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TMI Blog2021 (11) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... for a copyrighted article and represents the purchase price of an article. Hence, the payment for the same is not in the nature of royalty under Article 12 of the Tax Treaty. The receipts would constitute business receipts in the hands of the Assessee and is to be assessed as business income subject to assessee having business connection/PE in India as per adjudication on Ground - Decided in favour of assessee. - ITA No. 6661/Del/2019 - - - Dated:- 24-9-2021 - Sh. Kul Bharat, Judicial Member And Dr. B. R. R. Kumar, Accountant Member For the Assessee : Ms. Rashmi Chopra, Adv. For the Revenue : Sh. Sunil Kumar, CIT DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeal has been filed by the assessee against the order dated 24.06.2019 passed by the AO u/s 143(3) r.w.s. 144C(13). 2. Following grounds have been raised by the assessee: 1. General 1.1 That on facts and circumstances of the case and in law, the order passed by the Ld. AO pursuant to the directions issued by Hon ble DRP is bad in law in as much as failed to appreciate the facts involved and law thereon. 1.2 That on facts and in law, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le under the India-US tax treaty would still be available to the Appellant as the amendments in the Finance Act 2012 would not impact the treaty interpretation of the term royalty. 2.6.3 That on facts and in law, the Hon ble DRP and Ld. AO have failed to appreciate that the sale of software is a sale of Copyrighted Article and not Copyright and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India-US tax treaty in the absence of the PE of the Appellant in India. 2.7 That on facts and in law, the Ld. AO/ DRP have erred in not relying and distinguishing the decisions relied upon by the Appellant including the Hon ble Apex Court and the jurisdictional High Court in the cases of Tata Consultancy Services (2004) (271 ITR 401) (SC), ZTE Corporation (2017) (237 DLT 572) (Del HC), Infrasoft Ltd. (264 CTR 239), Ericsson A.B. and Metapath (343 ITR 370) (Del HC), Nokia Networks OY (253 CTR 0417) (Del HC), Alcatel Lucent Canada (2015) (372 ITR 0476) (Del HC) on the one side and rather relying on the decisions of other courts and AAR in the cases of Samsung Electronics [(203 taxman 477) (Kar HC) / (TS-696-HC-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P have erred by not appreciating that transfer pricing provisions are not applicable in the instant case and therefore, erred in initiating penalty proceedings under section 271BA of the Act for not furnishing the Accountant s Report in Form 3CEB as prescribed under Section 92E of the Act. 6. Levy of interest under section 234C of the Act That on facts and circumstances of the case and in law, the Ld. AO has grossly erred in charging interest under section 234C of the Act. 7. Initiation of Penalty Proceedings That on facts and circumstances of the case and in law, the Ld. AO has erred in initiating the penalty proceedings under section 271(1)(c) of the Act holding that the Appellant has furnished inaccurate particulars of income. 3. Aspect Software Inc. is a corporation incorporated in Delaware State, USA. The assessee is engaged in the business of provision of hardware, software and rendering of support services that enable call centre companies, to better manage customer interactions via voice, email, web and fax. The assessee derives its revenue primarily from supply of contact solutions , software license and provision of services includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o our notice, the order of the Hon ble Delhi High Court in the assessee s own case for the earlier year dated 25.04.2017 which reads as under: CIT (INTERNATIONAL TAXATION) 1 Vs. ASPECT SOFTWARE INC. ITA Nos. 909/2015, 28/2016, 861/2016, 944/2016, 4/2017, 6/2017 Page 4 of 7 ITA Nos. 909/2015, 28/2016, 861/2016, 944/2016, 4/2017, 6/2017 3. These are appeals under Section 260A of the Income Tax Act, 1961 ( Act‟) by the Revenue against the impugned Order dated 18th May 2015 passed by the Income Tax Appellate Tribunal ( ITAT‟) in ITA Nos. 04/Del/2012, 1124/Del/2014, 1125/Del/2014, 221/Del/2013, 720/Del/2013, and 82/Del/2011 for the Assessment Years ( AYs‟) 2008-09, 2004-05, 2010- 11, 2003-04, 2009-10 and 2007-08 respectively. 4. While admitting these appeals on 16th January, 2017, this Court passed the following order: Admit. The following questions of law arise for consideration: (i) Did the ITAT fall into error in holding that the transaction in question, i.e., supply of customized software was not royalty under Article 12 (4) of the Indo-US Double Taxation Avoidance Agreement (DTAA) read with Section 9 (1) (vii) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son (supra), a similar provision existed in the DTAA between India and Sweden. 8. The ITAT has, in its impugned order dated 18th May 2015, also relied upon the decision in Ericson (supra) and Director of Income Tax v. Infrasoft Limited (2014) 220 Taxman 273 (Del) and held as under: 41. Before us, the learned counsel for the Assessee as well as the learned D.R. relied on several decisions of the High Court and Tribunal rendered on the subject. These decisions are not being considered as the issue is extensively dealt by the Hon'ble Jurisdictional High court in the cases of M/s Ericsson A.B. and Infrasoft Ltd. (supra) which are binding on this Tribunal. We observe that all the arguments put forth by the Revenue and the Assessee are considered and answered in these decisions. Further, the Delhi High Court in Infrasoft has expressed it~ disagreement with the view taken by the Karnataka High Court in the case of Samsung Electronics Co Ltd. Hence, the decisions relied by the learned CITDR in the case of Samsung Electronics and Gracemac Corporation (supra) does not help the case of the Revenue, as we are under the Jurisdiction of the Hon'ble Delhi High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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