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TMI Blog2024 (11) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, LAN/WAN services, improvement projects etc. The assessee also acts as central procurer of SAP and Microsoft software for the group concerns and charges them on usage basis. 2.1 During the year, the assessee had provided software and IT Services to its Indian AE, M/s Perfetti Van Melle India Private Limited (hereinafter for short 'PVM India' ). The assessee had received sum of Rs. 7,95,71,627/- from IT support charges and Rs. 6,61,08,232/- from software licenses (SAP/Microsoft). The AO was of view that receipts for software licenses and IT services were chargeable to tax as royalty income under the Act and under the tax treaty. AO observed that the assessee was maintaining IT infrastructure for the whole group and charged the group concerns for usage such IT infrastructure which amounted to use of or right to use of scientific, industrial or commercial equipment and receipts against the same was liable to be taxed as royalty. Also, provision of customized SAP/Microsoft software licenses amounted to copyright royalty and IT services which were ancillary or subsidiary to application or enjoyment of the above software amounted to FTS/FIS. AO observed that the IT services were tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcular No.19/2019 dated 14.08.2019. 5. That the intimation letter dated 23.08.2023 informing the DIN for directions dated 23.08.2023 issued by the DRP is invalid, void and non-est as the DIN cannot be verified on the ITBA portal. 6. That the DRP erred in not appreciating that in terms of section 119 of the Act, all Circular/Order/ instruction / Directions issued by the CDBT for the proper administration of the Act are binding on subordinate income-tax authorities and other persons employed in the execution of the Act. 7. That the Assessing Officer ought to have appreciated that if, the directions dated 22.08.2023 issued by the DRP is non-est and void, then the final assessment order dated 30.10.2023 passed under section 143(3) r.w.s 144C(13) of the Act would consequentially be barred by limitation, non-est and void. Re: Reimbursement of INR 6,61,08,232/-, received on account of SAP software and Microsoft license fees taxed as Royalty under section 9(1)(vi) of the Act as well as Article 12 of the India-Netherlands DTAA. 8. That the AO has erred on the facts and circumstances of the case and in law by concluding that software license fees, i.e., fees paid in lieu of SAP Sof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classifying and taxing it as "Royalty" did not arise. Re: Payment of INR 7,95,71,627/- received on account Information & Communication Technology (ICT) service charges from Perfetti Van Melle India Private Ltd., taxed as "Fees for technical Services'' under Article 12 of the India-Netherlands DTAA. 11. That the AO has erred on the facts and circumstances of the case and in law by concluding that "ICT services" and "Regional Support services" rendered by the Appellant falls within the definition of "Fees for Technical Services" as defined under section 9(1)(vii) of the Act, as well as under Article 12 of the India-Netherlands DTAA. 12. That the AO failed to appreciate that this Hon'ble Tribunal in Appellant's own case for AY 2017-18 had held that payments made in lieu of ICT Services do not partake the character of "Fees for Technical Services" under section 9(1)(vii) of the Act, as well as under Article 12 of the India-Netherlands DTAA, as the restrictive definition of "Fees for Technical Services" as provided under Article 12(4)(b) of India-Portugal DTAA was applicable and the mandatory precondition of "made available" therein, had not been triggered. 13. Without prej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of interest under section 234A of the Act (f) Ground No. 15 -. Relating initiation of penalty under 270A of the Act. 4. Heard and perused the record. At the outset, it is pertinent to observe that Ld. Counsel mentioned that, on instructions, ground No's.1,2 and 4 to 7 raised in the present appeal are not pressed at this stage and similarly ground No. 14 and 15 are consequential. 5. Further it is also submitted that Ground No. 8 to 10(g) raised in the present appeal, whereby the Assessee has challenged taxability of reimbursement of INR 6,61,08,232/-, received on account of SAP Software and Microsoft License Fee as Royalty under section 9(1)(vi) of the Act as well as Article 12 of the DTAA stands covered in Assessee's favour by order dated 28.02.2022 passed by co-ordinate bench in Assessee's own case for AY 2017- 18. 5.1 We find and Ld. DR could not dispute the fact co-ordinate bench has categorically held that the issue of taxability of reimbursement of software licence fees stands covered in Assessee's favour by the Hon'ble Supreme Court's decision in the case of Engineering Analysis Centre of Excellence (P.) Ltd vs CIT [2021] 125 taxmann.com 42 (SC) [Refer Para 14,15 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed in assessee's case for AY 2017-18 observing that the order in assessee's own case for AY 2017-18 has not been accepted by revenue, and appeal was not been preferred before the Hon'ble High Court owing to low tax effect and an appeal was filed before Punjab and Haryana High Court against the Hon'ble Tribunal's decision in AY 2019-20, which is pending adjudication. Accordingly, the Assessing Officer confirmed the Additions made in the Draft Assessment order. 10. Ld. Counsel has submitted that Hon'ble Apex Court in a recent decision in the case of Nestle SA vs CIT [2023] 155 taxmann.com 384 (SC) ( "Nestle's decision") has held that that merely because a provision in a DTAA or Protocol with one nation requires the same treatment in a specific matter, subsequent to its initial signing when another nation receives preferential treatment, this does not automatically lead to the integration of such provision to extend the same benefit in the context of the DTAA of the first nation and in such a scenario, the terms of the earlier DTAA need to be amended through a separate notification under Section 90 of the Act. 11. To defend the case of assessee, independently of decision in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said benefit was also extended to Original India Netherlands DTAA, through an amendment vide Notification No. S.O. 693(E), dated 30.08.1999, issued under section 90(1) of the Act. Thus the restrictive covenant of make available was made applicable and the explanation emerging out of protocol of India US DTAA, on being duly notified also became applicable. In that view of the matter, it is claimed that irrespective of the "Nestle's decision", the restrictive covenant had to be read into India Netherlands DTAA. 11.1 Thus it is submitted that in the facts of the present case the rendition of ICT services do not satisfy the make available since the service are routine and recurring in nature. 12. However, as we go through the grounds No.11 to 13 (d), we observe that the arguments as raised before us relying the India US DTAA for interpreting the 'make available' criteria are not part of the grounds. Neither before any authority below the plea based on amendment of India Netherlands DTAA vide Notification No. S.O. 693(E), dated 30.08.1999, issued under section 90(1) of the Act, was raised. 12.1 In this context only we find that the final assessment order is dated 30.10.2023 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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