AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 824
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of appeal:- 1. "That on facts and in law, the orders passed by the Deputy Commissioner of Income Tax, Circle 2(2)(1), International Taxation, New Delhi [hereinafter referred as the "AO"] and the Dispute Resolution Panel -2 [hereinafter referred as the "DRP"] are bad in law and void ab-initio. 2. That on the facts and in law, AO / DRP have erred in holding / upholding that the consideration received by the Appellant from supply/distribution of its copyrighted software products is chargeable to tax in India as income from 'Royalty' as defined in Article 12 of Agreement for Avoidance of Double Taxation between India and Ireland ('AADT). 3. That on the facts and in the circumstances of the case and in la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order of the Assessing Officer in holding that the consideration received by the assessee for supply/distribution of its copyrighted software products is for grant of 'right to use' the copyright in the software and hence, qualifies as royalty. 5. The Ld.AR for the assessee after taking us through the draft assessment order elaborately and observations of the DRP, pointed out that the issue raised in the present appeal is similar in facts and issue as arising in Assessment Year 2013-14, in assessee's own case. Our attention was drawn to page 88 of the compilation wherein draft assessment order is placed and it is referred by the Assessing Officer that similar facts and issue had arisen in Assessment Year 2013-14. The Ld.AR for the assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Article 12 of India-Ireland Double Taxation Avoidance Agreement (DTAA). It is also not in dispute that there is no Permanent Establishment (PE) of the assessee in terms of Article 5 of DTAA in India. 8. However, as far as the amount received on sale of software is concerned, the Assessing Officer was of the view that the same needs to be taxed as income from 'Royalty' as per the provisions of section 9(1)(vi) of the Act and Article 12 of the DTAA between India and Ireland. The evidences were submitted by the assessee to establish its case of sale of only copyrighted product and wherein copyright remained with the assessee and same was not transferred to its distributor or user. The Assessing Officer however, held otherwise and the DRP re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and 5.3 at pages 18 & 19 held as under:- 5.2 "We find that treaty provisions between India and Ireland unambiguously require that the use of copyright is to be taxed in the source country. In the present case, the payment has been made by assessee for use of "copyrighted material" rather than for the use of copyright. The facts of the present case are identical with the facts before the Hon'ble Jurisdictional High Court. None of the lower authorities have factually doubted the contention of the assessee that it has received consideration for the transfer of a copyrighted product and not for the transfer of copyrights in the computer software programme. The distinction between the transfer of a copyright and the transfer of a co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from "Sale of Software" is not in nature of "Royalty" as defined under Article 12 of India-Ireland DTAA. Since treaty provisions are more beneficial, an adjudication on nature of receipts vis a vis provisions of Section 9(1)(vi) is not required. Grounds Nos. 1 to 4 are accordingly allowed." 10. The issue arising in the present appeal is identical to the issue raised in assessee's own case in Assessment Year 2013-14 and applying the ratio laid down by the Jurisdictional High Court in Infrasoft Ltd. (supra), we hold that the receipt from sale of software by the assessee was not in the nature of 'Royalty' under Article 12 of DTAA between India and Ireland. Since the treaty provisions are more beneficial, there is no merit in adjudicating t....