TMI Blog1998 (4) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, was taxable in the hands of the assessee in the two assessment years 1980-81 and 1981-82 ? and 2. Whether the grossing up of the tax as worked out by the Tribunal is correct in law ?" The first of these two questions has been referred to us at the instance of the assessee and the second question has been referred to us at the instance of the Revenue. As regards the first question, the Tribunal has found as a finding of fact that BHEL placed an order on October 14, 1975, on the foreign company, Cross Fraser for the supply of one numerically controlled (NC) deephole drilling machine with accessories and spares and the supplier was required to install the machinery. The machinery was supplied during the second half of 1977. The mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter grossed up that payment, as the tax liability was to be borne by the payer and determined that in order to enable the foreign supplier to receive the sum of Rs. 1,30,400 after tax the amount that will have to be paid was Rs. 2,17,330. He, therefore, levied the tax on Rs. 2,17,330. The assessment so made was confirmed by the Commissioner of Income-tax (Appeals). The Tribunal affirmed the views of the Assessing Officer and of the Commissioner of Income-tax (Appeals), that the payments made under the agreements of the year 1979 did not form part of the sale price of the equipment, which had been supplied pursuant to an order. which had been placed in the year 1975. We find no error in that finding of the Tribunal. When the machinery was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yee and included in the computation of the income of the employee for levy of income-tax. The Calcutta High Court also noticed the decisions of the House of Lords in North British Railway Co. v. Scott [1922] 8 TC 332 ; Hartland v. Diggines [1926] 10 TC 247; IRC v. Cook [1945] 26 TC 489 and Ferguson v. IRC [1969] 74 ITR 536, in all of which the payments by the employers of the tax payable on the amounts paid to the recipients were treated as part of the income of the recipients and taxable in their hands. The decision of the Court of Appeal in the case of Jaworski v. Institution of Polish Engineers in Great Britain Ltd. [1950] 2 All ER 1191 and of the Mysore High Court in Tokyo Shibaura Electric Co. Ltd. v. CIT [1964] 52 ITR 283, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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