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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 ..... years. We uphold the view taken by the CIT(A) that the A.O had rightly concluded that the subscription fees of ₹ 90,10,34,288/- received by the assessee from its Indian customers/subscribers was to be assessed as royalty as per the provisions of Sec. 9(1)(vi) of the Act r.w Article 12 of the India-Ireland DTAA and subjected to tax @10% on gross basis as per Article 12 of the India-Ireland DTAA. - appeal filed by the assessee is dismissed - ITA No.6950/Mum/2017 And ITA No. 167/Mum/2018 - - - Dated:- 9-8-2019 - Shri Ramit Kochar, Accountant Member And Shri Ravish Sood, Judicial Member For the Appellant : Shri F arrokh V. Irani, A.R. For the Respondent : Shri Nishant Somaiya, D.R ORDER PER RAVISH SOOD, JM The present appeals filed by the assessee are directed against the respective orders passed by the CIT(A)-56, Mumbai, dated 18.09.2017 and 16.10.2017, which in turn arises from the respective assessment orders passed by the A.O under Sec. 143(3) r.w.s 144C(3), dated 26.04.2016 and 26.12.2016 for A.Y 2013-14 and A.Y 2014-15, respectively. As a common issue is involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h protections and market share rankings of suppliers and vendors of IT manufacturers and the financial community. As is discernible from the orders of the lower authorities, the assessee sells subscriptions to its Indian customers/subscribers, on the basis of which they are able to access Gartner s research products over the internet from its data server which is located outside India. The research subscriptions at the nascent stage were delivered through print media and other physical means of delivery, however, with the passage of time the clients would now access the research products over the internet at www.gartner.com. The assessee enters into a Service agreement with its Indian customers for each Gartner service purchased, setting out the details of the services to be provided and the subscription fees applicable. Accordingly, the Indian subscribers would pay the subscription/access fees to the assessee as per the terms of the Service agreement . The assessee during the year under consideration viz. A.Y 2014-15 had received gross subscription fees of ₹ 90,10,34,288/-. 3. The assessee company had e-filed its return of income for A.Y 2013-14 on 27.09. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and had concluded that the subscription fees received by the assessee fell within the realm of the definition of royalty , and was thus taxable under the Act and also the India- Ireland DTAA. Accordingly, on the basis of his aforesaid deliberations the A.O assessed the subscription fees of ₹ 90,10,34,288/- as royalty , and subjected the same to tax @10% on gross basis as per Article 12 of the India-Ireland DTAA. 5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) observed that the Tribunal while disposing off the appeals of the assessee for the preceding years, viz. A.Ys 2003-04, 2005-06, 2008-09, 2009-10 and 2010-11, wherein identical facts were involved, had vide its consolidated order passed in ITA Nos. 2619 to 2622/Mum/2014 and ITA No. 4534/Mum/2014; dated 21.09.2016, had upheld the recharacterisation of the subscription fees as royalty by the A.O. On the basis of his aforesaid observations the CIT(A) upheld the order of the A.O and dismissed the appeal. 6. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Ld. Authorised representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitted the appeal, vide its order dated 16.04.2014 . 9. Subsequently, the Tribunal while disposing off the appeal of the assessee for A.Y 2007-08 vide its order passed in ITA No. 7101/Mum/2010, dated 24.07.2013, placed reliance on the decision of the Hon ble High Court of Karnataka in the case of Wipro Ltd. Vs.. ITO (2011) 203 Taxman 621 (Kar), and had concluded, that the subscription fees received by the assessee would constitute royalty . The Tribunal in its order had observed as under: 6. We are not convinced with the submissions advanced on behalf of the assessee for the obvious reason that the Hon ble Karnataka High Court considered a case in which Wipro Limited made payment to the assessee and the same has been held to be in the nature of `royalty , liable for deduction of tax at source u/s 195. The Hon ble High Court noticed in the penultimate para of the judgment that : the payment made by the respondent to M/s.Gartner, which is a non-resident company, would amount to `royalty and wherefor, there is a statutory obligation on the part of the respondent to make tax deduction . We are unable to see as to how the contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a-Ireland DTAA. 10. The appeal filed by the assessee is dismissed. A.Y 2014-15 ITA No. 167/Mum/2018 11. We shall now advert to the appeal of the assessee for A.Y 2014- 15. The assessee has assailed the impugned order on the following effective grounds of appeal before us : Ground No. 1:- Erroneous treatment of Business income as Royalty income. On the facts and circumstances of the case and in law, the Ld. Deputy Commissioner of Income-tax- International Taxation 2(3)(2) [Ld. DCIT] has erred in treating and further the Honble Commissioner of Income-tax (Appeals)[CIT(A)] has erred in confirming that the entire income earned by way of sale of online subscription based products amounting to ₹ 126,50,63,210/- 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 ₹ 79,15,262/-. On the facts and circumstances of case and in law, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the Gartner database was royalty . Also, it was noticed by him, that the Tribunal in the assesses own case for A.Y 2007-08 viz. M/s Gartner Ireland Limited Vs. The Asst. Director of Income-tax (International taxation), Mumbai [ITA No. 7101/Mum/2010; dated 24.07.2013] , had decided the issue against the assessee and had concluded that the subscription fees received by it fell within the realm of the definition of royalty and was taxable under the Act and also the India-Ireland DTAA. It was also noticed by him that the Tribunal while disposing off the appeals of the assessee for A.Ys 2003-04, 2005-06, 2008-09, 2009-10 and 2010-11, had vide its order passed in ITA Nos. 2619 to 2622/Mum/2014 and ITA No. 4534/Mum/2014, dated 21.09.2016, had followed its earlier view and had concluded that the subscription charges received by the assessee fell within the ambit of royalty and was taxable as per the Act/DTAA. Accordingly, on the basis of his aforesaid deliberations the A.O assessed the subscription fees of ₹ 126,50,63,206/- as royalty , and subjected the same to tax @10% on gross basis as per Article 12 of the India-Ireland DTAA. 14. Aggrie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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