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Commissioner of Income-Tax Versus Bharat Heavy Electricals

2001 (8) TMI 1408 - DELHI HIGH COURT

Income-Tax Reference No. 267 of 1983 - Dated:- 16-8-2001 - Arijit Pasayat (CJ) And D. K. Jain, JJ. For the Commissioner : Prem Lata Bansal JUDGMENT Arijit Pasayat, CJ. At the instance of the Revenue, the following question has been referred for the opinion of this court under section 256(1) by the Income-tax Act, 1961 (in short the Act ), by the Appellate Tribunal (in short the Tribunal ) : Whether, on the facts and in the circumstances of the case on the interpretation of clause (vii) of sub-se .....

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ricals is a Government of India undertaking, manufacturing heavy electrical equipment. It needed two experts of National Engineering Lab UK (in short NEL ), for certain experimental and analytical projects at Energy System and New Product division at Delhi. The said division requested NEL UK to make available the services of two consulting engineers in connection with the development of heat transfer equipment. Accordingly, two experts of NEL rendered services in India for seven days from August .....

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rtion of remittance of £ 1909 which was chargeable to tax. The assessee contended that no part of the remittance was chargeable to tax as it was remuneration paid to foreign experts for the services rendered in India as per conditions set out in section 10(6)(vi) of the Act. The Income-tax Officer rejected the claim and held that the amount remitted was not actually paid to the employees of the foreign concern as remuneration but was paid to the foreign concern itself directly for technica .....

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amount was not taxable. For coming to the aforesaid conclusion, the Tribunal recorded the following findings : 5. The question for our consideration is whether the said amount of £ 1897 was taxable as technical fee paid to the foreign concern or whether it was exempt in terms of section 10(6)(vi). It is true that the foreign concern, in their letter dated April 13, 1977, had stated that assistance was to be provided on consultancy basis and for that the amount that was to be charged was al .....

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ed received by the foreign national provided the conditions laid down in that provision are satisfied. There is no doubt that those conditions were satisfied. It is also clear as already stated that the amount of £ 1897 represented remuneration of the two experts for the services rendered by them on behalf of the foreign concern. Section 10(6)(vi) does not require that there should be contract between the Indian company and the foreign experts and remuneration be paid directly by the forme .....

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or the purpose of section 10(6)(vi). Since all the conditions laid down in section 10(6)(vi) appear to us to be satisfied, we hold that the amount of £ 1897 was exempt from tax. The Income-tax Officer and the learned Commissioner of Income-tax (Appeals) were not justified in holding tax was to be deducted at source by the assessee-company. We allow the appeal of the assesseecompany. On being moved for reference, the question as set out above has been referred for the opinion of this court. .....

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ii) and section 10(6)(vi) at the relevant time read as under: 9. Income deemed to accrue or arise in India.-(1) The following incomes shall be deemed to accrue or arise in India-. . . (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 utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any so .....

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10. Incomes not included in total income.-In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included-. . . (6) in the case of an individual who is not a citizen of India,-. . . (vi) the remuneration received by him as an employee of a foreign enterprise for services rendered by him during his stay in India, provided the following conditions are fulfilled- (a) the foreign enterprise is not engaged in any trade or b .....

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