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2018 (3) TMI 1301 - AT - Income TaxTDS u/s 195 - disallowance of the royalty payment in terms of section 40(a)(ia) - assessee has utilized the patents IPRs in India - Held that:- The facts of the case clearly indicate that the assessee company is also a tax resident in India, for the purpose of income tax and, therefore, the facts indicate that the assessee has utilized the patents IPRs in India and the products so manufactured with the aid of patents and IPRs are in reality exported to USA. Hence, the ld. CIT (Appeals)’s analogy is correct that DKLLC USA (assessee) has merely carried out the marketing of the products which are exported by the DKLLC India (assessee). Hence, we agree with the ld. CIT (Appeals) that the patent/IPRs are utilized for manufacturing activities in India and the rest of the activity, i.e., sale in USA has to be viewed in conjunction with this activity and the same cannot be isolated. Hence, the assessee’s contention that the patents, IPRs are utilized outside India and income has been earned from outside India are not sustainable. Hence, the ld. Commissioner of Income Tax (Appeals) is correct in holding that the disallowance of the royalty payment in terms of section 40(a)(ia) r/w s. 195 of the Act is justified. - Decided against assessee
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