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2021 (7) TMI 91 - AT - Income TaxAttribution of profit - attribution rate of 35% has been applied - AR submitted that the activities relatable to India and rate of attribution to be applied in relation to such activities undertaken has been adjudicated - HELD THAT:- Considering that there is no material change in facts and the legal issue on attribution of profit is already sub-judice in Assessee's appeal before High Court, whilst respectfully following the decision of co-ordinate Bench in earlier years we dispose off the grounds raised in Assessee's appeal for AY 2016-17 and AY 2017-18. As been brought to our attention that in AY 2017-18, the Assessing Officer has taken the “operating profitability” instead of the "net-operating profitability" as per published accounts. In view of the decision as rendered in the preceding years, we direct the Assessing Officer to take the "net-operating profitability" as per published accounts whilst calculating the attribution. Taxability of income from supply of software as Royalty - HELD THAT:- Respectfully following the decision of the co-ordinate Bench as approved by the jurisdictional High Court [2017 (8) TMI 1638 - DELHI HIGH COURT] we rule in favour of the Assessee. We also agree with the alternate argument of the Assessee that since the sale of software is inextricably linked with sale of software than the provision of Article 12(5) of the India-China DTAA would be applicable and such income from supply of software could be taxed only as business profits in terms of Article 7 of the India-China DTAA.
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