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2009 (10) TMI 906 - ITAT MUMBAISale of software - Whether the vendor retain ownership or grants user rights only to licensee, the amount received for permitting Reliance to utilize the computer software is taxable as 'royalty' within the meaning of Article 12 (3) of DTAA - non-resident company - HELD THAT:- Learned counsel however, placed reliance upon the decision of ITAT, Delhi Bench, in the case of Infrasoft Ltd. v. Asstt.[2008 (12) TMI 245 - ITAT DELHI-F] to submit that the decision of the Apex Court has limited application and the principle therein cannot be applied to the peculiar facts of the instant case inasmuch as the amount received by the assessee under the license agreement was in lieu of allowing the use of software and thus it cannot be termed as a royalty either under the Income Tax Act or under DTAA. In the light of the decisions cited by the learned counsel appearing on behalf of the assessee and in the absence of any contrary view taken on this issue, we do not find any infirmity in the Order passed by the learned CIT (A) and accordingly reject ground No. 1 of the Revenue. Upon hearing ld DR as well as the learned counsel appearing on behalf of the assesses, we are of the opinion that in the interests of substantial justice the matter deserves to be restored to the file of the Assessing Officer who is directed to verify as to whether there were two separate payments or one payment and if it is found that there is only one payment the plea of the assessee deserves to be accepted. However, since the issue is not examined in proper perspective, the Assessing Officer is directed to reconsider the matter in accordance with law. Thus, we are of the view that the Order passed by the learned CIT(A) does not call for interference and accordingly reject ground No.3 of the Revenue. In the result, appeal filed by the Revenue is treated as partly allowed for statistical purposes.
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