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TMI Blog2024 (7) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... Analysis Centre of Excellence (P.) Ltd. [ 2021 (3) TMI 138 - SUPREME COURT ] as held remittance made by the assessee to foreign parties on account of purchase of certain computer software, would not be liable to tax in India as royalty under the provisions of Section 9(1) (vi) - Decided in favour of assessee. - G. S. KULKARNI SOMASEKHAR SUNDARESAN, JJ. For the Appellant : Mr Suresh Kumar. For the Respondent : Mr. Percy Pardiwalla, Senior Advocate a/w. Mr. Jas Sanghavi Mr. Yash Prakash i/b. PDS Legal. ORAL JUDGMENT (PER G.S. KULKARNI, J) : 1. This is a batch of Appeals filed by the Appellant-Revenue against the Respondent-assessee, who is common in all these proceedings. 2. Income Tax Appeal (L) No. 3695 of 2018 pertains to the assessment year 2006-07 and Income Tax Appeal (L) No. 3693 of 2018 pertains to the assessment year 2010-11. Both these appeals arise from the common order passed by the Income Tax Appellate Tribunal (for short the Tribunal ). 3. There are three other connected appeals, namely, Income Tax Appeal No. 611 of 2020, Income Tax Appeal No. 621 of 2020, Income Tax Appeal No. 612 of 2020 and Income Tax Appeal No. 3081 of 2018, which pertain to the assessment year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration paid to the assessee was in fact towards a license to use the software, as no title or interest in the software was transferable to the user. The Assessing Officer accordingly held that the transaction not being a sale of the software and being a payment received for the license to use such software, it was taxable as royalty in terms of Section 9 (1) (vi) of the Act, read with relevant Article of the Double Taxation Avoidance Agreement ( DTAA ) (i.e. Article 12 under the Indo-US DTAA and similar clauses in the other DTAA s) 9. As regards the assessee s claim for refund of the TDS, the Assessing Officer noted that Reliance had claimed refund of the tax as paid by it on such transaction, on the basis of an order passed by the Commissioner of Income-Tax (Appeals) ( CIT (A) ) and hence, the claim of the assessee for refund of the amount be not entertained. Thus, the amount received by the assessee from Reliance was assessed as royalty and accordingly, was sought to be taxed. 10. Aggrieved by the orders passed by the Assessing Officer in treating such income as royalty income, the assessee approached the CIT (A). The assesee s appeal was adjudicated by the CIT (A) taking in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be treated differently and the same parameters of law would be required to be applied. 14. We find substance in the contentions raised by Mr. Pardiwalla that the question of law as raised by the Revenue in the present batch of appeals would stand covered by our orders in Income Tax Appeal No. 1655 of 2018 and also a batch of appeals decided by us on 24th June, 2024 in Income Tax Appeal No. 28 of 2018 and other connected appeals. For the sake of convenience, we note our order passed in Income Tax Appeal No. 1655 of 2018 which reads thus:- PC : 1. We have heard Mr. Suresh Kumar, Learned Counsel for the Appellant-Revenue and Mr. M. Agarwal, Learned Counsel for the Respondent. 2. At the outset, Mr. Suresh Kumar has stated that the Revenue would not have any objection for this Bench taking up the proceedings. 3. This Appeal of the Revenue assails an order dated 14th July, 2017 passed by Income Tax Appellate Tribunal ( Tribunal ), whereby a batch of appeals filed by the Revenue against the orders passed by the Commissioner of Income-Tax (Appeals) (for short CIT (A)) stand dismissed. The primary issue which had arisen for consideration of the Tribunal was as to whether the remittance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement of the Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. vs. Commissioner of Income Tax [2021] 125 taxmann.com 42 (SC) . In the said case the Assessing Officer, applying Article 12(3) of the DTAA entered between India and U.S.A. as also the provisions of Section 9 (1) (vi) of the IT Act ,to the transaction between the parties, held that the transaction involved copyright, which attracted the payment of royalty and accordingly, tax was required to be deducted at source by the Indian importer. Since this was not done, it was held that the assessee was liable to make good the payment of TDS which it had not deducted. Also interest under Section 201(1)(A) of the Act was levied. The Appeal before the Commissioner was also dismissed. 9. In these circumstances, the proceedings had reached the Tribunal at the instance of the assessee. The assessee succeeded in these proceedings, with the ITAT setting aside the concurrent findings of both the authorities below. On such backdrop, the proceedings reached the High Court. 10. The High Court of Karnataka, in similar proceedings, on examination of the End User Licence Agreement ( EULA ) involved in such trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end-users/distributors to nonresident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in section 195 of the Income-tax Act were not liable to deduct any TDS under section 195 of the Income-tax Act. The answer to this question will apply to all four categories of cases enumerated by us in paragraph 4 of this judgment. 170. The appeals from the impugned judgments of the High Court of Karnataka are allowed, and the aforesaid judgments are set aside. The ruling of the AAR in Citrix Systems (AAR) (supra) is set aside. The appeals from the impugned judgments of the High Court of Delhi are dismissed. (emphasis supplied) 11. It is not in dispute that transactions in the present case are similar to what had fell for consideration of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd (supra). Also there is no dispute that there is a DTAA entered with the countries in question, with who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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