1. This appeal has been filed by the assessee under Section 248 of the Income-tax Act, 1961 ('the Act') against the order dated 16-12-1983 passed by the Commissioner (Appeals). The order of the Commissioner (Appeals) relates to the order dated 2-3-1982 of the ITO purported to have been passed under Section 195(2) of the Act. The grounds of appeal taken in this appeal are reproduced below: 1. That on the facts and in the circumstances of the case the learned Commissioner (Appeals) was not justified in confirming the ITO's order charging tax at the rate of 50 per cent plus surcharge 2.5 per cent as against 40 per cent claimed by the appellant.
2. That the Commissioner (Appeals) erred in not giving a finding as to whether the sum of Rs. 23,95,335.90 representing royalty for the period from 1-1-1980 to 30-9-1981 was payable in pursuance of the agreement dated 10-12-1981 or the earlier agreement which expired on 31-12-1979.
3. That the learned Commissioner (Appeals) should have held that the aforesaid royalty became payable only in pursuance of the agreement dated 10-12-1981 and, therefore, was taxable under Section 115A of the Act at the rate of 40 per cent.
4. That the appellant craves leave to add to, supplement, rescind or modify the grounds hereinabove before or at the hearing of the appeal.
2. At the time of hearing of this appeal we went through the order dated 2-3-1982 of the ITO and the order dated 16-12-1983 of the Commissioner (Appeals). We have also gone through the grounds of appeal taken before us We find that Section 248 allows a person to file an appeal if he denies his liability to make such deduction as is directed by Section 195. Section 195(2) reads as under : (2) Where the person responsible for paying any such sum chargeable under this Act other than interest on securities, dividend and salary to a non-resident considers that the whole of such sum would not be income chargeable in the case of the recipient, he may make an application to the Income-tax Officer to determine, by general or special order, the appropriate proportion of such sum so chargeable, and upon such datermination, lax shall be deducted under Sub-section (1) only on that proportion of the sum which is so chargeable.
We find from the above provisions of Section 195(2) that the person responsible for paying any sum to a non-resident may apply to the ITO to determine the appropriate proportion of such sum which is chargeable to tax. We do not find therein any reference to the rate of tax that has to be applied to the chargeable amount. In other words, Section 195(2) relates to the proportion of the amount that can be chargeable to tax under the Act. The said provisions do not speak at all about the rate of tax that has to be applied to the appropriate proportion of the aforesaid sum held to be chargeable to tax.
3. We asked Shri S. Das Gupta, the learned representative for the assessee, to give us a copy of the application under Section 195(2) made by the assessee to the ITO on the basis of which the latter passed the order dated 2-3-1982 purporting it to be an order under Section 195(2). Shri S. Das Gupta replied that he was not in a position to supply a copy of the said application; but he stated before us that the dispute before the ITO was not as to the proportion of the amount paid by the assessee to the nonresident that should be chargeable to tax.
The only dispute raised by the assessee before the ITO, as stated before us by Shri S. Das Gupta, was as to the appropriate rate of tax to be applied to the said amount. We pointed out to Shri S. Das Gupta that the dispute raised regarding the rate of tax did not come under the purview of Section 195 and so the order dated 2-3-1982 purported to be passed under Section 195(2) was misconceived and so is non est in the eye of law. He replied that he had not looked at the matter from that angle and so he could not reply. It is evident from what is stated above that the assessee moved the ITO under Section 195(2) regarding a matter to which the said section does not apply. The dispute relating to the rate of tax that can be applied to the total income arises in the assessment of the recipient of the income and Section 246(1 )(c)of the Act provides for an appeal in case the assessee is aggrieved by the rate of tax applied for computing the lax. That matter is completely outside the purview of Section 195(2) and Section 248. Consequently, we come to the conclusion that the order dated 2-3-1982 passed by the 1TO does not exist in the eye of law. Similarly, the order dated 16-12-1983 is also misconceived and the appeal filed before us is, therefore, equally misconceived and incompetent.