TaxTMI 
TaxTMI 
2022 (7) TMI 276
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....sioner of Income Tax, Circle - 2(2)(1), International Taxation, Delhi ('Ld. AO') has erred in computing the total income of the Appellant at INR 4064,82,52,315 as against the returned income at INR 204,90,61,907. 2. Taxability of revenue from sale of software 2.1 That on the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('Hon'ble DRP') and the Ld. AO have erred in holding that revenue amounting to INR 38,32,90,74,884 earned by the Appellant from sale of Microsoft Retail Software Products to distributors in India is taxable as "Royalty" ignoring the fact that the same is not in nature of "Royalty" under Article 12 of the India - USA DTAA and is not taxable in India. 2.2 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 2.3 That on the facts and in ....
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....ution Panel ('Hon'ble DRP') and the Ld. AO have erred in holding that revenue amounting to INR 2037,46,16,031 earned by the Appellant from sale of Microsoft Retail Software Products to distributors in India is taxable as "Royalty" ignoring the fact that the same is not in nature of "Royalty" under Article 12 of the India - USA DTAA and is not taxable in India. 2.2 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 2.3 That on the facts and in the circumstances of the case and in law, the Hon'ble DRP and the Ld. AO have erred in not following the decision of the Hon'ble ITAT in the Appellant's own case for AY 2010-11 & AY 2011-12 and the decision of Hon'ble Delhi High Court in the case of Infrasoft Limited (220 Taxman 273). 3. Taxability of consideration from cloud services 3.1 That on the fact....
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.... 3.2 That on the facts and in circumstances of the case and in law, reiteration by Ld. DRP and Ld. AO that revenue of INR 14,57,54,90,041 earned by the Appellant from sale of Microsoft Retail Software Products to distributors belonging to India is taxable as "Royalty" (on protective basis) contrary to decision of this Hon'ble ITAT (ITA No. 1970/Del/2014) dated September 26, 2016 in Appellant's own case. 3.3 That on the facts and in the circumstances of the case and in law, the Ld. DRP and the Ld. AO have failed to appreciate that the sale of software is a sale of 'Copyrighted Article' and not 'Copyright' and accordingly, the revenue from sale of software is in the nature of business income not taxable under Article 7 of India - USA DTAA in the absence of a Permanent Establishment of the Appellant in India. 3.4 That on the facts and in the circumstances of the case and in law, the Ld. DRP and the Ld. AO have erred in not following the decision of this Hon'ble ITAT in the Appellant's own case for AYs 2010-11 & 2011-12 and the decision of Hon'ble Delhi High Court in the case of Infrasoft Limited (220 Taxman 273). 1.1 Ld. DRP and Ld. AO erred in failing to appreciate ....
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....sessee by considering the direction of the DRP, the total income of the assessee was assessed protectively at Rs. 4064,82,52,315/-. An amount of Rs. 3859,91,90,408/- is assessed protectively as royalty an amount of Rs. 204,90,61,907/- as interest on Income Tax refund disclosed in the return of income. The royalty income has been taxed @ 10%. Surcharge and Education cess charged as applicable limit u/s 234A, 234B, 234C & 234D as applicable order to be charged after giving credit to pre-paid taxes. 4. Aggrieved by the final assessment order dated 31/01/2017 the assessee has preferred the present appeal on the grounds mentioned above. 5. The Ground No. 1 is general in nature which enquires no adjudication. Ground No. 2 & its sub Grounds are in respect of taxability of revenue for sales software. Ground No. 3 and its Sub Grounds are in respect of taxability of consideration from cloud services. Ground No. 4 is on transfer of TDS credit. Ground No. 5 is regarding levying surcharge and education cess on interest on income tax refund, Ground No. 6 against not granting TDS credit, Ground No. 7 is regarding levying interest u/s 234B of the Act and Ground No. 8 is on initiation of p....
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....loud base service as royalty and the additions made by the Ld. A.O. Contrary to the India-USA Double Taxation Avoidance Agreement. The Ld. Counsel for the assessee submitted that, the similar issue has been dealt and decided in the case of MOL Corporation by the Co-ordinate Bench of the Tribunal vide order dated 13/04/2022 in ITA No. 1554/Del/2016. 11. Per contra, the Ld. DR has not disputed the above facts and could not produce any ratio laid down contrary to the above decisions, but relied on the orders of the lower Authorities. 12. We have heard the parties and verified the material on record. The very same issue regarding the cloud service in the case of MOL Corporation for the AY 2012-13 came up for consideration before the Co-ordinate Bench of the Tribunal. The Co-ordinate Bench, by following the ratio laid down in the case of M/s. Salesforce.com Singapore Pte. Vs. Dy. D.I.T. Circled-2(2) ITA No. 4915/Del/2016 [A.Y 2010-11] and also the decision of Mumbai Tribunal in the case of DDIT Vs. Savvis Communication Corporation [2016] 69 Taxman.com 106 (Mumbai- Trib.) and the Chennai Tribunal decision in the case of ACIT Vs/. Vishwak Solutions Pvt. Ltd. ITA No. 1935 & 1936/MDS/....