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TMI Blog2022 (8) TMI 1548X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act as well as Article 12(13) of the DTAA between India and the USA. Co-ordinate Bench of the Tribunal also held that assessee being a non resident company incorporated in the USA would not be liable 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. - Decided in favour of assessee. - Pramod Kumar (Vice President) And Amit Shukla (Judicial Member) For the Appellant : Punith Golecha Akshay Kumar For the Respondent : Milind Chavan. ORDER PER PRAMOD KUMAR, VP: 1. By way of this appeal, the assessee appellant has challenged correctness of the order dated 6th January, 2022 passed by the Assessing Officer under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, for the assessment year 2018-19. 2. Grievances raised by the assessee appellant are as follows : 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 ), lacks jurisdiction and is liable to be struck down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copyright in the computer software, and held that such income shall not taxable in the hands of the nonresident. 2.7. The learned AO erred in not granting the TDS credit to the extent of INR 8,84,58,733 claimed by the appellant in the Income tax return as per form 26AS. 2.8. The learned AO erred in levying interest under section 234A of the Act. 2.9. 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. 3. Learned representatives fairly agree that the issues in appeal are squarely covered, in favour of the assessee, by decisions of the co-ordinate benches in assessee s own cases, for the assessment years 2003-04 to 2016-17 - copies of which are placed before us at pages 1 to 129 of the Paper Book. Learned counsel for the assessee has also invited our attention to the latest decision dated 27.05.2022 on the same issue and in assessee s own case for the assessment year 2017-18, which, inter alia, observes as follows : 9. We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2016-17 available at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee s own case for the A.Y. 2002-03 in ITA No. 3095/Mum/2007 order dated 15th December 2009 and for the A.Y. 2005-06 in ITA No. 5097/Mum/2008 order dated 1st April 2010 and for A.Y. 2006-07 in ITA No. 3219/Mum/2010 order dated 08.02.2012 and for A.Y. 2007-08 in ITA No. 8721/Mum/2010 order dated 31.03.2016 and for A.Y. 2009-10 in ITA No. 7790/Mum/2012 order dated 31.03.2016. Therefore, in the said circumstances, the order passed by the Assessing Officer on the direction of the DRP is wrong against law and facts and is liable to be set aside and the receipt is not liable to be treated as royalty. It is also argued that when no patent right was sold however computer programs were sold which could not be taxed in view of the provision u/s.9(1) of the Act therefore in the said circumstances the amount in question is not liable to 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 Electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the views expressed below by the coordinate benches: ..It will be wholly inappropriate for us to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoint, as such an exercise will be de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon ble High Courts, adopt an objective criterion for deciding as to which of the Hon ble High Court should be followed by us. 8. We find guidance from the judgment of Hon ble Supreme Court in the matter of CIT Vs. Vegetable Products Ltd. 1973 CTR (SC) 177 : (1972) 88 ITR 192 (SC). Hon ble Supreme Court has laid down a principle that if two reasonable constructions of a taxing provisions 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 6 ITA No. 7027/MUM/2018 (A.Y: 2015-16) Dassault Systems Solidworks Corporation (P.) Ltd. Anr. Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon ble Supreme Court in the Commissioner of Income Tax V. Vegetable Product Ltd. (1973) 88 ITR 192 and in Mauri Yeast India Pvt. Ltd. Vs. State of U.P. (2008) 14 VST 259 (SC) : (2008) 5 S.C.C. 680 has held that, if two views in regard to the interpretation of a provision are possible, the Court would be justified in adopting that construction which favours the assessee. Reliance can also be placed in this regard on the 7 ITA No. 7027/MUM/2018 (A.Y: 2015-16) Dassault Systems Solidworks Corporation decision of Hon ble Supreme Court in Bihar State Electricity Board and another Vs. M/s. Usha Martin Industries and another : (1997) 5 SSC 289. We accordingly adopt the construction in favour of the assessee. [Capgemini Business Services India Ltd. Vs. ACIT (TS 100 ITAT 2016 (Mum)] 6. In view of the above discussion and having 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eipts from sale of Shrink-wrap software is not liable to tax in India accordingly, AO was directed to delete the addition so made on account of receipts for sale of Shrinkwrap software. Facts and circumstances in both the years under consideration are parimateria, therefore, respectfully following the order of the Tribunal in assessee s own case, we do not find any justification for taxing the receipt as taxable as royalty. 6. No distinguishing facts have been brought to our notice. Thus, facts being identical, respectfully following the said decision we allow the ground raised by the assessee on this issue. 10. So following the earlier year precedence on the identical issue by the co-ordinate Bench of the Tribunal, we are of the considered view that income derived by the assessee from the sale of shrink wrapped software being a copy righted article would not be construed as royalty under the provisions of section 9(1)(vi) of the Act as well as Article 12(13) of the DTAA between India and the USA. Co-ordinate Bench of the Tribunal also held that assessee being a non resident company incorporated in the USA would not be liable to tax in India in respect of the receipt from the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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