TMI Blog2024 (3) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... urn or in revised return would not ipso facto bar an assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. It is thus well settled that if a particular income is not taxable under the Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Revenue Authorities cannot enforce untenable actions of the assessee against it which led to declaration of income of higher amount incorrectly. It is thus open to assessee to show that it was over assessed under erroneous impression of law or facts even if it is attributable to the mistake of assessee. So viewed, we do see potency in the argument laid on behalf of the assessee that the AO committed error in denying the relief claimed. In our considered view, the action of the AO is in defiance of the judicial precedents on the issue and thus cannot be countenanced. In our view, the assessee can not be prevented from raising a claim that receipts from sale of software wrongly offered as royalty income and not chargeable to Indian Taxation merely because such income was wrongly offered in the ROI and which was not revised. The factual matrix towards the nature and character o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts during the year. 3. Impugned order and Ld. DRP directions erroneously retain amounts collected at source by concluding that the receipts from supply of copyrighted software license customers is in the nature of 'Royalty' as per the provisions of the Act and the Double Taxation Avoidance Agreement ('DTAA ). 4. Impugned order and Ld. DRP directions are bad in law, unlawful and illegal as same wrongly assume estopple in law to treat all amounts reflected in form 26AS as Royalty income contrary to provisions of Income Tax Act, relevant Double taxation avoidance agreement, CBDT circular and authentic decisions of Hon'ble Supreme Court. B. Grounds of appeal in relation to other matters 5. The learned AO has erred in law and in fact by levying of interest without any reference to the section under which the same has been levied. 6. The learned AO has erred in fact by restricting the TDS credits of INR 5,85,95,745 to INR 5,79,40, 187. 7. The learned AO has erred in fact by considering amount of INR 1,55,349 as refund already issued, whereas no refund has been issued to the Appellant till date. 3. As per Grounds No.1 to 4, the assessee seeks to challenge the correctness o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarded as income chargeable to tax in India in the absence of Permanent Establishment in India. The assessee thus contended that the benefit of judgment in the case of Engineering Analysis (supra) should apply to all the receipts on sale of software including receipts from Bharti Airtel. In the alternative, without prejudice to such plea, the assessee also contended that credit of taxes withheld against such receipts on sale of software must be provided while computing the assessed income in the Assessment Year 2020-21 in question. 5. The AO however while passing draft order under Section 144C(1) of the Act found the claim of the assessee to be untenable on the grounds of non furnishing of cogent submissions or documentary evidences in this regard and addition of Rs. 60,03,248/- to the taxable income offered by Assessee was proposed to be carried out as attributable to receipt from Bharti Airtel. 6. Aggrieved, the assessee referred the matter to Dispute Resolution Panel (DRP) for appropriate directions against the draft order. The additional evidences like copy of agreement with Bharti Airtel Ltd. and sample copies of invoices were furnished to support its case for non chargeabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. The ld. counsel thus submitted that there was no justification in the action of the DRP as well as the AO in its refusal to exclude the receipts on account of sale of software, which are copyrighted, from the ambit of taxation as per the Scheme of the Act read with relevant provisions of DTAA. The ld. counsel submitted that the Revenue has concluded the issue against the assessee merely because the assessee has wrongly declared receipts from various customers on account of sale of software as Royalty Income in its ITR disregarding the relevant evidences available in this regard and filed in the course of DRP proceedings. The ld. counsel submitted that the action of the AO is unlawful and unmindful of the fact that there is no estoppel against law governing the field. The taxability of such sale receipt as Royalty Income is contrary to provisions of Income Tax Act, relevant Double Taxation Avoidance Agreement, CBDT Circular and judgment of Hon ble Supreme Court and thus unsustainable in law. The ld. counsel thus urged for suitable relief. 10. The ld. DR for the Revenue, on the other hand, relied upon the observations made in the draft assessment order / directions issued by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 So viewed, we do see potency in the argument laid on behalf of the assessee that the Assessing Officer committed error in denying the relief claimed. In our considered view, the action of the AO is in defiance of the judicial precedents on the issue and thus cannot be countenanced. In our view, the assessee can not be prevented from raising a claim that receipts from sale of software wrongly offered as royalty income and not chargeable to Indian Taxation merely because such income was wrongly offered in the ROI and which was not revised. The factual matrix towards the nature and character of sale proceeds qua the underlying evidences however does not appear to have been verified by the AO at any stage of the proceedings. 12.3 Without any expression of opinion on merits on taxability of such receipts, in our view, it would be in fitness of things to remit the issue back to the file of AO. It shall be open to the assessee to demonstrate that receipts from various customers in India arises on account of sale of software and does not give rise to any chargeable income in law. The assessee shall be at liberty to adduce such evidences as it may deem expedient to demonstrate that inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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