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2016 (4) TMI 580 - AT - Income TaxTDS u/s 194J - expenditure incurred on payments made to M/s A.B. Hotels Ltd. under the memorandum of understanding with M/s A.B. Hotels Ltd - non deduction of tds - disallowance u/s 40(a)(ia) - Held that:- The assessee was not to receive any serviced from AB Hotels Ltd. AB Hotels owned the brand namely, “The Great Kabab Factory”, which was to be promoted by the assessee through providing franchises to various persons in India. The assessee was to charge fees from various persons who wanted to use this brand as an authorised franchise and the fee was to be shared between the assessee and M/s. AB Hotels in the manner specified above. The sharing of the revenue clearly demonstrates that no services were to be rendered by M/s.AB Hotels to the assessee. In fact it was assessee who had undertaken to promote the brand and assessee received various payments from the persons who got into franchise agreement with assessee and all such payments to the assessee were made after deducting TDS by such franchises. Thus, the year under consideration under the aforesaid MOU, assessee earned a total sum of ₹ 1,78,75,045/- and in accordance with the aforesaid letter dated 23.20.2007, an amount of ₹ 44,68,763/- paid to M/s A.B. Hotels Ltd. was in the share of revenue of M/s A.B. Hotels Ltd. and as such, tax was not required to be deducted in terms of section 194J of the Act and such disallowance made under section 40(a)(ia) is unwarranted and unsustainable in law. - Decided in favour of assessee
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