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2014 (11) TMI 900 - HC - Income TaxAmount received by Non-resident to be treated as Royalty or not u/s 9(i)(vi) - Drawing and designs and technical know-how – Transaction to be treated as outright sale of plant and profits to be treated business profit or not – Held that:- A comparison of the definitions or descriptions of the word royalty under Explanation 2 of Section 9(1)(vi) of the Income Tax Act, on the one hand, and the one, under Clause 13(3) of the DTA Convention, on the other hand, discloses that the amount, even if called as royalty, paid by the respondent, to the foreign company gets attracted by the DTA Convention - the know-how is intellectual property and excluded clauses referred to above pertained to the know-how of secret formula or process and the imparting of any information concerning the working thereof - the amount paid by the respondent to the foreign company is part of lump sum consideration for supply of technical know-how, machinery installation and erection and the same cannot be treated as royalty and even if the amount is to be treated as royalty, it stands covered by the DTA convention dated 16-04-1981 and thereby the amount is not liable to taxation in India – Decided against revenue. Liability to pay interest u/s 139(8) - Whether the Tribunal is justified in holding that the agent of non-resident is not responsible for discharge of statutory obligation anterior to grant of recognition of such agency – Held that:- It is only on 19.11.1990, that an order came to be passed under Section 163(2) of the Act treating the respondent as an agent of non- resident - The time for filing returns for assessment year 1988-89 was to expire by November, 1987 and for assessment year 1989-90, in November, 1989 - Since it is only after 19.11.1990, the respondent was treated as the agent of a non-resident, there was no obligation on the respondent to file a return for 1988-89 and 1989-90 for which the time for filing return had expired in November, 1987 and November, 1989 itself - there was no obligation on the part of the respondent to discharge the statutory obligation prior to 19.11.1990 - as there was no obligation on the part of the respondent to file a return prior to the date of its being treated as a representative of the foreign company, there was no obligation to file returns prior to that date - the liability to pay interest under Section 139(8) of the Act, cannot be fastened on the respondent - definition of tax does not include component of interest – Decided against revenue.
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