TaxTMI 
TaxTMI 
2026 (8) TMI 1469
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.... Appellant, on the acquisition of a capital asset towards which TDS was not deductible. 4. a) The learned CIT(A) erred in confirming that the remittance of Rs. 65,60,000/- made for the acquisition of trademark "Jamawar" constituted "royalty" u/s 9(1)(vi) despite the Appellant duly placing on record the transfer certificate issued by the State of Qatar to substantiate the absolute ownership of the trademark. b) The learned CIT(A) erred in upholding that the remittance made for acquiring the ownership of capital asset being the trademark "Jamawar was "royalty" by disregarding the provisions in Explanation 2 of Section9(1)(vi), which clearly states that consideration which would be the income of the recipient chargeable under the head Capital Gains does not constitute "royalty". c) The learned CIT(A) erred in treating the remittance for acquisition of trademark as royalty" by ignoring the fact that the Appellant had acquired ownership of various trademarks prior and post 2019, the remittances for which were accepted as "capital gain of the recipients" and not disputed as "royalty". 5. The learned CIT(A) erred in disregarding the documentary evidence....
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.... In response, the AO recorded that no response was filed. The AO issued a fresh notice, intimating that, non-submission of explanation order under section 201 will be passed. The AO recorded that no reply was furnished. The AO noted that the recipient, Abu-Ghazaleh Intellectual Property, (AGIP) T.M.P, is engaged in the business of registration, protection, and sale of intellectual property. Therefore, the remittance received for assignment of the trademark to the assessee is not a capital gain. The AO held that the assessee made the remittance in the nature of royalty and the assessee should have deducted TDS. The AO treated the assessee as an assessee in default for non-deduction of TDS. The AO held that the assessee was liable to deduct tax at the rate of 10% of the remittance. Accordingly, he passed an order under Section 201(1) and created a liability of Rs. 10,42,240/- in the following manner. A.Y. Total payments made to TMP Agents (Abus Ghazal Leh Property) Liability under section 201(1) & 10% tax + 4% EC on Tax + Surcharge Interest (u/s 201(1A)(i) @ 1% p.m. for 53 months [10.08.2018 to 31.12.2022] Total payable 2019-20 65,50,000 681200 361036 10....
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....hase was not taxable as royalty or fees for technical services under section 91. It was also stated that once it is held that no income chargeable to tax in the hand of payee in India, the provision of section 195 shall not be applicable. 4. The ld. CIT(A) after considering the submission of assessee upheld the action of AO by taking view that assessee simply contended that payment was made for outright purchase of trademark and, therefore, not taxable in India. However, no documentary evidence has been furnished to substantiate such claim. The assessee has not furnished trademark assignment agreement, deed of transfer of ownership, proof of ownership of trademark, nature of right transfer, rate list for valuation of trademark. It was also held that transfer of ownership or partial rights in the trademark falls within the scope of royalty unless it is conclusively prove that absolute and perpetual ownership has been transferred. Thus, AO was right in treating remittances as royalty. Further, aggrieved the assessee has filed present appeal before Tribunal. 5. We have heard the submission of ld. Authorised Representative (ld. AR) of the assessee and the ld. Senior Departmental ....
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....pient was also filed, copy of which is filed at page no. 104 of paper book. The ld. AR carried us through Explanation 2 of section 9(1)(vi) of the Act wherein definition of royalty is defined. The ld. AR reiterating that for the recipient the payment was for transfer of an asset to assessee and, therefore, the income if any to the recipient is under the head capital gain. Otherwise, the recipient has no permanent establishment or business connection in India, therefore, the income of recipient is not taxable in India the assessee is not under obligation to deduct tax at source. To support his submission, the ld. AR relied upon the decision following decision: * Saregama (I) Ltd. vs ACIT ITA No. 1813/Kol/2009 * Asia Satellite Telecommunication Co. Ltd. vs DIT (2011) 332 ITR 340 (Del) * GVK Oil & Gas Limited vs ADIT (TA Nos. 317 & 38/Hyd/2012 * GE India Technology Centra (P) Ltd. vs CIT (2010) 327 ITR 456 (SC) * Pidilite Industries Ltd. ITO (TDS) ITA No. 2174/Mum/2014 * ACIT vs M & B Engineering Limited ITA No. 370/Ahd/2018 * Engineering Analysis Centre of Excellence Pvt. Ltd. vs CIT & Anr. (CA Nos. 8733-8734 of 2018) ....