TMI Blog2015 (6) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly upheld. - Decided against revenue. - ITA No. 1874/HYD/2011, 1964/HYD/2011, 837/HYD/2013 - - - Dated:- 3-6-2015 - SHRI P.M. JAGTAP AND SHRI SAKTIJIT DEY, JJ. For the Appellant : Shri Rajat Mitra, DR For the Respondent : Shri A. Srinivas, AR ORDER PER SAKTIJIT DEY, J.M : Aforesaid appeals are by the department against separate orders of Ld. Commissioner of Income Tax (Appeals)-V, Hyderabad for the Assessment Years (AYs) 2008-09 and 2009-10. ITA No. 1874/HYD/2011 (AY. 2008-09): 2. This appeal has been filed by the department being aggrieved by the order of Ld. CIT(A) holding that the payment made by assessee to the foreign company not being in the nature of 'royalty', there is no requirement for deduction of tax at source u/s. 195 of the Income Tax Act [Act] and consequentially deleting the demand raised u/s. 201(1) and 201(1A) of the Act. 3. Briefly, the facts are the assessee an Indian company is basically engaged in the business of trading of software. On verification of record, the AO noticed that assessee has made payment of US $ 88,304 (Rs. 1,02,34,981/-) to a foreign company namely M/s. Altiris Singapore Pte. Ltd., (Alt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Altiris at ₹ 11,37,220/- and ₹ 1,64,608/- respectively. 4. Being aggrieved of the order passed u/s. 201(1) and 201(1A) of the Act, assessee preferred an appeal before the Ld.CIT(A). In the course of hearing of appeal before the First Appellate Authority, assessee reiterated that the transactions between assessee and the foreign company being purely in the nature of purchase and sale of software products, the payments made cannot be treated as 'royalty'. In support of his contention, assessee also produced the agreement with the foreign company and other relevant documents. Ld.CIT(A) after going through the registered reseller agreement between the assessee and Altiris and other relevant documents, accepted assessee's claim that it is purely a purchase and sale of goods and there is no right to use of any copyrighted articles or things conferred on the assessee by the foreign company. The Ld.CIT(A) on referring to the principles laid down in various judicial precedents finally concluded that as the assessee is merely acting as a reseller for standard software products of the foreign company and no ownership rights in the patents, copyrights or internatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of, the payment made is not in the nature of 'royalty' but merely towards the cost of the goods purchased for re-sale. In support of such contention, he relied upon the following decisions: i) 94 ITD 91 Samsung Electronics Company Ltd., Vs. ITO (ITAT, Bangalore Bench); ii) 95 ITD 269 Motorola Inc. Vs. DCIT (ITAT, Delhi Special Bench); iii) 43 SOT 506 DDIT (International Taxation) Vs. Reliance Industries Ltd., (ITAT, Mumbai Bench); iv) 271 ITR 401 Tata Consultancy Services Vs. Sate of Andhra Pradesh (Supreme Court); and v) Decision of the ITAT, Hyderabad in the case of ADIT Vs. M/s. Bartronics India Ltd. 7. We have considered the submissions of the parties and perused the materials on record. We have carefully applied our mind to the decisions relied upon by the parties before us. As can be seen, the AO has treated the payment made by the assessee to Altiris as 'royalty' on the reasoning that as the assessee is authorized by the foreign company to sell a product which is protected under the copyright, the consideration for the right to sale/distribute is to be treated as 'royalty'. According to the AO as the payment made by the assessee to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. In fact the assessee is not permitted to make copies or duplicate the software. To some extent, the AO has also accepted aforesaid factual position. In these circumstances, when the department has not been able to bring any material on record to controvert the factual findings, arrived at by the Ld.CIT(A), we do not see any merit in the contention of the department that the payment made is in the nature of 'royalty'. On going through the facts and materials on record, we are of the firm opinion that the payments made by the assessee to M/s. Altiris do not come within the purview of 'royalty' as finds place u/s. 9(1)(vi) of the Act. As far as the decisions relied upon by the parties, we are of the view that they have no relevance to the facts of the present case since, on the basis of facts on record, it is proved that assessee is merely a trader of software products of the foreign company. In the aforesaid facts and circumstances, we find no reason to interfere with the order of the Ld.CIT(A) which is accordingly upheld. The grounds raised are therefore, dismissed. ITA No. 1964/HYD/2011 (AY. 2008-09) ITA No. 837/HYD/2013 (AY. 2009-10): 8. These ..... X X X X Extracts X X X X X X X X Extracts X X X X
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