2016 (12) TMI 1598 - HC - Income Tax

Court grants exemptions, upholds ITAT's royalty interpretation under tax treaty

The Court allowed applications despite a 90-day delay, granted exemptions subject to conditions, and upheld the ITAT's interpretation of royalty under ... Amounts paid by the assessee to its licensors - whether sum amounted to royalty within the meaning of the expression under Section 9(1)(vi) and Article 12 of the Indo-Finland Double Taxation Avoidance Agreement (DTAA)? - Held that:- The Income Tax Appellate Tribunal (ITAT) followed the previous judgments of this Court including the judgment in DIT v. Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] and also the judgment – DIT (International Taxation) vs. Nokia Networks (2012 (9) TMI 409 - DELHI HIGH COURT ). The later decision had an occasion to interpret the same provision in the context of the very same treaty. Since the ITAT has followed the previous binding judgments of this Court, the present appeals do not raise a substantial question of law. Issues:1. Delay in filing applications2. Exemption applications3. Interpretation of royalty under Section 9(1)(vi) and Article 12 of the Indo-Finland DTAA4. Application of previous judgmentsDelay in filing applications:The judgment addressed the delay of 90 days in filing various applications related to the case. The Court allowed the applications based on the reasons provided, indicating a lenient approach towards the delay issue.Exemption applications:Two exemption applications were considered in the judgment, one in relation to ITA 899/2016 and the other in relation to ITA 900/2016. The Court granted the exemptions subject to all just exceptions, implying a conditional approval of the exemptions sought.Interpretation of royalty under Section 9(1)(vi) and Article 12 of the Indo-Finland DTAA:The primary issue in the appeals was whether the amounts paid by the assessee to its licensors constituted royalty as per Section 9(1)(vi) and Article 12 of the Indo-Finland DTAA. The judgment highlighted that the ITAT had followed previous decisions of the Court, including the cases of DIT v. Infrasoft Ltd. and DIT vs. Nokia Networks OY, to interpret the relevant provisions. As the ITAT's application of law was deemed sound and in line with the previous judgments, the Court concluded that no substantial question of law was raised in the present appeals.Application of previous judgments:The judgment emphasized that since the ITAT had relied on binding judgments of the Court, the appeals did not present any new substantial legal questions. The Court expressed satisfaction with the ITAT's application of the law and dismissed the appeals based on the soundness and propriety of the ITAT's decisions.