TMI Blog2007 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that the payment of DEM 6,00,000 towards purchase of designs and drawings from a German Party does not constitute a royalty as per Article 12 of the DTAA between India and Germany and section 9 of the Income-tax Act, 1961 ignoring the fact : ( i )that what the German Company has given to the assessee is right to use technical know-how including flow diagrams, layout drawings, lists and drawings of equipments, manual operating descriptions, performance date sheets, lists, drawings of equipments, manual operating descriptions, performance date sheets, lists, drawings and information etc. about the Dim-Kiln Plant, Dense Soda-Ash Plant and Quick-lime Plant. ( ii )that the ratio of decision of the Calcutta High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings for Lime Kiln Plant and Drawings for Dense Soda Ash Plant at a total consideration of DM 6 lakhs. Custom duty was also paid by the assessee on purchase of designs and drawings. The assessee applied to the Assessing Officer for authorization for remittance of DEM 6 lakhs towards purchases of designs and drawings from this German party. It was contended by the assessee before the Assessing Officer that this amount should be allowed to be remitted without payment of any tax and it was contended before the Assessing Officer that this payment does not fall within the purview of provisions of section 115A as the drawings are being purchased after payment of import duty. The Assessing Officer did not accept this contention of the assessee bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 9(1), royalty means a consideration for transfer of all or any rights of a patent, invention, models, designs etc. It is submitted that as per this section 9(1) also, the impugned payment is royalty. Reliance was placed on the Judgment of Hon ble Calcutta High Court rendered in the case of N.V. Philips Gloeilampenfabrieke N. Eindhoven ( supra ). 5. As against this, it is submitted by learned AR of the assessee that this issue is covered in favour of the assessee by the Tribunal judgment rendered in the case of Dy. CIT v. Topack Industries (India) Ltd. [IT Appeal No. 3671 (Mum.) of 1996, dated 3-7-2003]; copy of which was submitted. It is submitted that in this case also, the issue involved was regarding payment for p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the rival submissions, perused the materials on record and have gone through the orders of authorities below and judgments cited by both sides. We find that there is no dispute that in the present case, impugned payment is made by the assessee on account of purchase of designs from German party. In the light of this fact, we have to examine as to whether this payment can be treated as royalty as done by the Assessing Officer. In this regard, learned DR of the revenue has placed reliance on the judgment of Hon ble Calcutta High Court rendered in the case of N.V. Philips Gloeilampenfabrieke N. Eindhoven ( supra ). We find that this Judgment is not applicable in the present case because facts are different. In that case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was not towards the user of the property. In view of the definition of the term Royalties as appears in the DTAA, it cannot be said that the assessee did make the payment of royalty. As such, the case of the assessee falls beyond the ken of section 40( a )( i ) of the Act as because the assessee was not obliged to deduct any tax." 7. In the present case, learned CIT(A) has also decided the issue on similar basis. It is observed by learned CIT(A) that as per second para of the order passed by the Assessing Officer, the agreement between the German company and the assessee-company indicates that the amount was paid for the sale/purchase of technical documents; and, therefore, it is not a royalty as per Article 12 of the DTAA between ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
