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2022 (12) TMI 1091 - ITAT DELHIIncome deemed to accrue or arise in India - Amount received by on account of transfer of trademark and brand name - Whether be treated as royalty under Article 12 of India – Turkey Double Taxation Avoidance Agreement (DTAA), instead of capital gains under Article 13 of the DTAA - assessee is a non-resident corporate entity incorporated under the laws of Turkey and a tax resident of Turkey - HELD THAT:- As relying on Hilton Roulunds Ltd. case [2018 (4) TMI 1485 - DELHI HIGH COURT] licensee acknowledges the licensor’s rights and title over the trademark, the manner of use of trademark/brand name is specified and restricted in the TLA and the licensee is bound by such conditions/restrictions. TLA authorizes the licensor to terminate the agreement in case of any breach of the conditions. That being the case, it has to be held that it is a case of licence conferring right to use the trademark/brand name and not assignment/transfer of brand name/trademark in favour of the licensee. Thus we have no hesitation in holding that the consideration received by the assessee for permitting the right to use of brand name/trademark under TLA is nothing else but in the nature of royalties as defined under section 9(1)(vi) read with Article 12(3) of India – Turkey tax treaty. Therefore, we concur with the view expressed by learned DRP. Grounds are dismissed. Taxation of royalty income at the rate of 15% as per the treaty provision instead of applying the lower rate of tax as per the provisions of the domestic law - HELD THAT:- We find, the claim of the assessee has neither been examined by learned DRP, nor by the AO. Therefore, we restore this issue to the Assessing Officer for examining assessee’s claim with reference to the provisions of treaty and section 90(2) of the Act. Needless to mention, the assessee must be provided reasonable opportunity of being heard before deciding the issue. Set off of royalty income against the long term capital loss - HELD THAT:- Having heard the parties, we find, this issue also has not been addressed either by the DRP or by the Assessing Officer. Therefore, we restore this issue to the Assessing Officer for examining assessee’s claim, keeping in view the provisions of section 71(3) of the Act. Before deciding the issue, the assessee must be given a reasonable opportunity of being heard. This ground is allowed for statistical purposes.
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