TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 48
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....ted 25/01/2016 passed u/s 143(3)/144C (1) of the Act. Since both these appeals were heard together, for the sake of convenience, the same are being disposed of together. 2. The assessee company is a Finnish Software Company incorporated and registered in Finland and is listed on the Helsinki Stock Exchange. It is a tax resident of Finland as per the provisions of Double Taxation Avoidance Agreement between India and Finland (DTAA/Treaty). The assessee is stated to develop, manufacture and deliver off the shelf mediation, charging and fulfillment solutions and software. The company's solution and software are being sold to the telephone operators who maintain and provide services in the Telecommunication Networks. The assessee company is st....
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....The same was followed for AY 09-10 and 10-11 also. The orders of the AO were also confirmed by the Hon'ble DRP. Now, in AY 11-12 also the AO has followed the orders for earlier assessment years. In A.Y. 12-13 also, the AO followed the findings in his orders of earlier years. 2.4 The assessee has now preferred appeals before the ITAT and has raised the following grounds of appeal: Grounds of ITA No. 726/Del/15 for AY 2011-12: 1. "That on the facts and circumstances of the case and in law, the impugned order passed by the Deputy Commissioner of Income Tax, Circle 1(2)(1), International Taxation, New Delhi u/s 143(3) read with section 144C of the Income-tax Act, 1961 is bad in law and void ab-initio. 1.1 That the Ld. AO grossly erred in a....
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....cial cum scientific equipment. 4. That on the facts and in the circumstances of the case and in law, the Ld. AO/DRP erred in applying the retrospective amendment introduced by the Finance Act, 2012 in the definition of Royalty under section 9(1)(vi) of the Act without appreciating that there is no corresponding amendment in the definition of royalty under the DTAA. 5. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in not allowing the TDS credit of Rs. 6,40,81,778/- ignoring the TDS certificates submitted before the AO/DRP. 6. That on the facts and circumstances of the case and in law, the Ld. AO erred in applying the tax rate of 15% on all the receipts without appreciating that the agreements entered ....
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....not appreciating the fact that the case of the Appellant is squarely covered by the judgment of the jurisdictional High Court in the case of Infrasoft Ltd. vs. ADIT [264 CTR 329 (Del)] wherein the Hon'ble High Court while interpreting a similar agreement held that the payment made for the supply of software to be used by the asessee in its own business would not amount to royalty. 3. That on the facts and circumstances of the case and in law, the Ld. AO/DRP erred in holding that the receipts in thehands of the Appellant from sale of "standard software" are in the nature of royalty as defined in section 9(1)(vi) of the Act and under Article 12(3) of the Double Taxation Avoidance Agreement between India and Finland. 3.1 That the Ld. AO/DR....
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....f grossing up ought to have been given by the Ld. AO/DRP. 6. That the Ld. AO/DRP erred in charging interest u/s 234B and 234D of the Act. 7. The Appellant craves leave to alter, amend or withdraw all or any of the grounds of objections contained herein or add any further grounds as may be considered necessary either before or during the hearing of the objections." 3. At the outset, the Ld. AR submitted that the issue that the sale of software by the assessee was chargeable to tax under Article 7 of DTAA as business income and not under Article 12 as royalty has already been settled in favour of the assessee by the ITAT Delhi 'B' Bench in assessee's own case in ITA Nos. 5411/Del/2010, 5587/Del/2011 and ITA No. 699/Del/2013 for A.Ys. 07....
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....ed as business income or as royalty. The Ld. AR has placed reliance on the decision of the ITAT Delhi 'B' Bench in its own case for A.Ys. 07-08, 08-09 and 09-10 on this issue and a perusal of the aforesaid order reveals that the reliance of the Ld. AR is well placed as the issue is squarely covered in favour of the assessee by the order of the ITAT, wherein the coordinate bench has discussed the issue at great length and has thereafter held in Paragraph 27 of the said order as under: "27. In view of this we allow ground no. 1 to 3 of the appeal of the assessee holding that sale of software by the assessee is a standard software which is chargeable to tax under Article 7 of DTAA as business income of the assessee and not under Article 12 as....