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2016 (12) TMI 1542 - AT - Income TaxTaxability of Software Supply - Royalty or Business Income - DTAA between India & Israel - Permanent Establishment (PE) - Held that:- In view of the judgment of Hon’ble Supreme Court in the case of Radhasoami Satsang (1991 (11) TMI 2 - SUPREME Court ), we respectfully follow the order of the Tribunal for A.Ys. 2003-04 & 2006-07 and hold that the payment received by the assessee on account of supply of software by the assessee to Reliance in pursuance to agreements made between both the parties dated 27th September, 2002 read with supplementary agreement 17th September, 2007 is not in the nature of ‘Royalty’ within the meaning of Article 12 of DTAA between India and Israel and therefore not liable to tax as such, but assessable as business income of the assessee subject to other provisions of the Act and DTAA. Thus, Ground decided in favour of the assessee. TTI India was Dependent Agent Permanent Establishment (DAPE) of the assessee company in India - Held that:- As per Section 12 of agreement dated 27th September 2002, between the assessee and Reliance, it was agreed that a separate agreement would be entered into for providing annual maintenance services by the assessee to Reliance but this agreement was never entered into. Subsequently, assessee’s subsidiary i.e. TTI India entered into a separate agreement with Reliance for verification of AMC dated 28th May 2003. The said agreement was executed independently by TTI India as independent terms and conditions and on ‘Principal to Principal’ basis, and assessee was not part to the said agreement. Articles of Indo Israel DTAA have not been referred to at all while deciding this issue against the assessee. Dependent agency principles were not applicable in this case. It was also submitted that in A.Y. 2006-07, the Tribunal has already examined all the facts and held that assessee did not have any PE in India, and thus he requested for following order of the Tribunal. - Decided in favour of the assessee Expenses taxed as Fees for Technical Services in the hands of assessee - Held that:- In A.Y. 2005-06, Ld. CIT(A) decided this issue in favour of the assessee wherein it was held that amount of reimbursement of expenses (which were similar to expenses reimbursed in the impugned year) could not be taxed as FTS in the hands of assessee and this issue was not contested by the Revenue and thus attained finality. - Decided in favour of the assessee Levy of interest u/s 234B - Held that:- Interest under section 234B was not leviable upon the assessee being non-resident, in view of the judgment of Hon’ble Bombay High Court in the case of DIT v. NGC Network Asia LLC (2009 (1) TMI 174 - BOMBAY HIGH COURT ). - Decided in favour of the assessee
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