TMI Blog2019 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in not deducting the tax out of such payments. Hence, the demand created under section 201(1) of the Act and interest charged under section 201(1A) is cancelled - the payments made for purchase of hardware cannot be held to be royalty. The said amount was held to be liable to tax as royalty by the authorities below on the ground that software was held to be royalty. No merit in the orders of authorities below in this regard. CIT(A) in the later paras have directed the Assessing Officer to verify the stand of purchase of hardware raised by the assessee. However, since we have already decided the issue in turn, relying on the order of Tribunal in John Deere India Pvt. Ltd. Vs DDIT [2019 (3) TMI 458 - ITAT PUNE] we find no merit in the stand of authorities below in this regard and the same is dismissed. Monetary limit - Grossing up under section 195A - HELD THAT:- The tax effect involved in the appeal of Revenue is below the monetary limit prescribed by the CBDT vide Circular No.3/2018, dated 11.07.2018. In view of the said Circular prescribing the limits for filing the appeals before the Tribunal by the Revenue and since the tax effect in the present appeal filed by the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i)/9(1)(vii) of the Act as well as Article 12 of the DTAA between India and USA/UAE/SPAIN/SINGAPORE/ MALAYSIA/ GERMANY/THAILAND/CANADA/IRELAND/UK as such. 2. On the facts and circumstances of this case, the Ld. CIT(A) was not correct in holding that since the assessee did not produce any agreement regarding to grossing up / non grossing up of the amounts liable for deduction u/s 195 the AO was wrong in grossing up the amount paid. 3. The Ld CIT(A) erred in not considering the fact that the assessee had not deducted TDS u/s 195 from the payment of royalty which clearly shows that the entire payment was made to the AE and no recovery on account of TDS liability u/s 195 has been made by the assessee from the AE and hence it transpires that the TDS liability is borne by the assessee. 5. Briefly, in the facts of the case, the Assessing Officer on the basis of information available noted that the assessee had failed to deduct tax at source while making payment to non-resident / foreign company for purchase of software, consultancy services, AMC charges. The Assessing Officer thus, issued notice dated 01.10.2012 and asked the assessee to furnish reasons for non-deduction of tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative for the assessee also pointed out that order passed by the Assessing Officer was beyond the period of four years from the end of financial year was also time barred in view of different orders of various High Courts. 10. The learned Departmental Representative for the Revenue on the other hand, placed strong reliance on the order of CIT(A). 11. We have heard the rival contentions and perused the record. The issue on merits raised in the present appeal is against demand raised under section 201(1) of the Act and interest under section 201(1A) of the Act with regard to payments towards use of software. The assessee had made payments to the tune of ₹ 2.60 crores to third party for use of software. The case of assessee was that it had made the aforesaid payments for use of copyrighted article and had not received the copyright of software and hence, the payments could not be taxed as royalty under section 9(1)(vi) of the Act. The case of Revenue authorities on the other hand, was that the payments made for use of software was taxable as royalty under Explanation 4 to section 9(1)(vi) of the Act. The said issue was decided in view of retrospective amendment to section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Pune Bench of Tribunal in Cummins Inc Vs. DDIT (supra) has been recalled vide order passed in Miscellaneous Application and thereafter, relying on different decisions of various Hon ble High Courts, the Tribunal had decided the issue in holding that there is no amendment to the definition of royalty in DTAA and hence, the payment made for software is not royalty. The Tribunal also noted the amendment to provisions of section 9(1)(vi) of the Act by the Finance Act, 2012, under which the definition of software has been amended and held that where purchase of software was purchase of copyrighted article, then it was not covered by the term royalty under the provisions of section 9(1)(vi) of the Act. The Tribunal also held that since the provisions of DTAA overrides the provisions of Income Tax Act and are more beneficial, then there was no liability to deduct tax. The relevant findings of the Tribunal are in paras 45 to 89 and the Tribunal in final analysis it was held as under:- 90. In conclusion, we hold that purchase of software by the assessee being copyrighted article is not covered by the term royalty‟ under section 9(1)(vi) of the Act. Where the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the later paras have directed the Assessing Officer to verify the stand of purchase of hardware raised by the assessee. However, since we have already decided the issue in turn, relying on the order of Tribunal in John Deere India Pvt. Ltd. Vs DDIT (supra), we find no merit in the stand of authorities below in this regard and the same is dismissed. 15. Before parting, it may be pointed out that since the issue has been decided in favour of assessee on merits, we are not addressing the issue raised vis- -vis vide ground of appeal No.2 i.e. order passed under section 201(1)/201(1A) of the Act was time barred. 16. Now, coming to the second aspect of the said issue, where consultancy fees have been paid by the assessee which were held to be Fees for Technical Services under the Income Tax Act and DTAA. The said issue has also been decided by the Tribunal in para 103 and held that there was no requirement to deduct tax at source out of such payments for services and hence, following the same parity of reasoning, we hold that there was no requirement to deduct tax at source out of such payments. The grounds of appeal raised by assessee are thus, allowed. 17. Now, coming to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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