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TMI Blog2018 (1) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... 774548/- including interest of Rs. 3065522/-. 3. That the ld CIT (A) has erred in upholding the decision of the ld Assessing Officer treating the appellant as assesse in default u/s 201(1) Income Tax Act, 1961. 4. That the ld CIT (A) has erred in upholding the decision of the ld Assessing Officer that the appellant has failed to comply with the provisions of Section 195 of the Act without appreciating the facts of the case. 5. That the id CIT (A) has erroneously upheld that the payment as made by the appellant to the German Enterprise towards reimbursement of costs for intranet, SAP charges, represented income of the nature of Royalty and were changeable to tax @1 0% on the gross amount. 6. That the ld CIT (A) has erred in rejecting the various contentions of the assessee in respect of non taxability of the relevant amounts in terms of provisions of agreement for avoidance of Double Taxation (ADDDT) and provisions of the Act. 7. That the ld CIT (A) has erred in not following the decision of the Hon'ble Income Tax Appellate tribunal New Delhi on same issue in appellant's own case for AY 2000-01, and in various decisions of High Courts and other courts cited by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006. 5. Assessee aggrieved with the order of the ld Assessing Officer preferred an appeal before the ld CIT (A) who vide order dated 28.02.2014 confirmed the finding of the ld Assessing Officer by the consolidated order. Therefore, the assessee is in appeal before us. 6. The ld AR submitted that the issue is squarely covered in favour of the assessee as in the case of the recipient of the income i.e. SMS Demag AG for AY 2012-13 the ld DRP has held that above sum received by the assessee in relation to SAP and intranet charges are not fees for technical charges as well as the royalty as per DTAA. He therefore, submitted that according to the directions of the Id DRP in the case of the recipient when such sum is not chargeable to tax m India there cannot be any withholding tax liability on the assessee. He further submitted that the coordinate bench in case of the assessee for AY 2000-01 in SMS Demag (P.) Ltd. v. Dy. CIT[2010] 38 SOT 496 (Delhi) has held that disallowance u/s 40(a)(i) cannot be made in the hands of the assessee for non deduction of tax at source on these payments. Therefore, he submitted that assessee cannot be asked to deduct tax at source. He further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer cannot assume jurisdiction for FY 1999- 2000 and 2000-01 accordingly, the ld AO cannot work out short deduction of tax on SAP Maintenance expenses of Rs. 18248673/- and Rs. 2503235/- for FY 2000-01 respectively. Accordingly, respectfully following the decision of the Hon'ble Delhi High Court we direct the ld Assessing Officer to not to treat the assessee in default u/s 201(1) as well as not to charge interest consequently, u/s 201(1A) of the Act for these two financial years. Accordingly, the orders passed u/s 201 (1) / 201 (1A) for FY 1999-2000 and 2000-01, consequent tax and interest thereon covered in the order for these two years are cancelled. 9. Now coming to the next contentions raised by the assessee that it is a reimbursement of expenses and therefore, no tax is required to be deducted thereon. It was further pleaded by the assessee that the issue is squarely covered in favour of the assessee by the order of the coordinate bench in assessee's own case for assessment year 2000 - 01 in SMS Demag (P.) Ltd's. case (supra) as well as by the order of the Ld. DRP in case of the recipient of the income. We have carefully perused the above argument. It was also raised befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is accepted and the payment to third party, routed through its holding co. is considered as reimbursement of expenses to the related party, then probably all the relevant provisions in this regard will become redundant. Hence, we reject the argument of the Ld. authorised representative that it is merely an reimbursement of expenditure. The next argument was that coordinate bench has decided this issue in favour of the assessee in assessment year 2000 - 01 in SMS Demag (P.) Ltd's. case (supra) is also not sustainable. The Ld. CIT appeal has given detailed reasons that coordinate bench concluded on the basis of the findings that the assessing officer would not be justified in disallowing 50% of depreciation on the ground that provisions of section 40 (a) (i) were applicable. He further held that that coordinate bench was not on the issue whether the tax is required to be deducted or not. But was on the issue of whether the depreciation disallowance made by the Ld. assessing officer by applying the provisions of section 40 (a) (i) is proper or not. The coordinate bench has also not given any finding about the deductibility of tax at source on the payment of SAP charges a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Hon'ble Delhi High Court in case of DIT v. Infrasoft Ltd.[2013] 39 taxmann.com 88/[2014] 220 Taxman 273. On examination of the arguments of the assessee it is noted that in that particular case the issue before the Hon'ble high court was that whether amount received by assessee, a non-resident company, for granting license to use its copyrighted software for licencee's own business purpose only, could not be brought to tax as 'royalty' under article 12(3) of India-US DTAA. In the present case, license of the copyrighted software of the parent of the assessee is not given to the assessee for use of its own business. In the present case before us it is an payment made by the assessee for use of SAP software which was customised for the group concern, further more intranet charges paid are also not copyrighted article. Furthermore, the assessee has also not given any agreement that what kind of software assessee was using, hence, benefit of the above decisions cannot be given to the assessee. In view of this the reliance placed by the assessee on that decision is distinguishable on facts. To test the payment made by the assessee for SAP charges it is important to not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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