K.S. Puttaswamy, J.
1. In this case, the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore ('Tribunal'), at the instance of the Revenue, has referred the following question of law for the opinion of this court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no part of the sum of Rs. 26 lakhs could be taken as having accrued or arisen or deemed to have accrued or arisen to Messrs. Bernard Golay S. A. in India during the previous year relevant to the assessment year 1973-74 ?'
2. In order to appreciate the question referred to us, it is necessary to notice the facts in the first instance.
3. In pursuance of a technical collaboration agreement between the assessee and M/s. Bernard Golay S.A., a Swiss company, a sum of Rs. 26 lakhs was paid by the former to the latter before March 31, 1973.
4. For the assessment year 1973-74 relevant to the accounting year ending on March 31, 1973, the Income-tax Officer, Company Circle, Bangalore, brought the aforesaid sum of Rs. 26 lakhs paid to M/s. Bernard Golay as income of the non-resident collaborator to tax under the Income-tax Act, 1961 ('the Act'), for the aforesaid assessment year. Against the said assessment order, the assessee filed an appeal before the Appellate Assistant Commissioner who by his order dated March 31, 1977 allowed the same. Against the said order of the Appellate Assistant Commissioner, the Revenue filed a second appeal before the Tribunal which by its order dated July 24, 1978 dismissed the same. Hence, this reference at the instance of the Revenue.
5. Sri K. Srinivasan, senior standing counsel for the Department, appearing for the Revenue, contends that Rs. 26 lakhs had accrued to the foreign collaborator and was, therefore, subject to tax under the Act and on the acceptance of the same, we must answer the question referred to us in the negative and in favour of the Revenue.
6. Sri G. Sarangan, learned counsel for the assessee, contends that the whole of Rs. 26 lakhs had not accrued and was not received in India as found by the Tribunal and the Appellate Assistant Commissioner and accepting that finding of fact, the question should be answered in the affirmative and in favour of the assessee.
7. On the payment of Rs. 26 lakhs, the Tribunal and the Appellate Assistant Commissioner have found thus :
'(i) The collaboration agreement was entered into in Switzerland.
(ii) Under clause 5 of the collaboration agreement, the payment of 26 lakhs was 'for supply of technical know-how, for drawings, designs, documentation'. All the documents relating to technical know-how were given on the date of agreement in Switzerland.
(iii) No employee of the Swiss company was deputed to India to even hold that the Swiss company rendered service through its employees in India.
(iv) The training of the technicians of the assessee in Switzerland and elsewhere was not an activity carried on in India.
(v) No business activity as such was carried on by the Indian company, let alone the Swiss company in India during the accounting year in question.'
8. On these and other relevant facts, the Tribunal and the Appellate Assistant Commissioner, applying the principles enunciated in Carborandum Co. v. CIT : 108ITR335(SC) , found that the aforesaid sum of Rs. 26 lakhs had not accrued and had not been received by the Swiss company in India to subject the same to tax under the Act. We cannot take exception to this finding of fact on any ground. When once this finding of fact is found to be correct, it follows that on the application of the principles enunciated by the Supreme Court in Carborandum Company's case : 108ITR335(SC) the question referred to us has to be answered in the affirmative, against the Revenue and in favour of the assessee.
9. In the light of our above discussion, we answer the question referred to us in the negative, against the Revenue and in favour of the assessee. But, in the circumstances of the case, we direct the parties to bear their own costs.