9911796707
TMI Blog2022 (7) TMI 1460X X X X Extracts X X X X X X X X Extracts X X X X ..... read as follows: 3. The learned AO/Hon'ble DRP has erred, in law and on facts, by holding that the income from the sale of software amounting to INR 73,90,97,440 is 'Royalty'/ 'Fees for Technical Services ' as per Article 12 of the Double Taxation Avoidance Agreement between India and Netherlands ('Treaty') and consequently, liable to tax in India. 4. The learned AO/Hon'ble DRP has erred, in law and on facts, by holding that the income from the sale of subscriptions amounting to INR 30,78,07,318 is 'Royalty'/ Fees for Technical Services' as per Article 12 of the Treaty and consequently, liable to tax in India. 2. We have heard arguments of both sides and perused the relevant material placed on the record of the Tribunal including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at identical issue arose in assessee's own case in A.Y. 2013-14 before the Co-ordinate Bench of Tribunal. The Co-ordinate Bench of Tribunal in ITA No.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 Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the assessee are against the order of the Ld. assessing officer in holding that income from sale of software and income from sale of subscriptions is royalty income under article 12 (3) of the treaty and consequently liable to tax in India. Ld. Assessing Officer has discussed the whole gamut of the taxation of the software taxable as royalty in paragraph No. 6 of his order. Before us, Ld. Authorized Representative submitted that now the issue is squarely covered in favour of the assessee in view of the decision of the Hon'ble Delhi High Court in case of Director of income tax versus Infrasoft Ltd 264 CTR 329 (Delhi).He also submitted a chart during the course of hearing that compares the software considered by Hon'ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ftware 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 consent from Infrasoft; (i) be loaned, rented, sold transferred to any third party (ii) used by any parent, subsidiary or affiliated entity of Licensee (iii) Used for the operation of a service bureau or for data processing. Clause 1 of Software License: "Supplier grants to Buyer a nonexclusive license to use the accompanying software in machine- readable form ("Software"), together with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponents used in the Software by any means whatever; or (ii) remove or conceal any product identification., copyright, patent or other notices contained in or on the Software or accompanying documents; or (iii) modify the Software, incorporate it into or with another Software, or create a derivative work of any part of the Software. Customer must not publish or provide any results of benchmark tests run on the Software to a third 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 ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate the issue accordingly after giving due and proper opportunity to the assessee to present its case. Thus, ground Nos. 3 & 4 are allowed for statistical purposes." 9. We further find that consequent to the direction of the Tribunal, AO passed order on 19.03.2022 u/s 254 r.w.s 143(3) of the Act for A.Y. 2013-14 and the AO has accepted the income declared by the assessee and no addition was made. Since the facts of the case in the year under consideration are identical to that of earlier years, we following the decision of Tribunal for A.Y 2013-14 and for similar reasons are of the view that no addition is required to be made. Thus the grounds of assessee are allowed." 6. Undisputedly, grounds No.1 and 2 for AY 2014-15 are similar to g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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