S. 195 : Deduction of tax at source-Payment to non-resident-Acquisition of trademark-Assessee acquired absolute ownership of trademark “Jamawar” from a non-resident for lump-sum consideration-Assessee furnished trademark assignment agreement, proof of ownership, nature of right transferred, valuation details, commercial terms and Tax Residency Certificate of recipient-Payment was for acquisition of a capital asset and not for use of trademark or payment of royalty-Consideration for outright acquisition of trademark being capital gains in the hands of recipient, provisions of section 195 were not attracted-Assessee could not be treated as assessee-in-default under section 201(1) and interest under section 201(1A) was not leviable-Demand deleted. [S. 5, 9(1)(vi), 201, 201(1A).]
The assessee had remitted Rs.65.50 lakhs to Abu-Ghazaleh Intellectual Property (AGIP), acting as agent of Al Houda Hotels & Tourism Co., Qatar, towards acquisition of the trademark “Jamawar”. The assessee furnished the trademark assignment agreement, evidence of ownership, nature of right transferred, valuation and commercial terms and Tax Residency Certificate of the recipient, who was a tax resident of Jordan. The Tribunal held that the payment was towards outright acquisition of a capital asset and not royalty. Relying upon Saregama (I) Ltd. and GE India Technology Centre (P.) Ltd., it held that the obligation under section 195 arises only where the remittance is chargeable to tax in India and not merely because the payment is made to a non-resident. Accordingly, the assessee was not liable to deduct tax and the demand under sections 201(1) and 201(1A) was deleted. (AY. 2019-20) (ITA No. 2619/Mum/2026 dt. 18-08-2026)
LSL Holdings Private Limited v. ITO (IT),(Mum.)(Trib.) [www.itatonline.org]
[Coram : Hon’ble Shri Pawan Singh, JM and Hon’ble Shri Girish Agrawal, AM]