TaxTMI 
TaxTMI 
2019 (5) TMI 939
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....tax Act, 1961 (in short 'the Act'). 2. All the three appeals relating to the same assessee for different assessment years on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. In order to adjudicate the issues, we make reference to the facts and issues in ITA No.195/PUN/2017, relating to assessment year 2010-11. 3. The assessee in ITA No.195/PUN/2017, relating to assessment year 2010-11 has raised the following grounds of appeal:- 1. Ground 1: On the facts and circumstances of the case, and in law, the Learned Dispute Resolution Panel ('Ld. DRP') erred in confirming the action of the Learned Assessing Officer ('Ld.AO') in reopening the assessment proc....
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....AO has erred in levying education cess on the rate of tax specified in the tax treaty. It is prayed that education cess levied by Ld. AO be deleted 5. Ground 5 Without prejudice to the above grounds and on the facts and circumstances of the case, and in law, should the addition be confirmed Ld. AO has erred in levying interest under section234B of the Income Tax Act, 1961 ("the Act‟) while computing the tax and interest liability on income of the assessee foreign Company. It is prayed that the interest under section 234B levied by the Ld. AO be deleted. 4. Briefly, in the facts of the case, the assessee was non-resident foreign company. The assessee had received IT support services fees of Rs. 1,05,02,525/- from Sandvik ....
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....ted and directed the Assessing Officer to assess the license fees received by assessee as 'royalty' and the fees for connected IT support services and fees for application development services as fees for technical services. The Assessing Officer was also directed to tax even for other IT support services either as 'royalty' or 'fees for technical services'. The Assessing Officer noted that license fees charged by assessee amounting to Rs. 84,68,627/- and these were held to be IT support services, which fell within ambit of 'fees for included services' as also in Article 12(4) of DTAA. Further, the fees for providing GSS maintenance were held to belong to category of connected IT support services and also fell within ambit of 'fees for incl....
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....nd in assessment year 2011-12, the ground of appeal No.1 on initiation of re-assessment proceedings under section 147 of the Act is not pressed. 7. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below. 8. We have heard the rival contentions and perused the record. The assessee is non-resident and was providing software services to Sandvik Asia Pvt. Ltd. and also was providing IT support services to the said concern. The question which arises in the present appeal is whether the consideration received by assessee from the payer i.e. Sandvik Asia Pvt. Ltd. amounts to 'royalty' or 'fees for included services' or 'fees for technical services under the realm of section ....
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....Assessing Officer disallowed the said expenditure under section 195 of the Act. The DRP held that there was no transfer of any right in respect of copyright to the assessee and it was case of mere transfer of copyrighted article. The DRP thus, concluded by holding that payment representing purchase price of an article and could not be considered as royalty. In this regard, reliance was placed on the ratio laid down by the Pune Bench of Tribunal in the case of Allianz SE Vs ADIT reported in 51 SOT 399 (Pune - Trib.). In the appeal filed by Revenue in the statement of facts filed before the Tribunal, it is mentioned that the decision of DRP was not acceptable as the Department has filed an appeal before the Hon‟ble Bombay High Court in ....
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.... to the definition of "royalty‟ under DTAA, where the term "royalty‟ originally defined has not been amended. As per definition of "royalty‟ under DTAA, it is payment received in consideration for use or right to use any copyright of literary, artistic or scientific work, etc.; thus, purchase of copyrighted article does not fall in realm of "royalty‟. We also hold that since the provisions of DTAA overrides the provisions of Income Tax Act and are more beneficial and the definition of "royalty‟ having not undergone any amendment in DTAA, the assessee was not liable to deduct tax for payments made for purchase of software. In such scenario, the assessee cannot be held to be in default and the demand created unde....