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TMI Blog2024 (9) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... st the very essence of the provision, which does not put the condition of existence of PE for applicability of the provision. Thus, in our view, the conclusion drawn by DRP that the amounts received are in the nature of royalty u/s 9(1)(vi) read with section 115A of the Act is unacceptable. We accept the position taken by the assessee in offering the income to tax under section 44BB of the Act, as, it is in accordance with the statutory provision. Accordingly, we direct the AO to compute the income in both the assessment years under dispute under the provisions of section 44BB - Assessee appeal allowed. - Shri Vikas Awasthy, Judicial Member And Shri Naveen Chandra, Accountant Member For the Appellant : Shri Ved Jain, Advocate And Ms. Supriya Mehta For the Respondent : Shri Vizay B Vasanta, CIT-DR ORDER PER VIKAS AWASTHY, JM: These three appeals by the assessee are against the assessment orders passed u/s. 147 r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as the Act ), for AYs. 2013-14, 2014-15 2015-16, respectively. 2. Since, identical issues are involved in all the three appeals, these appeals are taken up together for adjudication and are decided by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide directions dated 23.02.2024 rejected objections and confirmed the addition made by AO. The AO vide impugned assessment order completed the assessment in accordance with the directions of DRP. Hence, the present appeal. 5. Shri Ved Jain appearing on behalf of the assessee submitted that the issue in appeal is identical to the issue raised by the assessee in appeals for AY 2012-13 and 2017-18 in ITA No. 569 570/Del/2021, respectively. The Tribunal after examining the issue threadbare vide order dated 01.02.2023 held that income of the assessee is taxable u/s. 44BB of the Act and directed the Assessing Officer to compute income in both the assessment years, accordingly. Against the said order of Tribunal, the Revenue carried the issue in appeal before the Hon ble Delhi High Court for both the assessment years i.e. 2012-13 2017-18 in ITA No. 153/2024 and 160/2024, respectively. The Hon ble Delhi High Court upheld the findings of the Tribunal and dismissed appeals of the Revenue. The ld. Counsel submits that since the issue in AY 2013-14 is identical to AY 2012-13 2017-18, the relief granted by the co-ordinate Bench in AY 2012-13 should be allowed to the assessee in impugned asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scope of royalty under explanation (2) was enlarged with introduction of clause (iva) w.e.f. 01.04.2002, which reads as under: Income deemed to accrue or arise in India. 9. (1) The following incomes shall be deemed to accrue or arise in India :-- 37(i) to (v).......................................... (vi) income by way of royalty payable by-- (a) ......................................... (b) ........................................ (c) ..................................... ............................................ Explanation 2.--For the purposes of this clause, royalty means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains ) for-- (i) ....................................; (ii) ....................................; (iii) ....................................; (iv) ...................................... (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; 10. A careful reading of clause (iva) to explanation 2 would make it clear that the term 'royalty' will also mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) to explanation 2 to section 9(1)(vi) of the Act while concluding that the amount received is in the nature of royalty under section 9(1)(vi) read with section 115A of the Act. One more fundament error committed by learned DRP is in holding that section 44BB will be applicable only in a case where non-resident has a PE in India. The aforesaid conclusion of learned DRP is based on complete misinterpretation of the provision and goes against the very essence of the provision, which does not put the condition of existence of PE for applicability of the provision. 13. Thus, in our view, the conclusion drawn by learned DRP that the amounts received are in the nature of royalty under section 9(1)(vi) read with section 115A of the Act is unacceptable. 14. On the contrary, we accept the position taken by the assessee in offering the income to tax under section 44BB of the Act, as, it is in accordance with the statutory provision. In course of hearing, learned counsel appearing for the assessee has cited the following decisions in support of its claim that the amount is taxable under section 44BB of the Act: 1. Schlumberger Asia Services Ltd. Vs. Deputy Director of India Tax (Internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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