Engineering fee in nature of royalty u/s 9(1).

Royalty characterisation determines taxation of cross border engineering payments; assessors must establish correct head for tax treatment.

Engineering fees to non resident collaborators must be characterised as either royalty or fees for technical or engineering services, because the characterisation determines source and allocation for tax. The Board instructs tax officers to examine the basic nature of such receipts in pending appeals and make representations to ensure assessment under the correct head. Where collaboration agreements pre date amendments and were government approved, officers must determine whether the fees are in the nature of royalty and raise the issue before appellate authorities if no finding exists.