TMI Blog2021 (11) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Explanation 4 to Section 9(1)(vi) of the Act, as per the SC in its judgment, the Finance Act, 2012 amendment has to be read as expanding the scope of royalty with prospective effect from the Assessment Year 2013-14 (After FA, 2012 was enacted) and cannot be upheld as clarificatory so as to apply retrospectively for previous assessment years (para 73 - 74, 78 and 79). Therefore, the payments made under the customer contracts are not be treated as royalty under section 9(1)(vi) of the Act itself for the subject AY 2010-11, even without reference to the DTAA. Under the DTAA, clearly these are not royalty payments under Article 12 of the India UK DTAA as held by the SC (UK DTAA has also been examined by the SC para 40. Hon ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] ) held that A copyright is an exclusive right that restricts others from doing certain acts. A copyright is an intangible right, in the nature of a privilege, entirely independent of any material substance. Owning copyright in a work is different from owning the physical material in which the copyrighted work may be embodied. Computer p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was offered to tax by the assessee and which by virtue of our conclusions as aforesaid cannot be regarded as royalty or FTS and hence cannot be taxable, the Revenue should be directed to not to tax the aforesaid sum also - Thus taxability of receipts on sale of set-top-box, the amount offered to tax by the assessee which is now found to be not taxable cannot be brought to tax. We hold and direct accordingly and allow the ground of appeal. Reimbursements from Cisco Video for expenses incurred on behalf of Cisco Video - HELD THAT:- We hold that pure reimbursement does not give rise to any income and the decisions cited by the learned AR in this regard lay down the above principle. We find that the revenue authorities have not firstly held that as to whether there was one-to-one tally of sums spent by the Assessee that was reimbursed by NDS Pay Tv. Once this factual finding is rendered then there has been no payment for any services whatsoever. The question is can one infer that the sums reimbursed were for services rendered by Assessee when there is one to one tally. In our view it cannot be said so. As we have already mentioned the AO has proceeded to draw inferences on surm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Taxation, Circle 1(2), Bengaluru, under section 143(3) r.w.s. 144C of the Act, relating to Assessment Year 2006-. IT(IT)A No.504/Bang/2017 is an appeal by the assessee against the order of assessment dated 30.12.2016 passed by the ACIT, International Taxation, Circle 1(2), Bengaluru, under section 143(3) r.w.s. 144C of the Act, relating to Assessment Year 2013-14. IT(IT)A No.505/Bang/2017 is an appeal by the assessee against the order of assessment dated 30.12.2016 passed by the ACIT, International Taxation, Circle 1(2), Bengaluru, under section 143(3) r.w.s. 144C of the Act, relating to Assessment Year 2012-13. 2. All these appeals were heard together. Since some the issues in all these appeals are common, we deem it convenient to pass a consolidated order. First, we shall take up the appeal relating to Assessment Year 2010-11. 3. Ground Nos. 2 and 4 raised by the assessee in this appeal and the additional ground raised by the assessee are in relation to the question whether the receipts on sale of hardware with software embedded therein can be taxed as royalty. These grounds of appeal reads as follows: 2. Hardware receipts held to be chargeable to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng ₹ 105,32,33,692/- towards sale of hardware and software embedded therein, even though the same was offered to tax by the foreign entity, and in holding that the said receipts are taxable under the provisions of the Act and/or DTAA. 4. The facts and circumstances that give rise to the aforesaid grounds of appeal are that the assessee is a non-resident foreign company incorporated in United Kingdom. It is in the business of supply of open digital technology and services to digital pay television (pay-TV) platform operators and content providers. The assessee entered into agreement with its customers for supply of integrated hardware systems along with embedded softwares. The hardware is primarily in the form of viewing cards, Set-top-Box (STB) and other connected components,usually used in viewing television through satellite. The embedded software is required to run the hardware components. The assessee received the following sums in respect of supply of integrated hardware systems along with embedded software. SL.NO Name Amount of receipts (INR) [A] Amount on which TDS is done and offered to tax, Ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of agreement between assessee and some of the parties set out in the chart in paragraph-4 of this order, came to the conclusion that the receipts from the aforesaid parties by the assessee was in the nature of royalty as defined in section 9(1)(vi) explanation 2 to 5 of the Act. The AO on this issue after referring to the several terms of the agreement dated 16.08.2007 between Bharti Telemedia Ltd., and the assessee, has drawn the following conclusions: 3.5 It is therefore evident as per the agreement a) Supply of software and hardware should not be treated as sales since it is only licensed to be used by Bharti. b) Bharti is expressly given the right to distribute the viewing cards which contains NDS proprietary technology, to its subscribers. c) The viewing cards are used in the Set Top Box ( STB ) which is located at the subscribers site. d) Bharti cannot provide the service to its customers without the Set top Box ( STB ) which is a device that executes functions as per the NDS Functional Specification. e) It is impossible for a subscriber to use the STB and Viewing cards independent of the NDS Software, NDS Hardware and STB. f) It is clear from the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to implementation services and support services( technical support, AMC, training etc) for hardware then such receipts are also held to be covered by the definition of Fees from Technical services under the Act and the DTAA as discussed in the following paragraphs. 7.1 Under the DTAA, the fees for technical services is defined as under: 12(4). For the purposes of paragraph 2 of this Article, and subject to paragraph 5, of this Article, the term fees for technical services means payments of any kind of any person in consideration for the rendering of any technical or consultancy services (including the provision of services of a technical or other personnel) which: (a) are ancillary and subsidiary to the application or enjoyment of the right, property or information for which a payment described in paragraph 3(a) of this article is received ; or (b) are ancillary and subsidiary to the enjoyment of the property for which a payment described in paragraph 3(b) of this Article is received ; or (c) make available technical knowledge, experience, skill know-how or processes, or consist of the development and transfer of a technical plan or technical design. 7.2 Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form of viewing cards. CAS etc. or the Intellectual Property, copyright distribution rights etc. embedded within these items. In other words. whether the item transferred was a mere plastic or fibre card alongwith a physical set top box, or rather a code aril license for distribution of electronic media content which resided within the physical items. Though the assessee has strenuously argued that it supplied only purely hardware items, it is clear to us that it is actually not the software which is ancillary to the hardware as claimed by the assessee, but rather that the hardware is nothing but a vehicle to store, carry and facilitate usage of the licensed rights, embedded within the form of a software, which are the actual commodity supplied and charged for in this case. We are in conformity with the AO's analysis of the agreements between the assessee and its customers which clearly reveal that the items being sold were far more than the mere physical hardware. The ownership over the IP and copyrights are found to be never transferred but rather charged for on a continuous usage or compounded basis. It is not case of the assessee that viewing card did not contain any ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, Viz Hathway Cable and Datacom Limited, DEN Networks Limited, Tata Sky Limited and Gujarat Telelink Private Limited, pertaining to sale of the software component to tax. It has been further stated that the legal issue with respect to deduction of tax at source was highly litigated during the decade including the relevant year under consideration. It has been stated that the legal issue with respect to taxability of the copyrighted article was recently settled by the Honorable Supreme Court (-SC ) on 2 March 2021 in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [2021] 125 taxmann.com 42 (SC). In light of the recent developments in the legal jurisprudence with respect to taxability of the software as 'royalty', the Assessee now seeks to raise a ground that since this claim is a purely legal claim, the Assessee is entitled to make this claim before the Tribunal in its pending appeal, as an additional ground. The Assessee has also placed reliance on the decision of Ahmedabad Income-tax Appellate Tribunal ( ITAT ) in case of ITO vs Smt. Manini Niranjanbhai [1992] 41 ITD 324 (Ahmedabad ITAT) wherein it has been explained that it is a well-established po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see are in the nature of royalty cannot be sustained. In this regard, learned Counsel has filed a chart before us explaining as to how the conclusions drawn by the Revenue authorities on various terms of the agreement between the parties are erroneous and contrary to the law laid down by the Hon ble Supreme Court in the case of Engineering Analysis (supra). 15. The learned counsel for the Assessee drew our attention to para 4 of the Hon ble Supreme Court s judgment in the case of Engineering Analysis (supra) wherein Hon ble Supreme Court specifically dealt with cases wherein computer software is affixed on to hardware as an integrated unit/equipment by foreign non-resident supplier to Indian distributors or end users. This is the fourth category of cases which was dealt with by the Hon ble Supreme Court in the aforesaid decision. The Hon ble Supreme Court thereafter dealt with category 4 in paragraphs 44 to 52 and paragraph 118 of its judgment. He pointed out that the Hon ble Supreme Court in paragraph 118 of its judgment has specifically approved the ruling of the Hon ble Delhi High Court in the case of Ericsson A.B. (infra) and Nokia Networks (infra). He brought to our notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist 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. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (In case of painting) or computer discs or cassettes, and marketed would become goods . We see no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of goods within the meaning of the term as defined in the said Act. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the presence case, this has not been established. It is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act, 1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply Contract. Distinction has to be made between the acquisition of a copyright right and a copyrighted article . Mr. Dastur is right in this submission which is based on the commentary on the OECD Model Convention. Such a distinction has been accepted in a recent ruling of the Authority for Advance Ruling (AAR) in Dassault Systems KK 229 CTR 125. We also find force in the submission of Mr. Dastur that even assuming the payment made by the cellular operator is regarded as a payment by way of royalty as defined in Explanation 2 below Section 9(1)(vi), nevertheless, it can never be regarded as royalty within the meaning of the said term in article 13, para 3 of the DTAA. This is so because the definition in the DTAA is narrower than the definition in the Act. Article 13(3) brings within the ambit of the definition of royalty a payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ericsson A.B. (supra), deciding the case in favour of the assessee. 16. It was therefore submitted by him that the receipts in question were not in the nature of royalty and therefore could not be charged to tax in India. 17. The next submission of the learned Counsel for the assessee was that in the case of the assessee in the Assesment Year 2016-17, the DRP had the benefit of considering the case of the assessee on identical issue in the light of the decision of the Hon ble Supreme Court in the case of Engineering Analysis (supra) and has concluded after remand report of the AO that the assessee s case is covered in favour of the assessee by the decision of the Hon ble Supreme Court. 18. On question whether the receipts can be taxed as FTS in so far as it relates to receipts from Tata Sky and DEN, it was submitted as follows: a. Mere issue of plastic/fiber cards along with physical set-up box does not constitutes FTS, instead of sale of hardware. b. Supply of products carrying the IP to the customer does not amounts to FTS . c. The AO and the DRP have erred in holding that provisions of DTAA are very similar to provision of the Act without understanding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts between the Assessee and the customers of STB. In so far as the agreement between the assessee and Bharti Telemedia Limited is concerned, Article 3 of the Licence Agreement provides as follows: Article 3. Licence 3.01. Licence Grant. In consideration of the payment (and any continuing payments, if any) by Bharti on the licence fees referred to in Annexure A. and subject at all times to the terms and conditions of this Contract, NDS hereby grants to Bharti the non-exclusive, perpetual, nontransferable object code only right and licence in the Country of Designation (which includes the right to grant limited end-user sub-licenses to Subscribers): (a) to use the NDS Software, Embedded Software and NDS Hardware on the hardware authorized by NDS solely for the purpose of developing and transmitting the Service to Subscribers using Set-top-Boxes and make two back-up copies of the NDS Software Incorporating the Embedded Software on back-up server(s) for the limited purpose of ensuring the provision of uninterrupted service in the event that the primary server(s) fails to function properly; (b) to permit Subscriber to use the NDS Software as integrated in a Set-top- Box for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cense to Accessed Materials. All content accessed by use of the NDS Conditional Access System is the properly of the applicable content owner and may be protected by applicable copyright law. This Contract gives Bharti shall be solely responsible to obtain such rights. 3.05 Ownership. The NDS Software, NDS Hardware and NTP's is licensed and not sold to Bharti. NDS and its licensors own and retain all right, title and interest in the NDS Software, NDS Hardware and NTP's any modifications thereto expressly authorized by this Contract, and intellectual Property Rights. 22. In respect of the agreement between assessee and Tata Sky is concerned, the relevant terms are as follows: 3 LICENSE 3.1 License Grant . In consideration of the payment (and any continuing payments) by TATA SKY of the license fees referred to in Schedule 1, and subject at all times to the terms and conditions of this Agreement, NDS hereby grants to TATA SKY the non-exclusive, non-transferable object code only right and perpetual license in the Territory: (a) To use the NDS Software and NDS Hardware authorized by NDS solely for the purpose of developing and transmitting the DTH Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance, to grant Subscribers a sublicense to use the NDS Software incorporated into the Viewing Cards but only as is strictly required to receive the Services from DEN and on terms consistent with those set out in Clause 7.2 and 7.4 which relate to the NDS Software contained on the Viewing Cards. 24. The terms of the other licence agreement between the various parties have not been set out in the order of assessment though the copies of the same are available in the Paper Book. The terms of the agreement are clearly similar to the terms of the agreement which the Hon ble Supreme Court analyzed in the case of Engineering Analysis. We shall anlyse the terms of the Agreement between the Assessee and Bharati Telemedia as a sample. Techinical and commercial proposal given by the Assessee alongwith the STB provides technical specifications for the engineering of the relevant systems. That by itself cannot be the basis to conclude that there has been use of any copyright or that technical services have been provided. This is like providing a technical and user manual describing the system and does not imply granting of any copyright rights or transferring technical knowledge. The softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 117 for overall conclusions of SC in the context of distinction between license over copyright and license to use copyrighted product specifically para 117(v), the Hon ble Supreme Court has held that even if fee schedule refers to royalty payment, this is consideration for purchase of an integrated system. One has to look at the overall agreement and the real nature of the transaction (para 51 of SC judgment). On the AO s reference in para 4.4 of FAO as license being for use of IPR over viewing cards and software is incorrect since as per Article 3.01 and 3.02 (page 58-59 of paper book), license is for simplicitor use of the software, with several restrictions. Also, as per clause 3.04 (No license to accessed materials) and clause 3.05 (Ownership), no license whatsoever is granted over using the IPR in the software. License is to only use software to enable using the accompanying hardware, as part of an integrated system. Aspect of training referred to in para 4.5 of FAO does not advance AO s case since software and hardware are part of an integrated system akin to supply of goods. When training is provided to use it, it is similar to initial training provided by a vendor o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do any of the acts mentioned in section 14 of the Copyright Act, 1957(Copyright Act). In the case of a computer program, section 14(b) of the Copyright Act, speaks explicitly of two sets of acts: 1. The seven acts enumerated in sub-clause (a); and 2. The eighth act of selling or giving of commercial rental or offering for sale or commercial rental any copy of the computer program. The seven acts as enumerated in section 14(a) of the Copyright Act, in respect of literary works are: 1. To reproduce the work in any material form, including the storing of it in any medium electronically; 2. To issue copies of the work to the public, provided they are not copies already in circulation; 3. To perform the work in public, or communicate it to the public; 4. To make any cinematographic film or sound recording in respect of the work; 5. To make any translation of the work; 6. To make any adaptation of the work; and 7. To do, in relation to a translation or an adaptation of the work, any of the acts specified in relation to the work in sub-clauses (1) to (6). The court held that a licence from a copyright owner, conferring no proprietary interest on the lice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DTAA, royalties are payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary work includes a computer program or software. It was held that the regarding the expression use of or the right to use , the position would be the same under explanation 2(v) of section 9(1)(vi) because there must be, under the licence granted or sales made, a transfer of any rights contained in sections 14(a) or 14(b) of the Copyright Act. Since the end-user only gets the right to use computer software under a non-exclusive licence, ensuring the owner continues to retain ownership under section 14(b) of the Copyright Act read with sub-section 14(a) (i)-(vii), payments for computer software sold/licenced on a CD/other physical media cannot be classed as a royalty. 27. The terms of the licence in the present case does not grant any proprietory interest on the licencee and there is no parting of any copy right in favour of the licencee. It is non-exclusive non-tranferrable licence merely enabling the use of the copy righted product and does not create any interest in copy right and therefore the payment for such licence would not be in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of section 9(1)(vi) of the Act (except for reimbursement towards software which has been held to be in the nature of 'royalty') as well as under the provisions of the India - UK DTAA. 3.2. The Ld AO and the Honourable DRP have erred in not appreciating the fact that the reimbursements were purely on cost to cost basis, which was initially incurred by NDS Limited purely for administrative purposes and does not contain any profit element to hold the amount taxable as income / revenue. 3.3. The Ld AO and the Honourable DRP have erred in law and on facts in placing reliance on several decisions and wrongly contending that the facts of the Appellant's case to be similar to the cases on which reliance were placed upon against the Appellant. 3.4. The Ld AO and the Honourable DRP have erred on facts in wrongly terming the receipts by the Appellant from Cisco Video as receipts for rendering of 'business support services'. 3.5. The Ld AO and the Honourable DRP have erred in law and on facts by presuming facts contrary to what was submitted by the Appellant and thereafter making several wrong inferences/ observations based on such incorrec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made available the services to the customers. The DRP further held that the cost sharing agreement is effective only from 1.4.2011 and hence, not applicable to the year under consideration. 32. Before the Tribunal it was submitted that the details of the reimbursement are as follows: Sl.No Nature of Reimbursement Amount Paper Book Page reference I Fixed Assets along with invoices 5,00,42,174 (sub-total) Page 313 382 - Detailed list of assets along with 38 Invoices Page 619 Disclosure in financials of NDS India Page 620 705 - Bill of Entry for proof of assets imported Plant and Machinery 1,55,55,218 Capital assets 2,96,03,311 Fixed assets accruals and miscellaneous 5,51,807 Software 12,80,565 II Other expenses along with invoices 6,53,63,696 (sub-total) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DRP. The cost reimbursement agreement (Page 305 of the Paper Book) support that fact that cost being reimbursed to Assessee not pursuant to any services but for actual expenditure incurred by the Assessee towards fixed assets and other administrative expenses. It was submitted that clause 2 of the Agreement (Page 306 of the Agreement) which states as under: It is expressly understood between the parties that the expenses reimbursed under this agreement would be at cost with no mark-up or profit element, since no service are being provided under the agreement The learned counsel thus submitted that supply of fixed assets are not part of any service arrangement between the parties and hence, the said amount received by the Assessee does not fall under the category of FTS under the Act as well as the DTAA. Even if the cost reimbursement agreement was not covering the subject AY 2010-11, the agreement should be seen as clarifying the position for AY 2010-11 as well in light of the supporting evidence and back-to-back reimbursement invoices provided by the Appellant. 34. With respect to reimbursement of expenses, it was submitted that the expenses are cross charged on cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiality clause is relating to finance and business affairs c. Does not refer to any technical knowledge or know-how shared by NDS UK Hence, it was submitted that the case-laws referred by the AO in his order are not relevant to the facts of the instant case. It was submitted that decision of the AAR in the case of Perfetti Van Melle ltd (16 Taxmann.com 207) [2012] (AAR) has been reversed by the Honorable Delhi Court vide [2014] 52 taxmann.com 161 (Delhi) (Provided at page 1820-1821 of case-law compilation 2). The learned counsel for Assessee also relied on the following judicial precedence to submit that the reimbursement of the expense are not taxable: a. A.P. Moller Maersk A S [2017] 78 taxmann.com 287 (SC) b. Expeditors International (India) (P.) Ltd. [2012] 24 taxmann.com 76 (Delhi) c. Dunlop Rubber Co. Ltd [1982] 10 Taxman 179 (Calcutta) d. Industrial Engineering Projects (P.) Ltd [1993] 202 ITR 1014 (Delhi) e. Krupp Udhe GMBH [2013] 40 taxmann.com 38 (Bombay) f. WNS Global Services (UK) Ltd [2013] 32 taxmann.com 54 (Bombay) g. CSC Technology Singapore Pte. Ltd. [2012] 19 taxmann.com 123 (Delhi) h. Global E-Business Operations (P.) Ltd. [2012] 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmation of purchase order to the receipt of material, invoicing and payment release and also equipment maintenance services. He also held that services of providing information technology will include identifying appropriate software and solutions for NDS Pav TV to successfully utilize cost advantaged locations and resources for application development. In so far as reimbursement of expenses is concerned, the AO has held that the assessee is providing human resources services in terms of managing overseas accommodation of NDS Pav TV employees, insurance benefits, travel plans, immigration services etc. He also held that the assessee is providing Marketing assistance support to NDS Pav TV employees who travel abroad for business purposes and that the services include arrangement of business meetings, marketing capabilities of NDS Pay TV to potential customers etc., 39. Having made the above observations (which are in our opinion purely on surmises and without first giving a finding that there is no one to one tally between the actual cost and actual sum reimbursed by NDS Pav TV to the assessee and that there is an element of mark up in such payments) he also observed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for any services whatsoever. The question is can one infer that the sums reimbursed were for services rendered by Assessee when there is one to one tally. In our view it cannot be said so. As we have already mentioned the AO has proceeded to draw inferences on surmises and conjectures. Firstly there is no evidence to show that services were rendered which can be termed as FTS. Under the DTAA FTS can be taxed only when it makes available technical knowledge to the person making payment. On the application of make available clause of the DTAA, there is no finding whatsoever as to what was the technical service made available to NDS Pay TV. We, therefore, deem it fit to set aside this issue and remand the same for consideration by the AO in the light of the observations made above (in particular with regard to actual tally of expenses incurred and reimbursed by NDS Pay Tv to Assessee), in accordance with law, after affording assessee opportunity of being heard. 42. Ground No.5 raised by the assessee in its appeal is with regard to non-grant of credit for TDS. In our view, it would be just and appropriate to direct the AO to consider the calim of the assessee and allow credit i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of interest under section 234D of the Act is purely consequential. The AO is directed to given consequential relief. 46. IT(IT)A Nos.504 and 505/Bang/2017 : As far as these appeals are concerned, the grounds of appeal raised in grounds 1 to 3 in both the appeals are on the issue with regard to receipts on sale of set-top-boxes with software embedded therein and whether it gives rise to royalty or not. We have already decided the issue in Assessment Year 2010-11 and the facts of the case are identical. Following the decision rendered in those Assessment Years, we hold that receipts in question cannot be brought to tax. The issue raised in ground 3 with regard to support services are incidental to the supply of set-top-box and hardware embedded software and therefore they cannot be regarded as FTS. The other issue in this appeal is with regard to reimbursement of expenses incurred from Cisco Technologies India Private Limited. This issue is identical with the issue raised in Assessment Year 2010-11 and for the reasons stated therein, we remand the issue to the AO for consideration afresh on the lines indicated in the order for AY 2010-11. The other issue raised in the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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