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TMI Blog2022 (11) TMI 1529X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax in India in respect of the receipt from the sale of software by treating the same in the nature of royalty and as such ordered to be deleted. Merely because of the fact that the Revenue has gone in appeal in the earlier years the findings returned by the coordinate Bench of the Tribunal cannot be brushed aside and AO is directed to delete the addition under the head Royalty. Decided in favour of assessee. - Shri Vikas Awasthy, Judicial Member And Shri Gagan Goyal, Accountant Member For the Appellant : Sh. Ananthakrishnan. N. For the Respondent : Sh. Soumendu Kumar Dash, Sr. DR. ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of Dispute Resolution Panel-1, Mumbai (CIT-DRP-1) read with assessment order passed under section 143(3) read with section 144C (13) of the Income Tax Act, 1961 (for short the Act ). The assessee has raised the following grounds of appeal: 1. General 1.1. The order of the learned Assessing Officer ( AO ) is contrary to canons of equity and natural justice, contrary to law and facts involved, not based on facts and circumstances of the case, contrary to mandatory provisions of the Income-tax Act, 1961 ( Act ), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers/ suppliers, is not payment for royalty for the use of copyright in the computer software, and held that such income shall not taxable in the hands of the non-resident. 2.7. The learned AD erred in levying interest under section 234A of the Act. 2.8 The learned AO erred in levying interest under section 234B of the Act. Each of the above ground is independent and without prejudice to the other grounds of appeal preferred by the Appellant. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Honourable Income Tax Appellate Tribunal to decide this appeal according to law. 2. Briefly stated facts necessary for adjudication of the controversy at hand are: assessee is a non resident company incorporated in USA, which is into the business of developing and marketing of 3D mechanical design solutions. The shrink wrap application software developed and sold by the assessee is used for 3D modelling. For the year under consideration the assessee has entered into software distribution agreement with reseller in India who buys shrink wrapped software from the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue has already been decided in favour of the assessee by the Tribunal but the department intends to keep this issue alive as it has already gone in appeal against the earlier order before the Hon ble Bombay High Court. 9. We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2017-18 available at page 9 to 20 of the case law paper book, which is on the identical issue in the identical facts and circumstances of the case. No distinguishable facts have been brought on record by the Ld. Lower Revenue Authorities. Co-ordinate Bench of the Tribunal in order dated 30.06.2020 for A.Y. 2016-17 held that income derived by the assessee from the sale of shrink wrapped software being a copy righted article would not be construed as royalty by returning following findings: 9. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. On a perusal of the recent order of the Tribunal i.e. ITAT I Bench, Mumbai, in the assessee s own case for the immediately preceding year i.e. A.Y 2015-16 in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as royalty. However, on the other hand, the learned representative of the department has refuted the said contentions and argued that the Hon ble Karnataka High Court has decided the issue in favour of the revenue in the cases of CIT Vs. Synopsis International Old Ltd., 212 Taxman 0454 (Kar. HC), dated 03.08.2010, CIT V. Samsung Electronics Co. Ltd. Others, (2011) 345 ITR 0494, Kar HC, dated 15.10.2011, CIT V. Wipro Ltd. (2011), 355 ITR 0284 (Kar.) / 203 Taxman 621 (Kar.) HC, dated 15.10.2011 and CIT Vs. CGI Information Systems and Management Consultants (P) Ltd., (2014) 48 Taxmann.com 264 (Kar), dated: 09.06.2014. It is also specifically argued that the Jurisdictional Tribunal in case of the DIT (IT) Vs. Reliance Infocomm Ltd. (Mum.Trib.) dated 06.09.2013 has followed the decision of Hon ble Karnataka High Court in the case of CIT Vs. Synopsis International Old Ltd., 212 Taxman 0454 (Kar. HC), dated 03.08.2010 and CIT vs. Samsung Electronics Co. Ltd. Others, (2011) 345 ITR 0494, Kar HC, dated 15.10.2011. Therefore, in the said circumstances the order passed by the ITA No. 7027/MUM/2018 (A.Y: 2015-16) Dassault Systems Solid works Corporation Assessing Officer is justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are possible, that construction which favours the assessee must be adopted . This principle has been consistently followed by the various authorities as also by the Hon ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction in ITA No. 7027/MUM/2018 (A.Y: 2015-16) Dassault Systems Solid works Corporation (P.) Ltd. Anr. Vs. CBDT Ors. (1998) 75 CTR (SC) 20: (1989) 175 ITR 523 (SC), it has been reiterated that the above principle of law is well established and there is no doubt about that. ITA No. 936/M/2015 A.Y. 2011- 12 Hon ble Supreme Court had, however, some occasions to deviate from this general principle of interpretation of taxing statute which can be construed as exceptions to this general rule. It has been held that the rule of resolving ambiguities in favour of taxpayer does not apply to deductions, exemptions and exceptions which are allowable only when plainly authorized. This exception, lain down in Littman vs. Barron 1952(2) AIR 393 and followed by apex Court in Mangalore Chemicals Fertilizers Ltd. vs. Dy. Comm. of CT (1992) Suppl. (1) SCC 21 and Novopan India Ltd. vs. CCE C 1994 (73) ELT 769 (SC), has been summed up in the words of Lord L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing noted that there is no material difference in the facts of the case for this year vis- -vis the facts of the assessment year 2006-07 as discussed above, respectfully following the views of the coordinate benches, we uphold the grievance of the assessee. It is, therefore, held that the receipts of Rs. 19, 20, 14,000/- on account of receipts for software are not exigible to tax in India. The Assessing Officer is, therefore, directed to delete the impugned addition of Rs. 19, 20, 14,000/. 7. In the result, the appeal is allowed. Pronounced in the open court today on 31st day of March, 2016. 5. However, the present case has been decided in view of the latest law settled by the Hon ble Delhi High Court in case of Ericsson AV (343 ITR 470) (Del.) On appraisal of the above mentioned finding, it came into the notice that the Hon ble Delhi High Court in case of DIT Vs. Infrasoft Ltd. 264 CTR 329 (Del.) and in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 (SC) has decided this issue in favour of the assessee. Since, the matter has also been considered by the Hon ble Income Tax Appellate Tribunal and decided this issue in favour of the assessee specifically for the A.Y. 2002- 03 in I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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