AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 497
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in computing the total income of the Appellant at INR 1,05,78,50,059/-. 2. Taxability of receipts towards sale of software products 2.1. The Honourable DRP has erred in upholding the draft assessment order after rejecting the Appellant's objections, even as it noted that the binding decisions of the jurisdictional Mumbai Bench of the Income Tax Appellate Tribunal on identical issue in the appellant's own case for the earlier assessment years 2003-04, 2005-06 and 2006- 07, 2007-08, 2009-10, 2011-12, 2013-14, 2014-15, 2015-16, 2016-17, 2017-18, 2018- 19 & 2019-20. 2.2. The Honourable DRP has erred in upholding the draft assessment order without considering the fact that the Hon'ble High Court of Bombay for the AY 2011-12 has held that the order of the Supreme Court of India in the case of Engineering Analysis Centre of Excellence Private Limited is squarely applicable to the Appellant. 2.3. On the facts and the circumstances of the case and in law, the learned AO and DRP have erred in holding that the income from sale of shrink-wrapped software is taxable in India, being in the nature of royalty under the provisions of section 9(1)(vi)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase of Engineering Analysis Centre of Excellence (P.) Limited v. CIT [2021] 432 ITR 471 (SC). Per contra, the ld. D/R could not bring any decision in favour of the revenue and strongly relied upon the findings of the lower authorities. 4. We have given a thoughtful consideration to the orders of the authorities below. 5. Briefly stated the facts of the case are that the assessee filed its return of income on 14/03/2022 declaring total income of Rs. 69,33,067/-. The assessee is a non-resident company incorporated in the United States of America and is engaged in the business of developing and marketing 3D mechanical design solutions. It entered into software distribution agreements with resellers in India, who buy shrink wrapped software from the assessee and in turn sell to customers in India. During the year under consideration, the assessee has offered royalty income of Rs. 14,80,656/- @10% as per the relevant provisions of the Act and also declared interest income of Rs. 54,52,411/- on income tax refund @15% as per DTAA. Further the assessee also received Rs. 1,05,09,16,992/- on account of sale of software solutions which has not been offered for taxation for the follow....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... India and the other Contracting States to change the definition of royalties contained in any of the DTAAs that we are concerned with in these appeals, in accordance with its position. As a matter of fact, DTAAs that were amended subsequently, such as the Convention between the Republic of India and the Kingdom of Morocco for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes On Income, 17 "India-Morocco DTAA"], which was amended on 22-10-2019,48 incorporated a definition of royalties, not very different from the definition contained in the OECD Model Tax Convention, as follows: "The term "royalties" as used in this Article means: (a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic or scientific work, including cinematograph films or recordings on any means of reproduction for use for radio or television broadcasting, any patent, trade mark, design or model, plan, computer software programme, secret formula or process, or for information concerning industrial, commercial or scientific experience; and (b) payments of any kind received as co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntral Board of Direct Taxes ('CBDT"). This will ensure uniformity of approach among all the assessing officers. Since new categories of transactions are likely to emerge at a fast pace with advances in technology, it is also recommended that the CBDT should closely monitor the developments and issue guidelines to the assessing officers on new emerging categories of transactions as a continuing process. The monitoring should be troupe an expert advisory body on which the tax administration, the professions and the concerned industry is represented." 161. The E-Commerce Report 2016 proposed an equalization levy to be chargeable on specified digital services (see paragraph 11.2) and noted that its recommendation to impose a withholding tax on digital transactions would require an express inclusion in tax treaties in order to be feasible, as follows: "108. After taking cognizance of these observations, the Committee considers that the option of "withholding tax" offers a practical way of allocating partial taxing rights in respect of income from digital economy, which shares attributes that may be similar to royalty or fee for technical services, and which can be ....