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2015 (4) TMI 579 - AT - Income TaxPurchase of Technical know-how - Covered under section 9(l)(vi) of Income Tax Act, 1961 and treated as royalty - Liable for TDS u/s 195 of the Income Tax Act,1961 - Seller transferred entire right, title,interest and ownership of the asset - Held that:- After going through rival submissions and material on record, we find that it is undisputed that payment made to M/s. Colour Limited was not taxable in India because of DTAA. Its case is that the transactions are not for royalty as defined in section 9(l)(vi) of the Act. Complete reading of the agreements and clauses there under reveal that assessee had purchased goodwill, trademark and technical knowhow from Colour Ltd, outright. M/s. Colour Limited ("seller") was the owner of manufacturing processes, formulae, trade secrets, technology, analytical techniques, testing procedures, processes and all documents and literature pertaining to the manufacturing. The knowhow relating to the business was purchased by assessee vide agreement dated 31-3-2007. The Seller had sold, assigned, conveyed and transferred to assessee its entire right, title, interest and ownership in the asset. It was accordingly agreed that pursuant to effective date, the seller shall cease to have right, title, interest and ownership in the asset. Similarly assessee would have right title, interest and ownership in the asset. In the case of Asia Satellite Telecommunications Co LTd. [2011 (1) TMI 47 - DELHI HIGH COURT], it was held that In case of royalty, the ownership on the property or right remains with owner and the transferee is permitted to use the right in respect of such property. A payment for the absolute assignment and ownership of rights transferred is not a payment for the use of something belonging to another party and, therefore, no royalty. In an outright transfer to be treated as sale of property as opposed to licence, alienation of all rights in the property is necessary. Same views were held in Davy Ashmore India [1990 (12) TMI 51 - CALCUTTA High Court]. Also same views were held in Deepak Fertilizers and Petrochemicals Corporation Limited [2014 (2) TMI 933 - ITAT PUNE]. So,we hold that CIT(A) was not justified in holding that an amount of € 2,10,000 remitted to GPN Engineering and Process, France as part of total lump sum price of € 3,00,000 on net of tax basis for acquisition of process, design, documentation called Basic Engineering Package on outright purchase basis for Ammonium Nitrate Prill production pursuant to agreement entered into with GPN France was fee for technical service, therefore, liable to withhold tax in India. In view of above, we hold that assessee is not liable to make such payment on such deduction of tax on said amount of remittance. - Decided against the revenue.
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