COMMISSIONER OF INCOME TAX Vs. FACT LIMITED

JUDGEMENT

(1.) AT the instance of the Revenue, the following two questions of law have been referred by the Income-tax Appellate Tribunal, Cochin Bench, for the decision of this court :

(2.) THE respondent is a public limited company. It acted as the agent of Messrs. Imperial Chemical Industries Limited of U.K. We are concerned with the assessment year 1970-71. THE respondent/assessee paid Rs. 14,65,810 to the non-resident company in the year ending March 31, 1970, for the technical services rendered. THE Income-tax Officer treated the assessee as the agent of the non-resident company and held that 75 per cent. of the said sum should be treated as the income of the nonresident company arising in India. He further held that the assessee has agreed to make the payment "net". THE income accruing to the non-resident company was computed on "tax on tax basis". He determined the total income at Rs. 21,98,716. In appeal, the Appellate Assistant Commissioner cancelled the order of assessment based on its earlier order. In second appeal by the Revenue, the Income-tax Appellate Tribunal followed its earlier orders in I.T.A. Nos. 226 to 231/(Coch) of 1976-77 and I.T.A. No. 826/(Coch) of 1976-77 dated February 28, 1978, -for the assessment year 1969-70 and held that no assessment could be made on the assessee treating it as the agent of the non-resident company. THE order of the Appellate Assistant Commissioner was affirmed. It is, thereafter, at the instance of the Revenue that the two questions of law formulated hereinabove have been referred for the decision of this court.

(3.) FOLLOWING the earlier Bench decisions of this court, we decline to answer the questions referred to this court by the Income-tax Appellate Tribunal in its statement of the case dated October 20, 1989. But, at the same time, we direct the Income-tax Appellate Tribunal to restore the appeal to file and decide the matter afresh for the assessment year 1970-71, bearing in mind the earlier decision on the subject in CIT v. Fertilisers and Chemicals (Travancore) Ltd. [1987] 166 ITR 823 (Ker).