VOEST ALPINE IND GMBH Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) This writ petition is directed against the proceedings initiated by the assessing authority which was started with the impugned notices dated June 10, 1997, May 21, 1997, June 6, 1997, June 25, 1997, February 19, 1998 and the impugned order dated March 24, 1998.

(2.) It appears that the assessing authority has assessed the income as well as tax to be paid by the writ petitioner. In view of the default, the aforesaid authority has directed to initiate a penalty proceeding under Sections 271B and 271(1)(c). It appears from the impugned order which was passed in the aforesaid impugned proceedings that it has been held amongst others that the writ petitioner is obliged to pay income-tax on the income which fetched from consultancy services rendered to Larsen and Toubro. This case has a slightly long history.

(3.) The writ petitioner-company upon an agreement in writing rendered technical know-how and consultancy services to the Indian company, Larsen and Toubro. Admittedly, the writ petitioner-company is a foreign company. The petitioner earned a substantial amount on account of the fees paid by Larsen and Toubro being the Indian company. The writ petitioner on protest paid a sum of Rs. 7,87,72,407 on account of advance tax on or about August 23, 1994. It is stated in the petition that the aforesaid advance tax was paid in view of a refusal to issue no objection certificate for remittance of 85 per cent. of the total income, from India to Austria. Immediately thereafter the petitioner made an application in Form No. 30 under Section 237 of the said Act and Rule 41(2) of the Income-tax Rules, 1962, accompanied by a return claiming refund of the aforesaid as fees earned by the petitioner are not taxable in India under the Double Taxation Avoidance Agreement between the Indian Government and the Austrian Government. By an order dated December 11, 1996, the Income-tax Officer concerned held that the said income is taxable. So the return filed was held to be invalid. So, on April 16, 1997, an appeal was preferred before the concerned Income-tax Commissioner. On May 19, 1997, the appeal was allowed holding that the aforesaid amount is refundable and to treat the return to be valid.