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TMI Blog2022 (7) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ELHI] , came up for consideration before 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. - I.T.A. No. 1135/Del/2017 I.T.A. No. 7257/Del/2017 I.T.A. No. 6832/Del/2018 - - - Dated:- 5-7-2022 - DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER Appellant by : Sh. Nageshwar Rao, Adv and Sh. Akshay Uppal, Adv Respondent by : Ms. Anupama Anand, CITDR ORDER PER YOGESH KUMAR U.S., JM These three appeals have been preferred by the assessee for the assessment years 2013-14, 2014-15 2015-16 against orders dated 31/01/2017, 31/10/2017 31/08/2018 respectively passed u/s 143(13) read with Section 144C (1) of the Act, by DCIT, International Taxation, New Delhi . I.T.A. No. 1135 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in levying surcharge and education cess on interest on income-tax refund, which is taxable as per the at the rate of 15% as prescribed under the India - USA DTAA. 6. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in not granting the TDS credit of INR 13,74,99,642 to the Appellant. 7. 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 27,08,71,276 under section 234B of the Act. 8. That on the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under section 271(l)(c) of the Act against the Appellant. I.T.A. No. 7257/Del/2017 (A.Y 2014-15) 1. That on the facts and in the circumstances of the case and in law, the Deputy Commissioner of Income Tax, Circle - 2(2)(1), International Taxation, Delhi ( Ld. AO ) has erred in computing the total income of the Appellant at INR 2270,03,49,198 as against the returned income at INR 72,08,35,574. 2. Taxability of revenue from sale of software 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd without prejudice to each other. The appellant craves leave to add, alter, amend and / or modify any of the grounds of appeal at or before the hearing of the appeal. I.T.A. No. 6832/Del/2018 (A.Y 2015-16) 1. That on the facts and in the circumstances of the case and in law, the Deputy Commissioner of Income Tax, Circle - 2(2)(1), International Taxation, Delhi ( Ld. AO ) has erred in computing the total income of the Appellant at INR 16,58,61,71,149 as against the returned income of INR 26,11,80,744. 2. Without prejudice to other grounds, Ld. DRP and LD. AO failed to appreciate that in any case income is not chargeable in appellant s hands under Income Tax Act, 1961 as the same was earned outside of India. 3. Taxability of revenue from sale of software 3.1 That on the facts and in the circumstances of the case and in law, the Ld. Dispute Resolution Panel ( Ld. DRP ) and the Ld. AO have erred in holding that receipt of INR 14,57,54,90,041 earned by the Appellant from sale of Microsoft Retail Software Products to distributors belonging to India is taxable as Royalty ignoring the fact that the same is not in nature of Royalty under Article 12 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under section 271(l)(c) of the Act against the Appellant. The above grounds of appeal are mutually exclusive and without prejudice to each other. The appellant craves leave to add, alter, amend and / or modify any of the grounds of appeal at or before the hearing of the appeal. I.T.A. No. 1135/Del/2017 (A.Y 2013-14) 2. Brief facts of the case are that, erstwhile M/s Microsoft Regional Sales Corporation ( MRSC ) now called as Microsoft Regional Sales Pte. Ltd. is a Company incorporated in USA and is wholly owned subsidiary of Microsoft Corporation, USA. The assessee is engaged in the business of distribution of Microsoft regional products in the Asia Pacific region, including India. 3. A return of income of Rs. 204,90,61,907/- was filed by the assessee on 30/09/2013 claiming TDS of Rs. 381,22,30,714/- and a revised return claiming the same income of Rs. 204,90,61,907/-, claiming the TDS of Rs. 392,67,91,700/- was filed on 31/03/2105. The case was selected for scrutiny and the notices were issued. In response, the Representative of the assessee attended the proceedings. A final assessment order came to be passed on 31/01/2017 u/s 143(13) read with Section 144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in DTI Vs. Infra Soft Ltd. to (2014) 220 Taxman 273 and also in 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 ratio laid down in the above judicial pronouncements have been relied by the Coordinate Bench in the Assessee s own case in ITA No. 1615/Del/2015 and 1970/Del/2014 for the AY 2010-11 and 2011-12 and decided the issue in favour of the assessee . 9. We have applied the above legal proposition laid down by the Hon'ble Supreme Court and also the Coordinate Bench of this Tribunal in Assessee s own case (supra) for the AY 2010-11 and 2011-12. Thus, we are also of the opinion that the sale of software product does not give rise to the royalty income. In the light of aforesaid, since there are no distinguishing facts with regard to present Assessment Year than the Assessment Year 2010-11 and 2011-12, we allow the Ground No. 2 and its Sub Grounds of the assessee. 10. Ground No. 3 The Ld. Counsel for the assessee submitted that, the authorities below have failed to appreciate functional aspect of cloud base ..... X X X X Extracts X X X X X X X X Extracts X X X X
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