TMI Blog2001 (4) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Andhra Pradesh, on April 19, 1990, for supply of equipment as well as engineering data besides personnel services for establishing a sub merged arc furnace at Kothagudem in Andhra Pradesh. In terms of the contract, a total amount of Rs. 6.257 million NCK (Norwegian currency) was payable by the Indian company. The Indian company deducted tax at source of Rs. 20,95,500 before remitting the consideration payable to the appellant-company. The Indian company filed a return of income as agent of the foreign company claiming that the amount received by the non-resident is not liable for Indian taxation. During the accounting year under consideration, the Indian company remitted Rs. 69,85,000 towards charges for engineering and, other services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Commissioner of Income-tax (Appeals-3), Hyderabad, who confirmed the assessment order. In further appeal, the learned Income-tax Appellate Tribunal in its order dated May 12, 2000, confirmed the order of the Commissioner of Income-tax-the first respondent, appellate authority. It is against the said order, the above appeal is preferred in terms of section 260A of the Act. Sri A. V. Krishna Koundinya, learned counsel appearing for the appellant, would submit that the Indian company remitted Rs. 69,85,000 towards charges for engineering and other services and that amount is not taxable in its hands because the payment was for construction, assembly undertaken by the recipient and the same being business profits is not taxable in its h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved by the Central Government. Explanation 1.--For the purposes of the foregoing proviso, an agreement made on or after the 1st day of April, 1976, shall be deemed to have been made before that date if the agreement is made in accordance with proposals approved by the Central Government before that date. Explanation 2.--For the purposes of this clause, 'fees for technical services', means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries". The question whether the payment would come within the exclusion part of this Explanation or not would have to be established by the person who claims the exclusion as held by the Orissa High Court in Orissa Synthetics Ltd. v. ITO [1993] 203 ITR 34. From a combined reading of clause (vii)(b) and Explanation 2, it becomes abundantly clear that any consideration, whether lump sum or otherwise, paid by a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for aluminium industry. The tests were carried out in the USA in regard to which the assessee made a payment of Rs. 7,69,614. The assessee also paid Rs. 1,19,303 and Rs. 38,271 which were payments in the nature of reimbursement of the payments made to the personnel of the said consultant. It was held that the services rendered by the foreign company would be in the nature of technical services and would, therefore, consequently, be covered fully by the Explanation to section 9(1)(vii). Further, it was held even with regard to the two payments of Rs. 1,19,303 and Rs. 38,271 in the nature of reimbursement of payments made to the personnel no different situation would be available because these payments would be part and parcel in the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X
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