TMI Blog1976 (11) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee was treated as a company for the purposes of such assessments. During the previous years it was also assessed as a non-resident. We are concerned in this reference with certain payments received by the assessee-company under an agreement dated 30th June, 1958, entered into between the assessee and an Indian company called Amar Dye Chem Ltd. Under the said agreement the assessee was, inter alia, entitled to receive a fee called "technical service fee"; this was under clause (3) of the agreement. The fee provided under the agreement, to which we shall make a detailed reference subsequently, was Rs. 25,000 annually. In the assessment year 1959-60, the assessee received the proportionate amount of Rs. 18,750. However, in the tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that a part of the technical fees received by the assessee could, in the circumstances, be deemed to be income accrued or received within the taxable territories. It may be mentioned here that before the Tribunal there was no dispute about the receipt being of an income nature or about the apportionment made by the departmental authorities in regard to the amounts held to be assessable in the taxable territories. This was 40% of the amounts paid to the assessee under clause (3), i.e., Rs. 7,500, Rs. 10,000 and Rs. 10,000, for the three assessment years respectively. Thereafter, at the instance of the assessee a reference has been made to this court under section 66(1) of Indian Income-tax. Act, 1922. The question which has been refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement period in connection with the dyes and chemicals stated in paragraph (1) above. All such information supplied by A.C.N.A. to Amar will be used by Amar without any restriction or objection by A.C.N.A even after the agreement period, but shall not be disclosed to any third party. (3) In consideration of A.C.N.A.'s disclosure and supply of the secret processes as referred to in paragraphs (1) and (2) above, Amar shall pay to A.C.N.A. an annual technical service fee of Rs. 25,000 net free from income-tax in Italian lire at Italian lire 130 per Re. 1, subject to any exchange restrictions as may be for the time being in force. This fee shall not include payments for A.C.N.A.'s technicians sent to India, as laid down in paragraph (6) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the technical service fees at the rate of Rs. 25,000 per annum was entirely for services rendered in Italy, i.e., outside India. Under these circumstances, it was submitted, the question of taxing any part of the income on the basis of accrual or on the basis of receipt in the hands of the assessee did not arise. It was further submitted that the obligation contained in clause (3) of the said agreement, for which payment had to be made, had to be considered separately and it would not be proper to consider the agreement as a general obligation of the respective parties therein contained as another link. We are unable to subscribe to this view. It is impossible in our opinion to read the obligations undertaken by the parties under the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of fact, it has been found that the assessee-company had deputed certain technicians to help the Indian company in 1959, 1961, 1962 and 1963. We are, therefore, in agreement with the conclusion of the Tribunal upholding the claim of the revenue that part of the payments represented income which was rightly deemed to accrue or arise to the assessees-company in the taxable territories. At stated earlier, the apportionment thereof at the rate of 40% made by the departmental authorities was not challenged before the Tribunal and, therefore, we are not concerned with the same. In the result, the question is answered in the affirmative and in favour of the revenue. The assessee will pay to the revenue the costs of this reference. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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