2024 (11) TMI 165

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....eal the assessee has assailed the order of CIT(A) in confirming disallowance u/s. 40(a)(i) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for non deduction of tax at source (TDS) on overseas payment towards patent fees, reimbursement of official fees and professional fees, by treating such payments as Royalty taxable in India even though the income had accrued or arisen outside India. 3. Mr. M.K Madan, representing the assessee, stated that the assessee is involved in manufacturing of rubber surgical goods, footwear soles, and automotive parts. The assessee also exports products such as hot water bottles and football bladders. The assessee in order to protect its invention has applied for patents abroad. The assessee ....

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....y rival sides and have examined the orders of authorities below. The short question before us for consideration is: Whether the assessee was liable to deduct tax at source on payments made to non-resident attorneys where such payments are in the nature of official fees, reimbursement of renewal fees and professional fees? 7. The department has not disputed the fact that the overseas payments made by the assessee are towards reimbursement of expenses incurred by the non-resident attorneys towards renewal of registration of patents abroad and payments to registration authorities. Further, the Revenue has not controverted the fact that professional fee paid to the foreign attorneys who are non residents have no Permanent Establishment (PE) ....

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....fessionals and overseas authorities for renewal/registration of trademarks and patents. The assessee had made payments to overseas attorneys towards professional fee as well as reimbursement of Govt. fee paid by them on behalf of assessee.; The AO and the CIT(A) held that the assessee ought to have deducted tax at source on such payments. In appeal by the assessee, the Tribunal held as under:- "16. A careful perusal of the information furnished in the tabular form reveals that payment of Rs. 10,68,995/- to Eli Lilly and company, New Zealand, is towards remittance of amount recovered in court proceeding on behalf of the client in litigation. Further, a payment of Rs. 2,56,973/- was made to World Intellectual Property, Switzerland, t....