TMI Blog2023 (1) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... non-transferable. The end users of the licnese do not have any access to the source code, nor there was any transfer of right in process or use of any process. The limited right granted to the customers under EULA is to use the software for their own internal purposes. There is no dispute that factually the issue stands on the same footing as assessment year 2014-15 [ 2022 (6) TMI 344 - ITAT DELHI] . Therefore, respectfully following the decision of the Coordinate Bench in assessee s own case, as referred to above, we hold that the receipt in dispute is not in the nature of royalty, hence, not taxable in India. The Assessing Officer is directed to delete the addition. These grounds are allowed. Fee for Included Services (FIS) under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the amount received falls under Article 12(4)(a) of the treaty. In view of the aforesaid, we hold that the amount received is not taxable in India as it cannot be treated as FIS under Article 12(4) of the tax treaty. Accordingly, we direct the Assessing Officer to delete the addition. Erroneous application of tax at the rate of 40% instead of 10% under section 115(1)(b)(B) of the Act, with regard to the income offered to tax in the return of income - It is an agreed position before us that the Assessing Officer has not, at all, considered the issue. Therefore, it was submitted before us to restore this issue to the Assessing Officer. - ITA No.7462/Del/2018 ITA No.616/Del/2021 - - - Dated:- 11-1-2023 - SHRI G. S. PANNU , HON BLE P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prises the flexibility to evolve at the speed of mobile technology. For this purpose, assessee employs a specialized staff of professionals globally dedicated to development, delivery, and support of mobile solutions and technologies. It provides software and support services to meet the demands of the ever changing mobile landscape and provides customers with innovative solutions. 4. Be that as it may, in the year under consideration, the assessee received an amount of Rs.7,27,33,773/- from sale of licence. However, in course of assessment proceeding, while explaining the reason for not offering such income to tax, the assessee submitted that the receipts are not in the nature of royalty under Article 12(3) of India USA DTAA, as, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to use the software for their own internal purposes. Notably, while deciding identical issue in assessee s own case in assessment year 2014-15, the Coordinate Bench in ITA No.6018/Del/2017, dated 01.06.2022 has held as under: 5. We have carefully considered the submissions of both the parties and gone through the record. 6. Ld. counsel of the assessee submitted that the issue is now squarely covered by the decision of Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Private Ltd. vs. The Commission of Income-tax in Civil Appeal Nos.8733-8734 of 2018. In this case, Hon'ble Apex Court expounded that consideration for the resale of the computer software through End User License Agreement (EULA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, hence, taxable in India. In the context of the said reasoning, the Assessing Officer held the view that the receipts from annual maintenance charges of the software are in the nature of FIS/FTS, both under the tax treaty as well as under section 9(1)(vii) of the Act. Accordingly, he brought to tax the amount of Rs.1,23,20,383/-. Learned DRP, while deciding the objections of the assessee, upheld the decision of the Assessing Officer. 10. We have considered rival submissions and perused the materials on record. It is evident, being of the view that annual maintenance charges are ancillary and subsidiary to the grant of licence for right to use software, which is treated as royalty, the Assessing Officer concluded that receipt from annua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, does not require adjudication. 13. In the result, appeal is allowed, as indicated above. ITA No.616/Del/2021 for AY: 2017-18 14. Ground no. 1, being a general ground, does not required specific adjudication. 15. The issue raised in ground no. 2 is identical to the issue raised in ground nos. 1 to 5 of ITA No. 7462/Del/2018 decided by us in the earlier part of the order. Therefore, our decision therein, will apply mutatis mutandis to this appeal as well. Accordingly, the Assessing Officer is directed to delete the addition. 16. In ground no. 3, the assessee has raised the issue of taxability of receipts from annual software maintenance charges as FIS under Article 12(4)(a) of India USA DTAA. This ground is identical ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
