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TMI Blog2008 (8) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 1997-98. In AY 1997-98, the Tribunal has followed the Tribunal judgment in assessee's own case for AY's 1995-96 and 1996-97 - In these two years, this issue had reached to the Hon'ble Delhi High Court and Hon'ble Delhi High Court has held that there is no reason to differ with the view taken by the Tribunal on this issue since the Tribunal has merely followed the decision of Hon'ble apex Court rendered in the case of Gramophone Co. of India Ltd. vs. CCE [ 1999 (11) TMI 62 - SUPREME COURT] . In view of this, we find no reason to take a contrary view in the present year and hence respectfully following the precedents, this issue is decided in favour of the assessee. This ground of the assessee is allowed. Claim for deduction for payment - duplicating and sublicensing of software to its customers - royalty payment to M/s Oracle Corporation - AO made a disallowance u/s. 92 r/w s. 37(1) on account of payment of royalty beyond 30 per cent of the license fee earned by the assessee - AO disallowed sum out of total royalty payment - HELD THAT:- From Persual of provisions of s. 92, it is seen that the preconditions for invoking provisions of s. 92 is that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C CHEMICAL WORKS COMPANY LIMITED VERSUS COMMISSIONER OF INCOME-TAX, GUJARAT [ 1989 (3) TMI 5 - SUPREME COURT] and it was held that expenditure on acquisition of master copy is a capital expenditure. Respectfully, following the precedent, in this year also, we decide this issue in favour of the Revenue and against the assessee. This ground of the Revenue is allowed. Error in allowing a relief of Rs. 4,38,34,831 on account of exemption claimed under s. 10A at the Software Development Center, Bangalore - HELD THAT:- This issue is decided in favour of the assessee and this ground of the Revenue is rejected because no difference in facts is pointed out by the learned Departmental Representative of the Revenue. Charge of interest under ss. 234A, 234B and 234D - HELD THAT:- We decide the issue in favour of the assessee by respectfully following the decision of the Tribunal in the case of ITO vs. Ekta Promoters (P) Ltd. [ 2008 (7) TMI 452 - ITAT DELHI-E] because it is held by the Tribunal in this judgment that interest u/s. 234D is chargeable from AY 2004-05 only because s. 234D was inserted by the Finance Act, 2003 w.e.f. 1st June, 2003 and hence it cannot be made applicable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the parties and perused the material available on record and the judgments cited by the learned Authorised Representative of the assessee. We find that this issue i.e., allowability of deduction under s. 80-IA on software duplication activity of the assessee has been decided by the Tribunal in favour of the assessee in the case of the assessee itself for asst. yrs. 1994-95 to 1997-98. In the present year, learned CIT(A) has followed his order passed by him in asst. yr. 1997-98. In asst. yr. 1997-98, the Tribunal has followed the Tribunal judgment in assessee's own case for asst. yrs. 1995-96 and 1996-97. In these two years, this issue had reached to the Hon'ble Delhi High Court and Hon'ble Delhi High Court has held that there is no reason to differ with the view taken by the Tribunal on this issue since the Tribunal has merely followed the decision of Hon'ble apex Court rendered in the case of Gramophone Co. of India Ltd. vs. CCE 114 ELT 770. In view of this, we find no reason to take a contrary view in the present year and hence respectfully following the precedents, this issue is decided in favour of the assessee. This ground of the assessee is allowed. 7. Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 lakhs. It is noted by the AO that the transactions between the Indian subsidiary, i.e., the assessee company and non-resident holding company i.e., M/s Oracle Corporation, USA has been arranged in such a manner that the assessee company is earning lesser revenue because more royalty is paid to the holding company. In reply, it was submitted by the assessee vide letter dt. 26th March, 2002 that the sales have been made at a lower price but as per the agreement between the assessee company and M/s Oracle Corporation, royalty is being paid at IPP only. The assessee has also submitted a copy of RBI notification wherein it has been mentioned that payment of royalty by an Indian software reproducer to the overseas copyright holder for reprod1,lction of software in foreign currency can be remitted upto 30 per cent of IPP. It is noted by the AO that RBI approval is for the implementation of FERA provisions irrespective of specific need of business expediency. The AO has come to the conclusion that in the facts of the present case, the provisions of s. 92 are squarely applicable to the case of the assessee. The AO made a disallowance under s. 92 r/w s. 37(1) on account of payment of roya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submissions of both the parties and perused the material available on record and the judgments cited by the learned Authorised Representative of the assessee. Before proceedings further, we feel that the provisions of s. 92 as appearing on the statute book during the relevant period should be reproduced herein for ready reference. The same reads as under: 92: Where a business is carried on between a resident and a non-resident and it appears to the AO that owing to the close connection between them, the course of business is so arranged that the business transacted between them produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the AO shall determine the amount of profits which may reasonably be deemed to have been derived therefrom and include such amount in the total income of the resident. 12. From the above, it is seen that the preconditions for invoking provisions of s. 92 is that there is no profit or less than ordinary profit accruing to the resident assessee on account of business connection between the resident and non-resident. Since, the assessee itself has declared an income of Rs. 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the case of Bharat Earth Movers vs. CIT (2000) 162 CTR (SC) 325 : (2000) 245 ITR 428 (SC). It was also submitted that in the assessee's own case for asst. yr. 1998-99, similar issue has been decided by the Tribunal in favour of the assessee by following the judgment of the Hon'ble apex Court rendered in the case of Bharat Earth Movers. In this regard, our attention was drawn to the Tribunal decision in assessee's own case for asst. yr. 1998-99 and it has been pointed out that this Tribunal decision is appearing on pp. 24 to 33 of the paper book. Our attention was drawn to para Nos. 11 and 12 of the Tribunal decision as appearing on page No. 30 of the paper book. 16. Learned Departmental Representative of the Revenue supported the orders of the authorities below. 17. We have heard the submissions of both the parties and perused the material available on record. We find that this issue is squarely covered in favour of the assessee by this judgment of Hon'ble apex Court rendered in the case of Bharat Earth Movers. We also find that the Tribunal in the assessee's own case for asst. yr. 1998-99 has decided this issue in favour of the assessee by following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this Tribunal decision is available on pp. 24 to 33 of the paper book and our attention was drawn to para Nos. 17 and 18 of this Tribunal as appearing on page No. 33 of the paper book. 24. We have heard the submissions of both the parties and perused the material available on record. We find that in asst. yr. 1998-99. this issue was decided by the Tribunal in favour of the assessee. The relevant para of this Tribunal decision being para No. 18 is being reproduced here: At the time of hearing before us, the learned representatives of both the sides have agreed that a similar relief claimed by the assessee in asst. yr. 1997-98 was allowed by the learned CIT(A) vide order dt. 29th March, 2001 passed under s. 154 and following the same. a similar issue has been decided by the learned CIT(A) in favour of the assessee vide his impugned order. Since the decision rendered by the learned CIT(A) in asst. yr. 1997-98 allowing the claim of the assessee for exemption under s. 10A has been accepted by the Department as agreed even by learned Departmental Representative, we uphold the impugned order of the learned CIT(A) allowing the said exemption to the assessee by following the rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal. 30. As per ground No. 1 of the appeal, the grievance of the assessee is regarding disallowance of deduction under s. 80-IA on account of software duplication activity, because it is held by the AO that it is not a manufacturing activity. 31. It is agreed by both sides that this issue is identical to the ground No. 1 in assessee's appeal for 1999-2000 and it can be decided on similar line. In that year, we have decided this issue in favour of the assessee as per para No. 6 above. On similar line, in this year also, this issue is decided in favour of the assessee. This ground is allowed. 32. As per ground No. 2 of the appeal, the grievance of the assessee is regarding disallowance of a portion of royalty paid to Oracle Corporation, USA amounting to Rs. 21,37,93,100 by invoking the provisions of ss. 92 and 37(1). 33. It is agreed by both sides that this issue is identical to the ground Nos. 2 to 4 in assessee's appeal for 1999-2000 and it can be decided on similar line. In that year, we have decided this issue in favour of the assessee as per para No. 12 above. On similar line, in this year also, this issue is decided in favour of the assessee. This ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided on similar line. In that year, we have decided this issue in favour of the assessee as per para No. 12 above. On similar line, in this year also, this issue is decided in favour of the assessee. This ground is allowed. 46. As per ground No. 3, the assessee is disputing the charge of interest under ss. 234A, 234B and 234D. 47. It was submitted by the learned Authorised Representative of the assessee that the issue regarding charging of interest under ss. 234A and 234B is consequential but the issue regarding charging of interest under s. 234D is covered in favour of the assessee by the decision of the Special Bench of the Tribunal rendered in the case of ITO vs. Ekta Promoters (P) Ltd. (2008) 10 DTR (Del)(SB)(Trib) 563. 48. Learned Departmental Representative of the Revenue also agreed. We, therefore, hold that the issue regarding charging of interest under ss. 234A and 234B is consequential and hence the AO should recalculate the interest after giving effect of this order. Regarding charging of interest under s. 234D, we decide the issue in favour of the assessee by respectfully following the decision of the Special Bench of the Tribunal rendered in the case of I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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