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2019 (9) TMI 304 - AT - Income TaxPE in India - Income accrued in India - taxation of revenues from supply of telecom hardware to the Indian customers - HELD THAT:- Since, the matter of PE stands adjudicated in favour of the assessee, in the absence of any change in the material facts, following the earlier order of this Tribunal [2018 (6) TMI 497 - ITAT DELHI] , we hereby hold that the assessee do not have a PE within the terms of Article 5 of India-Finland DTAA. Thus, this ground of appeal of the assessee is allowed. Taxability of revenue from supply of software - whether the consideration towards the software portion of the equipment is in the nature of royalties under Article 13 of India-Finland DTAA? - HELD THAT:- Regarding the taxability of revenue from supply of software, the ld. CIT (A) held that since software is an integral part of the telecom hardware and software supply has been made pursuant to the contract in respect of which a PE has been upheld, software is effectively connected to the PE and should be dealt with as the "business profits' in accordance with provisions of Article 7. In view thereof, there is no need to segregate the payments for software from other business receipts from supply of telecom hardware. Sale of hardware took place outside India and hence no income from sale of hardware accrued to Nokia in India. The issue of royalty on the software has been held in favour of the assessee based on the order in the case of DIT Vs Ericssion AB [2011 (12) TMI 91 - DELHI HIGH COURT] . It was held that these payments cannot be said to be in the nature of royalty either as per the Indian Income Tax Act or DTAA and hence cannot be held to be taxable. It was held that what was sold was a GSM which consisted both hardware as well as the software and hence they cannot be taxed under two different articles Taxability of the notional interest /vendor financing on delayed consideration for supply of equipment and licensing of software - HELD THAT:- No income can be said to accrue to the assessee on account of delayed payments as neither there was any corresponding liability on any of the debtors nor assessee had claimed any entitlement on such an interest. Accordingly, this issue is also decided in favour of the assessee Taxability of revenue from R&D activities undertaken in India - HELD THAT:- Fixed place PE do not exist as the right to use test or the disposal test is not satisfied. The appeal of the assessee on this ground is allowed.
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