TMI Blog2020 (12) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd (supra). Accordingly, demand raised in the hands of the assessee u/s 201(1) and 201(1A) cannot not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 deserves to be quashed. We delete penalty levied under section 201 (1) and (1A) Penalty under section 271C for non-deduction of TDS - HELD THAT:- As expressed in the present facts of the case, assessee cannot be held to be in default for non-deduction of TDS.Under such circumstances the penalty levied under section 271C deserves to be quashed and set-aside. - ITA No.2019/Bang/2019 - - - Dated:- 11-12-2020 - Shri. B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri Narendra Kumar Jain, Advocate For the Respondent : Shri R Premi, JCIT ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeals has been filed by assessee against separate orders dated 25/07/2019, passed by Ld. CIT (A), Bangalore-9 for assessment year 2010-11 on following grounds of appeal: ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant submits that each of the above grounds/ sub-grounds are independent and without prejudice to one another. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Income-tax Appellate Tribunal to decide the appeal according to law. The Appellant prays accordingly. ITA No. 2020/B/2019 1. The Order of the learned Commissioner of Income Tax (Appeals) - 9, Bangalore (hereinafter referred to as CIT(A)), to the extent prejudicial to the Appellant is bad in law. GROUND RELATED TO PENALTY U/S 271(l)(C): 2. The learned CIT(A) has erred in confirming the action of the AO in; a) Levying penalty u/s 271C, without appreciating the fact that, the requirement for withholding tax on purchase of software was mandated vide Finance Act 2012 as well as Karnataka High Court decision in the case of CIT vs. Samsung Electronics Co Ltd 203 Taxman 477 (Karnataka) was not in force when the Appellant complied with TDS provisions. The Appellant was therefore not required to deduct tax at source at the time of purchase of software license; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account. 5. Ld.AO also initiated penalty under section 271C on 08/05/2017 for failure to comply with the provisions of TDS. The Ld.AO after taking into consideration submissions of assessee was of the opinion that assessee should have complied with the TDS provisions by virtue of decision of Hon ble Karnataka High Court in case of CIT vs Samsung Electronics Co.Ltd., Ors., reported in (2011) 203 Taxman 477. The Ld.AO thus levied penalty of ₹ 2,84,644/- under 271C of the Act for failure to deduct tax at source. 6. Aggrieved by order passed by Ld.CIT(A) assessee filed appeal before the Ld.CIT(A). 7. Before Ld.CIT(A) assessee contended that requirement for withholding tax on purchase of software was mandated by Finance Act, 2012. During the relevant period under consideration assessee was not required to deduct tax at source is for purchase of software licenses. It was thus submitted that provisions of section 201(1) and (1A) could not be applicable to the year under consideration. 8. Ld.CIT(A) concluded that, assessee should have deducted TDS under section 195(2) by virtue of decision of Hon ble Karnataka High Court in case of CIT vs Samsung Electronics C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or purchase of software was in the nature of royalty and the said decision came to be pronounced on 15.10.2011. Accordingly, the present facts of case assessee could not be treated as an assessee in default in respect of payments made for purchase of licensed software prior to 15.10.2011, being the date of pronouncement of the decision in the case of Samsung Electronics Co. Ltd (supra). Accordingly, demand raised in the hands of the assessee u/s 201(1) and 201(1A) cannot not be sustained and the demands raised in respect of payments made prior to 15.10.2011 in assessment year 2012-13 deserves to be quashed. 16. Above view is fortified by view taken by coordinate bench of this Tribunal by order dated 05/10/2020, in case of Acer India Pvt.Ltd.Vs DCIT in IT(IT)No.107-114 of 2018 for assessment years 2009-10 to 2012-13, this Tribunal held as under: 7. .In the instant case also, the assessee was under bonafide belief that there was no required to deduct tax at source from the payments made for purchase of software, since there were certain decisions holding so. However, the jurisdictional High Court held that the payments made for purchase of software is in the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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