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2001 (12) TMI 8 - HC - Income TaxThe question which has been raised in this appeal under section 260A is the interpretation of "royalty" as envisaged under Explanation 2 appended to section 9(1) of the Act. By reason of this Explanation which provides that the income specified therein shall be deemed to accrue or arise in India specifies six items which would come within the scope thereof. - None of the sub-clauses in Explanation 2 under section 9(1)(vi) would, in the circumstances of this case, be capable of being regarded as covering the design and engineering carried out by the supplier of the machinery abroad. There is no transfer or licence of any patent, invention, model or design. The design referred to in the contract is only the design of the equipment required to be manufactured by the supplier abroad and supplied to the purchaser. The information concerning the working of the machine is only incidental to the supply as the machinery was tailor-made for the buyers. Unless the buyer knows the way in which the machinery has been put together, the machinery cannot be maintained in the best possible way and repaired when occasion arises. No licence of any patent is involved. Sub-clause (vi) and also (vii) of section 9(1) would have no application as the design was only preliminary to the manufacture and integrally connected therewith - we are of the opinion that no substantial question of law arises for consideration in this appeal.
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