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TMI Blog2023 (7) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of tax at source u/s. 195. No error in the reasons given by the CIT(A) to delete additions made by the AO towards disallowance of software support charges u/s. 40(a)(i) for non-deduction of tax at source u/s. 195 - Decided in favour of assessee. - ITA No.: 1088/Chny/2022 - - - Dated:- 28-6-2023 - Shri V. Durga Rao, Hon ble Judicial Member And Shri Manjunatha. G, Hon ble Accountant Member For the Appellant : Shri. S. Senthil Kumaran, CIT For the Respondent : Shri. S.P. Chidambaram, Advocate ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: This appeal filed by the revenue is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-16, Chennai, dated 07.10.2022 and pertains to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016, declaring a total income of Rs. 60,35,01,705/-. The assessment has been completed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) on 31.12.2019 and determined total income of Rs. 90,11,91,040/-, by making additions towards disallowance of software support charges u/s.40(a)(i) of the Act, for non-deduction of TDS u/s. 195 of the Act for Rs. 29,76,89,335/-. The assessee carried the matter in appeal before the first appellate authority. The ld. CIT(A), for the reasons stated in their appellate order dated 07.10.2022, and by following the decision of ITAT, Chennai Benches in assessee s own case for assessment year 2009-10 to 2015-16 in ITA No. 1862 to 1868/Mds/2017 dated 23.10.2017, deleted additions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.12.2021, where the Hon ble High Court by following the decision of Hon ble Supreme Court in the case of M/s. Engineering Analysis Centre of Excellence Pvt Ltd vs CIT (supra), held that the assessee is not liable to TDS on payments made to non-resident towards software support charges and consequently expenses cannot be disallowed u/s. 40(a)(i) of the Act. 6. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that the issue is now stands covered in favour of the assessee by the decision of Hon ble High Court of Madras in assessee s own case for earlier assessment years in TCA No. 549, 554, 555 558 of 2021, where the Hon ble High Court of Madras by following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia have permanent establishment in India through the medium of assessee company and as such liable to deduct tax at source on the payment received? 3. Whether the Tribunal was right in holding that the amounts paid by the assessee company to the non resident company for use of the assessee customer in India of operating net work payments, ATMs is not Royalty as per the provisions of Section 9(1) (vi) of the Income Tax Act? 4. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that payments made to two companies no TDS is required to be deducted under Section 195 of the Income Tax Act? 3. We have heard Mr.Karthik Ranganathan, the Standing Counsel for learned Senior ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the entire issues, the Hon'ble Supreme Court held as follows : 172. Given the definition of royalties contained in Article 12 of the DTAAs mentioned in paragraph 41 of this judgment, it is clear that there is no obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end Users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9 (1) (vi), along with explanations 2 and 4 there of), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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