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2017 (7) TMI 1269 - AT - Income TaxSupply of software which are "off the shelf" software - providing software on rental basis - software facilitates related to training used for the exploration/extraction of mineral oils - applicability provisions of Section 44BB - Indo-US DTAA - PE in India - HELD THAT:- Software supply to the foreign company cannot be taxed as royalty - The assessee claimed that these services have been provided in connection with the exploration, and the extraction of mineral oils in India and these revenues should be tax in terms of provisions of Section 44BB. CIT (A) deleted the additions made by the AO and held that the said additions should be as per the provisions of Section 44BB of the Act, but since there is no Permanent Establishment in India, the assessee cannot be taxed in India at least in A.Y. 2002-03. This issue has not arose in subsequent years wherein the CIT (A) has rightly held that the same should be taxed as per provisions of Section 44BB of the Act. As regards to the rental of software which was in connection with the exploration/extraction of mineral oils in India, the Assessing Officer was not right by applying 15% of rate by applying decision of Advance Authority Ruling in case of Ishikawajima Harima Heavy Industries Co. Ltd. v. DIT [2004 (10) TMI 87 - AUTHORITY FOR ADVANCE RULINGS] as the facts of the said case is different from that of the present appeals. Thus, for subsequent years the issue of permanent establishment is not in question and hence the applicability of the judgment of ONGC is very much necessary as all these activities which assessee took are coming under the purview of Section 44BB. AO is therefore, directed to tax the income of the assessee as per Section 44BB for A.Y. 2003-04, 2004-05, 2005-06, 2006-07 and 2008-09. Needless to say the assessee be given the opportunity to hear before the Assessing Officer.
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