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TMI Blog2016 (11) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to the decisions of the Delhi & Mumbai Tribunal in SMS Demag Pvt Ltd [2018 (1) TMI 184 - ITAT DELHI] & Sonic Biochem Extractions Pvt. Ltd. [2013 (9) TMI 193 - ITAT MUMBAI]. We uphold the decision of the CIT(A) and dismiss the grounds raised by the Revenue. - I.T.A No.1479/Bang/2015 - - - Dated:- 23-11-2016 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER For the Appellant : Shri. L. Bharath, CA For the Respondent : Shri. Sanjay Kumar Verma, CIT - DR ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER : The Revenue filed this appeal against the order of the CIT (A) I, Bengaluru, dt.09.09.2015, for the assessment year 2012-13. 02. During the assessment, the A O found that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appened in financial year 2010-11 i.e., the year in which credit to the account of the vendor was recognized and for this relied on the judgments of Cochin Tribunal in Kerala Vision Ltd (46 taxmann.com 50) and Agra Tribunal in Virola International (ITA No 2561/Agra/2013) . It pleaded that it had determined the rate of tax to be deducted at Nil following the judgments that were prevalent at the time of tax deduction i.e., FY 2010-11 viz Supreme Court in Tata Consultancy Services v. State of Andhra Pradesh, jurisdictional tribunal in Samsung Electronics Co. Ltd Velankani Mauritius Ltd which held that remittance towards copyrighted article is in ,the nature of business profits and not royalty and such proposition was also confirmed by the Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11. Subsequently, the Finance Act 2012 also introduced, retrospectively, Explanation 4 to section 9(1 (vi) of the Act to clarify that payments for, inter alia. license to use computer software would qualify as royalty. During the FY 10-11, the assessee did not have the benefit of clarification brought by the respective amendment. As such, for the FY 2010-11, in light of the provisions of section 9(1)(vi) of the Act read with judicial guidance on the taxation of computer software payments, tax was not required to be deducted at source. Given the practice in prior assessment years, the assessee was of the bona fide view that the payment of software license fee was not subject to tax deduction at source under section 194J/195 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11. The appellant has relied on the judgment of Cochin Tribunal in the case of Kerala Vision Ltd and Agra Tribunal in the case of Virola International, wherein it was held that The law amended was undoubtedly retrospective in nature but so far as tax withholding liability is concerned, it depends on the law as it existed at the point of time when payments, from which taxes ought to have been withheld, were made. The tax-deductor cannot be expected to have clairvoyance of knowing how the law will change in future. Further, software payment was included in definition of royalty only vide Explanation to section 9(1)(vi)inserted retrospectively vide Finance Act, 2012 and when the purchase was made, the appellant did not have the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the purchase of software amounted to acquisition of intangible asset and therefore, the payment was royalty and disallowable. On appeal: Held, (i) that mere purchase of software, a copyrighted article, for utilisation of computers cannot be considered as purchase of copyright and royalty. The assessee did not acquire any rights for making copies, selling or acquiring which generally could be considered within the definition of royalty . Explanation 2 to section 9(1)(vi) cannot be applied to purchase of a copyrighted software, which does not involve any commercial exploitation thereof. The assessee simply purchased software delivered along with computer hardware for utilization in the day-to-day business. 5.3 Relying on the above d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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