Aftab Alam, J.:— In this set of seven connected cases relating to the assessment years 1975-76 to 1980-81, a common question of law has been referred to this court by the Income-tax Appellate Tribunal under section 256(2) of the Income-tax Act, 1961, on a direction given by the Supreme Court at the instance of the assessee. The question of law on which decision is to be given by this court was framed by the Supreme Court in the following terms:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the income mentioned in article 111(a) of the collaboration agreement accrued or arose in India to Wean United within the meaning of section 5(2)(b) of the Income-tax Act, 1961?”

2. Hindustan Steel Limited, a Government of India undertaking (which was in existence at that time),-entered into an agreement with United Engineering and Foundry Company, U.S.A, for acquisition of technical know-how for the design and manufacturing of rolling mills and auxilliary equipment. The “collaboration agreement” being the subject-matter of this reference was executed in India on February 11, 1969, on behalf of Hindustan Steel Limited. It came into effect on April 1, 1969, and continued in operation for a period of ten years from that date. While the agreement was subsisting Hindustan Steel Limited was succeeded by Metallurgical and Engineering Consultants Limited (“MECON” for short), the assessee presently before this court. The other party to the agreement, namely, United Engineering and Foundry Company, was similarly taken over and succeeded by Wean United Incorporated. Payments continued to be made by the assessee (Mecon) to Wean United under different provisions of the agreement. The parties to the reference are in dispute over the taxability of the annual payments made to the U.S company under article 111(a) of the agreement. Presently, it would be required to examine the agreement in greater detail but suffice it to note here that the agreement provided in detail (vide article II) the manner in which technical knowhow was to be furnished by the U.S company to the Indian company. It similarly provided (vide article III) the different kinds of payments and the manner in which those payments were to be made by the Indian company to the U.S company. Article 111(a) provided for Hindustan Steel Limited for making payment of one hundred thousand U.S dollar (Rs. 1,00,000) to the U.S company on the execution of the agreement and to make payment of an equal amount on each anniversary date of the execution till the ninth anniversary of the agreement. The payment of the first instalment of Rs. 1,00,000 was made by Hindustan Steel Limited, with due sanction of the Reserve Bank of India on March 31, 1969. At that time, no question was raised regarding the taxability of the amount paid to the U.S company. However, at the time of the payment of the second instalment in March-April, 1970, the Reserve Bank of India asked for a certificate from the income-tax authorities concerning the taxability of the payment of “compensation” under the agreement before allowing the remittance. According to the case of the assessee, Hindustan Steel Limited made an application under section 195(2) of the Income-tax Act, 1961, before the Income-tax Officer for an order declaring that the payments made by Hindustan Steel Limited under the agreement to the U.S company were not income chargeable in India under the provisions of the Act. It is further the case of the assessee that as there was some delay in an order being passed by the Income-tax Officer, Hindustan Steel Limited communicated directly to the Chairman, Central Board of Direct Taxes, by letter dated June 15, 1970, seeking his ruling, on the tax liabilities on payments to be made to the U.S company under articles 111(a), (b) and (c) of the agreement under the relevant provisions of the Indian Income-tax Act for the purpose of deduction of tax at source. In reply it received a letter, dated July 12, 1970, from the Under Secretary, Central Board of Direct Taxes, stating that there would be no liability to tax on the lumpsum payment of Rs. 1,00,000 to the U.S company as provided in article 111(a) of the agreement but the payments under article 111(b) and (c) would be taxable under the Income-tax Act, 1961.

3. It appears that Hindustan Steel Limited was only partly satisfied with the views expressed in the letter from the Board which, in any event, were extra judicial opinion obtained by the company beyond the provisions of the Act. It accordingly, wrote to the Income-tax Officer on August 26, 1970, enclosing a copy of the letter from the Board and asking the Income-tax Officer to give his decision in its favour in respect of some other heads of payment as well. However, the Income-tax Officer, Special Circle, Ranchi, issued a certificate on April 23, 1971, to the effect that payment in respect of reimbursement of cost to the U.S company for services rendered in the U.S.A (that is, payment under article III(c) alone and not under article 111(a) and (b)), was exempt from Indian Income-tax Act.

4. At that stage Mecon was incorporated and took over the division of Hindustan Steel Limited which had the agreement with the U.S company and it was about the same time that United Engineering was taken over by Wean United Incorporated, another U.S company. Notwithstanding the refusal of the Income-tax Officer to issue a certificate concerning non-tax-ability of the payments made to the U.S company under article 111(a) and (b), the assessee continued to make payments to the U.S company on due dates under article 111(a) without making any deductions as provided under section 195(1) of the Act.

5. Though no objections were raised by the income-tax authorities at that stage, the Inspecting Assistant Commissioner of Income-tax later initiated a proceeding against the assessee under section 201 read with section 221 of the Act and by orders, dated March 25, 1981, and May 27, 1981, found and held that the payments made by the assessee under article 111(a) of the agreement were income chargeable within the meaning of section 5(2) read with section 9(1)(i), (vi) and (vii) and was, therefore, taxable in the hands of Wean United Incorporated and, consequently, the assessee was liable to deduct the amounts of tax under section 195(1) of the Act. The Inspecting Assistant Commissioner further held that for its failure to make the deductions the assessee was liable to pay the amount of tax along with interest and penalty.

6. The assessee preferred appeals against the aforesaid orders before the Commissioner of Income-tax (Appeals) who by orders, dated October 29, 1981, allowed the appeals only in so far as the imposition of pienalty under section 221 was concerned. The Commissioner of Income-tax (Appeals) affirmed the finding of the Inspecting Assistant Commissioner that the payments made under article 111(a) were income chargeable within the meaning of section 5(2)(b) of the Act and, consequently, the assessee was liable to make deduction of taxes in the hands of Wean United Incorporated in terms of section 195(1) of the Act. He also upheld the order of realisation of the amount of tax along with interest as provided under section 201(1A). In the facts and circumstances of the case, however, he cancelled the order of imposition of penalty under section 221 of the Act passed by the Inspecting Assistant Commissioner.

7. The assessee's appeals before the Income-tax Appellate Tribunal were dismissed by order, dated March 10, 1983, and the Tribunal fully upheld the orders passed by the Commissioner of Income-tax (Appeals).

8. The assessee made applications before the Tribunal under section 256(1) of the Act asking it to refer to the High Court a number of questions of law which, according to the assessee, arose out of the Tribunal's order. The Tribunal, by order dated December 31, 1984, rejected all the reference applications holding that there was no question of law involved in the case that could be referred to the High Court.

9. The assessee then moved applications before this court under section 256(2) of the Act which too were dismissed at the time of admission itself by order dated May 7, 1986 passed in Tax Cases Nos. 1 to 7 of 1985 (R).

10. Against the order of this court the assessee moved the Supreme Court in S.L.P (C) Nos. 15527-33 of 1986, giving rise to Civil Appeals Nos. 6060-66 of 1990. The Supreme Court by a brief order dated December 7, 1990, found and held that a question of law did arise out of the order of the Income-tax Appellate Tribunal for consideration by the High Court. It accordingly, framed the question of law as quoted above and directed the Tribunal to state the case and refer the question for the decision of this court.

11. In order to examine the question whether payments made under article 111(a) of the agreement were income to. Wean United accruing or arising in India within the meaning of section 5(2)(b) of the Act, it would be necessary to have a detailed look at the collaboration agreement. From the opening paragraphs of the agreement it is evident that Hindustan Steel Limited entered into the agreement with the object to acquire technical “know-how” from United Engineering and to have the right in India to use the acquired “know-how” in the design of “contract articles”. Both the expressions “contract articles” and “know-how” were defined in the agreement and for the purpose of the agreement the two expressions meant as under:

“(a) ‘Contract articles’ shall mean those machines and parts thereof for the hot and cold rolling and processing of metals, and those machines and parts thereof accessory thereto which are or may be designed by H.S.L for manufacture by others and/or sold by H.S.L and which are identified on the list thereof designated as exhibit-’A’ which is attached hereto and made a part of this agreement.

(b) ‘know-how’ shall mean technical and manufacturing information, data, detail design and related calculations for the mills and auxilliary services, plans, drawings, blueprints and specifications relating to the contract articles. United will furnish certain information with respect to electrics and auxilliary services, such information will be limited to that which is customarily prepared by United in connection with an inquiry and/or. furnished to a customer where equipment is supplied by United.”

12. The agreement has provided, in various paras of article II, the manner in which the “know-how” would be furnished by the U.S company to Hindustan Steel Limited. From a perusal of the various paragraphs under article II it appears that the personnel of H.S.L were to acquire the knowhow and the necessary skills by on-the-job-placement at the place of work of the U.S company and by interacting there with the personnel of the U.S company. Para (a) of article II, in so far as relevant, is as follows:

“United shall permit all such authorised representatives of H.S.L as the latter may choose, to visit its offices at any time during regular working hours in order to learn the methods and practices which it employs in the design of contract articles. As a part of the acquisition of the aforesaid information, H.S.L shall have the right to consult with United's representatives as may be reasonably necessary for H.S.L to become acquainted with all contract articles manufactured by United, and United will extend to H.S.L's representatives all necessary facilities required for the said representatives' training and in obtaining the technical know-how.”

13. Paragraphs (b) and (c) gave H.S.L the right to ask the US. company and obtain from it design/detailed design of any contract article. Para (e) of article II gave the H.S.L a non exclusive licence to use the know-how in the design of the contract articles for manufacture in its own plants or in the plants of others in India. The title to the know-how, however, was retained by the U.S company. Para (j) provided for the mutual exchange of any inventions, improvements or designs relating to the contract articles which either of the contracting parties might have made during the period of the agreement. Para (k) of article II provided that on the request of the U.S company, H.S.L would permit its authorised representatives to visit H.S.L's office at any time during regular working hours to learn the methods and practices H.S.L employed in its design and manufacture of the contract articles.

14. Article III of the agreement dealt with the “compensation for knowhow”. The payments under para (1) of article III are the subject-matter of dispute in this case. It will be useful to reproduce article III along with its paragraphs (a) and (b) which are as follows:

“Article III

Compensation for know-how

For the granting of the licence, the furnishing of know-how, material, and services in accordance with the provisions of article II, the parties shall make payment to one another of the following amounts and in compliance with the following conditions:

(a) On the execution of this agreement, H.S.L shall pay United one hundred thousand dollars (Rs. 1,00,000) and each year thereafter,. on the anniversary date of the execution of this agreement, through the ninth anniversary, a similar amount of one hundred thousand dollars (Rs. 1,00,000), provided, however, that if this agreement is terminated by United under the terms and conditions as set forth in article III hereof, then, in that event, any instalments remaining unpaid under this paragraph (a) shall become due and payable at such date of termination.

(b) In addition to the payments set forth in paragraph (a) of this arti-cle III, H.S.L shall pay United an amount equal to four and a quarter per cent. (41/4 per cent.) of the net sales price as later defined in paragraph (f) of this article III of all contract articles designed by H.S.L, and manufactured by H.S.L or by others during each calendar year after the execution of this agreement and irrespective of when quoted. It is understood that the definition “designed by H.S.L” as used in this paragraph shall also include those instances where H.S.L uses United's existing designs without modification.”

15. Para (c) provided for reimbursement of cost to the U.S company and as already noted earlier the Income-tax Officer had issued a certificate concerning payments under article III(c) that those payments were exempt from the Indian Income-tax Act. Para (d) of article III stated in definite terms that no payment would be made to H.S.L by the U.S company corresponding to the payments as provided in paras (a) and (b) of article III. Para (c) provided for payment by the U.S company to H.S.L corresponding to the reimbursement of cost provided under para (c). Para (f) defined “net sale price”, the expression used in para (b). Para (g) provided when payments under para (b) would fall due. Para (h) put H.S.L under obligation to keep accurate books of account and to make all payments to the U.S company in U.S dollars at exchange in effect on the due dates of those payments. Para (i) provided when payments under paras (c) and (e) would become due and payable. Para (j) stipulated that in case it were decided by a competent authority that the U.S company was liable for payment of any tax in India, the U.S company would pay only at the rates applicable to the assessment year 1965-66 or to the rates applicable to the year of assessment, whichever is less, and the balance would be met by H.S.L

16. On a careful consideration of the terms of the agreement it appears to me that the transfer of know-how was to take place mostly in the U.S but by virtue of the non-exclusive licence granted under the agreement H.S.L could use the acquired know-how for manufacture of contract articles in its own plants or in the plants of others in India. For the use of the knowhow for manufacture of contract articles the payment was to be made under article 111(b).

17. But the Income-tax Appellate Tribunal in its order, dated August 10, 1983, saw no distinction in the payments made under the two paragraphs (a) and (b) of article III of the agreement. It held that the payments both under paragraphs (a) and (b) of article III were part and parcel of the consolidated payment under the agreement. In this regard, it is stated in the order of the Tribunal as follows:

“If articles 111(a) and 111(b) of the agreement were to be read together, it would immediately appear that the payment as required to be made under article 111(b) was nothing but an additional payment which had to be made over to the American company, besides the payment stipulated in article 111(a). We would, therefore, agree with the representation that has been made on the side of the Department that the two payments as mentioned in articles 111(a) and 111(b) were, in fact, part and parcel of the same payment which had been stipulated to be made over by Mecon to Wean. We do not see any difference in the hue and colour of the payments described in articles 111(a) and 111(b) of the agreement. We do not know the reason why the Central Board of Direct Taxes thought that the sum to be paid under article 111(a) would not be liable to tax because according to us the payments under articles 111(a) and 111(b) and III(c) are part and parcel of the same income which had been agreed to be made over by the Indian company to the American company.”

18. The Tribunal then proceeded to hold that the payments under articles 111(a) and 111(b) of the agreement were income accrued or arisen to the U.S company in India for the following reasons:

“Apart from the points made by the Commissioner of Income-tax (Appeals) we are of the view, having regard to the fact that the contract had been signed in India at least by Mecon and also having regard to the fact that the contract was executed in India and the situs of income arisen as a result of the collaboration agreement was in India, it would be tenable in law to hold that the incomes as mentioned in articles 111(a) and 111(b) of the collaboration agreement did accrue or arise in India to the non-resident company within the scope of the provisions of section 5(2)(b) of the Income-tax Act, 1961.”

(emphasis1 added)

19. In arriving at its finding on the basis of the reason assigned by it, the Tribunal solely relied upon a decision of the Supreme Court in Performing Right Society Ltd. v. CIT, [1977] 106 ITR 11.

20. I fail to appreciate the reasons assigned by the Income-tax Appellate Tri-bunal for holding that payments made under article 111(a) were in the nature of income accruing or arising to the U.S company in India. I am unable to see how the two payments as mentioned in article 111(a) and (b) could be said to be part and parcel of the same payment which was stipulated to be made by Mecon to Wean. I further see no justification for the observation that there was no difference in the hue and colour of the payments described in article 111(a) and (b) of the agreement. It may be noted that the agreement under article II provided for the acquisition of technical know-how by H.S.L (and later by Mecon) from the U.S company. Besides the transfer of know-how the U.S company also granted, under the agreement, a non-exclusive licence to H.S.L/Mecon to employ the acquired know-how in the design of the contract articles for manufacture in its own plants or in the plants of others in this country. If one sees the different kinds of payments made under article III of the agreement in the light of the obligations of the U.S company under article II, it would appear highly plausible that payment under article 111(a) was for the transfer of know-how and payment under article 111(b) at 4¼ per cent, of the net sales price of all contract articles designed and manufactured by H.S.L was for the grant of the licence to use the know-how in the design of the contract articles for manufacture in its own plants. The payment under article III(c) was admittedly in the nature of reimbursement of cost. It, thus, appears to me to be incorrect to club together the payments under article 111(a) and (b) as part and parcel of the same payment with no difference in their hue and colour. To me it appears that the two payments corresponded to two separate rights accruing to H.S.L/Mecon under the agreement. This, however, is only a minor point and not much depends upon it.

21. The main question is whether the payment under article 111(a) was in the nature of income to the U.S company accruing or arising in India? In this connection, the Tribunal has solely relied upon a Supreme Court decision in the case of Performing Right Society Ltd., [1977] 106 ITR 11. The facts of that case were that the society was an association of composers, authors and publishers of copyright musical works established to grant permission for the performing right in such works. The society collected royalties for the issue of licences granting such permission and distributed the royalties to the members of the society who were composers, authors, music publishers and other persons having an interest in the copyright, in proportion to the extent to which a member's work was publicly performed or broadcast after a pro-rata deduction of the expenses. The society entered into an agreement with the resident of India granting licence to broadcast from the licensee's sound broadcasting stations in India all musical works included in the reportoire of the society. Under the agreement, for the rights granted to it, the licensee was to pay to the society annually a sum calculated at two pounds per hour of broadcasting western music from each of the licensee's broadcasting stations and the annual payment was to be made to the society in London. On those facts, the Supreme Court held that though it received the income out of the agreement executed not in India but in England, the income undoubtedly accrued or arose in India.

22. I am unable to see how the decision in Performing Right Society Ltd.'s case, [1977] 106 ITR 11 (SC), can be of any help to the Revenue in this case. To my mind the facts of the two cases are not quite similar; the acquisition of technical know-how and the use of the acquired know-how in the design of machines and accessories and their manufacture in India does not seem to me to be comparable to the playing and broadcasting of copyright musical compositions in India on the basis of the licence granted under an agreement. To my mind the facts of the case in hand would be comparable to a situation where some people went to England to learn western music from the members of the society, on payment of some specified fee and on coming back used the acquired skill to write musical compositions that were played and broadcast in this country. The decision in Performing Right Society Ltd.'s case, [1977] 106 ITR 11 (SC), would surely not apply to such a case.

23. Though the Tribunal relied only on the decision in Performing Right Society Ltd.'s case, [1977] 106 ITR 11 (SC), Mr. Vidyarthi, learned counsel appearing for the Revenue, cited another Supreme Court decision in Standard Triumph Motor Co. Ltd. v. CIT, [1993] 201 ITR 391. This decision does not seem to have any application to the facts of the case in hand. In Standard Triumph Motor Co.'s case, [1993] 201 ITR 391 (SC), the assessee denied any tax liability on the plea that there was “no actual payment” of the royalty to it by the Indian company. According to its case, it was maintaining its account on cash basis and not on mercantile basis and, there fore, though the Indian company made a credit entry in the accounts of the assessee in its books it did not actually receive the amount. The argument proceeded that the assessee could be said to have “received” the royalty amount only when it received the same in the U.K in pound sterling and made an entry to that effect in its own books of account. Since it was maintaining its accounts, with respect to the royalty in question, on cash basis, it was contended that receipt meant receipt in the U.K The Supreme Court noted the fact that the assessee had been very careful not to say that the Indian company did not place the said amount at the disposal of the assessee. In fact in answer to a question by the court, it was stated that even if the amount were put by the Indian company in a bank to the credit of the assessee it could not be said that the assessee had received the amount. The Supreme Court rejected the contention holding that the method of accounting adopted by the assessee was really irrelevant and the very “concept of receipt” as espoused by the assessee was untenable and unacceptable. The decision in Standard Triumph Motor Co.'s case, [1993] 201 ITR 391 (SC), has thus got nothing in common with the facts of this case.

24. Mr. A. Moitra, learned counsel for the assessee, on the other hand, relied upon the decision of the Supreme Court in Carborandum Co. v. CIT, [1977] 108 ITR 335, in support of his submission that the payment under article 111(a) of the agreement was not income in the hands of the U.S company accruing or arising in India. In that case an American company under the name of Carborandum company which had specialised in the manufacture of bonded abrasive products entered into an agreement with an Indian company under the name of Carborandum Universal Limited. The American company agreed to render to the Indian company certain technical know-how services under the agreement which was similar to the one in the case in hand. In that case besides furnishing technical know-how and other allied services the American company was to provide the Indian company with a resident factory manager for starting the plant and superintending its operations during its initial production stages, as also other technical personnel necessary for the operation of the plant. For the services rendered by it the American company was to receive from the Indian company an annual service fee equal to three percentum on the net sale proceeds of the products manufactured by the latter each year (that is, akin to payment under article 111(b) of the agreement in the case in hand). In that case the Commissioner of Income-tax held that at least 75 per cent, of the technical fee earned by the American company had accrued or arisen in India. The Supreme Court noted that the basis of the Commissioner's order was that even though the technical information was supplied by the American company from outside India, the information received by the Indian company was put to use only in the taxable territory and the technical fee paid by it was mainly on account of such use. The Supreme Court further noticed that the Commissioner held the view that though the technical personnel provided by the American company to the Indian company worked under the control of the Indian company which also paid them their salary, etc., the situs of the services rendered by them was in India. The Income-tax Appellate Tribunal reversed the order of the Commissioner of Income-tax (Appeals) but on a reference made to it the High Court answered the question in favour of the Revenue and against the assessee-company. The Supreme Court examined these facts in the light of section 4(1)(c) read with section 42 of the Indian Income-tax Act, 1922 and held as follows (page 344):

“The High Court was wrong in its view that activities of the foreign personnel lent or deputed by the American company amounted to a business activity carried on by that company in the taxable territory. The finding of the Tribunal in that regard was specific and clear and was unassailable in the reference in question. The American company had made the services of the foreign personnel available to the Indian company outside the taxable territory. The latter took them as their employees, paid their salary and they worked under the direct control of the Indian company. The service rendered by the American company in that connection was wholly and solely rendered in the foreign territory. Even assuming, however, that there was any business connection between the earning of the income in the shape of the technical fee by the American company and the affairs of the Indian company, yet no part of the activity or operation could be said to have been carried on by the American company in India.

25. And in the absence of such a sustainable finding by the High Court the provisions of section 42, either of sub-section (1) or of sub-section (3), were not attracted at all.”

26. The Supreme Court, thus, went on to hold (page 345):

“For the reasons stated above, we hold that, on the facts and in the circumstances of the case, the technical service fee received by the asses-see-company, from the Indian company during the accounting year relevant to the assessment year 1957-58 did not accrue or arise in India nor could it be deemed to have accrued or arisen in India.”

27. Mr. Moitra next relied upon a Bench decision of this court in Addl. CIT v. New Consolidated Gold Fields Limited (London), [1983] 143 ITR 599. In this case the assessee-company, Indian Copper Corporation Limited, Ghat-sila, entered into an agreement with a company in the U.K referred to in the reported judgment as “Gold Fields”. In that agreement Gold Fields were appointed as technical advisers' to the assessee-company in regard to its exploration, mining and mineral dressing operations on the terms and conditions contained in that agreement. In column 2 of the agreement, the details of the nature of technical advice the Gold Fields were required to give was mentioned. In column 6 of the agreement, it was provided that for general services “the company shall pay to Gold Fields a retaining fee at the rate of 7,000 per annum, such remuneration being paid in sterling in London.” There were other kinds of payment also but those were not the subject of dispute before the court. On examining the provisions contained in section 5(2) and section 9 of the Income-tax Act, 1961, this court found and held as follows (page 605):

“Taking into consideration the different clauses of the agreement and the findings recorded by the Appellate Assistant Commissioner and the Tribunal, it has to be held that 7,000 sterling was being paid to the non-resident at London for the advice given from London, which income cannot be reasonably attributed to the operations carried out in India. In my opinion, it is difficult to hold that a continuity between the business of the non-resident and the activity in the taxable territories in respect of the income in question has been established so as to hold that there was a business connection between the non-resident and the assessee-company.”

28. The court further held (page 606):

“So far as the facts of the present case are concerned, I have already pointed out that the non-resident received in London 7,000 sterling for the technical advice given to the assessee-company from London. The income to such a non-resident, in the facts and circumstances of the present case, cannot be co-related with the activity of any such non-resident within the territory of India so as to make it an income within the meaning of section 9(1) of the Act.”

29. Mr. Moitra also relied upon a Bench decision of the Calcutta High Court in CIT v. Usha Martins Black (Wire Ropes) Ltd., [1984] 148 ITR 236 and a decision of the Karnataka High Court in VDO Tachometer Werke, West Germany v. CIT, [1979] 117 ITR 804. The reliance on these two decisions too appears to be quite well placed.

30. In the case of Usha Martin Black, [1984] 148 ITR 236, the Calcutta High Court relying upon the Supreme Court decision in Carborandum Co.'s case, [1977] 108 ITR 335, held on similar facts as in the present case that the amount of royalty paid to the non-resident company was not assessable to tax in India.

31. The decision of the Karnataka High Court in VDO Tachometer Werke's case, [1979] 117 ITR 804, also applies to the facts of this case and lends considerable support to Mr. Moitra's submissions. In that decision Venka-taramaiah J., as his Lordship then was, examined in detail the terms and conditions of a similar collaboration agreement, the relevant provisions of the Income-tax Act, 1961, and the decisions of the Supreme Court includ-ing those in Carborandum Co.'s case, [1977] 108 ITR 335 and Performing Right Society Limited's case, [1977] 106 ITR 11, and answered the references in favour of the assessee holding that the payments to the non-resident company were not assessable to tax in India.

32. I have found above that the decision in the case of Performing Right Society Limited, [1977] 106 ITR 11 (SC), cannot be truly applied to the facts of this case. On the other hand, the facts of the decisions in Carborandum Co.'s case, [1977] 108 ITR 335 (SC); (ii) New Consolidated Gold Fields, [1983] 143 ITR 599 (Patna); (iii) Usha Martin Black, [1984] 148 ITR 236 (Cal) and (iv) VDO Tachometer Werke, [1979] 117 ITR 804 (Kar), are not only much closer but almost similar to the facts of the case in hand. Following those decisions, therefore I come to find and hold that the income mentioned in article 111(a) of the collaboration agreement did not accrue or arise in India to Wean United within the meaning of section 5(2)(b) of the Act. I, would, therefore, answer the reference in the negative, that is to say, in favour of the assessee and against the Revenue.

33. In the facts of the case, I will make no order as to costs. Let a copy of this decision be sent down to the Income-tax Appellate Tribunal for the needful.

S.N Jha, J.:— I agree.