TaxTMI 
TaxTMI 
2020 (11) TMI 642
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.... that Omron is a Japanese corporation, world leader in industrial automation and control components like Sensors, PLC, Power supply, timers, relays, controllers, switches etc, which caters to the industries in automobile, food and beverages, electronic and heavy manufacturing sectors. Omron started its operation in India through its liaison office - Omron Asia Pacific Ltd which is a part of Omron Asia Pacific Ltd, of Singapore. This office is involved in the liaison activities for the marketing, after sales services, support to the customers and distributors. Omron Automation Pvt Ltd. is a subsidiary of Omron Pacific Ltd, which holds 96% shares of Omron Automation Pvt Ltd. Omron Automation imports its products from its Singapore entity and sells it to the channel partners across India. 3.1. During the year under consideration, it was noticed that the assessee has incurred expenses in foreign currency amounting to Rs. 58,48,567/- as reported in notes to accounts schedule 17. The assessee was required to furnish the details and nature of expenses. The assessee submitted that it had incurred / reimbursed a sum of 58,48,567/- during the year under consideration towards computer m....
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....rt function. As per the agreement, Omron Asia Pacific Pte. Ltd., Singapore has to make available subscription for Microsoft office professional licenses symantic anti-virus enterprises licenses, symantic personal firewall licenses, Win zip licenses, Microsoft Office Professional addition and Notes user etc. Basically Omron Asia Pacific Pte Ltd., Singapore has provided licensed softwares for use in India and the same has been debited to computer maintenance expenses. Accordingly, it was pleaded that no technology has been ''made available'' as per Article 12(4)(b) of India-Singapore DTAA. Accordingly, the assessee pleaded that the said income is not chargeable to tax in terms of Section 195 of the Act in the hands of recipient entity and hence, there was no requirement for deduction of tax at source by the assessee while incurring the expenditure. 3.3. The ld. AO did not agree to the aforesaid contentions of the assessee. The ld. AO observed that the provisions of Section 9(1)(vi) and 9(1)(vii) have undergone change by way of explanation inserted by the Finance Act 2010 with retrospective effect from 01/06/1976 wherein the services rendered by the non-recipient services would be ....
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....8 was as under:- • Apps care for CRM application pivotal, including technical support and bug fixes, with not more than 45 users. • Apps care of ERP applications nexus, including technical support and bug fixes with not more than 4 users. • Notes care for 93 notes users. • Service Care (Manpower support for Development, Trouble shooting, Consultation,etc) upto 20 man-days, with minimum of 0.5 man-day per incident. • Business Care to perform IT compliance check. • Subscription (entitlement to use latest version) for 91 Microsoft office professional licenses till March 2009. • Subscription (entitlement to use latest version) for 91 Symantec Anti-virus enterprises license till March 2009. • Subscription (entitlement to use latest version ) for 91 win zip licenses till March 2009. • Host care for 91 users. • License required for 36 Microsoft office professional editions. • License required for 21 Symantec Anti-virus Enterprise Edition. • Licenses required for 24 notes users 3.6. For the aforesaid services, the bill of USD 116260 ....
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....ms, procedures and associated documentation concerned with the operation of data processing system. The ld. CIT(A) observed that in contrast to hardware, software is intangible. The ld. CIT(A) also observed that sometimes the term includes data that has not been traditionally being associated with computers such as film, tapes and records. The ld. CIT(A) finally concluded that the consideration for right to use the copyright in the software can be royalty. The ld. CIT(A) also placed reliance on the decision of Karnataka High Court in the case of CIT vs. Samsung Electronics Co. Ltd. reported in 16 Taxman.com 141 and Co-ordinate Bench of Mumbai of Tribunal in case of Reliance Infocomm in ITA No.837/Mum/2007, and ultimately concluded that the expenditure reiumbursed by the assessee to Omron Asia Pacific Pte. Ltd., Singapore is in the nature of royalty as per Section 9(1)(vi) and Article 12 of Indo-Singapore DTAA, since the said expenditure was incurred without deduction of tax at source, the same has been rightly disallowed by the ld. AO u/s.40(a)(i) of the Act. 4. Aggrieved, the assessee is in appeal before us. 5. We have heard rival submissions and perused the materials availa....