Law: Income Tax Act, 1961

Section: 9,256

Income-tax--Reference---Income deemed to accrue or arise in India---Fees for technical services---Finding by Tribunal that fees were payable under agreement entered into before 1-4-1976, and that agreement had been approved by Central Government---Tribunal justified in holding that fees were not taxable under S.9(1)(vii)---No question of law arose---Indian Income Tax Act, 1961, Ss.9 & 256. Held, dismissing the application to direct reference, that the fees for technical services were payable pursuant to an agreement, dated January 29,. 1976, and taken on record by the Central Government on March 4, 1976, which was much earlier to the first day of April, 1976, as had been specifically provided in the proviso appended to section 9(1)(vii) of the Income Tax Act, 1961. The Tribunal was right in law in holding that the technical service fee paid by the BHEL to the engineering personnel of the assessee, was not taxable under section 9(1)(vii). No question of law arose from the order. THIS JUDGMENT DELIVERED BY: JANARTHANAM, J.---These tax case petitions, at the instance of the Commissioner of Income-tax, Tamil Nadu-V, Madras, are for issuance of a direction to the Tribunal to state a case and refer the common question of law, as below for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the technical service fee paid by the BHEL to the engineering personnel of Sulzer Brother Ltd., are not taxable under section 9(1)(vii) of the Income Tax Act, 1961?" The Tribunal, while rejecting the reference application, stated as below: - "This question only challenges the finding of fact that the agreement was concluded prior to April 1, 1976, and cannot be referred as a question of law. The applications are rejected." Section 9 of the Income Tax Act, 1961 (Act No.43 of 1961) for short ("the I.T. Act"), deals with a situation, when income is deemed to accrue or arise in India. So far as the instant case is concerned, we are concerned with section 9(1)(ii) of the Income-tax Act, which reads as under: "9.(1) The following incomes shall be deemed to accrue or arise in India. . .---…

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