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2020 (3) TMI 1417 - AT - Income TaxIncome under section 2(24) - Receipt towards access to use software and IT support services - Whether it is erred in holding that the payments received by the Appellant constitutes income without appreciating that the appellant work only on cost- only arrangement and the receipts were reimbursement being in the nature of cost allocation without markup and hence does not constitute income under section 2(24) of the Act? - HELD THAT - As pointed out by the Ld. counsel, the coordinate Bench has decided the identical issue in favour of the assessee in assessee s own appeal AY 2015-16 2020 (1) TMI 649 - ITAT MUMBAI by following the decisions of the coordinate Bench rendered in the assessee s appeals pertaining to the AYs 2012-13 , 2013-14, 2014-15. Receipt towards access to use software held as royalty under the India-Netherland DTAA - HELD THAT - As in favour of the assessee in the assessee s appeals pertaining to the AYs 2011-12 to 2014-15. We further notice that Ground No. 5 and 6 of the present appeal are identical to the assessee s appeal for the AY 2015-16 2020 (1) TMI 649 - ITAT MUMBAI and the coordinate Bench has decided the said issue in favour of the assessee by following the decision of the Tribunal in assessee s own appeals pertaining to the earlier assessment years.
Issues Involved:
1. Assessment of total income. 2. Receipt towards access to use software and IT support services. 3. Receipt towards access to use software held as 'royalty' under the India-Netherlands DTAA. 4. Receipts towards IT support services held as 'Fees for Technical Services (FTS)' under the Act and India-Netherlands DTAA. 5. Non-granting of credit for Tax Deducted at Source (TDS). 6. Levying of interest under section 234B of the Act. Issue-wise Detailed Analysis: 1. Assessment of Total Income: The assessee challenged the assessment of total income at Rs. 2,29,87,71,627/- as against NIL total income offered in the return. The AO, based on the directions of the DRP, assessed the total income, which the assessee contended was erroneous. 2. Receipt towards Access to Use Software and IT Support Services: The assessee argued that the payments received did not constitute 'income' as they were reimbursements in the nature of cost allocation without markup. The Tribunal noted that the assessee worked on a cost-only arrangement, and the receipts were reimbursements, not income under section 2(24) of the Act. 3. Receipt towards Access to Use Software Held as 'Royalty' under the India-Netherlands DTAA: The Tribunal found that the issue of whether payments for access to copyrighted software constituted 'royalty' was covered in favor of the assessee by previous decisions. The Tribunal had consistently held that payments for the use of copyrighted articles did not constitute 'royalty' under Article 12 of the India-Netherlands DTAA. The Tribunal reiterated that the limited right to access/use the software did not amount to the use of any copyright, and thus, such payments were not 'royalty'. 4. Receipts towards IT Support Services Held as 'Fees for Technical Services (FTS)' under the Act and India-Netherlands DTAA: The Tribunal referred to previous decisions where it was held that IT support services did not 'make available' any technical knowledge, experience, skill, know-how, or processes to the service recipient under Article 12 of the India-Netherlands DTAA. The Tribunal followed the principle that such services were not taxable as FTS in India as they did not meet the 'make available' criterion. 5. Non-granting of Credit for Tax Deducted at Source (TDS): The assessee claimed that the AO erred in not granting the TDS credit of Rs. 4,86,64,794/-. The Tribunal did not specifically address this issue in the provided text, but it is implied that the issue was consequential and would be resolved in accordance with the Tribunal's findings on the primary issues. 6. Levying of Interest under Section 234B of the Act: The assessee contended that the AO erred in levying interest under section 234B without appreciating the facts and circumstances of the case. The Tribunal did not provide a detailed discussion on this issue, suggesting it might be a consequential matter dependent on the resolution of the primary issues. Conclusion: The Tribunal allowed the appeal filed by the assessee for the assessment year 2016-2017, setting aside the findings of the AO on the grounds that the issues of 'royalty' and 'FTS' were covered in favor of the assessee by previous Tribunal decisions. The Tribunal directed that Ground Nos. 1, 2, 7, and 8, being general or consequential, did not require adjudication. The order was pronounced in the open court on 6th March 2020.
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