ADIT(IT) Vs Aditya Vikram Global House Ltd. (ITAT Mumbai)- Royalty payment pursuant to a technical collaboration agreement in accordance with the Industrial policy of the Government of India, is exempt in the hands of the foreign company under clause (a) of Section 10(6A) of the Income tax Act, 1961. The Tribunal also held that approval of the Reserve Bank of India is sufficient confirmation that the technical collaboration agreement is in accordance with the Industrial Policy.
Full Text of the judgment is as follows:-
INCOME TAX APPELLATE TRIBUNAL, MUMBAI
ITA No. 5402/Mum/ 2007 – (Assessment Year: 2001- 02)
ITA No. 5403/Mum/ 2007 -(Assessment year: 2004- 05)
ITA No. 4651/Mum/2007 -(Assessment year: 2003- 04)
ADIT(IT) -1(1),
Vs
Aditya Vikram Global House Ltd.,
Date of Pronouncement: 19.08.2011
ORDER
PER R.S. PADVEKAR, JM:
These three appeals are filed by the revenue, in which the respective impugned orders of the Ld. CIT (A)-3 1 Mumbai for the A.Ys. 2001- 02, 2003- 04 & 2004- 05 are challenged. The solitary common issue in controversy arises in all these appeals is whether the ld. CIT (A) is justified in holding that the A.O. erred in grossing-up the amount of the withholding tax paid by M/s. Indian Rayon and Industries Limited (in short referred to as Indian Rayon) as per agreement with the assesse to the total income.
2. The facts pertaining to the issue in controversy are as under. The assessee is a foreign company who has entered into an agreement with Indian Rayon and as per the said agreement, the assessee received royalty on which tax was paid by IRIL as under:-
