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TMI Blog2022 (7) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Co-ordinate Bench of the Tribunal wherein by following the ratio laid down in the case of M/s. Salesforce.com Singapore Pte. [ 2022 (4) TMI 327 - ITAT DELHI] and also the decision of Savvis Communication Corporation [ 2016 (5) TMI 635 - ITAT MUMBAI] and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. [ 2015 (4) TMI 794 - ITAT CHENNAI] held that the authorities fallen in error in considering the subscription received towards cloud serviced to be royalty income. X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the revenue earned by MRSC from cloud services amounting to INR 27,01,15,524 is taxable as "Royalty" in India in the hands of the Appellant without appreciating that the same is not in the nature of "Royalty" under India * USA DTAA. 3.3 Without prejudice to the above, the Hon'ble DRP and the Ld. AO have erred on facts and in law in determining income of the Appellant from cloud services as INR 27,01,15,524, thereby completely ignoring the fact that the payments received from licensing of cloud services rights to MO pertaining to India was INR 16,20,69,314 only. 4. Transfer of TPS Credit 4.1 That on the facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in not transferring the TDS credit claimed by MRSC to MOLC in view of the mandatory directions of Hon'ble DRP and the law laid down by the Supreme Court in the case of ITO vs. Bachu Lai Kapoor (60 ITR 74) (1966) (SC). Other Grounds 5. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in levying interest amounting to INR 182,88,29,636 under section 234B of the Act. 6. That on the facts and in the circumstances of the case and in law, the Ld. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d services 3.1 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have erred in observing that amount paid by MO to Appellant was for earning income from a source in India. 3.2 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have erred in holding that the revenue earned by MRSC from cloud services amounting to INR 160,48,97,593 is taxable as "Royalty" in India in the hands of the Appellant without appreciating that the same is not in the nature of "Royalty" under India - USA DTAA. 3.3 Without prejudice to above, on the facts and in the circumstances of the case, revenue from the cloud services has been inadvertently taken as INR 160,48,97,593 instead of INR 155,16,55,505. 3.4 Without prejudice to the above, the Hon'ble DRP and the Ld. AO have erred on facts and in law in determining income of the Appellant from cloud services as INR 160,48,97,593, thereby completely ignoring the fact that the payments received from licensing of cloud services rights to MO pertaining to India was INR 96,29,38,556 only. Other Grounds 4. That on the facts and in the circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal and the Grounds mentioned above. 5. The Ground No. 1 is general in nature which enquires no adjudication. Ground No. 2 & its sub Grounds are in respect of taxability of revenue for sales software. Ground No. 3 and its Sub Grounds are in respect of taxability of consideration from cloud services. Ground No. 4 is on transfer of TDS credit. Ground No. 5 & 6 are regarding levying of interest u/s 234B and on initiation of penalty proceedings u/s 271(1)(c) of the Act. 6. Ground No. 2 and its sub grounds: The Ld. Counsel for the assessee arguing on the Ground No. 2 and its sub grounds submitted that, the authorities below failed to follow the ratio laid down on the sales of software product which will not giving rise to royalty income as held in Delhi High Court in DTI Vs. Infra Soft Ltd. to (2014) 220 Taxman 273. Further to buttress his submission, relied on the decision of Hon'ble Supreme Court of India dated 02/03/2021 in the case of Engineering Investigation centre of Excellence Pvt. Ltd. Vs. Commissioner of Income Tax (2021) 125 Taxman.com 42(S.C). The Ld. Counsel has also relied on the order of Coordinate Bench in the assessee's own case in ITA No. 1554/Del/2016 dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration [2016] 69 Taxman.com 106 (Mumbai- Trib.) and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. ITA No. 1935 & 1936/MDS/2010 dated 30/01/2015, held that the authorities fallen in error in considering the subscription received towards cloud serviced to be royalty income. 12. In the light of above binding decisions, since the Ld. DR has not produced any distinguishing facts or the decisions in the present appeal, we are inclined allow the Assessee's Grounds of appeal No. 3. 13. Ground No. 4 The Ground No. 4 is regarding transfer of TDS credit. Since, the Revenue has already given relief by passing an order u/s 154 of the Act, during the pendency of the appeal, the Ground No. 4 has becomes in-fructuous. Ground No. 5 & 6 are consequential in nature. Accordingly, we dismissed the Ground Nos. 4 to 6. 14. In the result, the appeal in ITA No 1134/Del/2017of the assessee is partly allowed. ITA NO. 7528/Del/2017 15. In view of the deciding the Appeal in ITA No 1134/Del/2017, since the assessee has raised the similar grounds of Appeal and the issue involved in the Appeal in ITA No 1134/Del/2017 are identical, we allow the Grounds of Appeal No.2, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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