| Case ID |
ecff3e76-5142-4f33-8d4f-95c2fa9f6e01 |
| Body |
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| Case Number |
Civil Appeals Nos. 2350 of 1986 and 6943 of 1995 |
| Decision Date |
Sep 26, 1996 |
| Hearing Date |
|
| Decision |
The Supreme Court upheld the decision of the Calcutta High Court, confirming that the income of 1,65,000 U.S. dollars, stipulated as consideration for the sale of trade secrets, was not deemed to have accrued in India, as the sale was explicitly stated to be executed in Japan. The court reiterated that while the agreement between the Japanese company and the Indian company had two interdependent parts, the consideration for technical assistance was taxable, whereas the consideration for the sale of trade secrets was not taxable in India. The court dismissed the appeals without costs. |
| Summary |
This landmark case revolves around the interpretation of the Income Tax Act, 1961, specifically Section 9, concerning the taxability of income for non-residents in India. The Supreme Court of India examined a collaboration agreement between an Indian company, Sri Ram Bearings Ltd, and a Japanese company, N.S.K., which included the sale of trade secrets and technical assistance. The court concluded that the income from the sale of trade secrets, amounting to 1,65,000 U.S. dollars, was not taxable in India as the transaction was executed in Japan, thus providing clarity on the tax obligations for foreign entities under Indian law. This case is pivotal for understanding international tax law, especially in the context of non-resident income and the implications of collaboration agreements in global business. |
| Court |
Supreme Court of India
|
| Entities Involved |
Sri Ram Bearings Ltd,
Nippon Seike Kabushiki Kaisha (N.S.K.)
|
| Judges |
B.P. Jeevan Reddy,
S.C. Sen
|
| Lawyers |
J. Ramamurthy, Senior Advocate,
B. S. Ahuja,
S.N. Terdol,
M.S. Syali,
Sathyen Sethi,
Ms. Geetanjali Mohan,
Ms. Kamini Jaiswal,
Ch. Inayat Ullah,
S. Wajid Hussain,
S. Jamil Hussain Rizvi, Senior Advocate,
S. Ali Imam Naqvi
|
| Petitioners |
Income Tax Officer and others
|
| Respondents |
Sri Ram Bearings Ltd
|
| Citations |
1997 SLD 209,
1997 PTD 1895,
(1997) 224 ITR 724
|
| Other Citations |
I.T.O. v. Shriram Bearings Ltd. (1987) 164 ITR 419
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
9
|