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2020 (12) TMI 527 - AT - Income TaxNon deduction of tds u/s 195 - Levy of interest u/s 201(1A) - withholding tax on purchase of software - AO held that the payment made for purchase of license to use a software was “royalty” income in the hands of non-resident accordingly, assessee should have deducted tax at source under section 195 - HELD THAT:- In the instant case, assessee was under bonafide belief that it was not required to deduct tax at source from the payments made for purchase of software as relying on Teekays Interior Solutions P Ltd [2019 (4) TMI 193 - ITAT BANGALORE] and Infineon Technologies India P Ltd [2020 (8) TMI 808 - ITAT BANGALORE]. Subsequently, Hon’ble Karnataka High Court in CIT vs. Samsung Electronics Co. Ltd [2011 (10) TMI 195 - KARNATAKA HIGH COURT] held that the payments made for purchase of software was in the nature of royalty and the said decision came to be pronounced on 15.10.2011. Accordingly, the present facts of case assessee could not be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd (supra). Accordingly, demand raised in the hands of the assessee u/s 201(1) and 201(1A) cannot not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 deserves to be quashed. We delete penalty levied under section 201 (1) and (1A) Penalty under section 271C for non-deduction of TDS - HELD THAT:- As expressed in the present facts of the case, assessee cannot be held to be in default for non-deduction of TDS.Under such circumstances the penalty levied under section 271C deserves to be quashed and set-aside.
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