Appeal details
Counselvise Citation
[2019] 115 COUNSELVISE.COM (IT) 9733 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 3 month(s) 14 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
23-09-2019
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Assessment Year
2010-2011
Appeal Filed On
09-06-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A NO.1851/DEL/2016 ASSESSMENT YEAR: 20 1 0 - 1 1 DCIT (INTERNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. V S . ALCATEL LUCENT ENTERPRISES, C/O PRICE WATER HOUSE COOPERS, 11A, VISHNU DIGAMBER MARG, SUCHTA BHAWAN, NEW DELHI. TAN/PAN: AAHCA 7398H (APP ELL ANT) (RESPONDENT) I.T.A NO.1853/DEL/2016 ASSESSMENT YEAR: 2010-11 DCIT (INTERNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. VS. ALCATEL LUCENT BELL NV, C/O PRICE WATER HOUSE COOPERS, 11A, VISHNU DIGAMBER MARG, SUCHTA BHAWAN, NEW DELHI. TAN/PAN: AAHCA 7652E (APPELLANT) (RESPONDENT) I.T.A NO.1854/DEL/2016 ASSESSMENT YEAR: 2010-11 DCIT (INTE RNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. VS. ALCATEL LUCENT FRANCE NOW KNOWN AS ALCATEL LUCENT INTL., C/O PRICE WATER HOUSE COOPERS, 11A, VISHNU DIGAMBER MARG, SUCHTA BHAWAN, NEW DELHI. TAN/PAN : AABCC 4864E (APPELLANT) (RESPONDENT) CO NO.211/DEL/2016 (ARISING OUT OF ITA NO.1853/DEL/2016) ASSESSMENT YEAR: 2010-11 I.T.A. NO.296/DEL/2016 2 ALCATEL LUCENT BELL NV, DLF CYBER GREENS, 14 TH AND 15 TH FLOOR, TOWER C, PHASE-III DLF CITY, GURGAON. VS. DCIT (INTERNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. TAN/PAN: AAHCA 7652E (APPELLANT) (RESPONDENT) CO NO.212/DEL/2016 (ARISING OUT OF ITA NO.1854/DEL/2016) ASSESSMENT YEAR: 2010-11 ALCATEL LUCENT FRANCE, DLF CYBER GREENS, 14 TH AND 15 TH FLOOR, TOWER C, PHASE-III DLF CITY, GURGAON. VS. DCIT (INTERNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. TAN/PAN: AABCC4864E (APPELLANT) (RESPONDENT) CO NO.213/DEL/2016 (ARISING OUT OF ITA NO.1851/DEL/2016) ASSESSMENT YEAR: 2010-11 ALCATEL LUCENT ENTERPRISES, DLF CYBER GREENS, 14 TH AND 15 TH FLOOR, TOWER C, PHASE-III DLF CITY, GURGAON. VS. DCIT (INTERNATIONAL TAXATION) CIRCLE-1(1)(1), NEW DELHI. TAN/PAN: AAHCA 7398H (APPELLANT) (RESPONDENT) APP ELL ANT BY: SHRI G.K. DHALL, CIT - DR (INTL.) RESPONDENT BY: S/SHRI SHASHI MATHEWS, ABHISHEK, ADV. DATE OF HEARING: 06 0 8 201 9 DATE OF PRONOUNCEMENT: 23 0 9 201 9 O R D E R PER AMIT SHUKLA, JUDICIAL MEMBER: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AS WELL AS THE CROSS OBJECTION BY THE ABOVE NAMED ASSE SSEE I.T.A. NO.296/DEL/2016 3 AGAINST THE SEPARATE IMPUGNED ORDERS OF EVEN DATE 27.01.2016, PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-XLII, NEW DELHI FOR THE QUANTUM OF ASSESS MENT PASSED U/S. 143(3) R.W.S. 144C FOR THE ASSESSMENT Y EAR 2010- 11. 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE A PPEALS, ARISING OUT OF IDENTICAL SET OF FACTS AND REASONING GIVEN BY THE AUTHORITIES BELOW, THEREFORE, SAME WERE HEARD TOGET HER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED O RDER. THE COMMON GROUND RAISED BY THE REVENUE IN ALL THE APPE ALS AS UNDER: 1. WHETHER THE CIT(A) WAS NOT JUSTIFIED IN LAW AND ON FACTS OF THE CASE BY NOT TREATING EMBEDDED SOFTWARE AS RO YLATY INCOME OF THE ASSESSEE AS PER EXPLANATION 4 TO SECT ION 9(I)(VI) OF THE INCOME TAX ACT, 1961. WHEREAS IN THE CROSS OBJECTION IN THE CASE OF ALL THE ASSESSEES READS AS UNDER: 1. THAT THE LD. CIT(A) ERRED IN NOT CONCLUDING THA T INTEREST UNDER SECTION 234B OF THE IT ACT IS NOT LEVIABLE IN THE FACTS OF THE PRESENT CASE IGNORING THE FACT THAT THE ENTIRE CONSIDERATION IN THE HANDS OF THE ASSESSEE WAS SUBJECT TO DEDUCTI ON OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT AND HENCE, T HE ASSESSEE WAS NOT LIABLE TO PAY ANY ADVANCE TAX. 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THIS PRECISE ISSUE NOW STANDS COVERED BY THE DECISI ON OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR I.T.A. NO.296/DEL/2016 4 2006-07 IN THE CASE OF ALCATEL LUCENT FRANCE VIDE O RDER DATED 27 TH FEBRUARY, 2015; AND 14 TH APRIL, 2014 IN ITA NO. 123/DEL/2015; AND 4855/DEL/2014, RESPECTIVELY. THE SAID JUDGMENT OF THE TRIBUNAL NOW STANDS APPROVED IN GROU P CASES OF ALCATEL INCLUDING THOSE OF THE ASSESSEE, BY THE HONBLE DELHI HIGH COURT VIDE JUDGMENT AND ORDER DATED 27 TH FEBRUARY, 2015. 4. THE FACTS IN BRIEF ARE THAT ALCATEL LUCENT GROUP IS A LEADING TELECOMMUNICATION GROUP AND INFRASTRUCTURE SUPPLIER. ALL THESE COMPANIES ARE INCORPORATED UNDER THE LAWS OF FRANCE AND BELGIUM. THESE COMPANIES IN THE RETURN O F INCOME FILED IN INDIA HAD OFFERED INCOME FROM FEES FOR TECHNICAL SERVICES (FTS) AND THE LD. ASSESSING OFFI CER BASED ON FINDING GIVEN IN THE EARLIER ASSESSMENT ORDERS HELD THAT, ASSESSEE HAD A PE IN INDIA. HOWEVER, NO INCOME WAS HELD TO BE ATTRIBUTABLE AS IT WAS FOUND THAT IT WAS FULLY C OMPENSATED FOR THE FUNCTIONS PERFORMED. HOWEVER, ASSESSING OFF ICER HELD THAT SOFTWARE SUPPLIES WERE TAXABLE AS ROYALTY ON THE GROSS BASES AS PER SECTION 9(1)(VI) OF THE INCOME TAX ACT READ WITH ARTICLE 12 OF INDIA-FRANCE DTAA. THE ASSESSING OFFI CERS CASE WAS THAT EQUIPMENT SUPPLIES BY THE ASSESSEE INCLUDE D BOTH HARDWARE AND SOFTWARE AND THE BASIS OF ATTRIBUTION CAN BE ONLY BE APPLIED TO HARDWARE SUPPLIES AND NOT TO THE SOFTWARE SUPPLIES. HE HELD THAT CONSIDERATION TOWARDS SOFTWA RE IS LIABLE TO BE TAXED AS ROYALTY BASED ON EARLIER YEAR ASSE SSMENT ORDERS AND HAS GIVEN A VERY DETAILED FINDING PRECIS ELY ON SIMILAR LINES THAT OF THE EARLIER YEARS AND HELD TH AT ROYALTY I.T.A. NO.296/DEL/2016 5 INCOME FROM THE SOFTWARE IS TO BE TAXED @ 10% AND H E ALSO LEVIED INTEREST INCOME U/S.234B ALONG WITH OTHER IN TEREST. 5. LD. CIT(A) HELD THAT THIS ISSUE HAS BEEN ADJUDICA TED IN FAVOUR OF THE ASSESSEE BY THE LD. CIT(A) IN THE EAR LIER YEARS WHICH HAS BEEN UPHELD BY THE TRIBUNAL AND ALSO CONF IRMED BY THE HONBLE DELHI HIGH COURT, WHEREIN IT WAS HELD T HAT CONSIDERATION RECEIVED BY THE ASSESSEE FOR THE SUPP LY OF EMBEDDED SOFTWARE IS TO BE TREATED AS CONSIDERATION RECEIVED FOR SUPPLY OF GOODS AND NOT AS ROYALTY UNDER THE IN COME TAX ACT OR INDIA-FRANCE DTAA. EVEN GOING BY THE RETROSP ECTIVE AMENDMENT MADE BY THE FINANCE ACT, 2012 IN SECTION 9(1)(VI), THERE IS NO CORRESPONDING CHANGE INTRODUCED IN THE DEFINITION OF ROYALTY UNDER THE DTAA. THUS, HE DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE. 6. WE FIND THAT NOW THIS ISSUE STANDS DECIDED BY TH E HONBLE DELHI HIGH COURT. FOLLOWING THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. NOKIA NETWORKS, (2013) 385 ITR 259 AND ALSO DIT VS. ERICSSON AB, (2 012) 343 ITR 470 . ACCORDINGLY, CONSISTENT WITH THE VIEW TAKEN IN THE EARLIER YEARS BY THE HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF THE ASSESSEE ITSELF, WE DECIDE THIS ISS UE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 7. SIMILARLY, THE ISSUE ON CHARGING OF INTEREST U/S .234B HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AND ALSO AFFIRMED BY THE HONBLE DELHI HIGH COURT. MOREOVER I.T.A. NO.296/DEL/2016 6 THIS ISSUE NOW STANDS COVERED BY THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF DIT VS. GE PACKAGED POWER INC., (2015) 373 ITR 65 , WHEREIN THE HONBLE HIGH COURT HAS HELD THAT, SINCE ASSESSEE WAS A NON-RESIDENT COMPAN Y AND THE ENTIRE TAX WAS TO BE DEDUCTED AT SOURCE ON PAYM ENTS MADE BY THE PAYEE TO IT, THEREFORE, THERE WAS NO QU ESTION OF PAYMENT OF ADVANCE TAX BY THE ASSESSEE, HENCE REVEN UE COULD NOT CHARGE ANY INTEREST U/S.234B. MOREOVER, ON THE ISSUE OF SOFTWARE ROYALTY ALREADY THE ADDITIONS MADE BY THE ASSESSING OFFICER STANDS TO BE DELETED. ACCORDINGLY, ALL THE APPEALS OF THE REVENUE ARE DISMISSED AND THE CROSS OBJECTIONS BY T HE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD SEPTEMBER, 2019. SD/- SD/- [B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 23 RD SEPTEMBER, 2019 PKK:
