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TMI Blog2019 (8) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... going use of its assets or property such as patents or natural resources for business purposes. Word royalty has been defined by the Supreme Court in the case titled as Entertainment Network (I) Ltd. v. Super Cassette Inds. Ltd [ 2008 (5) TMI 671 - SUPREME COURT] as the remuneration paid to an author in respect of the exploitation of a work, usually referring to payment on a continuing basis (i.e. 10 percent of the sale price) rather than a payment consisting of a lump sum in consideration of acquisition of rights. Word Royalty has been defined in Oxford Advanced Learner s Dictionary (New 9th Edition) as a sum of money that is paid by an oil or mining company to the owner of the land that they are working on Thus understood, the assessee wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the facts and in the circumstances of the case and true interpretation of the documents, the Hon'ble Tribunal was right in holding that there was no distinction between the expression "supply" and "use" for the supply of designs and drawings and thus the provisions of tax deduction at source were applicable to the above payment?" 2. The brief facts are that the assessee had entered into an agreement with Steyr-Daimler-Puch AG (Puch), (Materised Two Wheel Division), Austria, whereby the letter head granted to the assessee exclusive and individual right and licence to use manufacturing information supplied by PUCH to manufacture, assemble and sell in India vehicle Maxi Plus and Super Maxi. As per Clause No. 1.4 PUCH supplied drawi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct tax at source since it was in the nature of royalty payment. In an appeal filed by the assessee, the Commissioner held that this payment was not royalty payment and as per the convention signed between the Government of India and Austria for the avoidance of double taxation with respect to taxes on income, the amount of 3 million Austrian shillings would be taxable in the hands of PUCH in Austria and would not be exigible to tax in India since it was not payment made for royalty. The Revenue carried the matter to the Tribunal. It was the case of the assessee that the payment of 3 million Austrian Schilling was for the supply of material and their use would arise when the vehicles would be started to be produced and at that stage royalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w 9th Edition) as 'a sum of money that is paid by an oil or mining company to the owner of the land that they are working on' 9. Thus understood, the assessee would have to pay a certain amount of money to PUCH for every vehicle which is sold using its designs. 10. In our considered opinion, the Tribunal has given an unnatural and strained meaning to the expression 'supply'. Yes, by entering into the agreement and by supplying the material PUCH authorized its use but its actual use would start only when production and sale commenced and that would be the stage at which royalty would be payable. 11. No other argument has been raised before us. 12. Though the reference is answered in favour of the assessee and against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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