TMI Blog2022 (7) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bench in Assessment Year 2008-09 duly keeping in mind the ratio laid down by the Hon ble Apex Court in the case of Engineering Analysis Center of Excellence Pvt. Ltd. vs. CIT (supra) and adjudicate the issue accordingly after giving due and proper opportunity to the assessee to present its case. Private limitedas held consideration end user license, Copy Right Act, and provisions contained in DTAA and the Income Tax Act and has laid down the parameters to test whether the receipt from sale of software would tantamount to royalty or not. No substantial question of law arises for our consideration in the present appeal. - Shri C.M. Garg, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Sh. Nageshwar Rao. Adv. For the Respondent : Ms. Naina Soil Kapil, CIT-DR. ORDER PER C.M. GARG. JM : This appeal has been filed by the assessee against the order of the DCIT, Circle-2(2)(2), New Delhi u/s 143(3) read with Section 144C(13) of the Income tax Act, 1961 (in short the Act ). During arguments before us the learned counsel for the assessee submitted that the assessee wants to only press ground nos. 3 4, which read as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.1882/Del/2017 order dated 20.09.2021 had decided the issue in favour of the assessee by observing as under: 6.0 Ground Nos.3 4 are directed against the treatment of software and sale of subscription receipts as the royalty income under Article 12(3) of the India-Netherlands DTAA. The Assessing Officer, vide para 12 of the impugned final assessment order, has considered the subscription revenue of Rs.16,43,90,916/- in the nature of royalty and made addition to the extent of Rs.14,99,39,032/- in terms of Article 7 read with Article 12 of the DTAA. The Ld. AR submitted that the Assessing Officer has considered the addition on the basis of the view taken in the assessment order for Assessment Year 2008-09 and 2010- 11. It was further submitted by the Ld. AR that identical issue had come up for consideration before this Tribunal in Assessment Years 2008-09 and 2010-11 wherein the issue was restored to the file of the Assessing Officer with the direction to verify whether the facts of the case were identical to those as decided by the Hon ble Delhi High Court in the case of Infrasoft Ltd. reported in 264 CTR 329 (Delhi). It was accordingly submitted that this issue also may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry notices. All copies of the Software shall be the exclusive property of Infrasoft. Clause 2(h) of Infrasoft license agreement (h) Licensee may not copy, decompile. disassemble or reverse-engineer the Software without infrasoft s written consent. The Licensee's rights shall not be restricted by this Clause 2(h) to the extent that local law grants Licensee a right to do so for the purpose of achieving interoperability with other software and in addition thereto Infrasoft undertakes to make information relating to interoperability available to Licensee subject to such reasonable conditions as Infrasoft may from time to time impose including a reasonable fee for doing so. To ensure Licensee receives toe appropriate information, Licensee must first give Infrasoft sufficient details of its objectives and the other software concerned. Requests for the appropriate information should be directed to the Vice president Technical of Infrasaft Clause 2(f) of the Infrasoft License Agreement is quoted as below: (f) The Software shall be used only for Licensee's own business as defined within the Infrasoft License Schedule and shat? not, without prior written ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party without NatApp's prior written consent. Clause 7 of End User Software License: THIS LICENSE IS PERSONAL TO CUSTOMER.. CUSTOMER SHALL NOT ASSIGN, SUBUCENSE OR TRANSFER THE LICENSE OR AGREEMENT WITHOUT NET APRS PRIOR WRITTEN APPROVAL; ANY ATTEMPT TO DO SO SHALL BE VOID. 49. The revenue is also not seriously disputed before us that the issue is not covered by the decision of the Hon ble Delhi High Court. However the issue needs to be verified by the Ld. assessing officer whether the licensing agreement involved in the present appeal is similar to the issue decided by the Hon ble Delhi High Court. Therefore we set aside ground 3 and 4 of the appeal of the assessee back to the file of the Ld. assessing officer to decide the issue afresh considering the decision of the Hon ble Delhi High Court. In the result ground No. 3 and 4 of the appeal of the assessee allowed with above direction. 8.1 It is also pertinent to note that the issue of software royalty was recently adjudicated by the Hon ble Apex Court in the case of Engineering Analysis Center of Excellence Pvt. Ltd. vs. CIT (2021) 432 ITR 471 (SC). The Hon ble Apex Court, in its detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X
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