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TMI Blog2011 (10) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... ority, by following the judgment passed by the ITAT in Samsung Electronics Co. Ltd. v. ITO (TDS)-I (94 ITD 91)(Bang) by holding that payment made by the respondent herein - the appellant before the ITAT towards purchase of software is not royalty. 2. ITA Nos. 168 & 170/2004 are filed by the revenue being aggrieved by the order passed by the ITAT in ITA Nos. 114 & 115/Bang/2002 for the assessment years 1999-2000 and 2000-01 wherein the ITAT by order dated 31-10-2003 held that payment made by the assessee towards purchase of software is not royalty, by setting aside the order passed by the appellate authority and confirming the order passed by the assessing officer wherein it was held that payment made by the respondent is a royalty. 3. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals proceeded to hold that the software and the hardware had been imported by the assessee through two separate countries and integrated in India by the assessee. The execution of the contract by the assessee with the Telecommunication Department in India was a separate contract from the import of software from the USA. Even thougn the software was utilised in the execution of the contract by the assessee the payments made by the assessee cannot be integrated into the contract executed with the telecom Department. It was therefore held that the payments were made for supply of software which was utilised by the assessee and consequently the provisions of Section 9(1)(vi) of the Act read with the Double Taxation Avoidance Agreement betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his supply of software by Lucent Technologies, USA to the assessee was an independent transaction. The hardware utilised by the assessee was received from Lucent Technologies, Taiwan. Only after receipt of both the software and the hardware, they have been integrated by the assessee in India and thereafter supplied to the Department of Telecommunications as an end product in terms of the assessee's independent contract. Therefore the finding recorded by the Tribunal by examining the transactions of the assessee, in respect of the transactions of Lucent Technologies, USA, which is the subject matter of liability to tax in India, is therefore erroneous. Consequently the payments made by the assessee amounts to royalty and is liable to be taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding recorded by the tribunal upholding the contention of the assessee that the payments made for the supply of software cannot be brought under Section 9(1)(vi) of the Act as it was an integrated import cannot be sustained. In that view of the matter, these two appeals would have to be allowed by setting aside the order of the Tribunal and confirming the order passed by the assessing authority and the appellate authority and consequently by answering the substantial question of law in these appeals in favour of the Revenue and against the assessee. 13. For the aforesaid reasons we pass the following: ORDER The appeals are allowed. The order dated 18-11-2005 in 1TA Nos. 756/2006, 757/2006 and 758/2006 and the order dated 31-10-2003 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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