9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (9) TMI 686 - AT - Income TaxIncome taxable in India - receipt of sale of software licences as fee for technical services in accordance with the provisions of section 9(1)(vii) and Article 12 of the DTAA between India and Singapore - HELD THAT - ITAT in assessee s own case for AY 2016-17 2022 (6) TMI 882 - ITAT DELHI has referred to case of Engineering Analysis Center of Excellence Pvt. Ltd. 2021 (3) TMI 138 - SUPREME COURT held amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of 5 which the persons referred to in section 195 of the Income-tax Act were not liable to deduct any TDS under section 195 of the Income-tax Act and decided the issue in favour of the assessee.
Issues:
The judgment involves issues related to the assessment years 2018-19 & 2019-20, including violation of Section 144C of the Income-tax Act, characterization of revenue as Fees from Technical Services (FTS), taxation of income from services under India-Singapore Double Taxation Avoidance Agreement (DTAA), and consideration of beneficial rate under the DTAA. Issue 1 - Violation of Section 144C of the Act: The assessee challenged the Impugned Order, alleging it was passed arbitrarily and illegally in disregard of the directions given by the Dispute Resolution Panel (DRP). The Hon'ble DRP directed the Assessing Officer (AO) to verify the claim of the Appellant regarding income from hardware appliances and software licenses, following a Supreme Court decision. However, the AO did not conduct the required verification and did not grant relief as directed by the DRP. The Tribunal found in favor of the assessee based on the precedent set by the Hon'ble Supreme Court. Issue 2 - Characterization of Revenue as FTS: The AO characterized the entire revenue as Fees from Technical Services (FTS), disregarding the different revenue streams earned by the Appellant. The AO concluded that receipts from the sale of hardware appliances and software licenses were taxable as FTS, contrary to the directions of the DRP and the decision of the Supreme Court. The Tribunal, following the precedent set by the Supreme Court, directed the AO to treat the receipts as non-taxable, thereby upholding the principle of consistency. Issue 3 - Taxation of Income from Rendition of Services: The AO and the DRP erred in concluding that the income from the rendition of services is taxable under the India-Singapore DTAA. The Tribunal held that the income from services did not satisfy the conditions under the DTAA for taxation, and should be considered as business income not chargeable to tax. The Tribunal's decision was based on the provisions of the DTAA and relevant legal precedents. Issue 4 - Consideration of Beneficial Rate Under the DTAA: The AO erred in not considering the beneficial rate under the India-Singapore DTAA for determining the tax liability of the Appellant. The Tribunal directed the AO to apply the beneficial rate under the DTAA, in line with the provisions of the agreement. The Tribunal's decision was consistent with the principles of international taxation and the specific provisions of the DTAA between India and Singapore. Conclusion: The Appellate Tribunal, following legal precedents and the provisions of the Income-tax Act and the India-Singapore DTAA, ruled in favor of the assessee on all issues raised in the appeals for the assessment years 2018-19 & 2019-20. The Tribunal directed the Assessing Officer to delete the impugned addition and allowed both appeals filed by the assessee.
|
