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TMI Blog2019 (8) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and circumstances of the case and in law, the Ld. DCIT has erred in treating and further the Honble CIT(A) has erred in confirming that the entire income earned by way of sale of online subscription based products amounting to Rs. 901,034,288/- by the appellant during the captioned year are taxable as "royalty" under section 9(1)(vi) of the Income-tax Act, 1961 and under Article 12 of India-Ireland Double taxation Avoidance Agreement. Ground No. 2 :- Erroneous levy of interest under Section 234B of Rs. 79,15,262/-. On the facts and circumstances of case and in law, the ld. DCIT has erred in levying interest under Section 234B of the Act amounting to Rs. 79,15,262/- by treating the above income as Royalty income instead of Business income. Consequently, levy of interest would not be warranted. Ground No. 3 : - Initiation of penalty proceedings under section 271(1)(c) of the Act On the facts and circumstances of the case and in law, the ld. DCIT has erred in initiating penalty proceedings under Section 271(1)(c)." 2. Briefly stated, the assessee viz. Gartner Ireland Limited is a company incorporated in the Republic of Ireland and is a resident of Ireland. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), dated 26.04.2016. 4. During the course of the assessment proceedings it was observed by the A.O that it was the claim of the assessee that as it did not have any fixed place of business or permanent establishment in India, therefore, the subscription fees received by it from the Indian customers/subscribers was not liable to be taxed in India. However, the A.O was not persuaded to subscribe to the said view of the assessee. The A.O held a conviction that the subscription fees was liable to be taxed in India as 'royalty' within the meaning of Sec. 9(1)(vi) of the Act and also Article 12 of the India-Ireland Double Taxation Avoidance Agreement (for short "DTAA"). Accordingly, the A.O recharacterised the amount of Rs. 90,10,34,288/- received by the assessee from the Indian customers/subscribers as "royalty". In order to fortify his conviction that the subscription fees was to be assessed as 'royalty', it was observed by the A.O, that the assessee as the copyright owner of the research products exploited copyright protection vigorously. On the basis of his aforesaid deliberations the A.O held a conviction that the subscription receipts of the assessee were liable to be assessed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (for short 'D.R') endorsed the said factual position as stated by the ld. Counsel for the assessee. 8. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the orders of the lower authorities, the recharacterisation of the subscription fees received by the assessee company from the Indian customers/subscribers as 'royalty', by the A.O, had been upheld by the Tribunal in the assesses own case for the preceding years. For the sake of clarity, we shall briefly cull out the view taken by the Tribunal while disposing off the appeals of the assesse in the preceding years. Initially, the Tribunal while disposing off the appeal of the assessee for A.Y 2004-05 in ITA No. 1482/Mum/2008, dated 30.07.2010, had relied on the order of ITAT, Bangalore in the case of Wipro Limited vs. ITO (2005) 278 ITR (AT) 57 (Bang), and had concluded that the subscription fees received from the Indian subscribers shall not be taxed as 'royalty' in India, but was to be treated as 'business income', which could not be taxed in India. However, the decision in the case of Wipro Limited (supra) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ITA No. 4534/Mum/2014; dated 21.09.2016, had with a purpose of maintaining consistency followed its earlier order for A.Y 2007-08, and had upheld the view therein taken. As is discernible from the case law compilation of the assessee, the Tribunal had thereafter while disposing off its appeal for A.Y 2011-12, in ITA No. 497/Mum/2015, dated 12.04.2017 and A.Y 2012-13, in ITA No. 195/Mum/2016, date 07.11.2017 had followed its earlier view, and had concluded, that the subscription fees received by the assessee from the Indian customers/subscribers was to be brought to tax as 'royalty' in the hands of the assessee. 9. Admittedly, the issue and also the facts and the circumstances in the present appeal of the assessee remains the same as were involved in its appeals for the preceding years. Accordingly, finding ourselves to be in agreement with the view taken by the Tribunal while disposing off the appeal of the assessee for the aforementioned years viz. A.Y 2007-08 in ITA No. 7101/Mum/2010, dated 24.07.2013; A.Ys 2003-04, 2005-06, 2008-09, 2009-10 and 2010-11, in ITA Nos. 2619 to 2622/Mum/2014 and ITA No. 4534/Mum/2014, dated 21.09.2016; A.Y 2011-12 in ITA No.497/Mum/2015, dated 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to file an appeal before the CIT(A), therefore, the A.O proceeded with and passed the final assessment order vide his order u/s 143(3) r.w.s 144C(3), dated 26.12.2016. 13. During the course of the assessment proceedings it was observed by the A.O, that it was the claim of the assessee that as it did not have any fixed place of business or permanent establishment in India, therefore, the subscription fees received by it from the Indian customers/subscribers were not liable to be taxed in India. However, the A.O was not persuaded to subscribe to the said view of the assessee. The A.O held a conviction that the subscription fees was liable to be taxed in India as 'royalty' with the meaning of Sec. 9(1)(vi) of the Act and also Article 12 of the India-Ireland Double Taxation Avoidance Agreement (for short "DTAA"). Accordingly, the A.O recharacterised the amount of Rs. 126,50,63,206/- received by the assessee from the Indian customers/subscribers as "royalty". On the basis of his aforesaid deliberations the A.O was of the view that the subscription receipts of the assessee was liable to be assessed as 'royalty' under all pervasive provisions of Income-tax Act r.w Copyright Act r.w Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X
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