AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 969
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....020, Income Tax Appeal No. 612 of 2020 and Income Tax Appeal No. 3081 of 2018, which pertain to the assessment year 2004-05, 2007-08, 2005-06 and 2003-04 respectively. 4. Insofar as Income Tax Appeal (L) No. 3695 of 2018 and Income Tax Appeal (L) No. 3693 of 2018 are concerned, the Revenue has raised the following question of law:- "Whether on the facts and in the circumstances of the case and in law, the Tribunal has erred in not holding payments received by the assessee for supply of software to Reliance Infocomm Limited (now Reliance Communication Limited) to be in the nature of "royalty" under Section 9 (1) (vi) of the Income Tax Act, 1961?" 5. Insofar as the other three Appeals are concerned, [Income Tax Appeal No. 611 of 2020, Income Tax Appeal No. 621 of 2020, Income Tax Appeal No. 612 of 2020] the question of law as raised is similar, which by consent of the parties is re-framed as under :- "Whether on the facts and circumstances of the case and in law, the Tribunal has erred in holding that the payment made to assessee did not amount to income of the payee by way of "royalty" under Section 9 (1) (vi) of the Income Tax Act, 1961?" 6. We have heard Learned Counsel f....
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....in treating such income as royalty income, the assessee approached the CIT (A). The assesee's appeal was adjudicated by the CIT (A) taking into consideration the agreements in question as also the transaction being viewed and considered on the applicability of Section 9 (1) (vi) of the Act and the relevant Articles of the DTAA, namely, Article 12. The CIT (A) accordingly held that such amount received by the assessee did not amount to receipt of 'royalty' within the meaning of Section 9 (1) (iv) of the Act. The Revenue being aggrieved by such orders of the CIT (A) carried the proceedings before the Tribunal. By the impugned orders, the Tribunal confirmed the orders passed by the CIT (A) by upholding the contentions as raised on behalf of the assessee and recording finding against the Revenue. 11. In the course of hearing of these appeals, Mr. Suresh Kumar, Learned Counsel for the appellant-revenue as also Mr. Pardiwalla, Learned Senior Counsel for the assessee alongwith Mr. Jas Sanghavi would contend that the question Whether the payments made by the Reliance Communication Limited for obtaining computer software whether were liable to be taxed in India as 'royalties' under the pro....
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....er of Income-Tax (Appeals) (for short "CIT (A)) stand dismissed. The primary issue which had arisen for consideration of the Tribunal was as to whether the remittance made by the assessee to foreign parties on account of purchase of certain computer software, required for the business of the assessee, would be liable to tax in India as "royalty" under the provisions of Section 9(1) (vi) of the Income Tax Act, 1961 ("the Act") or would it be a business income of the recipient companies. 4. In its application as filed under Section 195 (2) of the Act the assessee raised contentions as to why remittance made to such foreign parties was not liable to be taxed as "royalty", under the provisions of Section 9 (1) (vi) of the Act. Such application of the assessee was rejected by an order dated 14th September, 2003 passed by the Deputy Director of Income Tax (International Tax). The assessee carried the matter in appeal before the CIT (A). The appeals filed by the assessee were allowed by the CIT (A), against which at the behest of the Revenue the proceedings reached the Tribunal. 5. In assailing the orders passed by the Tribunal the Revenue has urged the following substantial questio....
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....uch backdrop, the proceedings reached the High Court. 10. The High Court of Karnataka, in similar proceedings, on examination of the End User Licence Agreement ("EULA") involved in such transactions found that what was sold by way of computer software, including the right or interest in copyright, which gave rise to the payment of royalty, would be an income deemed to have accrued in India under Section 9 (1) (vi) requiring deduction of tax at source. The orders passed by the High Court were assailed before the Supreme Court. It is also required to be noted that similar issues had arisen before the Delhi High Court inter alia in the case of DIT vs. Ericson A.B. and DIT vs. Nokia Network. The Delhi High Court however took a view contrary to the view taken by the High Court of Karnataka. The Supreme Court examined the issues as arising from the decisions of both the High Courts in the case of Engineering Analysis Centre of Excellence (P.) Ltd (supra). The Supreme Court in its decision rendered in the said case upheld the view taken by the Delhi High Court in interpreting such transactions in the context of Section 9 (1) (vi) of the Act. The Supreme Court held that considering the ....
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....hat had fell for consideration of the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd (supra). Also there is no dispute that there is a DTAA entered with the countries in question, with whose residents the transactions were entered into by the assessee. 15. In the aforesaid circumstances, it is clear that the approach of the Assessing Officer in the present case was against the correct position in law as held by the Tribunal, and now also endorsed by the Supreme Court in Engineering Analysis Centre of Excellence (P.) Ltd (supra). In this view of the matter, we are in agreement with Mr. Madhur Agarwal that these four Appeals would not give rise to the question of law as noted by us hereinabove. 16. As fairly pointed out by the learned Counsel for the parties, as the facts are not in dispute as also the DTAA in question applicable we are not discussing the facts involved in each of these Appeals. 17. The Appeals are accordingly dismissed as they do not give rise to any question of law. No costs." 18. The order dated 24th June, 2024 passed in Income Tax Appeal No. 28 of 2018 is also required to be noted, as we had disposed of a batch of appeals filed by the Re....