TMI Blog2023 (2) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... f any interest by assignment, lease, transfer or sub-license to 3rd party is not for the own benefit of the 3rd party or generate revenue from independent business operations in which Reliance Jio would have no interest. Thus the first reason cited by the ld CIT(A) is not sustainable. Coming to the second reason it can be observed that the ld CIT(A) himself has found that right to decomplile the software has been given for a limited extent. Clause 9(b) again is part of exception clause and infact restricts decompilation, re-assemble or reverse engineering of the software and the clause mentions that it is only when the law, if any, mandates such decompilation the same would be permitted under the agreement in favour of the Reliance Jio. Thus, it is not under the agreement entered between the parties, the right to decompile has been allowed but only as exception, where the law of the land would mandate or to say casts duty for such decompilation, then the Reliance Jio has been permitted to do the same. Third reason cited by the ld CIT(A) is not sustainable as the provision made of source code escrow arrangement is only to deal with the contingency so that the buyer‟s bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Pannu, Hon ble President And Shri Anubhav Sharma , Judicial Member For the Assessee : Shri Bhavin Shah, CA Shri Jai Shah , CA For the Revenue : Ms. Sapna Bhatia, CIT DR Sh. Kanv Bali , Sr. DR ORDER PER ANUBHAV SHARMA , J. M. : 1. These appeals have been preferred by the Assessee against the order dated 29.11.2019 for Assessment Year 2015-16and 06.07.2020 for Assessment Year 2016-17 respectively of Ld. CIT(A)-43, New Delhi (hereinafter referred as the First Appellate Authority FAA ) in appeal No. 1030/2017-18 and 10307/2018-19 respectively arising out of an appeals before it against the order dated 24.01.2018 and 22.02.2019 for respective years passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act‟) by the ld AO, Addl. CIT, Circle-3(1)(2), New Delhi (hereinafter referred as the Ld. AO). 2. The Assessee Company is incorporated under the laws prevalent in Singapore and is engaged in the business of developing software and providing allied services. A return of income was filed declaring total income as Nil and the case was selected for complete scrutiny. During the year under consideration the Assessee company has licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that there is no dispute to the fact that the Assessee is a company incorporated in Singapore and certificate of residence for the purpose of claiming benefit under Singapore/India DTA for software technologies is on record at page No. 112-113 of the paper book. The ld AO has referred to two agreement entered between the Assessee and Reliance Jio Infocom Ltd (hereinafter referred as Reliance Jio ). The agreement dated 11.08.2017 is on record at page No. 1-38 of the paper book and the same shows that the terms of agreement is for five years. 7.1 Further, Clause 6 defines the scope of deliverables as software. It is shown to be agreed that 1. Vendor grants to Buyer a non-exclusive, non-transferable (unless otherwise as detailed hereunder), irrevocable (subject to compliance with the license grant as detailed under clause 6(1) and clause 6(9)), royalty free, fully paid up, perpetual, worldwide, (unless otherwise indicated in this Agreement), enterprise wide, unlimited use and related Documentation for Buyer s business operations. 2. Subject to the Buyer having a valid AMC or during the Warranty Period the Buyer will have a right to all future updates/upgrades/enhanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on individually and consider how far the same are sustainable or not. In regard to first reason it can be observed that clause 9(a) as reproduced above seems to have been selectively quoted and applied by the ld CIT(A). The Assessee has not agreed for absolute transfer or assignment, sub-license or lease of the rights to the Reliance Jio as 3rd Party but rather the right has been restricted by the Clause 9(a) as it is an exception clause. Further, it is only in regard to the business operation related to providing services to Reliance Jio assignment, lease, transfer or sub-license to a 3rd party is permitted. That only indicates that when the 3rd party is providing any service by its business operations to Reliance Jio only, in those circumstances the said 3rd party may be allowed to use the software license or documents by the buyer, reliance Jio. Such transfer of any interest by assignment, lease, transfer or sub-license to 3rd party is not for the own benefit of the 3rd party or generate revenue from independent business operations in which Reliance Jio would have no interest. Thus the first reason cited by the ld CIT(A) is not sustainable. 10. Coming to the second reason it ..... 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