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TMI Blog2019 (6) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or fees for technical services of the DTAA between India and USA as well as under the Income Tax Act and therefore, the Appellant Company was not required to withhold tax u/s. 195 on above amounts and accordingly, the demands raised of tax and interest u/s 201(1) and 201 (1A) may kindly be deleted. 3] The learned CIT(A) ought to have appreciated that the payments made to Deere. & Co. USA was on account of reimbursement of software license fees and IT support services and since there was no income earned by the said entity, no TDS was required to be deducted on such reimbursement of expenditure. 4] The learned CIT(A) erred holding that payment for leaseline charges to Deere & Co. USA is taxable as "Royalty" under the DTAA as well as per Regular provisions of the Income Tax Act, 1961. 5] The learned CIT(A) erred in not appreciating that - (a) the payment of lease line charges to Deere & Co. USA was not covered under clause "Royalty and/or Fees for Technical services" of the DTAA between India and USA and hence the Appellant Company was not required to withhold tax u/s. 195 on above amounts; (b) the payment of lease line charges to Deere & Co. USA were not covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Act as well as under the DTAA between India and USA. 12] The learned CIT(A) erred in not appreciating that Deere & Co. was not providing any fees for technical services to the appellant company by deputing its employees to the appellant company and therefore, there was no question of deducting any TDS on the reimbursement of the salaries of the expat employees. 13] Without prejudice to the above grounds, the learned CIT(A) erred in not appreciating that the A.O. had grossed up the amounts chargeable to TDS u/s 195A for the purposes of computing tax and interest, without appreciating that the said section was not applicable while determining the tax and interest u/s. 201 and 201(1A) and hence, the grossing up of the amounts was not justified at all. 3. The issue raised in the present appeal is against raising of demand under section 201(1) of the Act and charging of interest under section 201(1A) of the Act on the ground that assessee had failed to withhold tax under section 195 of the Act on the payments made which were either covered under the definition of 'royalty' and/or 'fees for technical services' as per provisions of section 9(1)(vi) of the Act or Article 12 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous decisions of AARs and decision of Hon'ble High Court of Karnataka in CIT Vs. Samsung Electronics Co. Ltd. (2009) 185 taxmann.com 313 (Kar) relied upon by learned Departmental Representative for the Revenue and also taken note of the fact that earlier decision of Pune Bench of Tribunal in the case of Cummins Inc had been recalled by Miscellaneous Application vide MA Nos.28 & 29/PUN/2017, order dated 06.12.2017 and had concluded by holding 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 assessee did not acquire any copyright in the software, is not covered under Explanation 2 to section 9(1)(vi) of the Act. We further hold that amended definition of 'royalty' under the domestic law cannot be extended to the definition of 'royalty' under DTAA, where the term 'royalty' originally defined has not been amended. As per definition of 'royalty' under DTAA, it is payment received in consideration for use or right to use any copyright of literary, artistic or scientific work, etc.; thus, purchase of copyrighted article does not fall in realm of 'ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o technical services were made available, hence there was no requirement for deduction of tax at source. Applying the said ratio to the facts of present case, we accordingly, hold so. 10. The next issue which was decided vide para 95 was against payments on account of lease line charges and whether any tax had to be deducted at source. The Tribunal vide paras 95 to 99 in turn, relying on earlier decisions of Tribunal had vide paras 100 and 101 held as under:- "100. As far as case of equipment royalty is concerned, the issue stands covered against the assessee by the decision of the Hon'ble High Court of Delhi in Asia Satellite Telecommunications Co. Ltd. vs. Director of IT (2011) 332 ITR 340 (Del), wherein the case of Revenue was that Non-resident was providing equipment for use of Transponder facility of Satellite to television companies outside India. However, the Hon'ble High Court held that there was no lease of equipment but only use of broadband facilities and applying the said ratio to the facts of present case, we hold that in the case of assessee, there is no question of any equipment royalty where the assessee was only using lease lines for transmitting data and it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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