TMI Blog2015 (4) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... ire 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 60,97,70,000 The stand of assessee before Assessing Officer was that payment is for outright purchase of capital assets being intangibles in the form of goodwill, trademark and technical know-how. However, Assessing Officer was of the view that payment is covered by section 9(l)(vi) of Income Tax Act, 1961 and therefore assessee was required to deduct tax treating the payment as Royalty. It was therefore treated assessee in default for its failure to do so. 3. Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to assessee by accepting its contention, whereby it was held that purchase of technical knowhow cannot be held as royalty and provision of 195 of the Act is not technical. 4. Same has been opposed before us on behalf of Revenue inter alia submitted that CIT(A) was not justified in holding that purchase of technical knowhow cannot be held as royalty and provision of 195 of the Act are not applicable. Ld. Departmental Representative further argued that CIT(A) was not justified in holding that payment and trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n object forming the subject-matter of his ownership. It consists of a bundle of rights, all of which are rights in rem, being good against the entire world and not merely against a specific person and such rights are indeterminate in duration and residuary in character as held by the Supreme Court in the case of Swadeshi Ranjan Sinha v. Hardev Banerjee AIR 1992 SC 1590. When rights in respect of a property are transferred and not the rights in the property, there is no transfer of the rights in rem which may be good against the world but not against the transferor. In that case, the transferee does not have the rights which are indeterminate in duration and residuary in character. Lump sum consideration is not decisive of the matter. That sum may be agreed for the transfer of one right, two rights and so on all the rights but not the ownership. Thus, the definition of term 'royalty' in respect of the copyright, literary, artistic or scientific work, patent, invention, process, etc. does not extend to the outright purchase of the right to use an asset, In case of royalty, the ownership on the property or right remains with owner and the transferee is permitted to use the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, assessee drew attention to various articles of agreement discussed above. Learned Authorized Representative of assessee also drew our attention to the order of ITAT, Pune A Bench in case of ITO Vs. M/s. Royle Extrusion Systems Ltd. in ITA No.591/PN/94 and others, wherein vide para 3, the Tribunal in its facts and circumstances dismissed the revenue's appeal by observing as under: 10. We have considered the rival submissions carefully. The sum and substance of the dispute revolves around the liability of the assessee to deduct tax at source on remittance of US$ 120,000to foreign collaborator. As per the assessee, the stated remittance was in terms of a foreign collaboration agreement with foreign collaborator and the said consideration related to the supply of drawings, designs, and detailed engineering services for erection of plant for manufacture of licensed products. The Income-tax officer, TDS-2 Pune, however, considered the same as in the nature of royalty/technical fees and also observed that assessee's plea that payment relates to the acquisition of technical know how for the purchase of machinery is not correct----- . On the contrary, the Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax (Appeals) for adjudication afresh. 6. Nothing contrary was brought to our knowledge on behalf of revenue with regard to decision of M/s. Royle Extrusion Systems Ltd, (supra). Facts being similar, so following same reasoning 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. Assessing Officer is directed accordingly. As a result, appeal filed by assessee is allowed as indicated above. 6. Even before us nothing contrary was brought to our knowledge on these legal propositions. In view of above discussion, we are not inclined to interfere in the finding of CIT(A) who has held that purchase of technical knowhow cannot be ..... 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