2006 (6) TMI 423

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....ducted at source in respect of payment made to M/s. Chang Leung Hvi and LI CPA Ltd. Hongkong in spite of the fact that such payment is covered under exception clause of 9(1)(vii)( b). 3. The facts and issues involved are evident from the following written submissions made by the assessee before the learned Commissioner of Income-tax (Appeals). "The assessee before your Honour is a company that is carrying on the business of manufacture and sale of watches and jewellery. The watches manufactured by the assessee are sold under the name 'Titan'. The assessee has registered its patent in his name. Watches manufactured by the assessee are sold in India as well as in several countries aboard. M/s. Titan Watches and Jewellery International (....

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....e outside India. Some of the customers are located abroad but this does not mean that source is necessarily located when the payer is (sic) (c)Export per se does not mean that source is outside India. Source always relate to activity which yields the income and such activity is the business activity in India. 5. Before us the learned Authorised Representative submitted that watches in the Asia Pacific Countries are marketed by an associate company, Titan Watches and Jewellery International (Asia Pacific) Pvt. Ltd. incorporated in Singapore. It was not advisable to allow the distributor to get the patent registered in his name as such patent right is a valuable right. Professional services were rendered in Honkong and the concern to wh....

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....hat it has a say in the business of sale of items under the brand name of Titan by its associate company. The carrying on of a business is a bundle of activities and marketing is one of such activity. If the products are marketed outside India then it cannot be said that there is no business activity. But exception clause says that such business should be carried out by the person who has paid the technical fee. 9. Source of income is not a legal concept but it must mean something which a practical man regard as a real source of income. When the customer of company i.e. associate company is located outside India than it cannot be said that source of income is not outside India. It is not the case of the revenue that associate company was....