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2021 (4) TMI 628 - AT - Income TaxTDS u/s 195 - use of logo - license fee payment without deducting TDS SUPIMA, USA - AO observed that the assessee has made a payment to SUPIMA, USA for use of the mark SUPIMA(R) at the time of sale of the products as it give credibility to the product. Thus, the assessee’s contention is that they do not derive any benefit out of its self-contradictory - HELD THAT:- The assessee-company is manufacturing cotton yarn. It imports long staple cotton from America known as “PIMA” cotton and producing cotton garments. The assessee entered into a contract with SUPIMA® license agreement dated 01.01.2015 as per Article I & II clearly shows that SUPIMA(R) has granted a license to the assessee. From the above Article I & II, it is very clear that the SUPIMA is the owner of the trade mark. This Logo for using in connection with apparel, home furnishing, fabrics, yarn, threads and the like further SUPIMA has granted license to the assessee to use trade mark SUPIMA(R) for the goods produced by the assessee. The payment made by the assessee in connection with the license obtained from the SUPIMA(R) at USA. Therefore, the payment made by the assessee is in the nature of royalty as defined under Explanation 2(1) to Section 9(1)(vi) of the Act and the assessee is liable for TDS u/s. 195 of the Act. The assessee without deducting the TDS payment made therefore, the AO has rightly invoked Section 195 of the Act for non deduction of TDS and the same is confirmed by the Ld. CIT(A). Agreement clearly shows that the payment is made by the assessee to use the Logo of SUPIMA(R) and therefore, it is a payment of royalty. In so far as the other argument of the assessee is that the payment is made every year, in our opinion, whether the payment is made once or payment is made every year does not make any difference. Whenever, the assessee makes payment is under obligation to deduct TDS. In this case, the assessee failed to deduct the TDS and therefore, the AO has rightly invoked Section 195 of the Act. Hence, we find no reason to interfere in the order passed by the Ld. CIT(A). Though the AO and Ld. CIT(A) has considered the DTAA between India and USA, the ld. counsel for the assessee has not made any submissions in respect of the above and therefore, no finding is required. - Decided against assessee.
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