Sabyasachi Mukharji, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, the following question has been referred to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the amounts described as 'commission' in the agreement dated 9th October, 1956, between the asses-see and the Indian Iron and Steel Co. were in the nature of royalties and fees covered by the exemption provided in Rule l(ix) and Rule l(x) of the First Schedule to the Companies (Profits) Surtax Act, 1964, and were liable to be excluded from the total income of the assessee in computing the chargeable profits for the assessment years 1965-66, 1966-67, 1967-68 and 1969-70?"
(2.) This reference arises out of the assessment for the assessment years 1965-66, 1966-67, 1967-68 and 1969-70 under the provisions of the C.(P.) S.T. Act, 1964. Now it would be relevant to refer to the relevant provisions of the said Act. The First Schedule to the said Act" provides rules for computing the chargeable profits under the provisions of that Act. Rule I stipulates that income, profits and gains and other sums falling within the-clauses mentioned thereafter should be excluded from the total income of Clauses (ix) and (x). Clause (ix) of Rule 1 of the First Schedule to the said Act reads as follows : "income by way of royalties received from Government or a local authority or any Indian concern."
(3.) Clause (x) reads as follows : "In the case of a non-resident company which has not made the prescribed arrangements for the declaration and payment of dividends within India, its income by way of any interest or fees for rendering technical services received from Government or a local authority or any Indian concern.'";