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2016 (4) TMI 123 - AT - Income TaxTDS u/s 194J - Non deduction of tds - Held that:- It is amply clear that none of the clauses of Explanation 2 to section 9(1)(vi) is attracted to the granting of economic interest of first refusal to the assessee-company by Shri Mohan Raju in any new business initiative. The right envisaged in the agreement is only acquiring the controlling interest in the new initiative of MR. We are unable to discern from the perusal of the agreement, transfer of any rights or use of intellectual property. Therefore, considering the definition given in the Explanation 2 to sec.9(1)(vi) of the Act, the impugned consideration paid to Shri Mohan Raju cannot be treated as royalty. Hence, the question of deducting tax at source under the provisions of 194J does not arise. No demand visualized u/s 201 of the Act should be enforced after the tax deductor had satisfied the officer in-charge of TDS that tax due have been paid by the deductee, held that once taxes have already been paid by the payee, there was no need to recover the same demand from the person responsible for deducting at source. In the present case, though no taxes have been paid by the payee on the amount, it serves no purpose to enforce demand from the tax deductor as the assessment in the hands of the payee is completed, the demand, if any, can be recovered from the payee under due process of law. - Decided in favour of assessee
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