TMI Blog2021 (7) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Sh. Kamal Shawney, Advocate, Sh. Divyansh Singh, Advocate ORDER PER N. K. BILLAIYA, AM: This appeal by the revenue is preferred against the order of the CIT(A)-42, New Delhi dated 20.07.2017 pertaining to A.Y. 2013-14. 2. The grievance of the revenue reads as under :- 1.1 That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred In deleting the addition made by the AO, and in holding that the revenue received by the assessee from supply of software is not taxable in India as royalty/s 9(l)(vi) of the Income Tax Act, as well as Article 13(3) of the India - France. 1.2 That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred deleting the addition made by the AO, without considering Explanation 5 and G to section 9(l)(vi), which have been inserted by clarificatory amendments with retrospective effect. 1.3 Thatin the facts and in circumstances of the case, and in law, the Ld. CIT(A)erredin deleting the addition made by the AO, after erroneously considering the claimed adequacy of compensation of Alcatel Lucent India while determining the income of the assessee, and in wrongly ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt France has merged with the assessee w.e.f. 26.12.2013. 8. A similar quarrel was decided by this Tribunal in favour of the assessee and against the revenue in a bunch of appeals in ITA Nos.4866/Del/2010 and others vide order dated 04.04.2014. This order of the Tribunal was confirmed by the Hon ble High court of Delhi in ITA Nos.119 to 157/2015 vide order dated 27.02.2015. The relevant findings of the Hon ble High Court of Delhi read as under :- 4. Re-assessment proceedings were initiated for the year under consideration. The assessee claimed that the income declared originally in the assessment proceedings be treated as return filed in the assessment proceedings. In the re-assessment order, the AO observed that the assessee, a company incorporated in France and other concerned countries used to manufacture, trade and supply equipments and services for GSM Cellular Radio Telephones Systems. The assessee had supplied hardware and software to various entities in India. Software licenced by the assessee embodies the process which is required to control and manage the specific set of activities involved in the business use of its customers. Software also made available the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware. The software is embodied in the system and the revenue accepts that it could not be used independently. This software merely facilitates the functioning of the equipment and is an integral part thereof. On these facts, it would be useful to refer to the judgment of the Supreme Court in TATA Consultancy Services Vs. State of Andhra Pradesh (2004) 271 ITR 401 (SC), wherein the Apex Court held that software which is incorporated on a media would be goods and,therefore, liable to sales tax. Following discussion in this behalf is required to be noted:- In our view, the term goods as used in Article 366(12) of the Constitution of India and as defined under the said Act are very wide and include all types of movable properties, whether those properties be tangible or intangible. We are in complete agreement with the observations made by this Court in Associated Cement Companies Ltd. (supra). A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses need not alter their status as goods because the Code definition includes specially manufactured goods. 56. A fortiorari when the assessee supplies the software which is incorporated on a CD, it has supplied tangible property and the payment made by the cellular operator for acquiring such property cannot be regarded as a payment by way of royalty. 6. This Court also noticed that the ITAT had in addition relied upon other judgment of this Court i.e. Director of Income Tax V. M/s. Nokia Networks, (2013) 358 ITR 259 (Delhi). 7. In view of this settled position, this court is of the opinion that no substantial question of law arises. The appeal is accordingly dismissed. 9. This order of the Hon ble High Court of Delhi has been upheld by the Hon ble Supreme Court in a bunch of appeals in the case of Engineering Analysis Centre of Excellence Private Limited vide order dated 02.03.2021 and in the bunch of appeals the assessee is at Civil appeal No.10674 of 2016, 010673 of 2016 and SLP (C) No.28868 of 2016. The relevant findings of the Hon ble Supreme Court read as under :- 168. Given the definition of royalties contained in Article 12 of the DTAAs mentioned i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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