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TMI Blog2015 (4) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... licable. II) The Ld. CIT(A) has erred in law and on facts in holding that the payments on transfer of technical knowhow to be not in the nature of royalty in spite of the express provisions of Section 9(1)(vi) of the I.T. Act." 2. Assessee is a company limited by shares and carrying on the business in India since last several years. Assessee is assessed to tax with Additional Commissioner of Income Tax, Bharuch Range, Bharuch. Assessee is in business of manufacturing and sale of colour pigments and fine chemicals. During the year A.Y. 2007-08, assessee had acquired Avecia Business from Colour Ltd. (hereinafter referred as "CL"). Assessee paid following amounts to CL claimed to be for the intangibles, trademarks and goodwill transferred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression of provision of section 9(l)(vi) of the Act. On other hand, ld. Authorized Representative supported the order of CIT(A) and submitted that CIT(A) was justified in holding that payment and transfer of technical knowhow to be not in nature of royalty. Accordingly, same should be upheld. 5. 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 Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been granted. Ownership denotes the relationship between a person and an 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 residu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961. As remittance made were held not chargeable to tax in India. In such situation, provisions of Section 195 are not applicable. Hon'ble Supreme Court in case of GE India Technology Centre P. Ltd vs. CIT & Another (2010) 327 ITR 456 (SC) held that u/s. 195 payer is bound to deduct tax only if the sum payable is assessable to tax in India. Once provisions of Section 195 of the Act are not applicable and there is no question of recovery of tax in accordance with provisions of Section 201 of the Act. 5.2 This view is verified by the decision of Pune 'B' Bench in ITA No. 2040/PN/2012 for A.Y. 2010-11 in Deepak Fertilizers and Petrochemicals Corporation Limited vs. DDIT (International Tax)- I, Pune, wherein Tribunal held as under: "5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Income-tax (Appeals) has accepted the plea of the assessee. We have also perused the technical-cum-financial collaboration agreement dated 23.12.1991 and the supplementary agreements dated 8.4.1992 and 9.4.1992 and find that the stated remittance is part of a consideration for supply of technical know how for erection of plant for manufacture of licensed products by way of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative, is found in any of the orders of the authorities below. The learned Departmental Representative has not referred to any incriminating material or evidence to demonstrate that the bifurcation made out in the supplementary agreements was with any mala fide intentions. In view of the aforesaid and considering that the plea of the learned Departmental Representative is based on mere bald assertion, we do not find any merit in his plea and thus find no reasons to remit the matter back to the Commissioner 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 follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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