TMI Blog1986 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... that the first installment of Rs. 3,33,333 of the lump sum amount of Rs. 10 lakhs representing consideration payable to Vicarb S. A., Grenable, France in consideration of the transfer and importing of data, documentation etc. was taxable in terms of provisions of section 115A of the Income-tax Act and consequently holding that the ITO was justified in passing an order under section 195(2) charging the same to tax. 2. That on the facts and in the circumstances of the case, the learned Commissioner was not justified in holding that the lump sum amounts payable under clause 11 of the agreement was in the nature of royalty both within the meaning of the provisions of section 9 of the Income-tax Act read with definition of the said terms in ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be liable to tax in India. Shri S. Dasgupta replied that the facts of this case are quite different inasmuch as the assessee in the instant case before us was totally denying its liability to deduct any tax whatsoever from the amount to be remitted on the ground that the said amount was not liable to tax in India. 6. We have carefully considered the contentions raised by Shri S. Dasgupta. We reproduce section 195(2) below : "(2) Where the person responsible for paying any such sum chargeable under this Act ... to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Income-tax Officer to determine, ... the appropriate proportion of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to be wholly exempt from tax. His remedy is to start assessment proceeding in the case of the recipient and put forward his claim that the entire sum is exempt. When the sub-section says 'that the whole of such sum would not be income chargeable in the case of the recipient' it implies that some portion of that sum is considered to be liable to tax. If no portion is considered to be liable to tax then, in our opinion, section 195(2) does not come into play at all. 7. We find that the assessee applied to the ITO under section 195(2) for a declaration that the sum to be remitted was totally exempt from tax. This petition under section 195(2) was evidently misconceived. Consequently, the order passed by the ITO thereof, and the subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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