TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 403
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....e Tribunal (hereinafter referred to as the 'ITAT') allowing inter alia ITA No. 2377/DEL/2016 for AY 2010-11 and ITA No. 177/DEL/2017 for AY 2013-14, filed by the Respondent-Assessee. 2. The Appellant-Revenue urges the following substantial questions of law: 2.1 Whether on the facts and circumstances of the case and in law, ld. ITAT erred in holding that receipts of the assessee from sale of software is not taxable as royalty under the India -UK DTAA? 2.2 Whether on the facts and circumstances of the case and in law, the ld. ITAT was right in holding that explanation 4 to section 9(1)(vi) of the I.T. Act, 1961, would not apply to India - UK DTAA without considering the fact that the explanation 4 is reiteration of legislature vi....
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....r Section 147/148 of the Act were initiated and notice under Section 148 was issued and served upon the Respondent-Assessee. In response to the notice, Respondent-Assessee filed its return declaring nil income. In respect of AY 2013-14, the case was selected for scrutiny and notice under Section 142 (1) was issued and was served on the Respondent-Assessee. In respect of both the years in question, draft assessment orders under Section 144C (1) were framed by the Assessing Officer ('AO'). Aggrieved by the same, the Respondent-Assessee filed its objections before the Dispute Resolution Panel ('DRP'). Vide separate orders for each of the wo years, the DRP disposed of the objections of the Respondent-Assessee and confirmed the stand taken by th....
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....s well as before the CIT(A). The DRP has not taken into account the correct and true meaning of the royalty and the services do not come under the purview of royalty. The Hon'ble High Court in case of Principal CIT Vs. M Tech India Pvt. Ltd. vide order dated 19/1/2016 has held that payment made by reseller for the purchase of software for sale in Indian market could not be considered as royalty. IT is observed and held that amendments cannot be read retrospectively in consonance with the treaty." 6. The Appellant-Revenue is aggrieved by the aforesaid order and has preferred the present appeals. 7. We have heard Mr. Kunal Sharma, learned Senior Standing Counsel appearing on behalf of the Appellant-Revenue, at considerable length. Mr. K....
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....se a software, the payment so made would amount to royalty. However in cases where the payments are made for purchase of software as a product, the consideration paid cannot be considered to be for use or the right to use the software. It is well settled that where software is sold as a product it would amount to sale of goods. In the case of Tata Consultancy Services v. State of Andhra Pradesh: (2004) 271 ITR 401 (SC), the Supreme Court examined the transactions relating to the purchase and sale of software recorded on a CD in the context of the Andhra Pradesh General Sales Tax Act. The court held the same to be goods within the meaning of Section 2(b) of the said Act and consequently exigible to sales tax under the said Act. Clearly, the ....
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....of no assistance to the Revenue in this case. 15. In another case, Dynamic Vertical Software India P. Ltd. (supra), this Court had reiterated the view that payment made by a reseller for the purchase of software for sale in the Indian market could by no stretch be considered as royalty. 16. In the aforesaid view, the question framed must be answered in the affirmative, that is, in favour of the Assessee and against the Revenue. 17. The Appeal is accordingly dismissed. In the circumstances the parties are left to bear their own costs." 9. Further, the learned ITAT also dealt with the contention of the Appellant- Revenue regarding Explanation 4 to Section 9 (1)(vi) of the Act for interpreting the terms used in Article 13 of the DTAA an....