Dassault Systemes Simulia Corporation, CHENNAI V. DDIT, CHENNAI

ITA 1025/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73614 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 16-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI IRS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENTAND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NOS.1024, 1025, 1026 & 1027(MDS)/2013 ASSESSMENT YEARS : 2003-04, 2004-05, 2005-06 & 200 6-07 M/S DASSAULT SYSTEMS SIMULIA CORPORATION (FORMERLY KNOWN AS ABAQUS INC), RISING SUN MILLS, 166, VALLEY STREET, PROVIDENCE, USA PAN : AADCD 3705 D V. THE DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION), CHENNAI - 600 034. (APPELLANT) (RESPONDENT) ITA NO. 1177(MDS)/2013 ASSESSMENT YEAR : 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I(4), CHENNAI - 600 034. V. M/S DASSAULT SYSTEMS SIMULIA P. LTD., 10 TH FLOOR, ASVN RAMANA TOWER, 37 & 38, VENKATNARAYANA RD., T. NAGAR, CHENNAI - 600 017. PAN : AAACF 4457 B (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SRIRAM S ESHADRI, CA REVENUE BY : SHRI T.N. BET GERI, IRS, JCIT DATE OF HEARING : 9 TH JANUARY, 2014 DATE OF PRONOUNCEMENT : 9 TH JANUARY, 2014 2 I.T.A. NOS.1024 TO 1027/MDS/13 I.T.A. NO.1177/MDS/13 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT THIS IS A BUNCH OF FIVE APPEALS. FOUR APPEALS AR E FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 AND 2006-07. THE FIFTH APPEAL IS FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2009-10. 2. THE ISSUE RAISED IN ALL THESE APPEALS IS THE SAM E AND THEREFORE, DISPOSED OF BY THIS COMMON ORDER. 3. THE COMMON ISSUE ON MERIT RAISED BY THE ASSESSEE IN ALL THE FOUR APPEALS IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TAXING THE CONSIDERATION RECEIVED FROM DAS SAULT SYSTEMS SIMULIA PRIVATE LTD. (DSSPL) TOWARDS SALE OF SOFTWA RE PRODUCTS BY APPLYING THE DEEMING PROVISIONS OF SECTION 9(1)(VI) OF THE INCOME- TAX ACT, 1961. 4. THE GROUND RAISED BY THE REVENUE IN ITS APPEAL I S ALSO THE SAME THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(I) MA DE IN RESPECT OF THE AMOUNTS PAID BY THE ASSESSEE TO M/S ABAQUS IN T HE CASE OF, WITHOUT DEDUCTION OF TAX AT SOURCE, TREATING THE SA ME AS NOT TAXABLE IN INDIA UNDER SECTION 9(1)(VI). 3 I.T.A. NOS.1024 TO 1027/MDS/13 I.T.A. NO.1177/MDS/13 5. IN FACT, THE ASSESSING AUTHORITY HAS TREATED THE PAYMENTS IN THE NATURE OF ROYALTY AS AGAINST PAYMENTS TOWARDS P URCHASE CONSIDERATION, AS ARGUED BY THE ASSESSEE. 6. THIS ISSUE HAS ALREADY BEEN DECIDED BY THE ITAT, CHENNAI B-BENCH IN THE CASE OF DASSAULT SYSTEMS SIMULIA P. LTD. (FORMERLY KNOWN AS ABACUS ENGINEERING PVT. LTD.) THROUGH THEI R ORDER DATED 16 TH SEPTEMBER, 2011 (2011-TII-143-ITAT-MAD-INTL). AFT ER CONSIDERING THE ISSUE AND FOLLOWING THE DECISION OF ITAT, DELHI SPECIAL BENCH IN THE CASE OF MOTORALA INC. V. DCIT (2005-TII-10- ITAT-DEL-SB-INTL), THE TRIBUNAL HAS HELD THAT THE P AYMENT IS NOT IN THE NATURE OF INCOME ARISING OR ACCRUING IN INDI A WITHIN THE MEANING OF SECTION 9(1)(VI) AND THEREFORE, NO TAXAB ILITY ARISES IN INDIA ON SUCH PAYMENTS. THE TRIBUNAL HELD THAT IT IS A CASE OF OUTRIGHT PURCHASE AND NO INCOME ARISES IN INDIA. 7. IN THESE CIRCUMSTANCES, WE FOLLOW THE SAID ORDER OF THE TRIBUNAL AND HOLD THAT THE DISPUTED PAYMENTS ARE NO T ASSESSABLE TO TAX IN INDIA. ACCORDINGLY, THE APPEALS FILED BY TH E ASSESSEE FOR ALL THE FOUR ASSESSMENT YEARS 2003-04, 2004-05, 2005-06 AND 2006-07 ARE ALLOWED AND THE APPEAL OF THE REVENUE FILED FOR ASSESSMENT YEAR 2009-10 IS DISMISSED. 4 I.T.A. NOS.1024 TO 1027/MDS/13 I.T.A. NO.1177/MDS/13 ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY, THE 9 TH OF JANUARY, 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED, THE 9 TH JANUARY, 2014. KRI. COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. DIT (INTER NATIONAL TAXATION), CHENNAI 4. CIT(A)-IV, CHENNAI - 600 034. 5. DR 6. GF.