9911796707
TMI Blog2022 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... 19/Del./2019 And ITA No.7019/Del./2019 - - - Dated:- 1-6-2022 - Shri Shamim Yahya, Accountant Member And Ms. Astha Chandra, Judicial Member For the Assessee : Shri Rajan Vora, CA For the Revenue : Shri Sanjay Kumar, Senior DR ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : These are appeals by the assessee against the respective orders of the ld. CIT (Appeals) for the concerned assessment years. 2. Since issues are common and connected and the appeals were heard together, these are being disposed off by this common order. 3. Since grounds are common we are referring to grounds of appeal for AY 2012-13 which read as under :- General Grounds: 1.1. That the Commissioner of Income Tax (Appeals)-42, New Delhi (hereinafter referred to as Ld. CIT(A) has erred in facts and in law in upholding the assessment order and assessing the income at INR 6,67,66,000 as against return income of NIL. 1.2. That the Ld. CIT(A) has also erred in omitting to consider and give effect to the Application u/s 158A filed by the Appellant. Grounds on taxability of Software License: 3. That on facts and in law, the Ld. CIT (A) has erred in not acceptin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and other support services and software licenses to the member firms of the EY Network. The assessee is said to be established as a non-profit central service provider to enable EY member firms to share the costs of centralized services. Accordingly, the assessee enters into agreements with each member firm, pursuant to which it provides services required by member firms and thereafter, recovered various costs incurred by it from the member firms on actual usage basis. Given the above, the assessee filed a 'NIL' return of income on 30th March 2012 contending that the payments received by the assessee from Indian member firms are mere reimbursement of costs and not taxable under the Act as well as the Double Taxation Avoidance Agreement between India and United Kingdom (hereinafter referred as the treaty ). 4.1 To seek certainty on the above tax position and avoid litigation with the Tax Department, the assessee had filed an application before the Authority of Advance Ruling ( AAR ) to seek an advance ruling that the payments so received by the assessee are not taxable in India under the Act or under the treaty. The Hon'ble AAR while pronouncing its ruling held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration provided by EYGSL UK that it does not have a permanent establishment in India in terms of Article 5 of the India- UK Tax Treaty, whether the payments received by EYGSL UK would be chargeable to tax in India? 5. Based on the answers to Questions above, would the receipts by EYGSL UK from EYGBS India suffer withholding tax under section 195 of the Act, and at what rate? 9. Answers given by the Hon'ble AAR 36. In view of discussions in earlier paragraphs the following rulings are pronounced with respect to question raised:- Q.1 Consideration received on account of provision of services/deliverables is not FTS. Q.2 Consideration received amounts to receive fees and it does not amount to reimbursement of expenses. Q.3 Consideration received for giving right to benefit from the computer software procured from several third party vendors (deliverables) is in the nature of royalty under Article 13 of India-UK DTAA as well as section 9(1)(vi) of the Act whereas consideration received for giving right to benefit from services is not in the nature of royalty under Article of India-UK DTAA. Q.4 In respect of Q.No.3, we have ruled that consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have heard both the parties and perused the record. We note that ITAT in assessee s own case for AYs 2010-11 2011-12 has adjudicated the issue as under :- 9. We have heard ld. DR for the Revenue and gone through the record. Nobody represented the assessee despite issuance of notice of hearing. Ld. DR for the Revenue submitted that the appeal is not at all maintainable inasmuch as AO has followed the ruling of Hon ble AAR in assessee s own case, hence ld. CIT (A) has rightly dismissed the assessee s appeal as not maintainable. Therefore, he pleaded that the Tribunal should also dismiss this appeal being not maintainable. He further submitted that assessee has already filed a writ petition before the Hon ble jurisdictional High Court against the above AAR ruling. The decision of Hon ble High Court is still awaited. 10. Upon careful consideration, we find ourselves in agreement with the submissions made by the ld. DR for the Revenue. AO has only followed the ruling of AAR in assessee s own case and as per the provisions of section 245S of the Act, ruling of Hon ble AAR is binding upon the Revenue authorities. The provisions of section 295S which reads as under :- 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and the EYGBS (India). As the same does NOT create any right to transfer the copyright in the software, the same would not Fall within the ambit of the term 'royalty' as held by the Supreme Court in Engineering Analysis Centre (supra) ... . 18. In view of the above, the Impugned Ruling dated 10.08.2016 passed by the learned AAR are set aside and it is held that the payment received by EYGSL (UK) for providing access to computer software to its member firms of EY Network located in India, that is, EYGBS (India), does not amount to 'royalty' liable to be taxed in India under the provisions of the Income Tax Act, 1961 and the India-UK DTAA. 5. A copy of the said HC order is enclosed as Annexure I for ready reference. In light of the favourable order of Hon'ble HC setting aside the order of Hon'ble AAR to the extent passed against the assessee, the order passed by AO and CIT(A) does not stand. Accordingly, payments received by appellant towards software license maintenance charges, global technology charges and GWAN connectivity charges are not taxable in India. It is prayed that post favourable order of Hon'ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
