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2019 (4) TMI 308 - AT - Income TaxDemand raised u/s 201(1) and interest u/s 201(1A) - TDS u/s 195 - payments towards use of software - case of Revenue was that the payments made for use of software was taxable as royalty under Explanation 4 to section 9(1)(vi) - HELD THAT:- We hold that the payments made by assessee for use of software were not taxable as royalty and hence, the assessee has not defaulted in not deducting tax at source out of such payments. Consequently, there is no merit in raising the demand under section 201(1) of the Act and charging interest under section 201(1A) of the Act. Payments towards subscription charges / fees for use or access to database or portal - treatment as ‘royalty’ on the same simile that the definition of ‘royalty’ under DTAA had not undergone any change - HELD THAT:- There is no merit in holding the aforesaid payments as liable to deduct tax under section 201(1) of the Act and consequently, the assessee has not defaulted in not deducting the tax out of such payments. Hence, the demand created under section 201(1) of the Act and interest charged under section 201(1A) is cancelled - the payments made for purchase of hardware cannot be held to be royalty. The said amount was held to be liable to tax as royalty by the authorities below on the ground that software was held to be royalty. No merit in the orders of authorities below in this regard. CIT(A) in the later paras have directed the Assessing Officer to verify the stand of purchase of hardware raised by the assessee. However, since we have already decided the issue in turn, relying on the order of Tribunal in John Deere India Pvt. Ltd. Vs DDIT [2019 (3) TMI 458 - ITAT PUNE] we find no merit in the stand of authorities below in this regard and the same is dismissed. Monetary limit - Grossing up under section 195A - HELD THAT:- The tax effect involved in the appeal of Revenue is below the monetary limit prescribed by the CBDT vide Circular No.3/2018, dated 11.07.2018. In view of the said Circular prescribing the limits for filing the appeals before the Tribunal by the Revenue and since the tax effect in the present appeal filed by the Revenue is below the said limit, then the appeal of Revenue is not maintainable and the same is dismissed.
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