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2012 (4) TMI 189 - AT - Income TaxMethod of accounting or royalty and assessment of reimbursement of expenses by the AO - Singapore based company - licensing of software to one of the customers which is its hundred per cent subsidiary - Held that:- even if there is force in the argument that the interpretation may lead to delay in payment of tax, it will be useful only in such cases where the AO makes out a case that the delay was with a view to defer the payment of tax. In absence of such a finding by the AO, it is held that the argument is not applicable to the facts of this case. Accordingly, it is held that royalty and FTS are taxable on payment basis and not on accrual basis. Taxability of reimbursement of expenses - held that:- royalties and FTS are taxable on payment basis, and reimbursement of traveling expenses will have to be included in the gross receipts for the purpose of taxation. Whether, the assessee is liable to pay surcharge?- held that:- circular no. 734 does not mention anything about surcharge for the purpose of deduction of tax at source from payments by way of dividends, interest and royalties. What is good for the TDS is also good for the taxation. Therefore, it is held that the assessee is not liable to pay surcharge.
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