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2014 (7) TMI 1167 - ANDHRA PRADESH HIGH COURTDisallowance under Section 40(a)(i) - licenses in software acquired by the Respondent-assessee from M/s.GE Network Technologies, Netherlands - whether the licenses are for the use of copyrighted article and the payments would be taxable as royalty? - Indo Netherlands treaty - Held that:- Tribunal on fact found that the supplier has no business operations in India to which the income may be attributed to as required under Explanation 1(a) to Section 9(1)(i) of the Income Tax Act, 1961 (for short ‘the Act’). As this conclusion was arrived at by the Tribunal on appreciation of fact, we do not find any wrong in it. As far as the second issue is concerned, the Tribunal found that the royalty is not payable as required under Section 9(1)(i) of the Act or Article 12 of India-Netherlands DTAA. As it was a case of frequent purchases of software, the question of payment of expenses incurred on account of the import does not arise. Communication charges - as per ITAT the charges shall not be excluded from Export Turnover though Explanation 2 to Section 10A - Held that:- Tribunal has followed the decision of Coordinate Bench of the learned Tribunal in case of PATNI TELECOM (P) LTD. v. ITO [2012 (8) TMI 641 - ITAT, HYDERABAD]. This decision does not appear to have been upset by higher foram Foreign exchange fluctuation arisen on account of conversion of funds in EEPC account into Indian Rupees - eligible for deduction under Section 10A as per ITAT - Held that:- As decided by the learned Tribunal following the decision of the Tribunal in case of SANYO LSI TECHNOLOGY INDIA PRIVATE LIMITED v. DEPUTY COMMISSIONER OF INCOME TAX [2014 (1) TMI 1257 - ITAT BANGALORE ] which was decided following Supreme Court decision in case of SUTLEJ COTTON MILLS LIMITED v. CIT. [1978 (9) TMI 1 - SUPREME Court] Interest ought to be charged at LIBOR + 2% when Indian entity advancing loan to its AE located in United States of America is in the nature of outbound loans effecting rupee loans on which PLR is applicable rather than LIBOR as per ITAT - Held that:- It is legally acceptable discretion of the learned Tribunal, this Court does not think fit to interfere with the same.
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