TaxTMI 
TaxTMI 
2018 (5) TMI 1318
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.... 2. The grounds of appeal are as under:- ITA No. 3312/Del/2016 (Assessment Year 2008-09) 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the consideration received by the assessee from various entities on account of sale of software is not royalty within the meaning of Article 13 of the India-UK DTAA ('DTAA'). 2. Whether the Ld. CIT(A) has erred in not considering the effect of Article 3(2) of the DTAA in terms of which any term not defined in the DTAA is deemed to have the same meaning as it has under the domestic law and therefore, the clarification provided in explanation 4 to section 9(l)(vi) of the Act can be used for interpreting the terms used in Article 13 of the DTAA. 3. Whether on stated facts and in law the Ld CIT(A) has erred in not giving the effect of the subsequent amendment to Section 9(l)(vi) of the Act and also whether the amount received for use of software would be royalty in terms thereof. 4. the appellant craves to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal. ITA No. 2376/Del/2016 (Assessment Year 2009-....
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....he Income-tax Act, 1961 ("the Act") dated 19 January 2016 for the Assessment Year 2010-2011 passed by the Deputy Commissioner of Income Tax, Circle 2(2)(1), Intl. Taxation, New Delhi 1. That on the facts and in the circumstances of the case and in law, the assessment order passed under section 144C(1) read with section 147/143(13) of the Income-tax Act, 1961 ('the Act') by the Assessing Officer (' the AO') is erroneous and bad in law as well as in facts. 2. That on the facts and in the circumstances of the case and in law, the AO/Dispute Resolution Panel ("DRP") has erred in law by proposing to hold that the receipt from the sale of software products in India amounting to INR 126, 466, 420 is taxable as 'Royalty' as per the provisions of section 9(1 )(vi) of the Act read with Article 13 of the India-UK Double Taxation Avoidance Agreement ('DTAA'). 3. That on the facts and circumstances of the case and in law, the AO/DRP has erred in law in ignoring the submissions placed on record by the assessee during the course of the assessment proceedings, and in not appreciating that the amount received from the sale of software is business income which in the absen....
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.... 1. That on the facts and in the circumstances of the case and in law, the AO/Dispute Resolution Panel ("DRP") has erred in law by proposing to hold that the receipt from the sale of software products in India amounting to INR 190, 710, 730 is taxable as 'Royalty' as per the provisions of section 9(l)(vi) of the Act read with Article 13 of the India-UK Double Taxation Avoidance Agreement ('DTAA'). 2. That on the facts and circumstances of the case and in law, the AO/DRP has erred in law in ignoring the submissions placed on record by the assessee during the course of the assessment proceedings, and in not appreciating that the amount received from the sale of software is business income which in the absence of Permanent Establishment, cannot be made taxable in India. 3. That on the facts and circumstances of the case and in law, the Ld. AO has erred in concluding that the assessee had accepted that its receipts are not taxable in India on the basis of the fact that the assessee had not applied for no or nil withholding tax certificates under section 195/197 of the Act. 4. That the AO has erred in charging interest under section 234B of the....
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....f royalty both under the Act and treaty as well. The same is under the Clause of distributors Agreement which is referred by the Assessing Officer in the assessment order. The Ld. AR relied upon the Hon'ble Delhi High Court decision in case of Infra Soft Ltd. (2013) 39 Taxman. com 88. 6. We have heard both the parties and perused the material available on record. The Distributer Agreement gives non exclusive ratio to only distributor to market and distribute the software products to third parties throughout the territory distributor will Act as independent Contractor only and will neither Act on behalf of Micro Focus nor purport to represent Micro Focus in any way. Thus, the Ld. AR submitted that the consideration received by the micro focus from the customers in India towards off shore supply of software could not be charitable to tax in India under the Act read with India UK Tax. The assessee enters into contracts with its customers on principal to principal basis and that the sale of software licenses is made outside of India. No portion of sale is carried out in India and the payment is made directly by the customers to the bank account in United Kingdom. It is pertinent to ....
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....view from this angle on non exclusive and non transferable license in attempting the use of a copy righted product cannot be construed as an authority to enjoy any or all of the enumerated rights ingredient article 12 of DTAA. The license granted to the licensee permitting him to do the computer program and storing it in the computer for his own use is only incidental to the facility extended to the licensee to make use of the copy righted product for his internal business purpose. The said process is necessary to make the program functional and to have excess to it and is qualitatively different from the right contemplated by the said paragraph because it is only integral to the use of copy righted product apart from such incidental facilities. The licensee has no right to deal with the product just as the owner would be in a position to do. The licensee has been prohibited from copying, decompiling, de-assembling or reverse engineering the software without the written consent of Infra Soft. The license agreement between Infra Soft and its customers stipulates that all copyrights and intellectual property rights in the software and copies made by the licensee were own by Infrasoft....
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.... Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement. 61. For the above reasons, it is held that the interpretation advanced by the Revenue cannot be accepted. The question of law framed is accordingly answered against the Revenue. The appeals fail and are dismissed, without any order as to costs. " Therefore, in fact, the reliance of New Sky Satellite by the Ld. DR is favouring the assessee's case and the issue involved before us is squarely covered by the judgment of Infra Soft Pvt. Ltd. as well as New Sky Satellite (Shine Satellite). 9. In result, appeal being ITA No. 3312/DEL/2016 for A. Y. 2008-09 filed by the Revenue is dismissed. 10. As regards to ITA No. 2376/DEL/2016 for A. Y. 2009-10 and ITA No. 2377/DEL/2016 for A. Y.....