Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 294 - AT - Income TaxTDS u/s 195 - payment to M/s. Balanced Scorecard Collaborative inc. of USA, towards affiliation fee - AO held that the fee paid as royalty within the meaning of clause (vi)(b) of Sub-section (1) of Section 9 - transfer of technical know-how or technical knowledge - PE in India - Held that:- Assessee being management consultant, the agreement with M/s. Balanced Scorecard Collaborative inc. of USA, had this high sounding management terminology, but put it simply assessee has paid only the affiliation fee and not a fee for consultation or for technical knowledge. Since there is no transfer of technical know-how or technical knowledge or use of technical knowledge, in our opinion, the definition ‘royalty’ either under IT Act or under the DTAA does not apply to the present payment of affiliation fee. Since the M/s. Balanced Scorecard Collaborative inc. of USA, does not have any PE in India, the payment itself per se does not attract any TDS provisions. Since the payment of affiliation fee alone do not result in either providing any technical service or use of technical knowledge, both the AO and CIT(A) have erred in considering the fee as in the nature of royalty. Since there is no transfer of technology or use of any technology and payment is only simply for affiliation, the above amount cannot be considered as ‘royalty’ either under the provisions of Income Tax Act or under the provisions of DTAA. The affiliation fee cannot be considered as taxable income of non-resident so as to attract TDS provisions. - Decided in favour of assessee.
|