Dy. DIT (International Taxation)-II, Pune V. IGate Computers Systems Ltd (formerly known as Patni Computer Systems Ltd), Pune

ITA 1172/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93675 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Double taxation relief; Retrospective amendment; Non-deduction of tax
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.1172 TO 1174/PN/2013 ASSESSMENT YEARS: 2008-09 TO 2010-11 THE DY. DIRECTOR OF INCOME TAX (IT)-II, PUNE . APPELLANT VS. IGATE COMPUTER SYSTEMS LTD., (FORMERLY KNOWN AS PATNI COMPUTER SYSTEMS LIMITED) LEVEL I, II, V & VI, TOWER 3, CYBERCITY, MAGARPATTA CITY, HADAPSAR, PUNE 411013 . RESPONDENT PAN: AABCP6219N APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : SHRI C.H. NANIWADEKAR DATE OF HEARING : 12-03-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER SUSHMA CHOWLA, J.M: ALL THESE APPEALS FILED BY THE REVENUE ARE AGAINST THE CONSOLIDATED ORDER OF CIT(A)-IT/TP, PUNE DATED 21.03.2013 RELATING TO ASSESSMENT YEARS 2008-09, 2009-10 AND 2010-11 PASSED UNDER SECTION 201(1)/201 (1A) OF THE INCOME TAX ACT, 1961. 2. ALL THE APPEALS RELATING TO SAME ASSESSEE ON SIM ILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN ALL THE YEARS UNDER APPE AL ARE IDENTICAL. HOWEVER, WE MAKE A REFERENCE TO THE FACTS IN ITA NO.1172/PN/201 3 TO ADJUDICATE THE ISSUE. 3. THE REVENUE HAS RAISED SIMILAR GROUNDS OF APPEAL IN ALL THE YEARS AND THE GROUNDS OF APPEAL IN ASSESSMENT YEAR 2008-09 READ A S UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN HOLDING THAT THE PAYMENT MADE FOR TRANSF ER OF USER RIGHTS OF SOFTWARES AND AVAILING OTHER SERVICES SUCH AS MAINT ENANCE OF SOFTWARE, ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 2 TRAINING ARE NOT TAXABLE UNDER ARTICLE 12/13 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND USA/UK /SINGAPORE. 2. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN HOLDING THAT THE PAYMENT MADE FOR TRANSF ER OF USER RIGHTS OF SOFTWARES ARE NOT TAXABLE AS ROYALTY UNDER ARTICLE 12/13 OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA A ND USA/UK/ SINGAPORE, WITHOUT VERIFYING AS TO WHAT RIGHTS ARE GIVEN TO THE ASSESSEE BY THE SOFTWARE SUPPLIERS, AS TO WHETHER THE SOFTW ARE WERE CUSTOMIZED FOR THE USE OF ASSESSEE, THE NATURE OF MAINTENANCE/TRAI NING SERVICES PROVIDED BY THE ASSESSEE, AS TO WHETHER ANY PERSONN EL WERE DEPUTED BY THE SOFTWARE SUPPLIERS AND VISITED INDIA FOR MAINTE NANCE/TRAINING SERVICES. 3. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN APPLYING THE DECISIONS OF HON'BLE DELHI HIGH COURT IN THE CASE ERICSSON AB (ITA 507 OF 2007) AND OTHER CASES IGNORING THE FACTUAL DIFFERENCES. 4. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE DECISIONS, RELIED BY THE AO, OF HON 'BLE HIGH COURT OF KARNATAKA IN THE CASE OF SAMSUNG ELECTRONICS CO. LT D. (ITA NO. 2808 OF 2005), HON'BLE AAR MILLENNIUM IT SOFTWARE LTD. (AAR NO. 835 OF 2009), HON'BLE AAR, IN THE CASE OF CITRIX SYSTEMS ASIA PA CIFIC PTY. LTD. (AAR NO.822 OF 2009) AND HON'BLE BANGALORE TRIBUNAL IN T HE CASE OF ING VYASYA BANK LTD [I.T.A. NO.160/2010, DATED 5 AUGUS T 2011 (AY 2008- 09)], IN WHICH IT HAD BEEN HELD THAT THE PAYMENT RE CEIVED FOR SUPPLY OF SOFTWARE (LICENSED PROGRAM) IS TAXABLE AS ROYALTY U NDER THE DTAA. 5. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN HOLDING PAYMENT FOR MAINTENANCE AND TRAI NING CANNOT BE TAXED AS 'FEES FOR TECHNICAL SERVICES' UNDER DTAA AS PER ARTICLE 13(4)(A) OF THE DTAA AS THE MAINTENANCE AND TRAINING SERVICES ARE A NCILLARY OR SUBSIDIARY TO THE APPLICATION OR ENJOYMENT OF RIGHT TO USE SOF TWARE. 6. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, T HE LD. CIT(A) WAS NOT CORRECT IN HOLDING PAYMENT FOR MAINTENANCE AND TRAI NING CANNOT BE TAXED AS 'FEES FOR TECHNICAL SERVICES' UNDER ARTICLE 13( 4)(C) OF DTAA AS THIS CONCLUSION IS NOT BASED ON ANY DOCUMENTARY EVIDENCE AND IN THE LIGHT OF THE FACT THAT IF THE ASSESSEE HAD RECEIVED THE CUST OMIZED SOFTWARE FROM THE FOREIGN SUPPLIERS THEN IT COULD BE TERMED AS TR ANSFER OF TECHNICAL PLAN OR TECHNICAL DESIGN AND IS TAXABLE AS FTS AND WHEN IT IS NOT A GROUND OF APPEAL RAISED BY THE APPELLANT. 7. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN HOLDING THAT PAYMENT FOR MAINTENANCE AND TRAINING CANNOT BE TAXED AS FEES FOR TECHNICAL SERVICES' UNDER ARTICL E 13(4)(B) OF DTAA AS THE COMPANIES RENDERING SERVICES HAVE NOT 'MADE AVAILAB LE' ANY TECHNICAL KNOWLEDGE EXPERIENCE, SKILL, KNOW-HOW ETC, WHICH WO ULD ENABLE THE ASSESSEE ACQUIRING THE SERVICES TO APPLY THE TECHNO LOGY CONTAINED THEREIN SPECIALLY WHEN CONCLUSION IS NOT BASED ON ANY DOCUM ENTARY EVIDENCE AND WITHOUT ANALYZING THE NATURE OF SERVICES PROVIDED B Y THE SERVICE PROVIDERS AND WHEN IT IS NOT A GROUND OF APPEAL RAISED BY THE APPELLANT. 8. ON THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE LD. CIT(A) WAS NOT CORRECT IN HOLDING THAT THE ASSESSEE HAS NOT AC QUIRED ANY SUCH TECHNICAL INPUTS FOR ITS OWN USE FROM THE COMPANIES RENDERING SUCH SERVICES, WHEN IN FACT THE ASSESSEE DOES ACQUIRE TH E TECHNICAL INPUTS DURING THE MAINTENANCE AND TRAINING SERVICES PROVID ED BY THE SERVICES PROVIDER, WHICH THEN ARE UTILIZED CONTINUOUSLY FOR ITS OWN USE. ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 3 9. THE APPELLANT CRAVES LEAVE TO ADD TO OR MODIFY A NY OF THE GROUNDS OF APPEAL. 4. THE GROUNDS OF APPEAL NO.1 AND 4 RAISED BY THE R EVENUE ARE GENERAL IN NATURE AND HENCE, THE SAME ARE DISMISSED AS GENERAL . 5. THE ISSUE RAISED IN OTHER GROUNDS OF APPEALS IS IN RELATION TO PAYMENT MADE FOR TRANSFER OF USER RIGHTS OF SOFTWARE AND WH ETHER THE SAME ARE TAXABLE AS ROYALTY UNDER ARTICLE 12/13 OF DOUBLE TAXATION AVOI DANCE AGREEMENT (DTAA) BETWEEN INDIA AND USA/UK/SINGAPORE. IN VIEW OF THE NON-DEDUCTION OF TAX AT SOURCE, WHETHER THE ASSESSEE IS LIABLE TO THE DEMAN D RAISED UNDER SECTION 201(1) OF THE ACT AND INTEREST UNDER SECTION 201(1A ) OF THE ACT. 6. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSING OFFICER HAD SOUGHT INFORMATION FROM THE ASSESSEE SEEKING DETAILS OF FO REIGN REMITTANCES MADE W.E.F. 01.04.2007 TO TILL DATE. THE ASSESSING OFFICER NOT ED THAT THE ASSESSEE HAD MADE PAYMENTS TOWARDS SOFTWARE PURCHASES AND RELATED COS T WITHOUT DEDUCTION OF TAX. THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BE LOW WAS THAT SINCE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND EXPORT OF COMPUTER SOFTWARE, IT HAD PURCHASED THE ABOVE SAID SOFTWARE AND NO TAX WAS DEDUCTED AND SINCE THE PAYMENTS WERE NOT FALLING WITHIN THE DEFI NITION OF ROYALTY OR TECHNICAL KNOW-HOW, NO TAX WAS REQUIRED TO BE DEDUCTED. THE ASSESSING OFFICER RELYING ON THE RATIO LAID DOWN BY HONBLE KARNATAKA HIGH COURT IN CIT VS. M/S. SAMSUNG ELECTRONICS CO. LTD. IN ITA NO.2808 OF 2005, HELD T HAT THE CONTENTION OF ASSESSEE THAT THE PURCHASE OF SOFTWARE WAS PURCHASE OF GOODS WAS NOT TENABLE. THE CONCLUSION OF THE ASSESSING OFFICER WAS THAT THE PA YMENTS MADE BY THE ASSESSEE FOR THE PURCHASE OF SOFTWARE AND RELATED C OSTS WAS ROYALTY PAYMENT AND IN VIEW OF THE PROVISIONS OF SECTION 195(1) OF THE ACT, IT WAS THE OBLIGATION ON THE ASSESSEE FOR MAKING PAYMENTS AND WHERE THE RECI PIENT OF THE AMOUNT IS FOREIGN COMPANY WITHIN THE MEANING OF SECTION 195 O F THE ACT, THEN TAX WAS TO BE DEDUCTED AT SOURCE ON SUCH PAYMENTS. SINCE THE ASS ESSEE HAD FAILED TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE ACT ON SOFTW ARE PAYMENTS OF ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 4 RS.1,52,15,205/-, THE ASSESSEE WAS FOUND TO BE IN D EFAULT OF TAX OF RS.15,21,521/- UNDER SECTION 201(1) OF THE ACT AND INTEREST WAS LEVIABLE UNDER SECTION 201(1A) OF THE ACT AT RS.8,74,757/-. 7. BEFORE THE CIT(A), THE EXPLANATION OF THE ASSESS EE WAS THAT THE AMOUNT PAID TOWARDS FEES OR SUBSCRIPTION CHARGES FOR THE U SE OR ACCESS OF DATA BASE OF THE PORTAL DO NOT FALL WITHIN THE DEFINITION OF ROY ALTY AND HENCE, NO TAX WAS DEDUCTIBLE ON SUCH PAYMENTS. FURTHER, IT WAS POINT ED OUT THAT WITH RESPECT TO PURCHASES OF COMPUTER PARTS AND HARDWARE, THE ASSES SING OFFICER HAD INADVERTENTLY CONSIDERED THE PAYMENTS MADE FOR THE PURCHASE OF HARDWARE ALONG WITH THE PAYMENTS MADE FOR THE PURCHASE OF SOFTWARE , POSSIBLY, BECAUSE THE SAME PARTY HAD ALSO SUPPLIED THE SOFTWARE. HOWEVER , THE SAID PAYMENTS TOWARDS PURCHASE OF COMPUTER SOFTWARE OR HARDWARE DO NOT AT TRACT THE PROVISIONS OF SECTION 195 OF THE ACT. 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH CO URT IN DIT VS. NOKIA NETWORKS OY (ITA NO.512 OF 2007) FOR THE PROPOSITION THAT TH E RETROSPECTIVE AMENDMENT TO SECTION 9(1)(VI) OF THE ACT COULD NOT BE READ INTO THE TAX TREATY. RELIANCE WAS PLACED ON SERIES OF DECISIONS BEFORE THE CIT(A). T HE CIT(A) NOTED THAT THE ASSESSEE HAD MADE PAYMENTS DURING THE YEAR FOR THE FOLLOWING PURPOSES:- I) PURCHASE OR LICENSE OF COMPUTER SOFTWARE II) ANNUAL MAINTENANCE CHARGES III) FEES FOR ACCESSING DATA BASE IV) TRAINING AND IMPLEMENTING CHARGES V) PURCHASE OF COMPUTER PARTS OR HARDWARE 9. WITH REGARD TO PAYMENTS MADE FOR PURCHASE OF COM PUTER PARTS AND HARDWARE, THE CIT(A) HELD THAT TDS WAS NOT REQUIRED TO DEDUCT ON SUCH PAYMENTS AND WITH RESPECT TO REMAINING PAYMENTS MAD E FOR ACQUIRING LICENSE OF SOFTWARE, THE CIT(A) NOTED THAT IT HAD BEEN MADE TA XABLE BY THE AMENDMENT TO SECTION 9(1)(VI) OF THE ACT BY WAY OF AMENDMENT TO FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT FROM 01.06.1976. HENCE, THE P AYMENTS MADE FOR ACQUIRING ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 5 SOFTWARE COULD NOT BE TAXABLE UNDER THE INCOME-TAX ACT. IT WAS FURTHER HELD BY THE CIT(A) THAT AS FAR AS THE PAYMENTS MADE TOWARDS ANNUAL MAINTENA NCE CHARGES, FEES PAID FOR ACCESSING DATA BASE, TRAININ G AND IMPLEMENTING CHARGES ARE CONCERNED, THE SAME WOULD BE TAXABLE AS A TECH NICAL SERVICE RENDERED BY NON-RESIDENT TO THE APPELLANT COMPANY UNDER SECTION 9(1)(VII) AS FEES FOR TECHNICAL SERVICES. THESE SERVICES ARE TECHNICAL IN NATURE AND ACCORDINGLY THE PROVISIONS ON FEES FOR TECHNICAL SERVICES WOULD B E APPLICABLE AND THE SAME WOULD BE TAXABLE UNDER THE INCOME TAX ACT. HOWEVER, THE CIT(A) HELD THAT HOWEVER, WHEN IT COMES TO THE TAXABILITY OF THE SAM E UNDER THE DTAA, THESE PAYMENTS WOULD NOT BE TAXABLE EITHER AS ROYALTY O R FEES FOR TECHNICAL SERVICE. FOR DECIDING THIS ISSUE, PARAGRAPHS 3 AND 4 OF ARTI CLE ON ROYALTY AND FEES FOR TECHNICAL SERVICES OF THE DTAA ARE RELEVANT. THIS ARTICLE IS SIMILAR IN ALL THE DTAAS WITH THE RESPECTIVE COUNTRIES. THE CIT(A) THUS, HELD AS UNDER:- 2.20. FROM THE ABOVE, IT CAN BE SEEN THAT THE TER M 'ROYALTY' IS DEFINED IN THE TAX TREATY. THEREFORE, THERE IS NO S COPE FOR USING THE DEFINITION OF 'ROYALTY' PROVIDED UNDER THE DOMESTIC LAW. ACCORDINGLY, RETROSPECTIVE AMENDMENT MADE UNDER THE INCOME TAX A CT TAXING PAYMENTS MADE FOR ACQUIRING LICENSE OF SOFTWARE WOU LD NOT BE RELEVANT IN ABSENCE OF SIMILAR CORRESPONDING AMENDMENT TO THE D TAA. IN THE CASES OF NOKIA DELIVERED BY DELHI HIGH COURT AS RELIED UP ON BY THE APPELLANT AND IN THE CASE OF B 4 U INTERNATIONAL HOLDINGS LTD V D CIT (ITA 3829/MUM/2008 DATED 28.05.2012) MUMBAI TRIBUNAL HAS HELD THAT, IN ABSENCE OF CORRESPONDING AMENDMENT TO THE DTAA, PAY MENT MADE FOR ACQUIRING LICENSE FOR SOFTWARE PURCHASE IS NOT TAXA BLE. SIMILAR DECISION IS GIVEN BY THE HONOURABLE TRIBUNAL IN THE OTHER CASES , WHICH ARE RELIED ON BY THE APPELLANT AND MENTIONED ABOVE IN THE PARA 2. 11 OF THIS ORDER. 10. IN RESPECT OF TAXABILITY OF OTHER SERVICES UNDE R DTAA, IT WAS FURTHER HELD BY THE CIT(A) THAT THE SAME ALSO COULD NOT BE TAXED AS FEES FOR TECHNICAL SERVICES UNDER DTAA. THUS, THE CIT(A) HELD THAT THE PAYMENT S MADE FOR PURCHASE OF SOFTWARE AND AVAILING OTHER SERVICES ARE TAXABLE UN DER THE INCOME-TAX ACT, BUT ARE NOT TAXABLE UNDER THE RESPECTIVE DTAAS AND CONS EQUENTLY, THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TAX ON SUCH PAYMENTS. 11. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF C IT(A). ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 6 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER AND POIN TED OUT THAT WHERE THERE WAS LICENSE TO USE SOFTWARE, THEN THE ASSESSEE WAS LIAB LE TO DEDUCT TAX AT SOURCE AND SINCE THE ASSESSEE HAS FAILED TO SO DEDUCT THE TAX AT SOURCE, WAS LIABLE FOR THE DEMAND RAISED UNDER SECTION 201(1) OF THE ACT AND I NTEREST UNDER SECTION 201(1A) OF THE ACT. 13. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT THE AMENDMENT BY WAY OF EXPLANATION 4 TO SECTION 19 5 OF THE ACT CANNOT BE APPLIED RETROSPECTIVELY. RELIANCE IN THIS REGARD W AS PLACED ON THE RATIOS LAID DOWN IN THE FOLLOWING DECISIONS:- I) DIRECTOR OF INCOME TAX VS. INFRASOFT LTD. (2013) 96 DTR (DEL) 113 II) NEW BOMBAY PARK HOTEL PVT. LTD. VS. ITO (INTR. TAXATION) (2014) 61 SOT 105 (MUMBAI) 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD MADE PAYMENTS FOR THE PURCHASE OF SOFTWARE AND FOR OTHER RELATED COSTS AS DETAILED AS UNDER:- NAME OF THE COMPANY NATURE OF PAYMENT DATE OF PAYMENT AMOUNT (RS) SAVVION INC. USA PURCHASE OF GENERAL SOFTWARE 04.05.2007 1,23,80,564 NCC SERVICES LTD, UK ANNUAL FEES FOR CHECKING SOFTWARE 24.06,2007 1,14,044 SERENA SOFTWARE PTE LTD PURCHASE OF GENERAL SOFTWARE 04.09.2007 66,990 CIPHER SOFT INC, USA SOFTWARE LICENSE FEE- CONVERSION OF FORMS RELEASE 3.0 JAVA WITH XML SWING 08.11.2007 47,784 AJIRA TECHNOLOGIES INC, USA PURCHASE OF SOFTWARE LICENSE- INTERNET USE-PILOT TESTING OF BPO 14.11.2007 3,93,800 AJIRA TECHNOLOGIES INC, USA PURCHASE OF SOFTWARE LICENSE- INTERNET USE-PILOT TESTING OF BPO 07.02.2008 22,12,023 TOTAL 1,52,15,205 15. THE ASSESSEE WAS FOUND TO HAVE DEFAULTED IN NOT DEDUCTING TAX AT SOURCE OUT OF SUCH PAYMENTS AND THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE DEFAULTED UNDER SECTION 201(1) AND FURTHER INTEREST WAS CHARGED UNDER SECTION ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 7 201(1A) OF THE ACT. THE PLEA OF THE ASSESSEE THAT IT HAD PURCHASED SOFTWARE WHICH WAS AKIN TO PURCHASE GOODS AND DOES NOT FALL WITHIN THE CATEGORY OF ROYALTY OR TECHNICAL KNOW-HOW, WAS REJECTED BY THE ASSESSIN G OFFICER. AS PER THE ASSESSING OFFICER, THE AMOUNTS PAID FELL WITHIN THE DEFINITION OF ROYALTY OR TECHNICAL KNOW-HOW AND IT WAS ALSO HELD THAT THESE PAYMENTS WERE TAXABLE UNDER DTAA. THE CASE OF THE ASSESSEE BEFORE US WAS THAT WHEN THE PAYMENTS WERE MADE FOR THE UNDER-MENTIONED PURPOSES, THERE WAS NO LIABILITY TO DEDUCT TAX AT SOURCE:- I) PURCHASE OR LICENSE OF COMPUTER SOFTWARE II) ANNUAL MAINTENANCE CHARGES III) FEES FOR ACCESSING DATA BASE IV) TRAINING AND IMPLEMENTING CHARGES V) PURCHASE OF COMPUTER PARTS OR HARDWARE 16. THE FINANCE ACT, 2012 HAD AMENDED THE PROVISION S OF SECTION 9 OF THE ACT BY WAY OF EXPLANATION 4, WITH RETROSPECTIVE EFFECT FROM 01.06.1976 AND THE PAYMENTS MADE FOR ACQUIRING LICENSE OF SOFTWARE HAS BEEN MADE TAXABLE UNDER THE INCOME-TAX ACT. THE ISSUE ARISING BEFORE US IS LIMITED TO THE ASPECT THAT IN SUCH CIRCUMSTANCES, CAN THE ASSESSEE BE HELD TO BE IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE RELYING ON THE SUBSEQUENT AMENDMEN TS MADE IN THE ACT WITH RETROSPECTIVE EFFECT? 17. WE FIND THAT MUMBAI BENCH OF THE TRIBUNAL IN NE W BOMBAY PARK HOTEL PVT. LTD. VS. ITO (INTR. TAXATION) (SUPRA) HAS HELD AS UNDER:- IF THE ENTIRE SERVICES RENDERED BY THE FOREIGN COM PANY TO THE ASSESSES IN RESPECT OF PHASE ONE AND TWO OUTSIDE INDIA, THEN TH E SAME CANNOT BECOME CHARGEABLE TO TAX IN THE HANDS OF THE FOREIG N COMPANY IN INDIA. UNLESS THE AMOUNT PAID BY THE ASSESSEE COMPANY TO T HE FOREIGN COMPANY DOES NOT BECOME CHARGEABLE TO TAX IN INDIA THEN THE QUESTION OF APPLICABILITY OF SECTION 195 DOES NOT ARISE. THERE FORE, WITHOUT CONSIDERING THE AMENDMENT BROUGHT INTO THE STATUTE BY FINANCE A CT 20I2 WITH RETROSPECTIVE EFFECT FROM 01.06.1976 IT HAS TO BE H ELD THAT THERE WAS NO LIABILITY OF THE ASSESSEE TO DEDUCT TAX AT SOURCE O N THE PAYMENT MADE BY IT WITH RESPECT TO WORK RELATING TO PHASE ONE AND TWO. FURTHER THE ASSESSEE CANNOT BE HELD TO BE LIABLE TO DEDUCT TAX AT SOURCE RELYING ON THE SUBSEQUENT AMENDMENTS MADE IN THE ACT WITH RETROSPE CTIVE EFFECT. THE TRIBUNAL BASED ITS DECISION ON A LEGAL MAXIM LEX NO N COGIT AD IMPOSSIBLIA MEANING THEREBY THAT THE LAW CANNOT POSSIBLY COMPEL A PERSON TO DO SOMETHING WHICH IS IMPOSSIBLE TO PERFORM. AMENDMEN T BROUGHT INTO THE STATUTE BY FINANCE ACT 2012 WITH RETROSPECTIVE EFFE CT FROM 01.06.1976 AMENDMENT DOES NOT CREATE ANY LIABILITY AGAINST THE ASSESSEE AS THE LEGAL ITA NOS.1172 TO 1174/PN/2013 IGATE COMPUTERS SYSTEMS LTD 8 POSITION PREVAILING AT THE RELEVANT TIME WAS TO BE CONSIDERED. ASSESSES WAS NOT LIABLE FOR DEDUCTION OF TAX UNDER SECTION 1 95 OF THE ACT. CHANNEL GUIDE INDIA LTD. VS. ACIT, 139 ITD 49, RELIED ON. ASSESSEE CANNOT BE MADE LIABLE TO DEDUCT TDS ON BAS IS OF SUBSEQUENT AMENDMENT IN RESPECT OF PAYMENT MADE TO NON-RESIDEN T FOR PROVIDING TECHNICAL DESIGNS AND DRAWINGS SERVICES OUTSIDE IND IA IN RELATION TO PROJECT IN INDIA. 18. FOLLOWING THE RATIO LAID DOWN BY THE MUMBAI BEN CH OF THE TRIBUNAL IN NEW BOMBAY PARK HOTEL PVT. LTD. VS. ITO (INTR. TAXATION ) (SUPRA), WE HOLD THAT NO LIABILITY CAN BE FASTENED ON THE ASSESSEE TO DEDUCT TAX AT SOURCE ON THE BASIS OF SUBSEQUENT AMENDMENTS MADE IN THE ACT, IN RELATION TO EARLIER PAYMENTS MADE TO NON-RESIDENTS, WHEN THE SAID AMENDMENT WAS NOT I N FORCE. WE CONFIRM THE ORDER OF CIT(A) ALBEIT ON DIFFERENT GROUNDS. THE G ROUNDS OF APPEAL RAISED BY THE REVENUE ARE THUS, DISMISSED. 19. THE FACTS AND ISSUES IN ITA NOS.1173 AND 1174/P N/2013 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.1172/PN/2013 AND OUR DECISION IN ITA NO.1172/PN/2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS.1173 AND 1174/PN/2013. 20. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED ON THIS 10 TH DAY OF APRIL, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 10 TH APRIL, 2015. GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-IT/TP, PUNE; 4) THE CIT-IT/TP, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE