COMMISSIONER OF INCOME TAX Vs. JAKKO POYRY ENGINGEERING

JUDGEMENT

(1.) THE Revenue has filed this application under Section 256(2) of the Income-tax Act, 1961, praying for calling for the statement of the case from the Income-tax Appellate Tribunal on the following two questions :

(2.) IT transpires that the assessee is a non-resident based in Finland. IT was approached by Nepa Mills, a resident, for consultancy services to solve its production and operation problems. An agreement was executed between the two and pursuant thereto, the non-resident assessee sent its consultants for field study who were paid on daily basis a total amount of $ 35,198. The results of their study were later finalised and prepared in Finland for which $ 24,000 were paid to the assessee under the agreement. The assessee was taxed for $ 35,198 which was treated its income by the Assessing Officer. IT took appeal before the Commissioner of Income-tax (Appeals) but failed. IT then carried the matter to the Tribunal and succeeded. The Tribunal interpreting the provisions of Section 9 of the Income-tax Act, 1961, along with its Explanation 2 took the view that rendering of service was a prerequisite for tax liability and since no such services were rendered by the non-resident assessee in India, therefore, any fee paid for technical services rendered could not be taxed as income at the hands of the non-resident assessee.

(3.) WE have examined the Tribunal's order rejecting R. A. No, 130 of 1992 and there is no clue that the Tribunal had had regard to the provisions referred to hereinabove. Therefore, it remained to be seen whether the fee paid to the assessee-company by the resident Nepa Mills could be held to be an income accruing or arising in India and thus taxable. The matter, in our view, gives rise to a question of law warranting calling for a statement of the case from the Tribunal, Indore Bench. WE order accordingly and require the Tribunal to send the statement of the case on the aforesaid two questions.