TMI Blog2015 (5) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... e non-resident is liable to pay tax and the question of payment of advance tax would not arise. This would be clear from the reading of s. 191 along with s. 209(1)(d). For this reason, it would not be permissible for the Revenue to charge any interest under s. 234BLevy of interest u/s. 234B of the Act cannot be sustained. Ground raised by the assessee is accordingly allowed. The aforesaid decision of the co-ordinate bench was followed by another co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 - Decided in favour of assessee. - I.T. (T.P.) A. No.1286/Bang/2011 - - - Dated:- 6-2-2015 - Shri Rajpal Yadav And Shri Jason P. Boaz JJ. For the Appellant : Shri T. Suryanarayana, Advocate. For the Respondent: Shri Farhat Hussain Qureshi, CIT (D.R) ORDER Per Shri Jason P. Boaz : This appeal by the assessee is directed against the final order of assessment for Asst. Year 2008-09 passed u/s. 143(3) r.w.s. 144C(5) 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dt.13.10.2011 in pursuance of and in conformity with the directions issued by the Dispute Resolution Panel, Bangalore ( DRP ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 144C(13) of the the Income Tax Act, 1961 (in short 'the Act') is bad on facts. 2. Erroneous demands The Assessing Officer has erred in : a) Determining the total income of the appellant at ₹ 169,133,480; b) Levying income tax of ₹ 16,913,350; c) Levying interest under Section 234B of the Act of ₹ 4,311,352; and d) Raising a demand of ₹ 14,337,820. 3. Erroneous treatment of the receipts from Indian customers as royalty 3.1 The Assessing Officer and the Dispute Resolution Panel (DRP) have erred in holding that the payments received by the appellant from the Indian customers are in the nature of royalty income taxable under Section 9(1)(vi) of the Act. 3.2 The Assessing Officer and the DRP have erred in not holding that the payments received from its Indian customers would not qualify as royalty under the Double Taxation Avoidance Agreement between India and Ireland ( the DTAA ) 3.3 The A.O. and the DRP have erred in not holding that whether the payment received by the appellant form Indian customers was in the nature of royalty had most appropriately to be judged under clause (v) of Explanation 2 to section 9(1)(vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as well as Article 12 of the DTAA between India and Ireland. In support of this proposition, the ld. D.R. placed reliance on the decisions of the co-ordinate benches of this Tribunal in the assessee s own case in ITA No.550/Bang/2011 dt. 31.10.2012; for Assessment Year 2006-07 in IT(TP)A No.1518/Bang/2010 dt.5.12.2014 and the decision of the Hon ble Karnataka Court in the case of CIT V Samsung Electronics Co. Ltd. Others reported in 245 CTR (Kar) 481 wherein it was held that the payments to non-resident foreign software suppliers for purchase of shrinkwrapped software was in the nature of royalty. The ld. D.R. prayed that in view of the above cited decisions of the co-ordinate benches of this Tribunal (supra) and of the Hon ble Karnataka High Court, the assessee s appeal on this issue was liable to be dismissed. 5.3.1 We have heard both parties and perused and carefully considered the material on record, including the judicial decisions cited and placed reliance on by the ld. D.R. for revenue. As submitted by the ld. D.R. we find that the identical issue, before us in this appeal, has been considered by the Hon ble Karnataka High Court in the case of Samsung Electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r off-the shelf software is not the price of CD alone or software alone or the licence but a combination of all. Therefore, the payments constitute 'royalty' within the meaning of art. 12(3) of the Indo-US DTAA and also as per the provisions of s. 9(1)(vi) as the definition of 'royalty' under s. 9(1)(vi) is broader than that under the DTAA. Consequently, assessee was under obligation to deduct tax at source under s. 195 from the amount paid to the foreign software suppliers. 7. In view of the aforesaid decision of the Hon ble High Court of Karnataka, we are of the view that the grievance projected by the assessee in ground No.3 cannot be accepted. Ground No.3 is therefore dismissed. The same finding was rendered by a co-ordinate bench of this Tribunal while dismissing the assessee's appeal for Assessment Year 2007-08 in IT(TP)A No.1518/Bang/2011 dt.5.12.2014. 5.3.2 Respectfully following the decision of the Hon'ble Karnataka High Court in the case of Samsung Electronics Co. Ltd. Others reported in 245 CTR (Kar) 481 and of the co-ordinate benches of this Tribunal in the assessee's own case for Assessment Year 2006-07 in ITA No.550/Bang/2011 dt.31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B cannot be sustained. 6.2 Per contra, the learned Departmental Representative submitted that the charging of interest under section 234B of the Act is mandatory and supported the order of the DRP. 6.3.1 We have heard both parties and perused and carefully considered the material on record. We find that the same issue of chargeability of interest under section 234B of the Act was considered by the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2006-07 in ITA No.550/Bang/2011 dt.31.10.2012 wherein at paras 10 and 11 of its order, it was held as under :- 10. We have considered the rival submissions. In view of the clear judicial pronouncements by the various High Courts on the issue, levy of interest u/s. 234A cannot be sustained. We may, in this regard, refer to the decision of the Hon ble Delhi High Court in the case of Jacabs Civil Inc. (2011) 330 ITR 578, wherein the Hon ble Delhi High Court has explained the legal position as follows:- The liability to deduct or collect the tax at source is that of the payer. Therefore, for the purposes of s. 234B, the question would be as to whether the payee, i.e. the assessee in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2007-08 in IT(TP)A No.1518/Bang/2010 dt.5.12.2014. 6.3.2 Following the decisions of the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2006-07 in ITA No.550/Bang/2011 dt.31.10.2012 and for Assessment Year 2007-08 in IT(TP)A No.1518/Bang/2010 dt.5.12.2014, we hold that the chargeability of interest under section 234B of the Act in the facts of the case on hand cannot be sustained. We, consequently, allow ground No.4 raised by the assessee. 7. In Ground No.5, the assessee has challenged the action of the Assessing Officer in initiating penalty proceedings under Section 271(1)(c) of the Act. Since no penalty under the aforesaid section has been levied in the case on hand for Assessment Year 2008-09, no cause of grievance arises to the assessee to agitate this issue before us for adjudication. The ground raised being premature, is non-maintainable in this appeal before us and is therefore dismissed. 8. In the result, the assessee's appeal for Assessment Year 2008-09 is partly allowed. Order pronounced in the open court on 6th Feb., 2015. Order pronounced in the open court on 6th Feb., 2015. - - TaxTMI - TMITax - Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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