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TMI Blog2020 (12) TMI 403X X X X Extracts X X X X X X X X Extracts X X X X ..... rder that In view of Section 90(2) of the Income Tax Act, the assessee opts for Double Taxation Avoidance Agreement between India and UK to override the provisions of the Act as there is no corresponding amendment to the definition of the term royalty in Article 13(3) of the aforesaid DTAA as carried out in the definition of royalty u/s 9 (1)(6) of the Act. The learned ITAT then rejected the contention of the Appellant-Revenue by relying upon the judgment of this Court in Director of Income Tax v. New Skies Satellite BV Ors. [ 2016 (2) TMI 415 - DELHI HIGH COURT] which deals with the question of retrospective effect of the amendment - No substantial question of law. - ITA 1388/2018 and ITA 1389/2018 - - - Dated:- 24-11-2020 - HON BLE MR. JUSTICE MANMOHAN AND HON BLE MR. JUSTICE SANJEEV NARULA Appellant Through: Mr. Kunal Sharma, Senior Standing Counsel with Ms. Zehra Khan, Advocate. Respondent Through: Mr. G C Srivastava and Mr. Suvinay K Dash, Advocates. SANJEEV NARULA, J. (Oral) 1. The present appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act') are directed against the common order dated 17.05.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent-Assessee. In response to the notice, Respondent-Assessee filed its return declaring nil income. In respect of AY 2013-14, the case was selected for scrutiny and notice under Section 142 (1) was issued and was served on the Respondent-Assessee. In respect of both the years in question, draft assessment orders under Section 144C (1) were framed by the Assessing Officer ( AO ). Aggrieved by the same, the Respondent-Assessee filed its objections before the Dispute Resolution Panel ( DRP ). Vide separate orders for each of the wo years, the DRP disposed of the objections of the Respondent-Assessee and confirmed the stand taken by the AO. Pursuant to the draft assessment, the final assessment under Section 144C(3) read with Section 143(3)/147 was framed by the AO wherein it was noted that the Respondent-Assessee had entered into a contract with a few Indian distributors/customers from whom the Respondent-Assessee was in receipt of income on which the TDS was also deducted by the distributors/customers. Accordingly, it was held by the AO that the receipt of income from the sale of software products in India is taxable under the head 'Royalty' as per the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(b)(ii) of the Copyright Act, 1957 which stipulates that selling or giving on commercial rent, any copy of a computer programme is copyright. 8. We notice that the learned ITAT has decided the appeals in favour of the Respondent-Assessee on the basis of the decision of this Court in the case of Principal CIT Vs. M. Tech India Pvt. Ltd. (2016) 287 CTR (Del) 213 wherein the Court relied upon the earlier decisions on the same issue including the judgment of this Court in Director of Income Tax v. Infrasoft Ltd. (2014) 264 CTR (Del) 329 and inter alia held that payment made by the reseller for the purchase of software for sale in Indian market could not be considered as royalty. The relevant portion of the said judgment reads as under: 12. In the cases where an Assessee acquires the right to use a software, the payment so made would amount to royalty. However in cases where the payments are made for purchase of software as a product, the consideration paid cannot be considered to be for use or the right to use the software. It is well settled that where software is sold as a product it would amount to sale of goods. In the case of Tata Consultancy Services v. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are left to bear their own costs. 9. Further, the learned ITAT also dealt with the contention of the Appellant- Revenue regarding Explanation 4 to Section 9 (1)(vi) of the Act for interpreting the terms used in Article 13 of the DTAA and observed in para 6 of the impugned order that In view of Section 90(2) of the Income Tax Act, the assessee opts for Double Taxation Avoidance Agreement between India and UK to override the provisions of the Act as there is no corresponding amendment to the definition of the term royalty in Article 13(3) of the aforesaid DTAA as carried out in the definition of royalty u/s 9 (1)(6) of the Act. The learned ITAT then rejected the contention of the Appellant-Revenue by relying upon the judgment of this Court in Director of Income Tax v. New Skies Satellite BV Ors.(2016) 285 CTR (Del) 1 which deals with the question of retrospective effect of the amendment. The relevant portion as quoted in para 8 of the impugned order is reproduced herein below- 8 . The Ld. DR's contention was that as per the judgment in the case of Shine Satellite, the amendment has to be given retrospective effect. But when we read the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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