TaxTMI 
TaxTMI 
2022 (6) TMI 510
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....ce to one another. 1. That the order of the Learned Deputy Commissioner of Income Tax, Circle 1(1)(1), International Taxation, New Delhi ("the learned Assessing Officer" or the "the learned AO") passed pursuant to the direction of the learned Dispute Resolution Panel ("the learned Panel" or "the learned DRP") is bad in law and liable to be quashed. 2. The learned AO/DRP erred in holding that the payments received by the Appellant on sale of software to Indian resellers/distributors is in the nature of 'royalty' chargeable to tax under Section 9(1)(vi) of the Income-tax Act, 1961 ("the Act") and under Article 12 of the India- USA Double Taxation Avoidance Agreement ("the DTAA"). 3. That the learned AO/DRP overlooked the differe....
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....royalty. 9. That, without prejudice, the learned AO/DRP erred in bringing to tax the entire amount of Rs. 3,51,92,160 as per Form 26AS as against Rs. 2,71,47,185 as per the invoices raised during the relevant year (comprising of Rs. 52,50,606 towards provision of ancillary services and Rs. 2,18,96,579 towards sale of software licenses). 10. The learned AO erred in law and on the facts and circumstance of the case by initiating penalty proceedings under section 271(1)(c) of the Act for furnishing inaccurate particulars of income. 11. That the impugned order passed by the learned AO is otherwise unsustainable in law and on facts and is thus liable to be set aside by this Hon'ble Tribunal. 3. Brief facts of the case are that the ass....
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....Hence, the Assessing Officer concluded that revenue received by the assessee on sale of software amounting to Rs. 3,51,92,160/- is to be treated as income of royalty to be taxed @ 15% as per Article-12 of the India USA DTAA. 4. Against the above order, the assessee is in appeal before us. 5. We have heard the ld. DR and perused the record. None appeared on behalf of the assessee despite notice issued. At the outset, we note that the issue is squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. dated 02.03.2021. In this case, on the issue of whether payments in different cross-border software transactions, i.e. payments made by end use....
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....s and distributors did not involve payment for grant of any right specified under the ICA, payments made by the distributors and end users do not qualify as royalty under the DTAA, as well as the pre-amended provisions of the ITA. Such payments qualify as business income not taxable in India under the DTAA. 7. In addition, the Hon'ble Supreme Court held that the machinery provisions of withholding under the ITA in respect of payment made to non-resident (NR) taxpayers is triggered only in respect of payments chargeable to tax in India after considering the provisions of the ITA as well as the DTAA. In case where a payment is not chargeable to tax in India under the DTAA, then no withholding is required on such payments. In doing so, th....