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2023 (4) TMI 1088 - ITAT DELHIIncome taxable in India - PE in India - Receipts on account of Software (Prime) License Fee - Taxability under Article 13 India-UK DTAA under the head ‘FTS’ - HELD THAT:- Having gone through the agreement since the user has no right to make copies or commercially exploit the right in the copyright of such software the ld DRP following the ratio laid down by Hon'ble Supreme Court in the context of Business Income/Royalty in Engineering Analysis Centre of Excellence Private Ltd. [2021 (3) TMI 138 - SUPREME COURT] directed to exclude receipts relating to sale of software licenses in accordance with and to the extent covered under the applicable categories contained in Hon'ble Supreme Court decision. DRP held that there is no dispute regarding the fact that the assessee does not have a permanent establishment in India. Accordingly, such receipts will constitute business income under Article 7 of the DTAA in line with the above-mentioned decision of Hon’ble Supreme Court and will not be taxable in India in the absence of PE. Receipts on account of provision of other related services - The services are in respect of training programme and updations in connection with utilization of the software PRIME. Hence, we hold that when software itself is not taxable, the training and the related activities concerned with utilization and installation cannot be held to be FTS. Further, simply latching on to use of words “Make Available” in the agreement, it cannot be said that conditions of Article 13(4)(c) are satisfied. Burden is on the Revenue to demonstrate that make available condition is satisfied. Appeal of the assessee on Ground Nos. 4 and 5 are allowed. Addition of reimbursement - We find that the ld DRP has remanded the matter to the AO to examine travelling and lodging expenses reimbursed. AO has wrongly taxed the same under FTS. Hence, the action of the AO cannot be supported. The addition made is hereby directed to be deleted.
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