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2017 (10) TMI 50 - AT - Income TaxDisallowance u/s 40(a)(i) - non deduction of TDS - purchase of software - payments made by the assessee for purchase of a copyrighted article being software product - whether remittance made by the assessee to IMTF, Switzerland was in the nature of payment for royalty - CIT-A held a conviction that the payment made by the assessee to the company for allowing the use of software could not be characterized as royalty - Held that:- The coordinate bench of the ITAT, Mumbai in the case of DDIT Vs. Solidworks Corporation (2017 (3) TMI 331 - ITAT MUMBAI ) concurred with the view arrived at by the High Court of Delhi in the case of Director of Income Tax Vs. Ericsson A.B. [2011 (12) TMI 91 - Delhi High Court], wherein it was held that when software is incorporated in a CD it becomes a tangible property and the payment made for acquiring the same is not a payment by way of royalty. We further find that a similar view had also been arrived at by the coordinate bench of the ITAT, Mumbai in the case of ACIT Vs. Sonata Information Technology Ltd. (2013 (9) TMI 519 - ITAT MUMBAI). We thus being of the considered view that no infirmity does emerges from the order passed by the CIT(A) Addition in respect of guarantee commission - Held that:- We are of the considered view that as the issue pertaining to the taxability of guarantee commission is covered in favour of the assessee by the earlier orders of the coordinate benches of the Tribunal in the assesses own case for AY’s 2002-03, 2005-06 and 2008-09, therefore, having no reason to take a different view, we respectfully follow the same. Expenses allocated by the Head Office (H.O) and other Branches of the assessee to its Indian Branch - Held that:- We have deliberated on the issue under consideration and find that the Tribunal in assessee's own case had held that the payments made by the assessee to its H.O, viz. Societe Generale, Singapore were neither Royalty or Fees for technical services, but were pure reimbursements for services, viz. data communication charges, Annual Miscrosoft Enterprise Software product billing and true up charges incurred etc., rendered for its Indian branch. We being of the considered view that the issue involved in the present appeal before us is squarely covered by the aforesaid order of the Tribunal, therefore, respectfully follow the same. The Ground raised by the revenue before us are dismissed. Taxability of the interest paid by the assessee to its H.O and other overseas branches on borrowings - Held that:- We have deliberated on the issue under consideration and are persuaded to be in agreement with the ld. A.R that the same is squarely covered by the order passed by the Tribunal in the assessee’s own case for AYs: 2005-06 and 2006-07 as held that the interest paid by the Indian branch/Permanent establishment of the foreign bank to its H.O and other overseas branches is not chargeable to tax. Disallowance under Sec. 14A of the expenses relatable to the interest paid by the assessee P.E to its H.O and Overseas Branches - Held that:- We are of the considered view that now when we have concluded that the interest of ₹ 15,86,609/- paid by the assessee to its H.O and other Overseas branches on borrowings is not liable to be brought to tax, therefore, as a necessary corollary, interest paid in respect of the deposits on which such interest was received would also be liable to be disallowed under Sec. 14A. We are persuaded to be in agreement with the view taken by the coordinate bench of the Tribunal while disposing of the appeal of the revenue in the assesses own case for A.Y.2001-02 as well as the order passed by the Tribunal in the case of Oman International Bank SAOG Vs. Jt.DIT (International Taxation) (2014 (1) TMI 537 - ITAT MUMBAI). The A.O shall during the course of the set aside proceedings adjudicate the issue afresh in the backdrop of the facts involved therein, though keeping in view our aforesaid observations.
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