9911796707
TMI Blog2017 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, in substance, is that the learned CIT(A) erred in upholding the tax withholding demand of Rs. 4,72,030 raised on the assessee under section 201 r.w.s 195 in respect off remittance of Euros 45,000 to OSE Oncology Services Europe S.a.r.l, Germany. 3. The issue in appeal lies in a rather narrow compass of material facts. During the relevant previous year, the assessee had payments, aggregating to Euros 45,000, to one Germany based entity by the name of OSE Oncology Services Europe S.a.r.l (OSE, in short) without any tax deduction at source. The Assessing Officer was of the view that these payments are made for "using the name, goodwill and market reputation" of OSE and, therefore, taxable in India as royalties under section 9(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d facts of the case in the light of the applicable legal position. 5. We have noted that under the agreement dated 8th September 2008, bonafides of which are not even in challenge before us, it is specifically stated that "OSE hereby agrees to permit OSI to use its name, brand, logo and website without any costs or financial liability". It cannot, therefore, be said that any part of the payment of Euros 45,000 is for the purposes of use of name, brand or logo etc. What is the true consideration, and it is so stated in the said agreement itself, is SOPs (Standard Operating Procedures) and "access to database, email server and hardware or software to OSI for this purpose". The aforesaid agreement specifically states that "OSE and OSI both ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready reference photocopy of 4 SOPs, namely mentioned below, are enclosed herewith and rest of the copies are in CD attached herewith. Also attached index copy of all the SOPs for your ready reference. a) SOP preparation, numbering and version identification b) Data Management Plan c) Investigator Site Auditing d) Change Control for Computer Systems 7. The question that really requires to be addressed by us is whether consideration for the sharing of these SOPs can be brought to tax as royalties under the India Germany Double Taxation Avoidance Agreement [(1990) 182 ITR (Stat) 357; Indo German tax treaty, in short]. 8. Article 13(3) of Indo German tax treaty, which defines the expression 'royalties', provides that " The term 'ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess, are only incidental to this main object of sharing the SOPs and cannot thus be viewed in isolation. 9. The essence of this arrangement, even going by the material on record and admission of the assessee in unambiguous words, is on sharing the SOPs, which, as we have noted above, amounts to sharing of scientific experiences taxable under article 13 of Indo German tax treaty. As for the fact that OSE does not have a permanent establishment in India, it is only elementary that existence of PE is sine qua non only for taxation of business profits but that the foreign entity not having a PE in India does not come in the way of taxation of royalties- which precisely is the case of the revenue. In this view of the matter, the payment for sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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