9911796707
TMI Blog1984 (11) TMI 112X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are that the assessee has received a sum of Rs. 11,87,683 as export commission from M/s Ceat Tyres of India Ltd. and claimed before the ITO that this is not taxable. The assessee entered into an agreement with M/s Ceat Tyres of India Ltd. on 9th Sept., 1977. As per the agreement, the Indian company was to pay the assessee Rs. 11,87,683 for the services rendered under the agreement vide cls. (a) to (d) which read as below: (a) The assessee would forego in favour of the Indian company exports in various markets and in certain cases export orders were to be transferred to the Indian company. (b) The assessee was to allow the use of channels of distribution in overseas markets to the Indian company and after sales services in those markets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our types of services. First is, that the assessee would forego in favour of the Indian company its exports in various markets, so far as the product of Indian company is concerned. In some cases, the assessee has transferred its export orders to the Indian company. The second is that the assessee has allowed the Indian company use its channels of, distribution in overseas market and third type of service is that the assessee will furnish detailed market information to the Indian company through their representatives in major international markets. The fourth and last type of service is that the assessee has allowed the benefit of advertising expenditure incurred by them to establish Ceat brands of goods in overseas market, by the Indian co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such services are taken to be covered, that means the normal meaning of the expression is destroyed. He further submitted that at he most, services mentioned in cl. (b) of the agreement can be taken as covered by the definition of 'royalty' On the other hand, the submission of the ld. Department representative Sri Roy Alphonso was that the services mentioned in cls. (a) to (d) of the agreement are fully covered by the definitions given by the legislature in ss. 9(1) (vi) and 9(1) (vii). He submitted that the legislature is fully competent to give a particular meaning with the intention of restricting or enlarging the scope of the word, to achieve a particular object and from the plain reading of the definition of the word 'royalty and tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of a licence) in respect of any copyright. literary. artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting. but not including consideration for the sale. distribution or exhibition of cinematographic films : or (vi) the rendering of any services in connection with the activities referred to in sub-cls. (i) to (v)." Simialy, the legislature has defined the expression 'fees for technical services' by inserting Explanation 2 to s. 9(1) (vii), which reads as under: Explanation 2 : For the purpose of this clause, "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian company. To get the information from aboard regarding the market cannot be considered just an ordinary information. It requires a thorough experience and well-established organisation. A layman straightway cannot go and get the order for selling his goods abroad. In their letter dt. 4th Dec., 1982. by the assessee to Ceat Tyres of India Ltd. they have pointed out that they have world wide net work of offices through which they will ascertain and pass on the latest market intelligence in respect of the demand trends. Not only that, they will agree to tranfer the orders for export which they obtain to Ceat Tyres of India Ltd. Further, the assessee agreed to advertise the Ceat Tyres at free of cost and they will also provide after-sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kets to the Ceat Tyres of India Ltd. and also allow other after-sales services in those markets. In our view, this service is covered by the definition of Royalty. As the assessee has provided the well-established machinery for sale abroad to the assessee and its experience by helping in exports of the Ceat Tyres of India Ltd., that is amounting to an imparting of information regarding sale or experience or skill which the assessee has acquired in its business. Further, it was indirectly admitted by the assessee that at the most, services in cl. (b) can be taken as covered by the provisions of s. 9(1)(vi). Clause (c) of the agreement deals with the service of the assessee by furnishing detailed market information to the Indian company throu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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