Law:

Section:

Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Assessee-company, a non-resident, under a written agreement with an Indian company I furnished technical assistance, technical know-how, secret processes and information in respect of working method, manufacturing process and methods of application relating to Vitamin D to enable I to manufacture, use and sell Vitamin D in India - Payments were made to assessee in respect of agreement - Assessee contended that said amount had been received by it by way of technical assistance fees and as such only 10 per cent of said amount would be taxable in India - However, it did not lead evidence in support of its contention - Therefore, on basis of agreement Tribunal treated 50 per cent of payment as fees for technical assistance and information and balance 50 per cent as royalty - Whether estimate made by Tribunal for purposes of computation of income was reasonable - Held, yes Facts The assessee, a non-resident company, entered into a written agreement with an Indian company I under which the assessee furnished technical assistance, technical know-how, secret processes and information at its disposal in respect of working methods, manufacturing processes and methods of application relating to Vitamin D to enable I to manufacture, use and sell Vitamin D in India. Payments in respect thereof were made to the assessee. It was contended by the assessee that the said amounts had been received by it by way of technical assistance fees and as such only 10 per cent of the said amounts would be treated as taxable income in India. For the assessment years 1973-74 and 1974-75 the ITO treated the entire payment as royalty and, therefore, held that 80 per cent of said receipt was taxable in the hands of the assessee. On appeal, the Commissioner (Appeals) held that 50 per cent of the payment was in the nature of technical assistance and balance 50 per cent was to be treated as royalty and had to be accordingly taxed. On second appeal, the Tribunal upheld the order of the Commissioner (Appeals). On reference, the assessee contended that taxable estimate of payments calculated by the Tribunal was…

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