TMI Blog2023 (10) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... to use of any copyright. This is so because, the assessee procures hardware and software packages from other vendors and sells them to third party customers. Therefore, the ownership over copyright lies with the manufacturer and original supplier of software packages and not with the assessee. Therefore, the ratio laid down in case of Engineering Analysis Centre of Excellence Pvt. Ltd. [ 2021 (3) TMI 138 - SUPREME COURT] will squarely apply to assessee s case.Therefore, we uphold the deletion of additions made on account of royalty income. Receipts from Technical services/service charges received - whether taxable as Fees for Technical Services u/s 9(1)(vii) and Article 12(4) of India- Singpore DTAA ? - assessee is a non-resident c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Misra, Adv. For the Respondent : Sh. Vizay B. Vasanta, CIT/DR ORDER Captioned appeals by the Revenue, in respect of the same assessee, arise out of four separate orders, all dated 03.03.2022, of learned Commissioner of Income-tax (Appeals)-42, Delhi pertaining to assessment years 2013-14, 2014-15, 2015-16 and 2017-18. 2. Grounds raised by the Revenue in all these appeals are identical except variation in figures. Therefore, for ease of reference, we reproduce the grounds raised in ITA No. 1282/Del/2022 hereunder: 1. That in the facts and circumstances of the case, and in law, the Ld. CIT(A) erred in deleting the addition made by the A.O. amounting to Rs. 94,21,081/- received by assessee company as receipts from Techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as to why, the revenue from sale of software should not be treated as royalty income. Though, the assessee, objecting to the proposed addition, submitted that it is a re-seller of hardware and software and it has not transferred any right to use of copyright, however, the Assessing Officer remained un-convinced and ultimately concluded that the amount received by the assessee from sale of software is taxable as royalty income under section 9(1)(vi) of the Act and Article 12(3) of India-Singapore Double Taxation Avoidance Agreement (DTAA). Further, the amount received by the assessee towards rendering certain services was treated by the Assessing Officer as fee for technical services (FTS) under section 9(1)(vii) of the Act. He also held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 9(1)(vi) of the Act or under Article 12(3) of India-Singapore DTAA, in view of Hon ble Supreme Court s decision in case of Engineering Analysis Centre of Excellence Pvt. Ltd. (supra). Thus, in view of the aforesaid, learned first appellate authority ultimately concluded that the receipts from hardware and software packages are not in the nature of royalty. Accordingly, he deleted the additions. 5. In so far as re-characterisation of service charges received as FTS under section 9(1)(vii) of the Act and Article 12(4) of India- Singpore DTAA, learned Commissioner (Appeals) observed, once it is held that the receipts from sale of hardware and software packages are not in the nature of royalty, the service charges cannot be considered to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturer and original supplier of software packages and not with the assessee. Therefore, the ratio laid down by Hon ble Supreme Court in case of Engineering Analysis Centre of Excellence Pvt. Ltd. (supra) will squarely apply to assessee s case. 7. One more relevant aspect, which needs to be considered is, while dealing with identical issue in assessee s own case in assessment years 2011-12 and 2012-13, the Tribunal in ITA No. 1288/Del/2015 and 4173/Del/2016 had passed an order on 18.11.2019, wherein, after taking note of the fact that the assessee is merely a distributor of software and hardware products after procuring the same from other vendors/manufacturers, the Tribunal had directed the Assessing Officer to verify whether there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as the issue relating to taxability of service charges received by the assessee as FTS, in our view, it does not require much deliberation. Undisputedly, though, the Assessing Officer has not expressed in so many words, however, his observations clearly reveal that he has treated the receipts as FTS by applying Article 12(4)(a) of India-Singapore DTAA, which treats fee received for services which are ancillary and subsidiary to the royalty income as FTS. Once, it is held that the receipts from sale of hardware and software packages are not in the nature of royalty either under the provisions of the Act or under Treaty provisions, the case of the Assessing Officer in treating the service charges as FTS under Article 12(4)(a) of the treat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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