Commissioner of Income Tax vs Mahindra and Mahindra Ltd.

For the reasons separately recorded, the following Order is passed. Both the above two appeals raise common question of fact and law and, therefore, they are decided by this Court by this common judgment. Both the above appeals have been preferred by the Department u/s 260A of the income tax Act.

The following question of law arises for determination in the above two appeals :

Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that no tax was to be deducted at source on payment made by the assessee to AVL-Gesselschaft Fur Verbrennungskraftmachlan M.B.H. Austria for the feasibility study of improving the performance of the existing Diesel Engine 265 DI as the payment represented fees for technical services and not royalty?

For the sake of convenience, facts in income tax Appeal No. 1287 of 2000 may be seen.

This Court has noticed on numerous occasions that the Department files appeals u/s 260A against orders in proceedings u/s 195 of the Act without moving this Court for interim relief. In the meantime, pursuant to the impugned orders, the assessee makes payment to the foreign party without deducting TDS. Therefore, by the time the appeal comes before this Court, their matter becomes infructuous. In fact, pending regular assessment, the Department should seek stay of the order u/s 195. In this case, the decision of the Tribunal was given on 10-5-2000 under which the assessee was allowed remittance without deducting TDS. The assessee has paid the Austrian Company before the matter could be taken for hearing. It is well-settled that section 195 deals with deduction subject to regular assessment. In fact, this appeal came before us for hearing on 4-12-2002 and it was adjourned to 11-12-2002 to enable the Department to ascertain as to what had happened in regular assessment proceedings. It was again adjourned on 11-12-2002 till today. Mr. R.V. Desai learned Senior Counsel appearing on behalf of the Department says that he has no instructions. In the circumstances, without going into the merits of the impugned order which is u/s 195, since payment has already been made to the Austrian Company, both the above appeals are dismissed as infructuous. No order as to costs.