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2016 (11) TMI 658 - ITAT MUMBAI

2016 (11) TMI 658 - ITAT MUMBAI - TMI - Reopening of assessment - Held that:- reopening of assessment in the present case is based on the stand of assessing authority for other assessment years, and thus there is enough cause and justification for invoking Sec. 147/148 of the Act and following the judgment of Hon’ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., (2007 (5) TMI 197 - SUPREME Court ) initiation of proceedings u/s 147/148 of the Act are upheld. Thus, on this a .....

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the assessee-company from Indian customers as subscription fee. 2. At the time of hearing, it was a common point between the parties that the facts and circumstances in relation to the said dispute are similar in all the assessment years, therefore, appeal of the assessee for Assessment Year 2003-04 is taken as lead case in order to appreciate the controversy. ITA NO. 2619/MUM/2014 (A.Y : 2003-04) 3. This appeal by the assessee is directed against the order of CIT(A)-10, Mumbai dated 08.11.2013, .....

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t have a local presence. The research products of the assessee entail qualitative research and analysis which aids decision-making for information technology buyers, users and vendors. Assessee-company sells its subscription to Indian customers/subscribers by providing them access to its products over the internet from its data server which is located outside India. Assessee-company enters into service agreements with its Indian customers/subscribers for each of Gartner services purchased, which .....

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ot have any fixed place of business or permanent establishment in India. However, Assessing Officer took the view that such subscription fee was liable to be taxed in India as Royalty within the meaning of Sec. 9(1)(vi) of the Act as also per Article 12 of the Double Taxation Avoidance Agreement (DTAA) between India and Ireland. Accordingly, Assessing Officer treated the amount of ₹ 24,94,595/- received by the assessee from Indian customers/subscribers as Royalty. The total income was dete .....

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of Indo-Ireland DTAA read alongwith Sec. 9(1)(vi) of the Act. The CIT(A) has also sustained the stand of Assessing Officer primarily by relying on the judgment of Hon'ble Karnataka High Court in the case of CIT (International Taxation) v. Wipro Ltd., 203 Taxman 621 (Kar). Against such a decision of the CIT(A), assessee is in further appeal before us. 6. Before us, it was a common point between the parties that similar issue had come up before the Tribunal in assessee s own case for Assessme .....

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ted that Wipro Limited, a customer of the present assessee made payment without deduction of tax at source u/s 195 of the Act. When the matter finally came up before the Hon ble Karnataka High Court, it was held that the payments made by Wipro Limited to Gartner for online use of database was for licence to use said database and hence the consideration was royalty, liable for deduction of tax at source u/s 195 of the Act. 5. The learned AR countered the submissions advanced on behalf of the Reve .....

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08.01.2012 considered both the judgments and thereafter took a view in favour of the assessee by holding that the amount was in the nature of business profits and not royalty . The said decision of the Mumbai Bench was subsequently followed by the Mumbai Bench in another case and the Pune Bench of the tribunal in Allianz SE v. ADIT (IT) [(2012) 51 SOT 399 (Pune)]. In view of these three decisions given by the Tribunal in assessee s favour, the learned AR contended that the view taken in assessee .....

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mpany, would amount to royalty and wherefor, there is a statutory obligation on the part of the respondent to make tax deduction ...... . We are unable to see as to how the contrary view expressed by the Tribunal in three orders can be adopted in the case of the payee-assessee, when the Hon ble Karnataka High Court has rendered judgment on the very same transaction in the hands of the payers. If the argument tendered by the ld. AR is accepted, it would amount to delivering an opinion contrary to .....

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Wipro Ltd. (supra), which has been relied by the Tribunal, to decide the issue against the assessee be not be followed for varied reasons. Firstly, according to him, assessee was not a party before the Hon ble Karnataka High Court and it was a case where the issue related to the nature of payments made by M/s. Wipro Ltd. as a customer of the assessee-company; and secondly, that subsequently the Hon ble Delhi High Court in the case of Infrasoft Ltd., 39 Taxmann.com 88 (Delhi) has examined paymen .....

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ensibly supports the plea of assessee that impugned sums are in the nature of business receipts not taxable in India in the absence of any permanent establishment or fixed place of business. In this regard, it is pointed out in the case of M/s. Capgemini Business Services (India) Ltd., ITA No. 7779/M/2011 dated 29.2.2016 the Mumbai Bench has followed the decision of Hon'ble Delhi High Court in preference to that of Hon'ble Karnataka High Court. Apart therefrom, the learned representative .....

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an Global B V, ITA No. 7048/Mum/2010 dated 13.6.2016 ii) Allianz SE, [2012] 21 taxmann.com 62 (Pune) iii) M/s. Reliance Industries Ltd., [2016] 69 taxmann.com 311 (Mumbai -Trib) iv) M/s. Solid Works Corporation, ITA No. 3219/Mum/2010 dated 8.1.2012 8. On the other hand, the ld. DR has reiterated the decision of Tribunal in assessee s own case for Assessment Year 2007-08 dated 24.7.2013 (supra) which according to him fully covers the controversy before us. 9. We have carefully considered the riva .....

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n of tax at source u/s 195 of the Act. The Tribunal noticed that when the matter came up before Hon ble Karnataka High Court it has been held that payment made by Wipro Ltd. to assessee, M/s. Gartner Ireland Ltd., as subscription fee was in the nature of royalty, thus liable for deduction of tax at source u/s 195 of the Act. Ostensibly, the Hon ble Karnataka High Court has considered the nature of a transaction which is one under consideration before us. Therefore, under these circumstances, in .....

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subsequent decision of Hon ble Delhi High Court in the case of Infrasoft Ltd. (supra), in our view, does not justify departure from the decision of Tribunal dated 24.7.2013 (supra) because the decision of Hon ble Karnataka High Court in the case of Wipro Ltd. (supra) is specific to the transaction before us, albeit in the hands of the payer of such income. Therefore, as per principles of judicial consistency and considering that the decision of Tribunal dated 24.7.2013 (supra) has not been alte .....

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son that the view of Hon'ble Karnataka High Court is specific to the transaction which involves the assessee herein, whereas the contrary view of the Hon'ble Delhi High Court is not specific to the assessee before us. In this view of the matter and in the absence of any decision of the jurisdictional High Court, we find no reason to depart from the earlier decision of the Tribunal in assessee s own case for Assessment Year 2007-08 with a view of maintaining consistency. 10. In Assessment .....

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