INGERSOLL RAND CO Vs. INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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K.S. Viswanathan, Accountant Member -
(1.) THESE two appeals are by the assessee, a non-resident company, against the order under Section 263 of the Income-tax Act, 1961 ('the Act'), by the Commissioner in respect of the assessment years 1975-76 and 1976-77. In these orders, the Commissioner had directed the ITO to ascertain whether any income arises to the assessee owing to business connection in India.
(2.) The assessee is a company, registered in USA (hereinafter referred to as 'US Co.'). They had filed returns in both the assessment years showing income from dividend from their Indian subsidiary company (hereinafter referred to as 'Indian Co.'). The assessments had been completed accepting the returns.
The reason why the Commissioner thought that there may be income arising to the assessee from business connection in India would be clear from the following facts: The US Co. had entered into an agreement with the Indian Co. as far back as 1-11-1931, which is still existent. That agreement describes the Indian Co. as 'dealer'. The US Co. would 'sell to the dealer for resale, goods and manufactures as covered by discount sheets' attached to the agreement 'to execute orders for the goods placed by Indian Co., and the US Co. would charge Indian Co. at net prices and list prices as per price list, less discounts'. The US Co, had reserved the right to increase or decrease the prices shown in the price list. On its part the Indian Co. agreed to make every effort to sell the goods and to pay the US Co. for all the goods shipped and the amount charged.
(3.) AS a matter of practice, the discount allowed to the Indian Co. was 10 per cent. The modus operandi of the business would be clear from one illustrative deal, as given in the paper book furnished at the time of hearing.;
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