TaxTMI 
TaxTMI 
2024 (8) TMI 1659
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....levant documentary evidence brought on record duly considered in light of Rule 18(6) of the ITAT Rules. Relevant judicial decisions considered wherever necessary. 4. Both the parties before us fairly agreed that ITA No. 2557/Del/2024 for AY 2016-17 be taken as the lead case and the decision rendered thereon would apply with equal force for AYs 2013-14 also in view of identical facts, except with variance in figures. Accordingly, we proceed to take up the appeal in ITA No. 2557/Del/2024 for A.Y 2016-17. 5. The grounds of appeal raised by the assessee read as under: "1. The Ld. AO erred in initiating and completing the assessment without possessing information as required under explanation 1 to section 148 of the Act, rendering such assessment to be void ab initio and liable to be quashed. 2. The Ld. AO while issuing the notice under section 148 of the Act, 148A(b) of the Act and passing the order under section 148A(d) of the Act erred in not obtaining prior approval of the competent authority as specified under Section 151 of the Act and therefore the said notices and order are void and liable to be quashed. 3. The Ld. AO erred in making additions to....
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....uld be taxable under the Article 12 under the India-US tax treaty and taxing the said income at a higher rate of 40%. 10. The Ld. AO erred in levying interest under section 234B and 234C of the Act. 11. The Ld. AO erred in law on initiation of penalty proceedings under section 270A of the Act." 6. M/s Qualcomm is a non-resident company incorporated under the laws of USA. It is engaged in the business of design, development, manufacture, marketing and licensing of digital wireless telecommunication products and services based on its code division multiple access (CDMA) technology. M/s Qualcomm Incorporated is a world leader in 3G, 4G, 5G and next generation wireless technologies. M/s Qualcomm Incorporated includes Qualcomm licensing business, QTL and the vast majority of it's patent portfolio. QTL grants licenses or otherwise provides rights to use portions of their intellectual property portfolio, which among other rights include certain rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing CDMA 2000, WCDMA, CDMA, TDD and/ or LTE standards and their derivatives. 7. The....
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....r ground no. 3 to 9 and have perused the relevant material on record. We have also perused the Tribunal order dated 13.06.2023 relied upon by the ld. counsel for the assessee. We find force in the submissions of the ld. counsel for the assessee that the issue is squarely covered in favour of the assessee and against the Revenue by the order of the Tribunal [supra]. The Tribunal has given a categorical finding at Para 11 to 16 at page 36-56 of its order which reads as under: "11. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. As could be seen from the facts on record, the assessee has offered the royalty income received from OEMs carrying on business in India through their PEs. Whereas, in respect of royalty received from OEMs located outside having no PE in India, the assessee has not offered royalty income to tax. It is the say of the assessee that it has granted patent license of subscriber units/equipments to OEMs, who manufacture them by incorporating/embedding the patents license given by the assessee. The manufactured handsets/equipments also incorporate/embed the chipsets sold by the QCT Divis....
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....o the assessing officer for re-examination after obtaining reports from the technical experts. 14. On carefully going through the two orders of the tribunal in assesses own cases one for assessment year 2000-01 to 2004-05 and second one for assessment years 2005-06 to 2008-09, it is observed in the order passed for the AY 200-01 to 2004-05, the Tribunal has categorically held that foreign OEM's since have not carried on any business in India, it cannot be said that such OEMs have used assesses patents for the purpose of any business by them in India. The Tribunal has further held that by utilizing the patents of the assessee, OEMs have not earned any income from a source in India. Therefore, the royalty income cannot be taxable under the first limb of section 9(1)(vi)( c) of the Act. Even in the second order passed for assessment years 2004-05 to 2005-06, the Tribunal has agreed with the observation made in the earlier order to the effect that as long as patents are used in the manufacturing process which has taken place outside India, such royalty income cannot have tax implications in India. 15. As could be seen, the assessing officer, as discussed earlier, has ....