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2019 (11) TMI 933 - AT - Income TaxAddition in respect of receipt for supply of software as held to be royalty income - Addition in royalty income distributor of software products developed by the other companies, and it merely purchased and re-sold the off the shelf software without acquiring or transferring any right to use the copyright in the software. Thus, it could not be possibly have transferred any copyright - HELD THAT:- From the submissions of the Ld. AR it is observed that Avnet Asia and its parent company are all distributors of software and hardware products of various manufacturers, but whether they provide the services which include the royalty component or not, this major aspect was neither verified by the Assessing Officer as well as DRP. AO and the DRP has not looked into the aspect of the assessee and its group companies whether they merely buy and sell software products developed by other companies or acquire any right in the said products which involves the royalty components. The case laws referred by the Ld. AR though seem to be on the issue but in the present case the facts were not properly verified by the Revenue authorities. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper adjudication of this aspect in light of the decisions mentioned by the Ld. AR. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 2 to 2.4 are partly allowed for statistical purpose. Selling warranties, upgrades and similar service packages on behalf of manufacturers of the software without providing any actual service - AR submitted that the assessee was not providing technical service at all - HELD THAT:- We have heard both the parties and perused all the relevant material available on record. From the perusal of the assessment order it can be seen that the Assessing Officer should have verified the nature of service packages and direct sale of provision of services relating to FTS. This fact is not disputed by the Ld. AR that the nature of services are not properly verified by the Assessing Officer. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper adjudication. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground Nos. 3 to 3.3 are partly allowed for statistical purpose.
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