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TMI Blog2019 (5) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 (3) TMI 458 - ITAT PUNE] where the software is purchased across the counter as shrink proof software, then it is not akin to royalty both under the Income Tax Act or the DTAA. The Tribunal held that since the definition of royalty has not been amended under DTAA, then the said definition would be paramount and would have to be applied for deciding the issue. It also held that amendment to section 9(1)(vi) of the Act by insertion of Explanations 4 to 6 would not change the scenario and make the assessee liable for deduction of tax at source in the relevant year. Thus no merit in the orders of authorities below in having held the assessee to be in default for non deduction of tax at source out of aforesaid payments. We reverse the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 32,35,518/- to GFG Gorup Ltd., New Zealand for purchase of software. The Assessing Officer notes this to be licensed software and hence, was of the view that payment was in the nature of royalty and the assessee ought to have deducted tax at source. Since the assessee failed to deduct tax at source, expenditure of ₹ 32,35,518/- was disallowed in the hands of assessee. 5. Before the CIT(A), the assessee pointed out that in earlier year, the issue was decided in favour of assessee. However, the CIT(A) referred to the decision of Pune Bench of Tribunal in the case of Cummins Inc in ITA Nos.73 74/PN/2011, relating to assessment years 2004-05 and 2006-07, order dated 08.08.2013, wherein it was held that purchase of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t source, expenditure was disallowed in the hands of assessee. In this regard, the CIT(A) had placed reliance on the ratio laid down by Pune Bench of Tribunal in the case of Cummins Inc (supra) and Mumbai Bench of Tribunal in DDIT Vs. Reliance Infocom (supra). The case of assessee on the other hand, before us is that the issue now stands covered by latest decision of Pune Bench of Tribunal in John Deere India Pvt. Ltd. Vs. DDIT (supra). The Tribunal while deciding the issue of deduction of tax at source out of payments made for purchase of software had in turn, referred to the orders passed in Miscellaneous Application in the case of both Cummins Inc (supra) and Reliance Infocom (supra), wherein the respective Benches of Tribunal had recall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not fall in realm of royalty . We also hold that since the provisions of DTAA overrides the provisions of Income Tax Act and are more beneficial and the definition of royalty having not undergone any amendment in DTAA, the assessee was not liable to deduct tax for payments made for purchase of software. In such scenario, the assessee cannot be held to be in default and the demand created under section 201(1) and interest charged under section 201(1A) of the Act is thus, cancelled. 10. In the entirety of the above said facts and circumstances, we find no merit in the orders of authorities below in having held the assessee to be in default for non deduction of tax at source out of aforesaid payments. We reverse t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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