9911796707
TMI Blog2023 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... yalty, transfer of copyright in software is essential without considering the fact that transactions of assessee do not fall in four categories as mentioned in paragraph 4 of SC in its judgement of Engineering Analysis Centre. 3. Whether on the facts and in the circumstances of the case and in law, the Ed. CIT(A) is correct in holding that amounts received by EYGBS(UK) from its Member Firms is squarely covered by SC in its judgement of Engineering Analysis Centre, even though there is no direct transfer of Off the Shelf Software from Third Party Vendor to End User in the present case." 2. At the outset, the Ld. Counsel for the assessee submits that the issue in appeal is squarely covered by the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT, (432 ITR 471). The Ld. Counsel for the assessee further submits that in assessee's own case the Hon'ble Delhi High Court while setting aside the decision of the Hon'ble Authority for Advance Ruling (AAR) adjudicated the issue in favour of the assessee holding that Software License Fees, GWAN connectivity and global technology charges are not royalty under India UK DTAA as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, GWAN connectivity charges and Software license and maintenance charges are in the nature of royalty basis the ruling of Hon'ble AAR. Further, for AY 2018-19 and AY 2019-20, which assessments were made after the aforesaid decision of the Hon'ble Delhi High Court, the Ld. AO in the assessment held that Global Technology charges, GWAN connectivity charges are in the nature of royalty basis the ruling of Hon'ble AAR. The additions made by the Id.AO in assessment are tabulated as under: CIT(A) proceedings: 8. Aggrieved by the order of the Ld. AO, the Respondent had filed an appeal before the Ld. CIT(A), wherein the Ld. CIT(A) following the decision of Hon'ble Delhi High Court in Writ petition filed against AAR order and ITAT orders for AY 2012-13 to 2015-16 has held that above mentioned payments are not taxable as Royalty under India-UK DTAA and Section 9(1). Against the said order of Ld. CIT(A), the Department has filed the present appeals before the Hon'ble ITAT. Our Submissions against Department's Appeals 9. At the outset, it is respectfully submitted that the issue raised by department in Appeals for AY 2017-18 to 2019-20 is covered by decisions of Hon'ble Delhi High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reproduced herein under: "11. Accordingly, upon careful consideration, we find that undoubtedly Hon'ble Delhi High Court has reversed the order of AAR but the Hon'ble High Court order was not in existence when the authorities below passed the order. Hence it would be appropriate to remit the cases to the AO to follow the Hon'ble High Court order and give effect accordingly. 12. Our aforesaid order applies mutatis mutandis to AYs 2013-14, 2014-15 and 2015-16 also. 13. In the result, all the appeals filed by the assessee stand allowed for statistical purposes. " A copy of the order so passed by the Hon'ble ITAT is enclosed at page 59 to 68 of the Paper Book for your Honor's reference. 9.3 Against the said order of the Hon'ble ITAT dated 1st June 2022, the Department had filed an appeal before the Hon'ble Delhi HC which has been dismissed. A copy of the order dated 09 January 2023 passed by the Hon'ble Delhi HC dismissing revenue's appeal is also enclosed at page 69 to 71 of the Paper Book for your Honor's reference. Assessment proceedings for AY 2020-21 and AY 2021-22 9.4 Further, the Ld. AO in the assessment for AY 2020-21 and 2021-22 has accepted the returned incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the payments received by the appellant are pursuant to right to access a bundle of software applications and not for any right to reproduce or make copies of these applications of make commercial use of the same; the appellant neither gets nor does it provide the member firms the source code or object code pertaining to the software applications and it merely grants right to use the computer software product i.e. copyrighted product and not right to use of copyright of the computer software. Relying upon various case laws and in particular Hon'ble Supreme Court judgment in Engineering Analysis Centre of Excellence Private Limited [TS-106- SC-2021], it is contended that the impugned receipt does not amount to Royalty. It is further argued relying upon various case laws that the nature of payment was pure reimbursement and the same was not taxable on this ground as well. 8.3 The appellant has drawn attention to the Hon'ble Delhi High Court's order dated 09.12.2021 in WP(C) 11957/2016 & CM 27602/2021 wherein the High Court has allowed the writ filed by the appellant against the ruling of Hon'ble AAR by setting aside the ruling of the AAR and the Hon'ble Court held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11957/2016 & CM 27602/2021 set aside the ruling of the AAR and the Hon'ble Court held that the payment received by appellant for providing access to computer software to its members firms in India does not amount to Royalty liable to be taxed in India under the Act and India-UK DTAA. 9.4 Further, the Hon'ble ITAT has also allowed the appeal of the appellant for AYs 2012-13 to AY 2015-16 in ITA nos. 7017-7018-7019-7020/Del/2019 and directed the AO to follow the order passed by Hon'ble Delhi HC in favour of the assessee. Furthermore, the Hon'ble HC has dismissed the appeal filed by department against the said ITAT order. 9.5 St is observed that following the order of Hon'ble Supreme Court in Engineering Analysis Centre of Excellence Pvt. Ltd. [TS-106-SC-2021] and Hon'ble Delhi High Court in appellant's own case, the AO in AY 2020- 21 and AY 2021-22 has not taxed Global technology charges and GWAN connectivity charges as income. 9.6 Respectfully following the order of Hon'ble Supreme Court in Engineering Analysis Centre of Excellence Pvt. Ltd. [TS-106-SC-2021] and Hon'ble Delhi High Court in appellant's own case in WP(C) 11957/2016 & CM 27602/2021 and considering the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
