COMPUTER MODELLING GROUP LIMITED,CANADA V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE INT TAX 1(2)(1), NEW DELHI

SA 301/DEL/2025

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The case involves Computer Modeling Group Ltd., a Canadian company, which filed a Stay Application against the Assistant Commissioner of Income Tax, Circle International Taxation 1(2)(1), New Delhi. The dispute centered on the classification of payments made for software license and maintenance fees as royalty or business income under the India-Canada Double Taxation Avoidance Agreement (DTAA). The Assessing Officer (AO) had treated these payments as royalty and subjected them to tax, which the assessee contested, citing previous Tribunal decisions that recognized such receipts as business income, not taxable in India due to the absence of a Permanent Establishment (PE). The Tribunal, referencing its earlier decisions, stayed the recovery of the demand pending the appeal's outcome.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398184 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 06-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2022-2023
• Other Referred Cases: 162 taxamann.com 437 (Del- Trib.)
• Laws Referred To: India-Canada DTAA
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEEJU GUPTA
• Keywords: Business income; Double taxation relief; Application of stay
• Section: 2

Judgement Text

"आयकर अपीलीय अिधकरण िदʟी पीठ “डी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी मनीष अŤवाल, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER SA No. 301/Del/2025 (Arising out of ITA No. 1978/Del/2025, A.Y 2022-23) Computer Modeling Group Ltd. 3710, 33 Street NV, Calgary, Canada, Edmonton AB PAN: AADCC-9658-E ...... आवेदक/Applicant बनाम Vs. Assistant Commissioner of Income Tax, Circle International Taxation 1(2)(1), New Delhi ..... ᮧितवादी/Respondent आवेदक/Applicant : Shri S.K. Agarwal, Chartered Accountant ŮितवादीȪारा/Respondent by : Ms. Neeju Gupta, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 06/06/2025 घोषणा कᳱ ितिथ/ Date of pronouncement : 06/06/2025 आदेश/ORDER PER VIKAS AWASTHY, JM: This Stay Application has been filed by the assessee seeking stay of outstanding demand for impugned assessment year i.e. AY 2022-23. 2. The ld. Counsel for the assessee submitted that the demand for impugned assessment year arises from the adjustment made by the AO on account of payments made for software license fee and software maintenance and support fee. The AO has held that the payments made in respect of aforesaid two items are in the nature of Royalty and FTS under Article 12 (3) and 12(4) of the India- Canada DTAA. He pointed out that similar adjustments were been made in the 2 SA No. 301/Del/2025 (AY 2022-23) assessee's case in preceding assessment years. The matter travelled to the Tribunal, the Tribunal in assessee's case reported as 162 taxamann.com 437 (Del- Trib.) for AY 2012-13, 2019-20 to 2021-22 has held that the receipts are in the nature of business income, since there is no PE of the assessee in India, the receipts are not taxable in India. In the impugned assessment year payments are made with reference to the same agreements which were very much subject matter of appeal in AY 2012-13, 2019-20 to 2021-22, therefore, there is no change in the nature of receipts in AY 2022-23. 3. Ms. Neeju Gupta, representing the department opposed the Stay Application and prayed that the assessee may be directed to pay at least 20% of the outstanding demand. 4. Both sides heard. Prima facie, we are of considered view that the issue raised in instant appeal arises out of the adjustments made by the AO with reference to agreement that was previously considered by the Tribunal in the preceding assessment years. Since, the Coordinate Bench in assessee's case for preceding assessment years has deleted the additions, recovery of outstanding demand in the impugned assessment year is stayed for a period of 180 days from the date of this order or till the disposal of appeal, whichever is earlier. 5. The Registry is directed to list appeal for hearing on 23.07.2025. Since, the date of hearing of appeal has been announced in the open court in presence of both sides, issuance of separate notice of hearing to the parties is dispensed with. 3 SA No. 301/Del/2025 (AY 2022-23) 6. Paper book if any be filed on or before the date of hearing of appeal with an advance copy to the opposite side, in accordance with ITAT Rules. The assessee shall not seek adjournment on the date fixed for hearing. 7. In the result, Stay Application of the assessee is allowed. Sd/- Sd/- (MANISH AGARWAL) (VIKAS AWASTHY) लेखाकार सद˟/ACCOUNTANT MEMBER Ɋाियक सद˟/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 06/09/2025 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT/CIT(A) 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "