TMI Blog2023 (3) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... automated services in the nature of technical services - Whether these technical services were without human intervention - AR submitted that the question of human intervention is a question of facts and need to be examined by the Tax Authorities below but the same was not examined - HELD THAT:- The bench is of considered opinion that although reference has been made by the Tax Authorities below to have taken into consideration the aspect of questioning technical services on the basis of human intervention however, there seems to have been lack of examination of the issue by taking into account the relevant evidence and opinion of expert. Conclusion are more on basis of general perception of the nature of service. Thus, the bench is of considered opinion that this issue requires restoration to the files of the ld AO to decide the issue afresh after taking into consideration the judgment of the Hon'ble Supreme Court in CIT Vs. Bharti Cellular [ 2010 (8) TMI 332 - SUPREME COURT ] In the light of the aforesaid the grounds in appeal of the assessee are allowed for statistical purposes. - ITA No.526/Del/2020 And ITA No.714/Del/2020 - - - Dated:- 7-3-2023 - Shri N. K. Billaiya, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opyright' and hence, is out of the ambit of 'royalty' as per Article 12(3) of the India-Ireland Double Taxation Avoidance Agreement (DTAA') and hence, is not taxable in India. 4. Further during the course of assessment proceedings, the Ld. AO had required the Assessee to submit reason as to why income from rendering sale of standard automated services should not be taxable as fees for technical services ('FTS'). In this regard, the Assessee had filed detailed submissions wherein it was submitted that the services provided by the Assessee are purely standard automated in nature and the same did not involve any human intervention. Accordingly, the same should not qualify as FTS as per Article 12 of the India- Ireland DTAA and hence, not taxable in India. 5. The Ld. AO treated the software sales as royalty and provision of business support activities as technical services taxable as FTS. The ld CIT(A) had deleted the addition of treating the software sales for the purpose of royalty by following relevant para 6.29 while sustained the additions of technical support as FTS as under:- 6.29 On the basis of the above observations, I find that the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the learned CIT(A) has erred in not directing the learned AO to drop these penalty proceedings. 7. The revenue has raised the following grounds of appeal:- Ground No 1 On the facts and in the circumstances of the case and in law, the Assistant Commissioner of Income Tax, Circle 1(1)(1). International Taxation (the Ld. AO) erred in determining assessed income as INR 61,87.44.770 as against the nil income as reported by the Appellant in its return of income. Your Appellant prays that the addition made by the Ld.AO in this regard be deleted. Ground No 2 On the facts and circumstances of the case, and in law, Ld. AO has erred in characterising the receipts from sale of software as 'Royalty' within the meaning of Article 12 of the Double taxation Avoidance Agreement (DTAA') between India and Ireland. It is prayed that the income from sale of software do not qualify as 'royalty' as per India-Ireland DTAA. Ground No 3 On the facts and circumstances of the case, and in law, Ld. AO has erred in characterising the receipts to the tune of INR 30,04,84,790 as income from sale of software and hence, taxable as 'Royalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round No 11 On the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under section 271BA of the Act for non-filing of report from an accountant as required under section 92E of the Act. Your Appellant prays that the penalty proceedings be dropped. All the grounds of appeals stated above are without prejudice to each other. 8. In regard to appeal of the revenue in ITA No. 714/Del/2020 it can be observed that the ld CIT(A) in para No. 6.29 and 6.30 had made relevant finding, however, the disputed question of fact and law in regard to issue involved stand now settled by the judgment of Hon'ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT and Another (2022) 3SCC 321 , wherein, the Hon ble Apex Court categorized the batch of appeals before it into following four categories of software payments: Category 1 Sale of software directly to an end user by a non-resident Category 2 Sale of Software by a non-resident to Indian distributors for resale to end customers in India Category 3 Sale of software by a non-resident to a foreign distributor for resale to en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as INR 30,04,84,790 instead of USD 9,714(INR 6,19,380). 1. Our submission Without prejudice to our arguments in Ground 5 and Ground 6 of the submission, the Appellant submits that the Ld. AO has inadvertently considered the amount from provision of standard automated services as INR 30,04,84,790. As mentioned in the bifurcation of total amount of receipts appearing in Form 26AS in para 2 of the submission above.. the Appellant submits that the receipts from provision of standard automated services is INR 6,19,380. In this regard, alisting of invoices along with sample copies of invoices pertaining to provision of standard automated services is enclosed herewith for your Honour's reference (Page no to of the Paperbook).) 1. Prayer In light of the above, on a without prejudice basis, the Appellant humbly requests your Honour to consider the amount in connection to provision of standard automated services as INR 6,19,380 Findings: 10.2 The appellant pointed out that the receipts from provision of standard automated services is Rs. 6,19,380/- as against the receipt of Rs. 30,04,84,790/- as taken by the AO. The AO is directed to veri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before the Commissioner of Income Tax (Appeals) [CIT(A)] being Appeal No. 34/09- 10 for the AY 2004-05. In the order dated 8th December 2010, dismissing the appeal, the CIT(A) agreed with the contention of DTL that Section 194C of the Act would apply since electricity was 'goods' as defined under Section 2 of the Sales of Goods Act and in terms of the contract, PGCIL was in fact transporting such goods to DTL. The CIT (A), however, held that in the absence of sufficient legal precedent on the subject, I am unable to reject the view taken by Ld. Assessing Officer . The CIT (A), therefore, confirmed the said order of the AO. Some relief was granted as far as the calculation of interest payable. The order of the ITAT 8. DTL then carried the matter further in appeal to the Income Tax Appellate Tribunal (TTAT) by filing ITA No. 755(Del) 2011 (for AY 2004-05). The ITAT agreed with the DTL that what had been availed by it from PGCIL was not a technical service. It was held that DTL was not liable to be saddled with higher liability of TDS. The appeal was accordingly allowed. 9. The ITAT based its opinion on the decision of this Court in CITV. Bharti Cellular Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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