TMI Blog1983 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ed are these : The petitioner-company entered into a collaboration agreement dated February 22, 1965, with Messrs Vulcan Materials Company, a company incorporated in the State of New Jersey, U.S.A. Under the collaboration agreement, the petitioner has to make a down payment of 50,000 U.S. dollars for the processes, engineering drawings, etc., called the know-how package and a recurring payment of a royalty at the rate of 2.5% of the net sales value in India on all the materials produced in the petitioner's plant for a period of six years, subject to certain conditions. Clause 6(vi) of the collaboration agreement provided that all tax or taxes, if any, under the laws and rules in force in the Union of India on all payments of royalty by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made, it has been found that a sum of Rs. 5,31,559 was due to be refunded to the petitioner by the Department. When the petitioner sought the refund of the said amount of Rs. 5,31,559, he was informed by the respondent herein by letter dated August 19, 1982, that the refund of Rs. 5,31,559 due to him for the assessment year 1978-79 has been adjusted towards the tax due by the Vulcan Materials Company for the assessment year 1965-66, which has been computed at Rs. 6,57,550. In the impugned letter dated August 19, 1982, the respondent has not only adjusted the refund of Rs. 5,31,559 as against the tax due by the Vulcan Materials Company, but also called upon the petitioner-assessee to pay the balance of tax of Rs. 1,25,991 due by the said f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea of estoppel. Thus, the petitioner has challenged the jurisdiction of the respondent to adjust the refund due to it as against the tax due from the foreign company and to call upon it to pay the balance of tax. In the counter-affidavit filed by the respondent, the adjustment of the refund amount due to the petitioner towards the dues of the foreign company has been justified on a new ground which had not been set out in the impugned letter. The new ground set out is that the petitioner as a person remitting the income to a foreign company is liable to make deduction towards the tax payable under s. 195 of the I.T. Act and since the petitioner has not deducted the tax payable under the Act at source, the Department can proceed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in default, a reading of s. 246 will indicate that the statute normally contemplates a written order under s. 201 so that the person aggrieved can file an appeal under s. 246 : Unless there is a written order, it is not possible for the petitioner to challenge the same by filing an appeal under s. 246. As a matter of fact in CIT v. Express Newspapers (P.) Ltd. [1978] 111 ITR 347 (Mad), it has specifically been held that since an order under s. 201 is appealable, written order is essential. Even if the impugned letter dated August 19, 1982, is treated as a written order, we find that that letter does not proceed on the basis that the petitioner is an assessee in default for non-compliance with the provisions of s. 195. Therefore, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in error in proceeding on the basis of the assertion made by the foreign company that all the taxes are payable only by the petitioner company without an independent investigation as to who is liable. Therefore, the said reasoning cannot at all be sustained. The next reason given is that the petitioner-company has paid two amounts, viz., Rs. 8,265 and Rs. 100, on earlier occasions on behalf of the foreign company and that, therefore, the petitioner-company should also be held liable for the amount of Rs. 6,57,550 which has been assessed on the foreign company. Merely because there are two earlier payments by the petitioner-company, that cannot be taken as final or conclusive on the question of its liability to pay the tax due by the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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