Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (8) TMI 752 - AT - Income TaxRoyalty income - sale of Microsoft software products to the Indian distributors – selling/licensing of software through independent distributors to the end users under the End User License Agreement (EULA). – MS Corp is the sole owner of intellectual property rights vested in Microsoft software. It has granted exclusive license to manufacture and distribute Microsoft products to one of its wholly owned subsidiaries, M/s Gracemac (now merged with MOL Corporation), which, in turn, granted similar non-exclusive rights to its wholly owned subsidiaries, Microsoft Operations Pte.Ltd., Singapore (MO Singapore) to manufacture Microsoft products in Singapore and distribute such products in Asia (excluding non-English language products in China and Taiwan). The assessee has been appointed as a distributor of Microsoft products in India by MO Singapore. Held that:- MRSC reproduced certain software products and distributed the same through chain of distributors in India. Therefore, the very appointment of distributors by MRSC in India, had business connection in India. But, MRSC cannot be taxed again on the same income by way of royalty for exploitation of same rights which had been assessed in the hands of Gracemac, otherwise it would result in double taxation -Decision in the case of Gracemac Corpn. and Microsoft Corpn. Versus ADIT [2010 (10) TMI 583 - ITAT, DELHI] followed. – Decided in favor of Assessee. Penalty for concealment u/s 271(1)(c) of the Income Tax Act – Held that:- As income has not been held to be assessable in the hands of the assessee, no justification in levy of penalty, therefore, the order of the CIT (A) deleting the penalty is upheld on the ground that as the income itself is not assessable in the hands of the assessee, there is no question of levy of penalty.
|