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TMI Blog2017 (3) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... , the payment must be treated as royalty. That argument does not appeal to us. While examining taxability of income in the hands of the recipient, embedded in foreign remittance, all that is required to be seen is whether or not that particular income is taxable in India. In the present case, the payment is made for purchase of equipments and appliances and these equipments and appliances under the agreement belonged to the assessee and clearly, therefore, the income embedded in these payments is not exigible to tax in India in the absence of permanent establishment of the vender on such equipments and appliances. While it is true that the contract for the purpose of which these equipments and appliances were purchased, relates to a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned AO in holding that remittances to HMR Invest AS, Norway were in the nature of Royalty as defined under explanation 2 to clause (iv) of subsection (1) of S.9 of the Act. In facts and circumstances of the case, the said remittances are not income and thereby no liability can be fastened against the appellant u/s 201(1) r.w.s 195 of the Act. 2. The Id. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in holding that the appellant was liable to deduct tax at source at the rate of 20% u/s 206AA on alleged royalty payments amounting to ₹ 56,01,715/-, resulting in demand of ₹ 12,69,349/- u/s 201(1) of the Act. 3. The learned CIT(A) ought to have appreciated that the provisions of S.139A(8) r.w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to ecological changes depend upon local geography and marine ecosystem. This agreement was for total value not exceeding NOK (Norwegian Krone) 25,00,000/-. Under this agreement, the Norway based company had the primary responsibility to perform and supervise the research project on behalf of the assessee company though it was to have control over the manner in which the research project is conducted. It was also agreed under the said agreement that any equipment and material that is purchased, acquired or fabricated with the funds provided under the agreement was belong to the assessee. During the relevant previous year, the assessee company made a payment of NKR 7,50,000, which was equivalent to ₹ 56,01,715/- at the relevant poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arily has drawn his conclusion from the fact that M/s. HMR Invest AS, Norway, still undertake research techniques for extraction of electrical energy from sea/ocean or tidal waves. The A.O. pointed out that the appellant and M/s. HMR Invest AS, have a mutual interest in the project and M/s. HMR will have primary responsibility to conduct energy related projects for the appellant. The A.O. further observed that the appellant will have all rights, title and interests to the research results, which are accrued as a result of activities performed by M/s.HMR. The appellant on the other hand has submitted that the payments made to M/s. HMR as a result of research conducted, is in the nature of reimbursement and this fact is inferable from the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s action for making tax deduction @ 20% u/s. 206AA is legally tenable as the PAN database of the payee is not available. The ground relating to this dispute is also dismissed. 4. The assessee is aggrieved and is in further appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. We find that so far as the payment before us is concerned, it is undisputedly made for acquiring certain equipments and appliances for the purpose of research. This aspect of the matter is beyond any dispute or controversy in the light of invoice dated 20.05.2010, a copy of which is placed before us at page no.16 of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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