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TMI Blog2009 (7) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... 92. The production was to be done by using vaccum residue from refinery. For the said purpose IOC wanted to construct and install a plant according to the Biturox process. Biturox process is a process used in manufacture of bitumen. To use the Biturox process the plant manufacturing bitumen has to be designed in a particular manner. One Ingenieurgesellschaft MBH, Austria (hereinafter referred to as "Porner") is a licensor of biturox process from OMV and has a right to grant license in favour of third parties. 3. IOC approached Porner for setting up a plant for manufacture of bitumen by using Bilurox process and the agreement dt. 7th Aug., 2000 in this regard was entered into between them. The plant was to be designed to suit particular pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ths performance test, training etc.) (b) Supply and equipment (c) Commissioning and start up (d) Site supervision and other services on site As part of the BEDP, IOC was given a license unlimited in terms of usage by IOC but without any authority to assign the license alone in favour of third parties. 4. The consideration payable by the IOC for the various services and supplies to be done under the agreement to Proner is set out in s. 5 of commercial part of the agreement and the same is as follows: "Sec. 5 (5) Prices: The total contract value shall be US $ 520,926.00 as per following break-up. The above price shall be inclusive of all taxes, duties and levies applicable outside India. (5.1) Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the three invoices set out above applied to the AO under s. 195(2) of the Act to make payment without TDS. The case of IOC was that the services rendered by Proner for preparation of basic engineering with related know-how package are in the nature of technical services. The entire basic engineering and related know-how package is prepared by Proner in Austria. As per the tax treaty between India and Austria, art. 7 the payment made by roc to Proner in respect of BEDP was fees for technical services. Article 7 of the treaty is as follows: "Amount paid by an enterprise of one of the territories for technical services furnished by an enterprise of the other territory shall not be subject to tax by the first mentioned territory except ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tistic or scientific work, cinematographic films, patents, models, designs, plans, secret process or formulae, trademarks and other like property or rights." The Dy. CIT, TDS Circle 1(1), Mumbai, accordingly, directed IOC to deduct tax at 20 per cent before making remittances to Proner. The said three orders arising out of rejection of the three applications of IOC under s. 195(2) of the Act, were confirmed by the learned CIT(A) giving rise to these three appeals by IOC before the Tribunal. 7. We have heard the submissions of the learned counsel for the assessee, who reiterated the stand as taken before the Revenue authorities. The learned Departmental Representative relied on the order of learned CIT(A). 8. We have considered the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal. In these appeals, we are concerned only with the payments for BEDP. BEDP package is nothing but a know-how supplied along with a license to use the know-how by IOC without any limitation for its own use. IOC does not have any other right. In-order that a payment be qualified as royalty under art. 6(2) of the Indo-Austrian treaty, it has to be in the nature of royalty or like royalty and such royalty is paid towards right to use copyrights, artistic or scientific works, cinematographic films, patents, models, designs, plans, secret processes or formulae, trademarks and other like property or rights. The impugned payment towards the supply of basic and engineering package and is not towards the use of some property nonetheles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be taxable only if Proner has a PE in India. In this regard, the assessee placed reliance on the decision in the case of Modern Threads (India) Ltd. vs. Dy. CIT (1999) 63 TTJ (Jp)(TM) 601 : (1999) 69 ITD 115 (Jp)(TM). The facts in the aforesaid case was that Technimont S.P.A., an Italian company sub-licensed to the assessee company right to use the process for manufacturing of PTA. The contract provided for supply to technical know-how and basic process engineering documentation for the design, construction and operation of the plant. The Issue for consideration was whether the amount paid towards supply of technical know-how and basic process engineering documentation could be regarded as royalty. The Tribunal held that payment towards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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