TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 468
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.... reimbursement of software and license renewal. 4. The Assessing Officer came to the conclusion that such payments made by the assessee attracted withholding tax provisions and as such the assessee was required to deduct tax at source on such payments rendering the assessee as "assessee in default" section 201 (1) of the Act. By treating the assessee as assessee in default the Assessing Officer levied a tax demand u/s 201 (1) and interest u/s 201(1A) of the Act. 5. Aggrieved, the assessee agitated the matter before the CIT(A) but without any success. 6. Before us the counsel for the assessee vehemently stated that all the payments made to non-resident were reimbursement of travel expenses, research expenses and seminar, training and conference expenses. It is the say of the counsel that all the reimbursement are duly supported by the invoices alongwith certificate of the Chartered Accountant accordingly reliance was placed on the decision of Hon'ble High Court of Bombay in the case of Krupp Udhe GmbH 354 ITR 173. Reliance was also placed on the decision of the Hon'ble High Court of Delhi in the case of Industrial Engineering Projects Private Limited 202 ITR 1014. 7. Per contra ....
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.... June 26,2007 integralis SAS Reimbursement of software and license renewal expenses EUR 5,678 June 26, 20 Integralis SAS Reimbursement of software and license renewal expenses EUR 5,702 October 16, 2007 Swedley Place Ltd. UK Design Development charges GBP 12,500 (Tax already deducted and deposited of GBP 1,822) January 10, 2008 Pernod Ricard, France Reimbursement of software and license renewal expenses EUR 27,000 January 30, 2008 Integralis SAS Reimbursement of software and license renewal expenses EUR 4,284 February 22, 2008 9. It is a settled principal of law that any payment made to non-resident become subject to withholding tax u/s 195 of the Act only when it is chargeable to tax in India. As per the copy of the agreement placed at pages 1 to 6 of the paper book it was agreed by the assessee to reimbursem travelling expense and other incidental expenses on actual basis. The invoices raised by Jean Manuel Jackquinot which is at page 7 clearly show that the same is for travelled expenses / visa charges/ car parking charges and diesel reimbursements which is further supported by a certificate by Chartered Accountant placed at page 8....
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....emens Aktiorigesellschaft 120091 310 ITR 320/177 Taxman 81. a Division Bench of this court held that it was in agreement with the view taken by the Calcutta High Court in Dunlop Rubber Co. Ltd. case (supra) and by the Delhi High Court in CIT v. Industrial Engineering Projects (P.) Ltd. 119931 202 ITR 1014 (Delhi). The observations of this court in Siemens Aktiongesellschaft (supra) are as follows (page 340): "That leaves us with the last contention as to whether the amounts by way of reimbursement are liable to tax. To answer that issue, we may gainfully refer to the judgment of a Division Bench of the Delhi High Court in CIT v. Industrial Engineering Projects (P.) Ltd. [1993] 202 ITR 1014 (Delhi). The learned Division Bench of the Delhi High Court was pleased to hold that reimbursement of expenses can, under no circumstances, be regarded as a revenue receipt and in the present case the Tribunal had found that the assessee received no sums in excess of expenses incurred. A similar issue had also come up for consideration before the Division Bench of the Calcutta High Court in CIT v. Dunlop Rubber Co. Ltd. [1983] 142 ITR 493 (Cal). The learned Division Bench was answering the fol....
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....he use of copy right itself and not for the use of copy righted article. The Assessing Officer accordingly treated the income from software licenses in the nature of royalty. 14. The CIT(A) confirmed the findings of the Assessing Officer. 15. Before us the counsel for the assessee reiterated what has been stated before the lower authorities. 16. We have carefully perused the orders of the authorities below and have also considered the relevant invoices brought on record in the paper book filed. On perusal of the invoices supported by the certificate from a Chartered Accountant show that amount paid are either annual maintenance charges or for the use of software or for software maintenance or the payments were made for antivirus software, anti spam software etc. The invoices clearly show that the payments have been made for the use of copy righted article. The Hon'ble High Court of Delhi in the case of Infrasoft Limited 264 CTR 329 has held that amount received by the assessee a non-resident company for granting license to use its copyrighted software for licensee own business purpose only could not be brought to tax as royalty under article 12 (3) OF India USDTA. The relevant f....
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.... purposes. It is also stipulated that the copy so made shall include Infrasoft's copyright and other proprietary notices. AH copies of the Software are the exclusive property of Infrasoft. The Software includes a licence authorisation device, which restricts the use of the Software. The software is to be used only for Licensee's own business as defined within the Infrasoft Licence Schedule. Without the consent of the Assessee the software cannot be loaned, rented, sold, sub-licensed or transferred to any third party or used by any parent, subsidiary or affiliated entity of Licensee or used for the operation of a service bureau or for data processing. The Licensee is further restricted from making copies, decompile, disassemble or reverse-engineer the Software without Infrasoft's written consent. The Software contains a mechanism which Infrasoft may activate to deny the Licensee use of the Software in the event that the Licensee is in breach of payment terms or any other provisions of this Agreement. All copyrights and intellectual property rights in and to the Software, and copies made by Licensee, are owned by or duly licensed to Infrasoft. 90. In order to qualify a....