9911796707
TMI Blog2022 (7) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... al Taxation, Delhi ('Ld. AO') has erred in computing the total income of the Appellant at INR 4064,82,52,315 as against the returned income at INR 204,90,61,907. 2. Taxability of revenue from sale of software 2.1 That on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') and the Ld. AO have erred in holding that revenue amounting to INR 38,32,90,74,884 earned by the Appellant from sale of Microsoft Retail Software Products to distributors in India is taxable as "Royalty" ignoring the fact that the same is not in nature of "Royalty" under Article 12 of the India - USA DTAA and is not taxable in India. 2.2 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 2.3 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icrosoft Retail Software Products to distributors in India is taxable as "Royalty" ignoring the fact that the same is not in nature of "Royalty" under Article 12 of the India - USA DTAA and is not taxable in India. 2.2 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 2.3 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have erred in not following the decision of the Hon'ble ITAT in the Appellant's own case for AY 2010-11 & AY 2011-12 and the decision of Hon'ble Delhi High Court in the case of Infrasoft Limited (220 Taxman 273). 3. Taxability of consideration from cloud services 3.1 That on the facts and in the circumstances of the case and in law, the Hon' ble DRP and the Ld. AO have erred in not holding that the revenue earned by MRSC from cloud services amounting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is taxable as "Royalty" (on protective basis) contrary to decision of this Hon'ble ITAT (ITA No. 1970/Del/2014) dated September 26, 2016 in Appellant's own case. 3.3 That on the facts and in the circumstances of the case and in law, the Ld. DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 3.4 That on the facts and in the circumstances of the case and in law, the Ld. DRP and the Ld. AO have erred in not following the decision of this Hon'ble ITAT in the Appellant's own case for AYs 2010-11 & 2011-12 and the decision of Hon'ble Delhi High Court in the case of Infrasoft Limited (220 Taxman 273). 1.1 Ld. DRP and Ld. AO erred in failing to appreciate that receipt of INR 14,57,54,90,041 is not taxable as 'Royalty5 or 'otherwise' in the hands of Appellant, under the Act or DTAA. 4. Taxability of consideration from cloud services 4.1 That in the facts and in circumstances of the case and in law, Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yalty income has been taxed @ 10%. Surcharge and Education cess charged as applicable limit u/s 234A, 234B, 234C & 234D as applicable order to be charged after giving credit to pre-paid taxes. 4. Aggrieved by the final assessment order dated 31/01/2017 the assessee has preferred the present appeal on the grounds mentioned above. 5. The Ground No. 1 is general in nature which enquires no adjudication. Ground No. 2 & its sub Grounds are in respect of taxability of revenue for sales software. Ground No. 3 and its Sub Grounds are in respect of taxability of consideration from cloud services. Ground No. 4 is on transfer of TDS credit. Ground No. 5 is regarding levying surcharge and education cess on interest on income tax refund, Ground No. 6 against not granting TDS credit, Ground No. 7 is regarding levying interest u/s 234B of the Act and Ground No. 8 is on initiation of penalty proceedings u/s 271(1)(c) of the Act. 6. Ground No. 2 and its sub grounds: The Ld. Counsel for the assessee arguing on the Ground No. 2 and its sub grounds submitted that, the authorities below failed to follow the ratio laid down on the sales of software product which will not giving rise to royalty incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No. 1554/Del/2016. 11. Per contra, the Ld. DR has not disputed the above facts and could not produce any ratio laid down contrary to the above decisions, but relied on the orders of the lower Authorities. 12. We have heard the parties and verified the material on record. The very same issue regarding the cloud service in the case of MOL Corporation for the AY 2012-13 came up for consideration before the Co-ordinate Bench of the Tribunal. The Co-ordinate Bench, by following the ratio laid down in the case of M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circled-2(2) ITA No. 4915/Del/2016 [A.Y 2010-11] and also the decision of Mumbai Tribunal in the case of DDIT Vs. Savvis Communication Corporation [2016] 69 Taxman.com 106 (Mumbai- Trib.) and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. ITA No. 1935 & 1936/MDS/2010 dated 30/01/2015, held that the authorities fallen in error in considering the subscription received towards cloud serviced to be royalty income. 13. In the light of above binding decisions, since the Ld. DR has not produced any distinguishing facts or the decisions, we are inclined allow the Assessee's Grounds of appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
