act or a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) under Section 2(36A). 11. Now, let us consider whether the COD approval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings could not be proceeded with. The High Court was wrong in dealing with the merits of the matter. 13. In Union of India Through Central Organisation Railway Vs. Union of India Through Secretary, Ministry of Finance and others (2006) 285 ITR 362, when the two Departments of Union of India, Railway and Finance brought out a litigation, the Allahabad High Court after referring the judgment of Supreme Court in Oil and Natural Gas Commission v. Collector of Central Excise (1995) Supp (4) SCC 541 and Chief Conservator of Forests, Government of Andhra Pradesh Vs. Collector (AIR 2003 SC 1805) held that it was mandatory obligation of every court and every Tribunal to demand a clearance from the Committee in case it has not been so pleaded and in the absence of the clearance, the proceedings would not be proceeded with. The reason for such direction was also amplified in the judgment of the Supreme Court in Chief Conservator of Forests, Government of Andhra Pradesh Vs. Collector (AIR 2003 SC 1805) in the following manner (page 1811, 1812): "14. The facts of this appeal, noticed above, make out a strong case that there is a felt need of setting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to file the appeal in the name of the State of Andhra Pradesh in accordance with the provisions of the Constitution and the Civil Procedure Code. We may also record that in spite of the pattedars taking objection to that effect at the earliest, no steps were taken to substitute or implead the State of Andhra Pradesh in the writ petition in the High Court or in the appeal in this Court." 14. As could be seen from the above rulings, clearance from the Committee constituted pursuant to the direction of the Supreme Court is necessary only when there exists a dispute between the Ministry and Ministry of Government of India, Ministry and Public sector undertakings of the Government of India and public sector undertakings in between themselves. The assessee, a non-resident cannot by any stretch of imagination be considered as a public sector undertaking with reference to the definition under Section 2(36A). Likewise, the requirement cannot be extended to cases where an assessee is represented by a public sector undertaking as an agent to them. Of course, it might be correct on the part of the Tribunal to dismiss the appeal filed by the revenue against Bharat Heavy Electricals Li ..... X X X X Extracts X X X X X X X X Extracts X X X X
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