COMMISSIONER OF INCOME TAX Vs. PREMIER TYRES LIMITED

JUDGEMENT

(1.) THE following question stands referred to us under S. 256(1) of the IT Act, 1961 :

(2.) THE assessee company carries on the business of manufacturing tyres and other rubber products. Whilst it was in the process of formation but not actually incorporated, the promoter of the assessee company, namely, Indo Orient Agency Ltd., entered into an agreement dated 9th October, 1959, called "Initial Service Agreement" as agents for and on behalf of the assessee company yet to be formed with M/s Dayton Rubber Company, Dayton, Ohio, U. S. A., hereinafter, for the sake of brevity, referred to as 'Dayton'. The purpose of the agreement was to obtain technical service and assistance of Dayton to enable the assessee company to erect plant structure, acquire suitable equipment and machinery, install and erect such equipment and machinery, train its key personnel, procure required materials and supplies and initiate and efficiently maintain production of high quality products, and to procure the right to use Dayton's technical information and patents relating to the manufacture of tyres, tubes, camel back and tyre repair materials. A copy of the said agreement is annexed as annexure 'A' to the statement of the case.

(3.) IT is the agreed position that the assessee company did not make any deductions out of the above payments.