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2020 (4) TMI 110 - AT - Income TaxRoyalty receipt - amount received by the assessee from providing users a right in off-the-shelf software and use of standard facilities and support services - HELD THAT - As decided in own case 2020 (1) TMI 1177 - ITAT PUNE such amount cannot be treated as Royalty chargeable to tax. Rate of tax at which software and standard facility income should be charged to tax - AO charged the tax @ 40% - HELD THAT - In view of our decision on grounds nos. 1 2 about non-taxability of these amounts, this ground has been rendered infructuous. Since the income itself is not chargeable to tax, there can be no question of rate of tax at which such income should be charged. Surcharge and Education Cess in the amount of tax charged by the AO under the Double Taxation Avoidance Agreement (DTAA) - HELD THAT - From the computation of income, it can be seen that the income of the assessee which has been charged to tax under the regular provisions has also been subjected to Surcharge and Education Cess. In so far as the taxability of income under the DTAA is concerned, there are specific rates on which such incomes are chargeable to tax. Such rates cannot be further enhanced by Surcharge and Education Cess as has been held in the several decisions including the one dated 30-11-2015 relied by the ld. AR in DDIT (IT) Vs. The BOC Group Limited 2016 (1) TMI 414 - ITAT KOLKATA - We, therefore, overturn the impugned order and direct not to charge Surcharge and Education Cess on the rates of tax under the DTAA. This ground is allowed. Levy of interest u/s.234D - HELD THAT - As AR submitted that the assessee was not granted any intimation of refund u/s. 143(1) of the Income-tax Act, 1961 (hereinafter also called the Act ), which ultimately turned out to be not refundable AO is directed to verify the factual scenario in this regard and decide the issue afresh as per law. Allowing lesser credit of TDS - HELD THAT - AO is directed to examine the correct amount of TDS as per certificates and grant necessary credit as per law after allowing reasonable opportunity to the assessee.
Issues:
1. Treatment of amount received by the assessee as 'Royalty' for off-the-shelf software and standard facilities. 2. Rate of tax on software and standard facility income. 3. Inclusion of Surcharge and Education Cess in tax charged under DTAA. 4. Levy of interest u/s 234B. 5. Addition on account of Expat cross charges. 6. Levy of interest u/s 234D. 7. Credit of TDS/TCS. A.Y. 2011-12: - The first two grounds were against treating the amount received by the assessee as 'Royalty.' The Tribunal allowed these grounds based on earlier decisions. - The ground against the tax rate on software income was rendered infructuous due to non-taxability of the amounts. - The inclusion of Surcharge and Education Cess under DTAA was disallowed, following specific rates for tax under the DTAA. - The ground on interest u/s 234B was consequential, and the appeal was allowed. A.Y. 2012-13: - Similar to 2011-12, the first two grounds were allowed regarding the treatment of 'Royalty' income. - The matter of Expat cross charges was remitted to the AO based on directions from a previous order. - Surcharge and Education Cess on income under DTAA were disallowed. - Directions were given for interest u/s 234D and correct credit of TDS. A.Y. 2013-14: - The first two grounds were allowed, similar to previous years. - The issue of interest u/s 234A was directed to be verified based on the filing date of the return. - The appeal was partly allowed. A.Y. 2014-15: - Grounds against 'Royalty' treatment were allowed. - Verification of TDS credit was directed, and interest u/s 234B was disallowed. - The appeal was partly allowed. A.Y. 2015-16: - Similar to previous years, the first two grounds were allowed. - Directions were given for TDS credit, interest u/s 234D, and verification by the Assessing Officer. - The appeal was partly allowed in this assessment year as well.
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