AUTOMATION ANYWHERE INC,USA V. DEPUTY COMMISSIONER OF INCOME TAX, DELHI

SA 284/DEL/2025

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The case involves Automation Anywhere Inc., a US-based company, which filed a stay application against the Deputy Commissioner of Income-tax, Delhi, concerning an outstanding demand of Rs. 8,51,95,330 for the assessment year 2021-22. The demand arose from the company's income from software licensing fees, which the Assessing Officer (AO) classified as business income, subject to a 40% tax rate, due to the existence of a Permanent Establishment (PE) in India. The ITAT had previously ruled that there was no Fixed Place PE but remanded the matter to examine the existence of a Dependent Agent PE. The Dispute Resolution Panel (DRP) found in favor of the existence of a DAPE, leading to the current dispute. The company argued that the demand was excessive and contested the classification of its income as business income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360933 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Other Referred Cases: Orion Security Solutions Private Limited v. DCIT, Circle 19(1), New Delhi in WP(C) 11789/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OM PARKASH
• Assessee Lawyers: DAMODAR VAID
• Keywords: Business income; TDS; Permanent establishment; Application of stay
• Section: 143(3); 6; 2

Judgement Text

"1 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘D’: NEW DELHI) BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER SA No. 284/Del/2025 (In ITA no. 2963/Del/2025) Assessment Year.: 2021-22 Automation Anywhere Inc. 633, River Oaks PKWY, San Jose CA 95134, USA v. Deputy Commissioner of Income-tax, Circle International Taxation 1(1)(1) , Civic Centre, Minto Road, Delhi-110002 PAN No: AAMCA9481A APPLICANT RESPONDENT Assesseeby : Shri Damodar Vaid, Adv. Revenue by : Shri Om Parkash, Sr. DR Date of Hearing : 23.05.2025 Date of Pronouncement :23.05.2025 ORDER PER RAMIT KOCHAR, AM: The assessee has filed this stay application bearing SA No. 284/Del/2025 which has arisen from ITA no. 2963/Del/2025 for assessment year 2021-22, seeking stay on recovery of the outstanding demand to the tune of Rs. 8,51,95,330/- towards income- tax and interest thereon, which demand has arisen vide notice of demand u/s 156 & 2 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 Computation sheet , both dated 30.03.2025(page 74-78/PB), in pursuant to assessment order dated 30/03/3025 passed by learned Assessing Officer u/s 143(3) read with Section 254(DIN & Order No. ITBA/AST/S/ 143(3)/2024-25/1075315509(1))(Page 25-73/PB). This is second round of litigation before the ITAT, wherein ITAT remanded the matter in first round of litigation to ld. DRP. In second round of litigation, the ld. DRP issued directions dated 28.03.2025 u/s 144C read with Section 254 of the 1961 Act(DIN: ITBA/DRP/M/144C(5) r.w.s. 254_260A/2024-25/ 1075201686(1))(Page 79-90/PB), and thereafter AO passed the assessment order dated 30.03.2025. 2.It is submitted by ld. Counsel for the assessee that the assessee is incorporated in USA and is tax-resident of USA. As per the assessment order para 2 , the assessee is a developer, marketer and seller of robotic process automation(RPA) technology and related products and services . The assessee develops and sells RPA software and a digital workforce platform (DWP) . RPA services enable customers to automate business processes through the use of configurable software “bots”. The assessee has subsidiary in India namely ‘ Anywhere Software Private Limited’. The assessee has executed an intercompany agreement with the said subsidiary. It is the say of the ld. Counsel for the assessee that the assessee declared and offered to tax, income of Rs. 12,38,17,271/- in its return of income filed with Department towards rendering of services as also interest income to the tune of Rs. 28,97,370/-. It was submitted by ld. Counsel for the assessee that the assessee has receipts towards software license fees to the tune of Rs. 135,47,34,187/- from India , which was not offered to tax by the assessee because as per the assessee the said receipts were not in the nature of royalty or fees for technical services in terms of Article 12 of th’e India-USA tax treaty. 3 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 There was a claim of refund of Rs. 9,19,05,900/- filed by the assessee in the return of income out of TDS of Rs. 10,55,44,963/-. It is submitted by ld. Counsel for the assessee that in second round of litigation vide assessment order dated 30.03.2025, the AO has made additions to the income of the assessee to the tune of Rs.33,86,83,526/- being 25% of the receipts to the tune of Rs. 135,47,34,107/- towards software licensing fees, wherein the AO held the same as business income by holding that the assessee has Fixed Place PE in India as well Dependent Agent PE In India. The said income was brought to tax by the AO @40%. It was submitted by ld. Counsel for the assessee that the assessee has disputed and challenged the said addition made by the AO in second round of litigation by challenging the same before ITAT in ITA no. 2963/Del/2025. It is contended by ld. counsel for the assessee that in first round of litigation, the ITAT vide orders dated 19.02.2024 in ITA NO. 3418/Del/2023 has held in favour of the assessee by holding that there is no Fixed Place PE of the assessee in India. However , the ITAT vide orders dated 19.02.2024 remanded the matter back to ld. DRP, and directed ld. DRP to examine the existence of Dependent Agent Permanent Establishment(DAPE) of the assessee in India in the relevant assessment year. The ld. DRP decided the issue against the assessee by holding that the assessee’s subsidiary in India is its DAPE. The AO held that there exists both Fixed Place PE as well DAPE of the assessee in India, and made aforesaid addition. It is claimed by ld. Counsel for the assessee that AO exceeded its jurisdiction beyond the directions given by ITAT vide order dated 19.02.2024, by holding that the assessee has Fixed Place PE in India , while the ITAT has already decided this issue of Fixed Place PE of the assessee in India in favour of the assessee in the first round of litigation. It was submitted by ld. Counsel for the assessee that the AO has adjusted claim of refund of TDS of Rs. 9,19,05,900/- made by the assessee in its return of income filed with the 4 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 department,towards the liability created towards tax and interest on account of aforesaid additions made by the AO, which additionsare now disputed by the assessee and challenged before ITAT in second round of litigation. It was submitted by ld. Counsel for the assessee even after adjustment of aforesaid TDS, a further demand of Rs. 8,51,95,330/- is determined to be payable by the assessee by the AO towards income-tax and interest thereon, for which the assessee is claiming stay on recovery of outstanding demand. It is claimed that by way of adjustment of claim of refund of TDS of Rs. 9,19,05,990/- against the additions made by the AO vide assessment order dated 30.03.2025, there is recovery of more than 20% of the additional demand of income-tax and interest thereon computed and attributable towards additions so made by the AO. The assessee relied on the order of Hon’ble Delhi High Court in the case of Orion Security Solutions Private Limited v. DCIT, Circle 19(1), New Delhi in WP(C) 11789/2023 vide orders dated 05.09.2023. It is further claimed that there is deposit of equalisation levy by the assessee to the tune of Rs. 2,59,86,629/- , and the said sum also stood deposited with the department. It was submitted by ld. Counsel for the assessee that the assessee is tax-resident of USA ,and selling its software through e-commerce on which equalisation levy was deposited . Reference was drawn by ld. Counsel for the assessee to provisions of Section 10(50). It was submitted that , at the same time, the Revenue has brought to tax receipts from software license fee as business income by holding that the assessee has Fixed Place PE as well DAPE in India. Thus, it was prayed that stay of recovery of outstanding demand of income-tax and interest thereon be granted by submitting that department is having more than 20% of the additional liability created towards income-tax and interest thereon towards additions made by the AO , which additionsso made by the AO are disputed by the assessee and is subject to challenge before the Tribunal in ITA no. 5 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 2963/Del/2025. It is also claimed that the issue of bringing to tax said income as business income on the account of Fixed Place PE has already been adjudicated by the Tribunal in favour of the assessee in the assessment year(s) 2018-19& 2019-20, vide common order dated 24.08.2023 in ITA No. 2147-2148/Del/2022 . Similar view was taken by ITAT for assessment year 2020-21 vide orders dated 30.04.2025 in ITA No. 1615/Del/2023..It was also submitted by ld. Counsel for the assessee that so far as issue of adjudication ofexistence of Fixed Place PE of the assessee in India by the ITAT in favour of the assessee is concerned, to the best of knowledge of the assessee, the said issue has reached finality as Revenue has not filed any appeal with Hon’ble High Court for the assessment year(s) 2018-19, 2019-20 and 2020-21.It was also claimed that in the earlier years, it was never held that the assessee has DAPE in India, and in this year the ld. DRP in second round of litigation followed it’s order for assessment year 2022-23 to come to conclusion that the assessee has DAPE in India, which is now subject to challenge before the Tribunal. It was also submitted that the facts and circumstances surrounding the assessee as well its subsidiary remained same as were in the earlier years, but in this year it was held that the assessee has DAPE in India. However, it was fairly submitted that these are matter to be adjudicated in the appeal as it requires investigation of facts, and facts may vary from year to year, and the Tribunal being last fact finding authority . It was prayed that stay on recovery of outstanding demand of Rs. 8,51,95,330/- be granted and an early hearing of quantum appeal be granted as the assessee is interested in adjudication of its appeal by the Tribunal at the earliest. 3. Ld. Sr. DR submitted that the assessee may be asked to deposit further amount so that entire demand stood deposited. 6 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 4. After hearing both the parties and considering the entire factual matrix surrounding the case and without commenting on the merits of the issue, we are inclined to grant stay on recovery of the outstanding demand of Rs. 8,51,95,353/- towards income-tax and interest thereon for a period of 180 days or till the disposal of the appeal , which ever is earlier. The terms and conditions of the stay on recovery of outstanding demand were announced in the open court in the presence of both the parties. The appeal of the assessee in ITA No. 2963/Del/2025 is now directed to be listed for hearing before the Division Bench ‘D’ on 09th July, 2025. The said date is announced in the open court in the presence of both the partiesand issuance of notice of hearing stood dispensed with .Needless to say that the assessee will not seek any un-necessary adjournments and will co-operate in early adjudication of its appeal in ITA no. 2963/Del/2025, otherwise stay will stand vacated. At the cost of repetition, we reiterate that we have not commented on the merits of the issue’s arising in the appeal filed by the assessee in ITA no. 2963/Del/2025 for assessment year 2021-22. We order accordingly. 4. In the result, stay application in SA No. 284/Del/2025 is allowed in the manner as indicated in this order Order pronounced in the open court on 23rdMay, 2025. Sd/- Sd/- (SUDHIR PAREEK) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26.05.2025. 7 SA No. 284/Del/2025 (In ITA No. 2963/Del/2025) Automation Anywhere Inc., USA v.DCIT, Delhi A.Y: 2021-22 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DRP 5. DR 6. Guard File Asst. Registrar, ITAT, New Delhi "