TaxTMI 
TaxTMI 
2024 (6) TMI 415
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.... taxable income. 2. That on the facts and circumstances of the case and in law, the Learned Assessing Officer ('Ld. AO') has erred by disregarding the principles laid down by Hon'ble Supreme Court in case of M/s Engineering Analysis Centre of Excellence Private Limited vs. CIT [2021] 125 taxmann.com 42 (SC) on taxability of standard shrink wrapped software, which squarely applies to the facts of the Appellant's case. The Ld. AO erred in holding that the SC decision is not applicable to the facts of Appellant as the transaction is one for use of industrial, commercial or scientific equipment and not for use of standard software as dealt in the SC decision. 3. That, on facts and in the circumstances of the case and in law, the Ld. AO has erred in passing the final assessment order with a pre-determined mindset quoting unsubstantiated, imaginary and farfetched facts to conclude that the Appellant maintained IT infrastructure and was providing third party standard software through Enterprise applications and Enterprise Servers by allowing access to such IT infrastructure. The Ld. AO failed to appreciate that the software under question are standard off....
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.... Microsoft. The Assessing Officer held that the assessee was procuring various softwares for the whole group and mainlining an IT Infrastructure and recovered charges on usage basis from group concerns. The AO held that Saxo Group is engaged in providing various platforms for investment in capital markets and operates all over the world. 6. The Assessing Officer held that the assessee was allowing access to its IT Infrastructure and charges received against the same were chargeable to tax as royalty. 7. The assessee contended that the receipts are not chargeable to tax for the following reasons: (i) That the assessee only purchases software for its own captive use and for group concerns and it does not maintain any IT infrastructure. (ii) That the assessee cross charges the cost of software to group concerns. (iii) Decision of Hon'ble Supreme Court in the case of M/s Engineering Analysis Centre of Excellence Private Limited vs. CIT [2021] 125 taxmann.com 42 (SC) is applicable to the facts of the case and receipts are not chargeable to tax. 8. In the case of the assessee, central procurement IT department carries out the following functions in the....
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.... servers provide consolidated connections a choice of broadcast, TCP/IP or multicast, as well as user-defined tools for conflation and hibernation, resulting in improved network and desktop performance. The assessee's central team i.e. Information Technology Department and Chief Information Officer handles the issue of procurement of licenses by signing Enterprise Licensing Agreements. 12. An enterprise license agreement (ELA) is a contract between a customer and a vendor that allows purchase of a software product for a company at a discounted, fixed rate for a certain time period. Enterprise license agreements benefit the customer in a variety of ways. It provides a common IT platform deployed across an organization and ensures that users always have access to the latest software version. The software purchased by the assessee form a part of its IT infrastructure as discussed above and they form an integral part of IT systems owned/leased by the assessee. The assessee maintains a global IT Infrastructure which consists of owned, leased, supported and hosted IT systems, hardware devices, internet and intranet systems etc. It is not the case that the assessee makes purchases on t....
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....ubmitted these facts, and the AO also did not bring any evidence on record to support this statement. As stated above, the assessee has not maintained any IT infrastructure or servers for providing software licenses to SGIPL. Thus, these facts are incorrect and mere guesswork of the AO. * The cost-to-cost reimbursement does not have any income element and thus, cannot be brought to tax. Further, mapping the cost with IT infrastructure is not applicable in the instant case in absence of any IT infrastructure maintained by the assessee for the said purpose. * When a new employee / user joins the organization viz. SGIPL, a request is made for various softwares required by the employee and licensed from Microsoft. * The software provided by the assessee to SGIPL mostly does not require any IT Infrastructure / server as the same are installed in the hardware (laptops/ desktops) of the end users i.e., employees of SGIPL. * the software used by SGIPL and the amount for which is cross charged by assessee, does not pertain to any use or right to use of any copyright as neither the assessee nor SGIPL can sub-license, transfer, reverse engineer, modify or r....
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..... Considering the above, the Panel is of the view that the AO should consider and factually verify the assessee's submission dated 03.04.2023 made before the Panel by passing a speaking and reasoned order within the ambit of law and judicial precedents. The Panel hastens to clarify that the AO shall not conduct any fresh inquiry in this regard; the verification shall be made based on documents/submissions available on the assessment records. The assessee's objections made at 2 and 3 in this regard, are hereby rejected and disposed off accordingly." 18. We have gone through the facts and in agreement with the fact that the software used by SGIPL and the amount for which is cross charged by assessee, does not pertain to any use or right to use of any copyright as neither the assessee nor SGIPL can sub-license, transfer, reverse engineer, modify or reproduce the software / user license. SGIPL acknowledges that the Microsoft Software has been granted to assessee by Microsoft Denmark ApS under an object code-only, non-exclusive, nonsublicensable, non-transferable, revocable license to access and use the object code version of the proprietary software, solely for assessee and ....