TMI Blog2020 (7) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... s length need to be re-examined by the Assessing Officer after examining the issue relating to dependent agent/PE. We find force in this contention of the ld. DR. AO is directed to decide the issue relating to dependent agent/PE in line with the direction of the co-ordinate bench and thereafter should decide attribution of income and the issue relating to transactions being at arms length price. Grant of TDS credit - HELD THAT:- AO is directed to give credit of TDS as per provisions of law. - ITA No. 7698/DEL/2017, ITA No. 8276/DEL/2018 - - - Dated:- 25-6-2020 - Ms. Sushma Chowla, Vice President And Shri N.K. Billaiya, Accountant Member For the Assessee : Ms. Rashmi Chopra, Sr. Adv, Shri Aditya Vohra, Adv, Shri Arpit Goyal, CA For the Department : Shri Satpal Gulati, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, The above two appeals by the assessee are preferred against two separate orders framed u/s 143(3) r.w.s 144C of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] dated 31.10.2017 and 30.10.2018 pertaining to assessment years 2014-15 and 2015-16. Since both these appeals pertain to same assessee involving commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nataka High Court in the case of Samsung Electronics Co Ltd. Hence, the decisions relied by the learned CIT-DR in the case of Samsung Electronics and Gracemac Corporation (supra) does not help the case of the Revenue, as we are under the Jurisdiction of the Hon ble Delhi High Court. 42. In view of the above, respectfully following the decision of Hon'ble Jurisdictional High Court in the case of Ericsson A.B. (supra) and Infrasoft Ltd. (supra), we hold that the consideration received by the Assessee for supply of product along with license of software to End user is not royalty under Article 12 of the Tax Treaty. Even where the software is separately licensed without supply of hardware to the end users (i.e. eight out of 63 customers), we are of the view that the terms of license agreement is similar to the facts of Infrasoft Ltd (Supra). Accordingly, we hold that there was no transfer of any right in respect of copyright by the assessee and it was a case of mere transfer of a copyrighted article. The payment is for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er fee) is indeterminate of the true nature. Nor is the circumstance that updates of the software are routinely given to the Assessee‟s customers. These facts do not detract from the nature of the transaction, which was supply of software, in the nature of articles or goods. This Court is also not persuaded with the submission that the payments, if not royalty, amounted to payments for the use of machinery or equipment. Such a submission was never advanced before any of the lower tax authorities; moreover, even in Ericson (supra), a similar provision existed in the DTAA between India and Sweden. 8. The ITAT has, in its impugned order dated 18th May 2015, also relied upon the decision in Ericson (supra) and Director of Income Tax v. ITA Nos. 909/2015, 28/2016, 861/2016, 944/2016, 4/2017, 6/2017 Page 6 of 7 Infrasoft Limited (2014) 220 Taxman 273 (Del) and held as under: 41. Before us, the learned counsel for the Assessee as well as the learned D.R. relied on several decisions of the High Court and Tribunal rendered on the subject. These decisions are not being considered as the issue is extensively dealt by the Hon'ble Jurisdictional High court in the cases of M/s Eric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation (supra), the question has been answered in favour of the Assessee and against the Revenue following the decision in Director of Income Tax v. GE Packaged Power Inc. 373 ITR 65. Consequently, this issue is also answered against the Revenue and in favour of the Assessee 12. On finding party that there is no change in the factual matrix in Assessment Year under consideration as compared to earlier years, which has also been accepted by the lower authorities, respectfully following the findings of the co-ordinate bench, being upheld by the Hon'ble High Court of Delhi, we are of the considered view that receipts would constitute business receipts and is to be assessed as such, subject to the assessee having business connection/PE in India. Ground No. 2 is, accordingly, allowed. 13. Next grievance relates to the allegation that the assessee is having installation and dependent agent/PE in India. 14. This issue is also no more res Integra, as the same has been considered and decided by the co-ordinate bench in a bunch of appeals relating to Assessment Years 2003-04 to 2010-11 in ITA No. 1124/DEL/2014 and Ors. Relevant findings of the co-ordinate bench read as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since installation and support services are provided by Aspect India, there exists an installation PE of the assessee in India. As per Article 5(2) of India USA Treaty, the term Permanent Establishment includes especially the following: (i) Clause (j): An installation or structure used for the exploration or exploitation of natural resources, but, only if so used for a period of more than 120 days in any twelve-month period; (ii) Clause (k): A building site or construction, installation or assembly project or supervisory activities in connection therewith, where such site, project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 120 days in any twelvemonth period. There is no dispute that clause (j) above is not applicable. The dispute is with regard to existence of PE under clause (k) above. As per Article 5(2)(k), a building site or construction, installation or assembly project or supervisory activities in connection therewith is regarded as PE is such project or activities (together with other such sites, projects or activities, if any) continue for a period of more than 120 days in any twelvemonth period. Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and the transactions between the agent and the enterprise are not made under arm s length conditions, he shall not be considered an agent of independent status within the meaning of this paragraph. Paragraph 5 lays down conditions as to when can an agent; broker is regarded as dependent agent or independent agent. If the agent is devoted wholly or almost wholly on behalf of the enterprise and the transactions between the agent and the enterprise are not made under arm s length conditions, the agent is not considered as agent of independent status . In such circumstances, the agent would be regarded as dependent agent . Further, the dependent agent has to satisfy any of the tests laid down in (a), (b) or (c) above in order to constitute a dependent agent PE of the non-resident. Coming to the facts of the present case, the assessee has argued that Aspect India neither secures orders nor habitually exercises an authority to concl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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