Garg AM- These cross appeals are against the orders of the Commissioner of Income-tax (Appeals) for assessment years 1984-85 to 1988-89. Since there is a common dispute, they are being disposed of by this common order for the sake of convenience.

2. In all the appeals filed by the Revenue for assessment years 1984-85 to 1988-89, the dispute is with regard to taxability of the amount received by the assessee, M/s SMS Schloemann Siemag Aktiengesels chaft (hereinafter referred to as SMS), towards design and engineering services in pursuance of two separate agreements with M/s Rashtriya Ispat Nigam Ltd., Visakhapatnam Steel Project - one in respect of Wire Rod Mill and the other in respect of Light and Medium Merchant Mill. In the Wire Rod Mill agreement, SMS is the prime contractor whereas in the case of Light and Medium Merchant Mill agreement, SMS is a Confirming Party and M/ s Metallurgical & Engineering Consultants (India) Ltd. Thereinafter referred to as (MECON) is the main contractor. In the first contract, SMS was given the overall responsibility with regard to the entire work referred to in the scope, whereas in the second contract, the overall responsibility was to be jointly shared by SMS on one hand and MECON on the other. The first contract is dated 15-11-1983 whereas the second contract is dated 9-2-1993.

3. The assessee received various amounts under the contracts for -

(i)equipment and commissioning spares;

(ii)design and engineering fees including reimbursement of expenditure and fees for training services;

(iii)supply of spares for two years of operation and maintenance.

There is no dispute insofar as the taxability of the receipts for supply of equipment and spares is concerned. The dispute, however, is with regard to the taxability of the receipt of design and engineering fees and fees for imparting training abroad. The assessee’s stand has been that the receipt by the assessee was not taxable as the receipts for the services rendered abroad formed part of the commercial profits of the assessee, that though separate payments were stipulated for supply of machinery and for supply of engineering services relating and incidental to the supply of machinery, the contract was a composite one for supply of equipment, that the documentation forms part of the equipment and plant and without the documentation, the purchaser would not be in a position either to erect or to operate the same, that the Assessing Officer had issued a no objection certificate for remittance of these amounts by Rashtriya Ispat Nigam Ltd. to the assessee without deduction of tax therefrom, considering that any income arising therefrom was exempt from tax, that the receipt towards engineering fees did not fall under the definition of the term "Royalty" in terms of section 9(1)(vi) of the Income-tax Act, as the documentation related only to erection and operation of equipment and did not involve either the transfer of any right in the know-how and the purchaser could not manufacture similar items of equipment even if it wanted to, with the aid of the documentation supplied by the assessee, and that the receipt of engineering fees did not fall under the definition of "Fee for Technical Services" in terms of section 9(1)(vii) of the Income-tax Act as the services were not separate from the supply of equipment and as the contract was not for performance of services in the preparation of designs and, besides, the said definition clearly excludes any consideration for construction, assembly, mining or like project undertaken by the recip-ient. The assessee submitted that the case was covered by the decision of the Tribunal, Hyderabad Bench, in the case of Klayman Porcelains Ltd. v. ITO [1984] 8 ITD 265.

3A. The Assessing Officer did not agree with the assessee. He held in the order for assessment year 1984-85 that the assessee had agreed to transfer licence for latest Morgan know-how for setting up Wire Rod Mill and had transferred technical know-how th