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2018 (1) TMI 1648 - AT - Income TaxTDS u/s 195 - non-deduction of taxes on payment to NR entities - payment for acquiring access/user rights of software - transfer / sale of software - Royalty payment - distinction between a transaction involving the 'transfer of copyrighted article' and 'transfer of rights in a copyright' - exclusive right to do or authorise the doing of the acts - Diversified views- whether decision of non jurisdictional High Court is not binding on Mumbai ITAT? - HELD THAT:- We find ourselves in agreement with the submission of the ld. Counsel of the assessee that there is no Hon’ble Bombay High Court decision on this issue. In such circumstances, the co-ordinate bench of this tribunal in National Stock Exchange of India Ltd. [2017 (5) TMI 916 - ITAT MUMBAI] has considered identical issue find that admittedly there is no direct jurisdictional High Court decision on the subject. However there is a direct Hon’ble Delhi High Court decision which is in favour of the assessee. As against this there are decisions of Hon’ble Karnataka High Court which are in favour of revenue. In this regard we note that Hon’ble Apex Court in the case of vegetable products 88 ITR 192 [1973 (1) TMI 1 - SUPREME COURT] had held that if two constructions are possible one in favour of the assessee should be adopted. Accordingly respectfully following the precedent we follow the Hon’ble Delhi High Court decision. Accordingly we set aside the order of authority below. We hold that the transfer / sale of software in this case is not taxable as royalty. Hence the assessee was not liable to deduct tax at source u/s 195 of the Incometax Act, before remitting the money to the US supplier. - Decided in favour of assessee.
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