2015 (4) TMI 1273 - AT - Income Tax

TDS u/s 195 - royalty payment - expenditure on imported software - India- USA DTAA or India- Singapore DTAA - HELD THAT - The issue before the Hon ble jurisdictional High Court in case of M/s Wipro Ltd 2010 (8) TMI 1053 - KARNATAKA HIGH COURT was regarding allowability of expenditure of imported software whether capital in nature or revenue. There was no issue before the Hon ble High Court whether the said expenditure was in the nature of royalty and only a passing reference was made by the Hon ble High Court that the Commissioner rightly pointed out that it is not a royalty. In any case when the prior decision in case of CIT Vs M/s Synopsis International Ltd 2013 (2) TMI 448 - KARNATAKA HIGH COURT and in the latest decision in the case of M/s Samsung Electronics Co. Ltd. 2011 (10) TMI 195 - KARNATAKA HIGH COURT on the issue of payment being royalty then the contention raised by the learned AR is devoid of any merits. The Tribunal in case of M/s Synopsis International Ltd. (Supra) for the assessment year 2006-07 has decided an identical issue against the assessee

Summary

Issues Involved:
Appeals against CIT(A) orders u/s 201(1) and 201(1A) for AYs 2009-10, 2010-11 & 2011-12.

Analysis:
1. The assessee contended that payments for software licenses were not taxable as royalty under IT Act or DTAA with USA/Singapore. AO held payments as royalty, confirmed by CIT(A) citing precedents.
2. Assessee engaged in software distribution, claimed payments to non-resident vendors were for copyright articles, not taxable in India. High Court judgments differed; assessee relied on Wipro Ltd case.
3. Tribunal noted High Court decisions against assessee, binding on Tribunal. Synopsis International Ltd case upheld royalty classification for software payments.
4. Tribunal upheld CIT(A) order, dismissing assessee's appeals. Payment for software licenses considered royalty, necessitating TDS under sec. 195.

This detailed analysis covers the issues raised in the appeals, the arguments presented, and the Tribunal's decision based on relevant legal precedents and interpretations of royalty payments for software licenses under the IT Act and DTAA.