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2023 (10) TMI 259 - AT - Income TaxIncome accrued in India - royalty receipts - receipts towards software license and maintenance charges, global technology charges and GWAN connectivity charges - HELD THAT - As we observe that the issues have been decided by Ld.CIT(A) in favour of the assessee following the decision of in assessee s own case 2021 (12) TMI 571 - DELHI HIGH COURT and also Engineering Analysis Centre of Excellence Pvt. Ltd. 2021 (3) TMI 138 - SUPREME COURT and therefore, we see no infirmity in the order passed by the Ld.CIT(A) in holding that receipts towards software license and maintenance charges, global technology charges and GWAN connectivity charges are not royalty under the IT Act and also under India UK DTAA. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds raised by the Revenue.
Issues Involved:
1. Taxability of amounts received by EYGBS(UK) for providing Bundle of Software hosted on Common Platform to its Associate Group Entities. 2. Requirement of transfer of copyright in software for taxing amounts received by EYGBS(UK) from EYGBS(India) as Royalty. 3. Applicability of SC judgement in Engineering Analysis Centre to amounts received by EYGBS(UK) from its Member Firms. Summary: Issue 1: Taxability of Software Bundle Amounts The Revenue questioned whether amounts received by EYGBS(UK) for providing a Bundle of Software to its Associate Group Entities are covered under the SC judgement in Engineering Analysis Centre. The Tribunal upheld the CIT(A)'s decision that these amounts are not taxable as royalty under the IT Act and India-UK DTAA, following the SC judgement in Engineering Analysis Centre and the Delhi High Court's decision in the assessee's own case. Issue 2: Transfer of Copyright Requirement The Revenue contended that the transfer of copyright in software is essential for taxing amounts received by EYGBS(UK) from EYGBS(India) as Royalty. The Tribunal affirmed that the amounts are not taxable as royalty, as the agreements did not involve any transfer of copyright, aligning with the SC judgement in Engineering Analysis Centre and the Delhi High Court's ruling. Issue 3: Applicability of SC Judgement The Revenue argued that the SC judgement in Engineering Analysis Centre does not apply to amounts received by EYGBS(UK) from its Member Firms, as there was no direct transfer of Off the Shelf Software from Third Party Vendor to End User. The Tribunal dismissed this argument, stating that the payments are not royalty under the IT Act and India-UK DTAA, based on the SC judgement and the Delhi High Court's decision in the assessee's case. Conclusion: The Tribunal found no infirmity in the CIT(A)'s order, which followed the decisions of the Delhi High Court and the SC in Engineering Analysis Centre, and held that receipts towards software license and maintenance charges, global technology charges, and GWAN connectivity charges are not royalty. Consequently, the appeals of the Revenue were dismissed.
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