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Payment towards supplying specification for manufacture of two wheelers not taxable as royalty until production starts

November 1, 2019[2019] 110 261 (Punjab & Haryana)/[2019] 267 Taxman 252 (Punjab & Haryana)

INTERNATIONAL TAXATION: Where payment made by assessee to a foreign company for supplying drawings, designs, specifications, processes and all other relevant details in order to manufacture two wheelers in India was brought to tax as 'royalty' by revenue authorities, in view of fact that even though by entering into agreement and by supplying necessary material said foreign entity authorised its actual use, yet actual use would start only when production and sale commenced and that would be stage at which royalty would be payable and, thus, impugned order passed by authorities below was to be set aside

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