In absence of transfer of full and absolute ownership right payment made for know-how or intellectual properties is to be treated as royalty

Brief Facts of the case 1. HCL Limited (HCL) has made payment to Apollo Domain Computers (ADC), Gmbh Germany of Rs Rs.1,11,38,650/- and Rs 50,51,050 in AY 1989-90 and 1990-91 respectively in terms of the agreement dated 11th May, 1987 under Article VIIIA of the Double Taxation Avoidance Agreement between India and the then Federal Republic of Germany. 2. In the facts of the present case, if court held that the payments made by HCL to ADC were for transfer of full ownership in the know-how or intellectual properties, the same would not be taxable under Article VIIIA of DTAA, but would be taxabl...