Income: Accrual in India: Non-resident: Fees for technical services: Section 9(1)(vii): A. Y. 1991-92: Sale of design and engineering drawings outside India: Sale of plant: Income does not accrue in India: Not taxable in India:

The assessee is a non-resident company and it is represented by RINL Visakhapatnam. The assessee company had provided design and engineering services, manufacture, delivery, technical assistance through supervision of erection and commissioning etc., to establish compressor house-I for RINL. The payments were made by RINL separately for each of the services/ equipments provided/supplied by the assessee. It, inter alia, included payment made towards supply of design and engineering drawings. The assessee company claimed that the said payment is not taxable in India as the transaction was of a sale of goods outside India. The Assessing Officer rejected the claim and assessed it as income. The Tribunal allowed the assessee’s claim, deleted the addition and held as under:

“We are of the view that the amount received by the assessee for supply of design and engineering drawings is in the nature of plant and since the preparation and delivery has taken place outside Indian territories, the same cannot be taxed in India.”

On appeal by the Revenue, the Andhra Pradesh High Court upheld the decision of the Tribunal and held as under:

“i) It appears, the learned Tribunal, on fact, found that there has been no accrual of income in India and this accrual of income has taken place in Japan. As such, the Income-tax Act, cannot be made applicable.

ii) We feel that the decision is legally correct and we do not find any element of law to be decided in this appeal. The appeal is accordingly dismissed.”