STEFFEN, ROBERTSON AND KIRSTEN CONSULTING ENGINEERS AND SCIENTISTS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is an application under section 245Q(1) of the Income -tax Act, 1961 ('the Act'). The applicant, Steffen, Robertson and Kirsten ('SRK') is a company incorporated under the laws of South Africa having its Registered office at SRK House, Johannesburg, South Africa. It is, thus, a foreign company which is non -resident in India and as such, entitled to maintain the present application which has been filed in the following circumstances. The applicant has signed a technical consultancy agreement dated 20 -12 -1996 with Tata Iron & Steel Company Ltd. (TISCO) for providing engineering services to the latter in the form of validation of orebody model, optimisation of pit operations and feasibility study of under ground mining of TISCO's chromite ore mines at Sukinda in Orissa. According to the appellant, the operations under the agreement are divided into different stages and some of the work will be carried out at the Johannesburg office of SRK and some in India. The aggregate consideration to be paid by TISCO to SRK under the agreement is US $ 203,090 (sic) but, it is stated, separate costs/fees are provided for each stage of work, broadly classified as follows: <FRM>JUDGEMENT_2_LAWS(AR)10_1997.htm </FRM>

(2.) The applicant has formulated as many as six questions for the ruling of this Authority. These questions read as follows:

(3.) Dr. Samir Chakraborty, appearing for the applicant, took us through the agreement between SRK and TISCO dated 20 -12 -1996. After setting out the preamble and the nature of services and information to be provided by SRK to TISCO, the agreement provides for the contract price and mode of payment thereof. This clause stipulates the stages at which the consideration is to be paid and also refers to the break -up, as per Appendix 'B', of the payments to be made. It, however, specifically excludes any liability whatsoever for SRK in respect of any taxes payable in India. It provides: