Law:

Section:

Section 251(1)(c), read with sections 248 and 195, of the Income-tax Act, 1961 - Appellate Assistant Commissioner/Commissioner (Appeals) - Powers of - Assessment year 1964-65 - Whether in an appeal filed under section 248, AAC has jurisdiction to deal with quantum of sum chargeable under provision of Income-tax Act from which assessee was liable to deduct tax under section 195 - Held, yes FACTS The assessee-company carried on some business in collaboration with a German company. By an agreement entered on 1-1-1963 it was agreed that the foreign collaborators would grant to the Indian company during the term (a) the exclusive right to manufacture the licensed equipment in India, (b) the exclusive right to sell the licensed equipment in India, (c ) the permission to export the licensed equipment freely outside India, except to countries where the licensors had similar licence-arrangements. Clause 5 of the agreement provided for payment to the German company of the following sums: (a)A payment of 5 per cent towards the cost of detailed working drawings in terms of clause 3(b). The payment for these drawings was to be admissible in those cases where new drawings were supplied by the licensors abroad, i.e., from their or their associates' work design offices at Stuttgart or elsewhere in Europe. (b)A royalty at 5 per cent which would be subject to Indian taxes on the annual net ex-factory sale value of each licensed equipment manufactured by the licensees was payable to the licensors. The value of imported components, if any, that might be used in manufacture of the licensed equipment was to be deducted in computing the ex-factory price of the licensed equipment for the purpose of payment of royalty. In the assessment year 1964-65, in the matter of remittance to the non-resident company, the assessee requested the ITO to grant necessary certificate in order to enable them to approach the Reserve Bank of India for remittance to their collaborators. The said applications related to the invoice in regard to supply of drawings for the manufacture of furnaces in India in accordance with their collaboration agreement. The ITO placing reliance on the terms of the agreement…

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