TMI Blog2016 (12) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue : Sh. Anuj Arora, CIT DR ORDER PER BENCH: Both these appeals have been preferred by the assessee. ITA No. 726/Del/2015 pertains to the AY 2011-12 and has been filed against the order dated 25/11/2014 passed u/s 143(3)/144C(13) of the Income Tax Act, 1961 (hereinafter called the Act ). ITA No. 1686/Del/2016 pertains to AY 2012-13 and has been filed against the order dated 25/01/2016 passed u/s 143(3)/144C (1) of the Act. Since both these appeals were heard together, for the sake of convenience, the same are being disposed of together. 2. The assessee company is a Finnish Software Company incorporated and registered in Finland and is listed on the Helsinki Stock Exchange. It is a tax resident of Finland as per the provisions of Double Taxation Avoidance Agreement between India and Finland (DTAA/Treaty). The assessee is stated to develop, manufacture and deliver off the shelf mediation, charging and fulfillment solutions and software. The company s solution and software are being sold to the telephone operators who maintain and provide services in the Telecommunication Networks. The assessee company is stated to be a Global Market Player in providing conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case and in law, the Ld. AO/DRP erred in not appreciating the fact that the case of the Appellant is squarely covered by the judgment of the jurisdictional High Court in the case of Infrasoft Ltd. vs. ADIT [125 TTJ 53] wherein the Hon ble High Court while interpreting a similar agreement held that the payment made for the supply of software to be used by the assessee in its own business would not amount to royalty. 3. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in holding that the receipts in the hands of the Appellant from sale of standard software are in the nature of royalty u/s 9(1)(vi) clauses (i), (iii), (iva) and (v) of the Act and under Article 13(3)(a) and 13(3)(b) of the Double Taxation Avoidance Agreement (DTAA) between India and Finland. 3.1 That the Ld. AO/DRP erred in holding that the Appellant is receiving the payment for conferment of a right in the nature of a copyright. 3.2 That the Ld. AO/DRP erred in holding that the Appellant is receiving the payment for transfer of right to use the process embedded in the software to the customer who use such process while carrying out their business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case and in law, the Ld. AO/DRP erred in not appreciating the fact that the case of the Appellant is squarely covered by the judgment of the jurisdictional High Court in the case of Infrasoft Ltd. vs. ADIT [264 CTR 329 (Del)] wherein the Hon ble High Court while interpreting a similar agreement held that the payment made for the supply of software to be used by the asessee in its own business would not amount to royalty. 3. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in holding that the receipts in thehands of the Appellant from sale of standard software are in the nature of royalty as defined in section 9(1)(vi) of the Act and under Article 12(3) of the Double Taxation Avoidance Agreement between India and Finland. 3.1 That the Ld. AO/DRP erred in holding that the Appellant is receiving the payment for conferment of a right allowing the use of a copyright. 3.2 That the Ld. AO/DRP erred in holding that the Appellant is receiving the payment for transfer of right to use the process embedded in the software to the customer who use such process while carrying out their business. 3.3 That the Ld. AO/DRP erred in holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The Ld. CIT DR placed extensive reliance on the order of the lower authorities and vehemently argued that the receipts were taxable as royalty and not as business income. 5. We have heard the rival contentions and have perused the material on record. A perusal of the impugned order reveals that the AO has given a categorical finding that there was no change in the facts or the business model during assessment years 11-12 and 12-13 as compared to earlier assessment years 08-09, 09-10 and 10-11 and, therefore, the findings made and conclusions arrived at in earlier assessment years would also apply with equal force in the assessment years in question. It has been stated by the AO that there has been admittedly no change in the factual matrix or the business model of the assessee from earlier years and as such there was no reason to arrive at a different conclusion other than that as an earlier assessment years on the question as to whether the sale of software was to be charged as business income or as royalty. The Ld. AR has placed reliance on the decision of the ITAT Delhi B Bench in its own case for A.Ys. 07-08, 08-09 and 09-10 on this issue and a perusal of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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