DEBANGSU BASAK,J. - (1.) An Order dated December 30, 2011 passed by the Settlement Commission (Income Tax and Wealth Tax) Additional Bench, Kolkata in respect of three applicants is under challenge at the behest of the Director of Income Tax.
(2.) Learned Advocate appearing for the petitioner submits that, the Settlement Commission was considering three separate applications filed by the respondent nos. 2, 3 and 4 on June 29, 2010. The respondent nos. 2, 3 and 4 were neither assessee nor have permanent account numbers. They obtained the permanent account numbers just before filing the application before the Settlement Commission. In their applications, the respondent nos. 2, 3 and 4 contended that, they had entered into three types of contracts with Indian companies. They classified such contracts firstly, as sale of drawings and designs, secondly as sale of equipments and thirdly as spares and rendering supervisory services. The disputes relate to the contract for sale of equipments and spares. The respondent nos. 2, 3 and 4 claim that, it sold the plant to the Indian purchaser aboard and that, the sale being concluded abroad on CIF basis Income Tax cannot be charged on such proceeds. Learned Advocate for the petitioner contends that, the contract does not conclusively establish that, the title to the plant stood transferred abroad. On the contrary, since the plants are to be installed in India, the sale stands concluded on Indian territory and, therefore, the income derived therefrom is amenable to Income Tax under the Income Tax Act , 1961. He refers to various clauses of the contract in support of such contention.
(3.) Referring to the impugned order passed by the Settlement Commission, learned Advocate for the petitioner submits that, the Settlement Commission has erred both in fact and in law in allowing the application for settlement. According to him, the Settlement Commission has failed to consider that, the sale of the plant did take place in India in view of the various terms and conditions of the contract. The Settlement Commission has misapplied the various ratios of the decisions of the Courts cited before it. Such decisions are of the view that, when a sale takes place in India, the income derived there from is amenable to the imposition of the Income Tax under the Act of 1961. In the facts of the present case, according to him, the respondent nos. 2, 3 and 4 having sold the plant and machinery in India to the Indian clients, they are obliged to pay Income Tax thereon. He draws the attention of the Court to the various provisions of the Sale of Goods Act , 1930, namely, Sections 4 , 16 , 19 , 21 , 42 in respect of the contention that, the sale stood completed and the title to the goods stood transferred in India only.;