SUHAS CHANDRA SEN, J. - (1.) THE following three questions have been referred by the Tribunal under s. 256(1) of the IT Act, 1961 ("the Act"), as under : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the amounts of Rs. 7,12,268 and Rs. 9,90,000 were not liable to be included in the assessee's total income of the previous year relevant to the asst. yrs. 1971-72 and 1972-73 respectively on the ground that the assessee had divested itself of the right at the very inception of those amounts ? (2) Whether, on the facts and in the circumstances of the case and on a correct interpretation of the agreement dated September 2, 1969, entered into between Tata Iron and Steel Co. Ltd. and the assessee, the Tribunal was right in holding that, during the relevant years, there was provision of technical know-how within the meaning of cl. (i) of s.80MM(1) of the IT Act, 1961, and the assessee is entitled to relief under that section for the asst. yrs. 1971-72 and 1972-73 ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the entire remuneration received by the assessee-company was for the provision of technical know-how within the meaning of sub-s. (2) of s. 80MM and as such was entitled to relief under s. 80MM(1)?"
(2.) THE assessment years involved are 1971-72 and 1972-73. The facts of the case as stated by the Tribunal are as under. The assessee-company is an Indian company and 50 per cent. of its shares are held by a non- resident company known as Sofremines (Paris). In the previous years relevant to the asst. yrs. 1971-72 and 1972-73, Sofremines (Paris) received directly from Tata Iron and Steel Co. Ltd. (TISCO), Rs. 7,12,268 and Rs. 9,90,000, respectively, in terms of the principal agreement dated September 2, 1969, entered into between the assessee-company and Tata Iron and Steel Co. Ltd. and also in terms of another agreement dated November 25, 1969, entered into between the assessee-company and Sofremines (Paris).
(3.) IN terms of the aforementioned agreements, Sofremines (Paris) directly received from TISCO a sum of Rs. 7,30,770 in the previous year relevant to the asst. yr. 1970-71. The assessee- company contended that a11 these amounts paid under the aforesaid agreements represented the income of the non-resident company, Sofremines (Paris) and were, therefore, not liable to be included in the assessee's total income. The ITO rejected this contention of the assessee and held in the assessment for the asst. yr. 1970-71 that those amounts were assessable in the hands of the assessee herein. He, accordingly, included the sum of Rs. 7,30,770 in the assessee's total income of the previous year relevant to the asst. yr. 1970-71. In the appeal by the assessee, the AAC confirmed the inclusion of the sum of Rs. 7,30,770 in the assessee's total income of the previous year relevant to the asst. yr. 1970-71. In further appeal by the assessee for the asst. yr. 1970-71, the Tribunal, for the reasons mentioned in its order, reversed the finding of the authorities below and decided the point in favour of the assessee.;