Rc/123/1996 Of The Commissioner Of Income Tax Ap-I Hyd v. M/S.blei Kumj Helomut Hyd

THE HON’BLE SRI JUSTICE V.V.S.RAOANDTHE HON’BLE SRI JUSTICE B.N.RAO NALLA REFERRED CASE No.123 OF 1996 ORDER:(Per Hon’ble Sri Justice V.V.S.Rao) This case referred by the Income Tax Appellate Tribunal,Hyderabad ‘B’ Bench under Section 256(1) of the Income Tax Act,1961 (the Act, for brevity), at the instance of the Revenue requires this Court to give opinion on the following five questions. 1.(a) Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that theamounts/remuneration for services rendered in Indiareceived by the assessee-technician was covered bysection 9(1)(vii) of the Income Tax Act, 1961?case, the ITAT was justified in law in holding that theamounts/remuneration for services rendered in Indiareceived by the assessee-technician was covered bysection 9(1)(vii) of the Income Tax Act, 1961? (b) Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that incomefor services rendered in India did not arise in Indiabecause the amount is payable outside India and thattherefore, it cannot be taxed by resort to S.9(1)(ii) andexplanation thereunder?case, the ITAT was justified in law in holding that incomefor services rendered in India did not arise in Indiabecause the amount is payable outside India and thattherefore, it cannot be taxed by resort to S.9(1)(ii) andexplanation thereunder? 2.Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that directcontracts and employer-employee relationship shouldexist between the assessee technician on one hand andBHEL on the other for taxing the amount ofremuneration/daily allowance and perquisite payable to thetechnicians under the agreement between the BHEL andthe foreign collaborators at whose instance and on whosebehalf the technicians rendered services and at whoseinstance payments were made and the amenitiesprovided to them by BHEL in India?case, the ITAT was justified in law in holding that directcontracts and employer-employee relationship shouldexist between the assessee technician on one hand andBHEL on the other for taxing the amount ofremuneration/daily allowance and perquisite payable to thetechnicians under the agreement between the BHEL andthe foreign collaborators at whose instance and on whosebehalf the technicians rendered services and at whoseinstance payments were made and the amenitiesprovided to them by BHEL in India? 3.Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that since theterms of agreement between BHEL and foreigncollaborators mentioned that the normal place of work ofthe assessee was outside India and that fees, allowanceand perquisites are payable to him what was received bythe assessee was only a part of technical services feeand expenses payable to the foreign collaborators andcannot be assessed as salary in the hands of theassessee technician?case, the ITAT was justified in law in holding that since theterms of agreement between BHEL and foreigncollaborators mentioned that the normal place of work ofthe assessee was outside India and that fees, allowanceand perquisites are payable to him what was received bythe assessee was only a part of technical services feeand expenses payable to the foreign collaborators andcannot be assessed as salary in the hands of theassessee technician? 4.Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that theprovisions of section 9(1)(ii) and explanation thereunderare not applicable to the assessee for the assessmentyear 1982-83?case, the ITAT was justified in law in holding that theprovisions of section 9(1)(ii) and explanation thereunderare not applicable to the assessee for the assessmentyear 1982-83? 4.Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that theprovisions of section 9(1)(ii) and explanation thereunderare not applicable to the assessee for the assessmentyear 1982-83?case, the ITAT was justified in law in holding that theprovisions of section 9(1)(ii) and explanation thereunderare not applicable to the assessee for the assessmentyear 1982-83? 5.(a) Whether on the facts and in the circumstances of thecase, the ITAT was justified in law in holding that for theassessment year 1982-83, the provisions of section 10(6)(vi) clause(a) and (c)?case, the ITAT was justified in law in holding that for theassessment year 1982-83, the provisions of section 10(6)(vi) clause(a) and (c)? (b) Whether on the facts and in the circumstances of thecase, the ITAT ought to have held that since there was abusiness connection between the Indian Company andthe foreign collaborators within the meaning of sec.9(1)(i),the provisions of sec.10(6)(vi) clause (a) and (c) are notapplicable? M/s.Bharat Heavy Electricals Limited (BHEL) availed thetechnical services from M/s.Siemens West Germany andM/s.Nuovo Pignone, Italy as well as M/s.Techno Export, Pregue,Czechoslovakia. On behalf of the foreign technicians, whorendered service, nil returns of income were filed. The IncomeTax Officer (ITO), however, treated the amounts as a salary underSection 9(1)(vii) of the Act. The Commissioner of Income Tax(Appeals) (CIT(A)), however, reversed the order of the ITO on theground that the payments made by BHEL were to the employers ofthe assessees. Following their earlier orders, the Tribunalconfirmed the Appellate Commissioner, whereupon the referencewas sought. The questions referred to require consideration as towhether remuneration paid by BHEL to the foreign technicians issalary earned in India within the meaning of Section 9(1)(ii) of theAct or it is the fit case for technical service paid by BHEL underSection 9(1)(vii) of the Act. In Referred Case Nos.56 and 57 of 1990, this Courtconsidered similar matter, wherein similar questionswere referred for the opinion of the Court. Noticing that there existed DoubleTaxation Avoidable Agreement (DTAA) between the Governmentof India and the Governments of West Germany and Italy, thisCourt by a common order dated 10.04.1998 declined to answer thequestions referred to. The same was followed by another bench inR.C.No.105 of 1995 dated 09.03.2006, wherein the answers weredeclined. As this case also arose in similar background facts, following theearlier order of the Bench, we decline to answer the questionsreferred to this Court. The Referred Case shall stand disposed of accordingly. _______________ (V.V.S.RAO, J) _____________________ (B.N.RAO NALLA, J)