TMI Blog2017 (3) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... rink-wrap software is not liable to tax in India. Therefore, the Assessing Officer is hereby directed to delete the full addition. Accordingly, these issues are decided in favour of the assessee against the revenue. - I.T.A. No.936/Mum/2015 - - - Dated:- 28-2-2017 - SHRI R.C.SHARMA, AM AND SHRI AMARJIT SINGH, JM For The Assessee : Shri Anantha Krishanan N. For The Revenue : Shri Jasbir Chauhan (CIT-DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the assessment order dated 08.12.2014 for the A.Y.2011-12. 2. The assessee has raised the following grounds:- 1. The learned Assessing Officer (AO) has erred in law and on facts in computing the total income of the assessee at ₹ 26,87,30,378/-. Assessee by: Shri Anantha Krishanan N. Revenue by: Shri Jasbir Chauhan (CIT-DR) 2. On the facts and the circumstances of the case and in law, the learned AO and the Dispute Resolution Panel ( DRP ) have erred in holding that the income from sale of shrink-wrap software is taxable in India, being in the nature of royalty under the provisions of section 9(1)(vi) of the Act as well as Article 12(3) of the Double Taxati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approach the Dispute Resolution Panel I, Mumbai (the DRP) by filing the objections against the draft assessment order. The DRP issued directions under 144C(5) of the Act vide its order dated 12.11.2014 received in this office on 21.11.2014. The present order was issued consequent to the said directions given by the DRP. The assessee filed its return of income declaring total income to the tune of Rs. Nil on 29.09.2011. The case was selected for scrutiny and notice u/s.143(2) and notice u/s.142(1) of the Act were issued to the assessee. The assessee was a company engaged in the business of developing and marketing of 3D mechanical design solutions all over the world. Under the order of assessment an assessee has entered into agreement with resellers in India for sale of shrink-wrapped SolidWorks 2003 software to clients in India and has sold software in India through its distributor / reseller amounting to USD 6.05 millions. The notice was given to the assessee as to why the receipt should not be treated as royalty and income in hands of the assessee. After getting the reply from the assessee, the Assessing Officer and the DRP were of the view that the said income falls in the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Karnataka High Court in the case of CIT Vs. Synopsis International Old Ltd., 212 Taxman 0454 (Kar. HC), dated 03.08.2010 and CIT Vs. Samsung Electronics Co. Ltd. Others, (2011) 345 ITR 0494, Kar HC, dated 15.10.2011. Therefore, in the said circumstances the order passed by the Assessing Officer is justifiable which is not liable to be interfere with at this appellate stage. Keeping in view of the argument advanced by the parties and perused the record carefully, it is apparent on record that the said issue has been decided in favour of the assessee by the Hon ble Income Tax Appellate Tribunal in the assessee s own case for the A.Y.2002-03 in ITA No. 3095/Mum/2007 order dated 15th December 2009 and for the A.Y.2005-06 in ITA No.5097/Mum/2008 order dated 1st April 2010 and for A.Y.2006-07 in ITA No.3219/Mum/2010 order dated 08.02.2012 and for A.Y.2007-08 in ITA No.8721/Mum/2010 order dated 31.03.2016 and for A.Y.2009-10 in ITA No.7790/Mum/2012 order dated 31.03.2016. On appraisal of the latest order for the A.Y.2009-10, we found that the Hon ble Income Tax Appellate Tribunal considered the order passed by the Hon ble Karnataka High Court which was favour of the assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd followed by apex Court in Mangalore Chemicals Fertilizers Ltd. vs Dy. Commr. of CT (1992) Suppl. (1) SCC 21 and Novopan India Ltd. vs CCE C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord Lohen, in case of ambiguity, a taxing statute should be construed in favour of a tax-payer does not apply to a provision giving tax-payer relief in certain cases from a section clearly imposing liability. This exception, in the present case, has no application. The rule of resolving ambiguity in favour of the assessee does not also apply where the interpretation in favour of assessee will have to treat the provisions unconstitutional, as held in the matter of State of M.P. vs Dadabhoy s New Chirmiry Ponri Hill Colliery Co. Ltd. AIR 1972 (SC) 614. [Tej International Pvt. Ltd. Vs. DCIT (2000) 69 TTJ 650 (Del)] 52. Even otherwise, the Revenue has not cited any direct case law of the jurisdictional High Court of Bombay before us. In the case laws cited by the Revenue of the Hom le Karnataka High Court in the matter of CIT Vs. Samsung Electronics Company Ltd. (supra) and CIT Vs. Synopsis International Old Ltd. (supra) though a view in favour of the Revenue has been take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter has also been considered by the Hon ble Income Tax Appellate Tribunal and decided this issue in favour of the assessee specifically for the A.Y.2002-03 in ITA No. 3095/Mum/2007 order dated 15th December 2009 and for the A.Y.2005-06 in ITA No.5097/Mum/2008 order dated 1st April 2010 and for A.Y.2006-07 in ITA No.3219/Mum/2010 order dated 08.02.2012 and for A.Y.2007-08 in ITA No.8721/Mum/2010 order dated 31.03.2016 and for A.Y.2009-10 in ITA No.7790/Mum/2012 order dated 31.03.2016 in which the receipt on account of sale of Shrink-wrap software is not in the nature of royalty hence is not liable in India un view of the provision of section 9(1)(iv) of the Act as well as Article 12(3) of the Double Taxation Avoidance Agreement between India and U.S.A. In view of the said circumstances, we are of the view that the case of the assessee is fully covered by the above mentioned decisions and the finding of the Assessing Officer is based upon the DRP direction is wrong against law and facts and is hereby ordered to be set aside on this issue. It is therefore held that receipt to the tune of ₹ 26,87,30,378/- on account of the receipt for sale of shrink-wrap software is not liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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