TaxTMI 
TaxTMI 
2019 (1) TMI 35
X X X X Extracts X X X X
X X X X Extracts X X X X
....ault u/s.201(1) of the Income Tax Act, 1961 (in short ''the Act") and levying interest on it u/s.201(1A) of the Act, on payments made for software annual maintenance charges and payments made for what is claimed as software license fees. 2. Arguing on the grounds relating to annual maintenance charges (in short ''AMC"), ld. Counsel for the assessee submitted that assessee was primarily engaged in the business of software development. According to him, during the relevant previous year, assessee had paid annual maintenance charges aggregating to B7,91,76,107/- to various Non Resident companies, listed hereunder:- Sl. No Name of the party Country Amount (Rs.) 1 Altova GmbH Australia 4,85,179 2 Core Security....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... export of software and payments. Thus, according to the ld. Authorised Representative, source for such payments were sales made by the assessee outside India and the source being situated outside India, it could not be taxed in India. Further, as per the ld. Authorised Representative, ld. Commissioner of Income Tax (Appeals) though he considered DTAA, did not state how the assessee satisfied the test of ''making available" the technical knowledge so as to consider the AMC payments as fees for included services. Contention of the ld. Authorised Representative was that ld. Commissioner of Income Tax (Appeals) had applied certain positive and negative tests without appreciating the contention of the assessee that ''making available" in articl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee. Contention was that AMC payments made to the companies listed at para 2 above, did not make available any such technical knowledge to the assessee. Assessee has placed specific reliance on the DTAA with the respective countries. What we find is that ld. Commissioner of Income Tax (Appeals) did not go into the question whether the technical services were made available to the assessee by companies listed at para 2 above, through the AMCs. He held that the payments made, fell within the meaning of fees for technical services, applying certain tests like nature of services, requirement of professional expertise for running the services, element of human interface while providing services, whether the Non Resident companies had provided s....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... We set aside the orders of the lower authorities on this issue remit it back to the file of the ld. Assessing Officer for consideration afresh in accordance with law. 6. Adverting to the grounds relating to payments made to license for software, without deducting tax at source. Ld. Counsel for the assessee submitted that dispute was limited to payments made by the assessee to one M/s.JQ Network Pte Ltd, Singapore (in short ''JQ Network", Singapore). As per the ld. Authorised Representative, aggregate amounts paid by the assessee to the above company came to B54,86,734/-. According to ld. Authorised Representative, ld. Assessing Officer had treated assessee as one in default considering payment to M/s.JQ Network Pte Ltd, Singapore as wel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nted by JQ Network, Singapore. Relying on paper book pages 9 to 109, ld. Authorised Representative submitted that many of the invoices raised by JQ Network, Singapore clearly indicated that supply was for networking equipment and accessories. According to him, networking equipment supplied by JQ Network, Singapore had embedded software in it and the hardware would not work without such software. Further, as per the ld. Authorised Representative, the embedded software were not a standalone item but a part of the hardware. Thus, according to him, what assessee acquired from JQ Network, Singapore was networking equipment with embedded software and the question of bifurcatation thereof did not arise. Reliance was placed on the purchase orders i....