Dassault Systemes Simulia Corporation, CHENNAI V. DDIT, CHENNAI

ITA 1399/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7924 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 23-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G M DOSS IRS
• Assessee Lawyers: PRANITH GOLECHA
• Keywords: Double taxation relief; Retrospective amendment; Validity of assessment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !'# . $%$& , ' #( ) [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 1399/MDS/2014 / ASSESSMENT YEAR : 2010-2011. DASAULT SYSTEMES SIMULIA CORPORATION (FORMERLY KNOWN AS ABAQUS INC) RISING SUN MILLS, 166, VALLEY STREET, PROVIDENCE, USA [PAN AADCD 3705D] VS. DEPUTY DIRECTOR OF INCOME TAX, INTERNATIONAL TAXATION (1) CHENNAI. ( *+ / APPELLANT) ( ,-*+ /RESPONDENT) / APPELLANT BY : SHRI. PRANITH GOLECHA, C.A. /RESPONDENT BY : SHRI. G.M. DOSS, IRS, CIT. /DATE OF HEARING : 23-11-2016 ! /DATE OF PRONOUNCEMENT : 30-11-2016. / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRI EVED ON TAXING THE CONSIDERATION RECEIVED BY IT FROM ITS SUBSIDIARY IN INDIA ITA NO.1399/MDS/2014. :- 2 -: DASSAULT SYSTEMS PRIVATE LIMITED (HEREIN AFTER REFE RRED TO AS DSSPL), TOWARDS SALE OF SOFTWARE PRODUCTS, BY APPLYING DEE MING PROVISIONS UNDER SECTION 9(1)(VI) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WHERE BY IT QUESTIONS THE VALIDITY OF ASSESSMENT DONE ON IT WIT HOUT FIRST ISSUING A DRAFT ASSESSMENT ORDER AS MANDATED U/S.144C OF THE ACT. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSE E HAD RECEIVED A13,21,57,925/- FROM DSSPL, FOR SOFTWARE PRODUCTS SOLD TO DSSPL, FOR DISTRIBUTION IN INDIA. AS PER THE LD. AR SUCH SOFTWARE PRODUCTS WERE DELIVERED DIRECTLY TO THE END CUSTOME RS BY THE ASSESSEE, AND THEY COULD LOAD THE SOFTWARE USING THE LICENCE KEYS PROVIDED BY THE ASSESSEE. FURTHER AS PER LD. AUTHORISED REPRESE NTATIVE, DSSPL WAS ONLY A DISTRIBUTOR OF THE SOFTWARE PRODUCT AND NEVER OBTAINED A RIGHT TO COPY OR COMMERCIALLY EXPLOIT THE SOFTWARE. SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT LD. ASSESSIN G OFFICER CONSIDERED THE AMOUNT RECEIVED BY THE ASSESSEE FRO M DSSPL AS ROYALTY INCOME, ACCRUING OR ARISING IN INDIA IN TER MS ARTICLE 9(1)(VI) OF THE ACT, ERRONEOUSLY. AS PER LD. AUTHORISED REPRES ENTATIVE, ASSESSING OFFICER HAD COME TO AN ERRONEOUS CONCLUSION THAT AMOUNT RECEIVED FROM DSSPL FELL WITHIN THE DEFINITION OF ROYALTY UNDER ARTICLE 12 OF THE ITA NO.1399/MDS/2014. :- 3 -: DOUBLE TAXATION AVOIDANCE AGREEMENT (HEREIN AFTER R EFERRED TO AS THE DTAA) BETWEEN INDIA AND USA. FURTHER, AS PER LD. AUTHORISED REPRESENTATIVE, LD. COMMISSIONER OF INCOME TAX (APP EALS) HAD CONFIRMED THIS VIEW DISREGARDING THE TRIBUNAL ORDER FOR EARLIER YEARS IN ASSESSEES OWN CASE, WHERE IT WAS HELD THAT THE AMO UNTS WERE NOT IN THE NATURE OF ROYALTY. RELIANCE WAS PLACED BY THE LD. AUTHORISED REPRESENTATIVE ON DECISIONS DATED 09.01.2014 OF CO- ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NOS.1024, 1025, 1026 & 1 027/MDS/2013 AND ITA NO.1177/MDS/2013. LD. AUTHORISED REPRESENT ATIVE ALSO PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF DASSAULT SYSTEMS SIMULIA P. LTD (2011-TII-143-IT AT-MAD-INTL) DATED 16 TH SEPTEMBER, 2011, WHICH WAS RELIED ON BY THE CO-OR DINATE BENCH IN ITA NOS.1024, 1025, 1026 & 1027/MDS/2013 ( SUPRA). ACCORDING TO HIM, PAYMENTS RECEIVED FROM DSSPL DUR ING THE PREVIOUS YEAR RELEVANT TO IMPUGNED ASSESSMENT YEAR WAS BASE D ON THE VERY SAME REGIONAL SUPPORT AGREEMENTS ENTERED BY THE ASS ESSEE WITH M/S. DSSPL WHICH WAS CONSIDERED BY THE CO-ORDINATE BENCH IN THE DECISIONS FOR ASSESSMENT YEARS 2002-03 TO 2006-2007 . 4. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDERS OF THE LOWER AUTHORITIES SUB MITTED THAT DECISIONS CITED BY THE LD. AUTHORISED REPRESENTATIVE HAD NOT CONSIDERED ITA NO.1399/MDS/2014. :- 4 -: EXPLANATION 4 TO SEC. 9(1)(VI) OF THE ACT WHICH WAS BROUGHT IN BY FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT 01.06. 1976. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, THROUGH THE E XPLANATION, DEFINITION OF ROYALTY WAS BROADENED TO INCLUDE TRAN SFER OF COPY RIGHTED SOFTWARE AS WELL AS COPY RIGHT IN SOFTWARE. AS PE R LD. DEPARTMENTAL REPRESENTATIVE, BY VIRTUE OF THE SAID EXPLANATION, PAYMENTS RECEIVED BY THE ASSESSEE FROM DSSPL CAME WITHIN THE AMBIT OF ROYALTY. THUS, ACCORDING TO HIM, AS PER THE MANDATE OF SEC. 9(1)(V I) OF THE ACT, ROYALTY INCOME HAD TO BE DEEMED AS ARISING OR ACCR UING IN INDIA, AND THEREFORE LIABLE TO TAX IN THE HANDS OF THE ASS ESSEE. 5. AD LIBITUM REPLY OF THE LD. AUTHORISED REPRESENTATI VE WAS THAT DEFINITION OF THE TERM ROYALTY IN THE DTAA BETWEE N INDIA AND USA ALONE WOULD APPLY, SINCE IT WAS MORE ADVANTAGEOUS T O IT. ACCORDING TO HIM ARTICLE 12(3) OF THE DTAA DEFINED THE ROYALTY AND SAID DEFINITION WAS NEVER AMENDED TO BRING IT IN LINE WITH THE MEAN ING OF THE TERM ROYALTY AS BROADENED BY EXPLANATION 4 TO SEC. 9(1)( VI) OF THE ACT. ACCORDING TO HIM, ASSESSEE COULD TAKE ADVANTAGE OF THE DEFINITION OF ROYALTY AS PER DTAA AND A FALL BACK ON THE DEFINITI ON AS PER ACT WAS POSSIBLE ONLY WERE A DEFINITION WAS NOT AVAILABLE I N THE DTAA. RELYING ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. INFRASOFT LTD 264 CTR 329 , LD. AUTHORISED REPRESENTATIVE SUBMITTED ITA NO.1399/MDS/2014. :- 5 -: THAT AMENDMENT MADE TO SEC.9(1)(VI) OF THE ACT, AND WHETHER SUMS RECEIVED FOR USE OF SOFTWARE COULD BE ROYALTY IN TE RMS OF THE ACT, WERE IRRELEVANT SINCE ASSESSEE WAS COVERED UNDER DTAA WH ICH WAS MORE BENEFICIAL TO HIM. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D BY THE REVENUE THAT PAYMENTS RECEIVED BY THE ASSESSEE FROM DSSPL WERE B ASED ON SAME REGIONAL SUPPORT AGREEMENTS BETWEEN ASSESSEE AND DS SPL WHICH WAS CONSIDERED BY THE CO-ORDINATE BENCH OF THIS TRIBUNA L IN ITA NOS.1698 TO 1702/MDS/2010, IN ITS ORDER DATED 16.09.2011. SO THE PAYMENTS RECEIVED BY THE ASSESSEE DURING THE RELEVANT ASSES SMENT YEAR FROM DSSPL WAS OF THE SAME NATURE AS WHAT WERE RECEIVED BY IT FROM THE SAID CONCERN IN THE PREVIOUS YEAR RELEVANT TO ASSES SMENT YEARS 2002- 03 TO 2006-2007. IN ITS ORDER DATED 16.09.2011, THI S TRIBUNAL HAD FOLLOWED THE DECISION OF SPECIAL BENCH IN THE CASE OF MOTORALA INC. VS. DCIT 95 ITD 269 AND HAD HELD AS UNDER:- 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, WE FIND THAT NO SPECIFIC ERROR IN THE ORDER OF THE LD. CIT(A) COULD BE POINTED OUT BY THE LD. D.R. WE FIND THAT THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE DELHI SPECI AL BENCH OF THE TRIBUNAL IN THE CASE OF MOTORALA INC. VS. DCIT 95 I TD 269. WE FIND THAT FOLLOWING THE ABOVE DECISION OF THE MUMBA I E BENCH OF THE TRIBUNAL IN THE CASE OF ADIT VS. TII TEAM TELEC OM ITA NO.1399/MDS/2014. :- 6 -: INTERNATIONAL ITA NOS. 3939/MUM/2010 ORDER DATED 26 .8.2011 HAS HELD AS UNDER: 17. IT IS NOT EVEN REVENUE'S CASE THAT ANY OF THES E RIGHTS HAVE BEEN TRANSFERRED BY THE ASSESSEE, ON THE FACTS OF THIS CASE, AND, FOR THIS REASON, THE PAYMENT FOR SOFTWAR E CANNOT BE TREATED AS PAYMENT FOR USE OF COPYRIGHT IN THE S OFTWARE. AS WE HOLD SO, WE MAY MENTION THAT IN THE CASE OF GRACEMAC (SUPRA), A CONTRARY VIEW HAS BEEN TAKEN BU T THAT CONCLUSION IS ARRIVED AT IN THE LIGHT OF THE PROVIS IONS OF CLAUSE (V) IN EXPLANATION 2 TO SECTION 9(1)(VI) WHI CH ALSO COVERS CONSIDERATION FOR 'TRANSFER OF ALL OR ANY RI GHTS (INCLUDING THE GRANTING OF A LICENCE) IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WORK' - A PROVISION WHICH IS CLEARLY LARGER IN SCOPE THAN THE PROVISION OF ARTICLE 12(3) OF THE INDO ISRAEL TAX TREATY. THE WO RD 'OF' BETWEEN 'COPYRIGHT' AND 'LITERARY, ARTISTIC OR SCIE NTIFIC WORK' IS ALSO MISSING IN THE STATUTORY PROVISION. T HE TREATY PROVISION THAT WE ARE DEALING WITH ARE THUS CERTAIN LY NOT IN PARI MATERIA WITH THIS STATUTORY PROVISION, AND, BY THE VIRTUE OF SECTION 90(2) OF THE ACT, THE PROVISIONS OF INDIA ISRAEL TAX TREATY CLEARLY OVERRIDE THIS STATUTORY P ROVISION. IN GRACEMAC DECISION (SUPRA), THE COORDINATE BENCH WAS OF THE VIEW THAT THE PROVISIONS OF THE APPLICABLE TAX TREATY AND THE INCOME TAX ACT ARE 'IDENTICAL' - A POSITION WHICH DOES NOT PREVAIL IN THE SITUATION BEFORE US. WE, TH EREFORE, SEE NO REASONS TO BE GUIDED BY GRACEMAC DECISION (S UPRA). THE NEXT ISSUE THAT WE NEED TO CONSIDER IS WHETHER A PAYMENT FOR SOFTWARE CAN BE SAID TO BE A PAYMENT FO R 'PROCESS' AS A COMPUTER PROGRAM IS A NOTHING BUT A SET OF INSTRUCTION LYING IN THE PASSIVE STATE AND THIS EXE CUTION OF INSTRUCTIONS IS' A PROCESS' OR' A SERIES OF PROCESS ES'. NO DOUBT, IN TERMS OF THE PROVISIONS OF SECTION 2 (FFC ) OF THE INDIAN COPYRIGHT ACT, 1957, A COMPUTER PROGRAM, I.E . SOFTWARE, HAS BEEN DEFINED AS 'A SET OF INSTRUCTION S EXPRESSED IN WORDS, CODES, SCHEMES OR IN ANY OTHER FORM, INCLUDING A MACHINE READABLE MEDIUM, CAPABLE OF CAU SING A COMPUTER TO PERFORM A PARTICULAR TASK OR ACHIEVE A PARTICULAR RESULT', BUT THE MOOT QUESTION IS AS TO WHAT IS THAT A CUSTOMER PAYS FOR WHEN HE BUYS, OR TO PUT IT IN TECHNICAL TERMS 'OBTAINS LICENCE TO USE THE SOFTWAR E FOR THE PROCESS OF EXECUTING THE INSTRUCTIONS IN THE SOFTWA RE, OR FOR THE RESULTS ACHIEVED ON ACCOUNT OF USE OF THE S OFTWARE. TO DRAW AN ANALOGY, IT IS AKIN TO A SITUATION IN WH ICH A PERSON HIRES A VEHICLE, AND THE QUESTION COULD BE A S TO WHAT DOES HE PAY FOR - FOR THE USE OF THE TECHNICAL KNOWHOW ON THE BASIS OF WHICH VEHICLE OPERATES, OR FOR THE USE OF A PRODUCT WHICH CARRIES PASSENGERS OR G OODS ITA NO.1399/MDS/2014. :- 7 -: FROM ONE PLACE TO ANOTHER. THE ANSWER IS OBVIOUS. W HEN YOU PAY FOR USE OF VEHICLE, YOU ACTUALLY PAY FOR A PRODUCT WHICH CARRIES THE PASSENGERS OR GOODS FROM ONE PLAC E TO ANOTHER AND NOT THE TECHNICAL KNOWHOW ON THE BASIS OF WHICH SUCH A PRODUCT OPERATES. SAME IS THE CASE WIT H THE SOFTWARE, WHEN SOMEONE PAYS FOR THE SOFTWARE, HE AC TUALLY PAYS FOR A PRODUCT WHICH GIVES CERTAIN RESULTS, AND NOT THE PROCESS OF EXECUTION OF INSTRUCTIONS EMBEDDED THERE IN. AS A MATTER OF FACT, UNDER STANDARD TERMS AND CONDITIO NS FOR SALE OF SOFTWARE, THE BUYER OF SOFTWARE IS NOT EVEN ALLOWED TO TINKER WITH THE PROCESS ON THE BASIS OF WHICH SU CH SOFTWARE RUNS OR TO EVEN WORK AROUND THE TECHNICAL LIMITATIONS OF THE SOFTWARE. IN ASIA SATELLITE TELECOMMUNICATIONS LTD VS DCIT (78 TTJ 489), A COORDINATE BENCH OF THIS TRIBUNAL DID TAKE THE VIEW THAT WHEN AN ASSESSEE PAYS FOR TRANSPONDER HIRE, HE ACTU ALLY PAYS FOR THE A PROCESS INASMUCH AS TRANSPONDER AMPL IFIES AND SHIFTS THE FREQUENCY OF EACH SIGNAL, AND, THERE FORE, PAYMENT FOR USE OF TRANSPONDER IS INFACT A PAYMENT FOR PROCESS LIABLE TO BE TREATED AS 'ROYALTY' WITHIN ME ANINGS OF THAT EXPRESSION UNDER EXPLANATION 2 TO SECTION 9 (L )(VI) OF THE INCOME TAX ACT. HOWEVER, WHEN THIS DECISION CAM E UP FOR SCRUTINY OF HON'BLE DELHI HIGH COURT, IN THE CASE REPORTED AS ASIA SATELLITE TELECOMMUNICATIONS CO LT D VS DIT (332 ITR 340), THEIR LORDSHIPS, AFTER A VERY ER UDITE AND DETAILED DISCUSSION, CONCLUDED THAT 'WE ARE UNA BLE TO SUBSCRIBE TO THE VIEW TAKEN BY THE TRIBUNAL IN THE IMPUGNED JUDGMENT ON THE INTERPRETATION OF SECTION 9(1)(VI) OF THE ACT'. IT CANNOT, THEREFORE, BE OPEN TO US TO APPROVE THE STAND OF THE REVENUE TO THE EFFECT THAT THE PAYMENT FOR SOFTWARE IS DE FACTO A PAYMENT FOR PROC ESS. THAT IS A HYPER TECHNICAL APPROACH TOTALLY DIVORCED FROM THE GROUND BUSINESS REALITIES. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT THE EXPRESSION 'PROCESS' APPEARS IMMEDIATELY AFTER, AND IN THE COMPANY OF, EXPRESSIO NS 'ANY PATENT, TRADE MARK, DESIGN OR MODEL, PLAN, SEC RET FORMULA OR PROCESS'. WE FIND THAT THESE EXPRESSIONS ARE USED TOGETHER IN THE TREATY AND AS IT IS WELL SETTL ED, AS NOTED BY MAXWELL IN INTERPRETATION OF STATUTES AND WHILE ELABORATING ON THE PRINCIPLE OF NOSCITUR A SOCIIS, THAT WHEN TWO OR MORE WORDS WHICH ARE SUSCEPTIBLE TO ANALOGOU S MEANING ARE USED TOGETHER THEY ARE DEEMED TO BE USE D IN THEIR COGNATE SENSE. THEY TAKE, AS IT WERE, THEIR C OLOURS FROM EACH OTHER, THE MEANING OF MORE GENERAL BEING RESTRICTED TO A SENSE ANALOGOUS TO THAT OF LESS GEN ERAL. THIS PRINCIPLE OF INTERPRETATION OF STATUTES, IN OUR CON SIDERED VIEW, HOLDS EQUALLY GOOD FOR INTERPRETATION OF A TR EATY PROVISION. EXPLAINING THIS PRINCIPLE IN MORE GENERA L TERMS, A VERY DISTINGUISHED FORMER COLLEAGUE OF OURS HON'B LE SHRI ITA NO.1399/MDS/2014. :- 8 -: M.K. CHATURVEDI, HAD, IN AN ARTICLE 'INTERPRETATION OF TAXING STATUTES' (AIFTP JOURNAL: VOL. 4 NO.7, JULY, 2002, AT P. 7), PUT IT IN HIS INIMITABLE WORDS AS FOLLOWS : 'LAW IS NOT A BROODING OMNIPOTENCE IN THE SKY. IT IS A PRAGMATIC TOOL OF THE SOCIAL ORDER. THE TENETS OF LAW BEING ENACTED ON THE BASIS OF PRAGMATISM. SIMILARLY, THE RULES RELATING TO INTERPRETATION ARE ALSO BASED ON COMMONSENSE APPROACH. SUPPOSE A MAN TELLS HIS WIFE TO GO OUT AND BUY BREAD, MILK OR ANYTHING ELSE-SHE NEEDS, HE WILL NOT NORMALLY BE UNDERSTOOD TO INCLUDE IN THE TERMS 'ANYTHING ELSE SHE NEEDS' A NEW CAR OR AN ITEM OF JEWELLERY. THE DICTUM OF EJUSDEM GENERIS REFERS TO SIMILAR SITUATION. IT MEANS OF THE SAME KIND, CLASS OR NATURE. THE RULE IS THAT WHEN GENERAL WORDS FOLLOW PARTICULAR AND SPECIFIC WORDS OF THE SAME NATURE, THE GENERAL WORDS MUST BE CONFINED TO THE THINGS OF SAME KIND AS SPECIFIED. NOSCITUR A SOCIIS IS A BROADER VERSION OF THE MAXIM EJUSDEM GENERIS. A MAN MAY BE KNOWN BY THE COMPANY HE KEEPS AND A WORD MAY BE INTERPRETED WITH REFERENCE TO THE ACCOMPANYING WORDS. WORDS DERIVE COLOUR FROM THE SURROUNDING WORDS.' 16. IN THE INSTANT CASE, WE FIND THAT THE ASSESSEE SOLD COPY RIGHTED SOFTWARE AND NOT COPYRIGHT IN THE SOFTWARE. THEREFO RE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED. GROUNDS OF APPEAL TAKEN BY THE REVENUE A RE DISMISSED. IN A LATER DECISION DATED 09.01.2014 IN ITA NO.1024 TO 1027/MDS/2013 AND 1177/MDS/2013 (SUPRA), THIS TRIBUNAL HAD FOLLOW ED ABOVE MENTIONED ORDER AND HELD AS UNDER:- 6. THIS ISSUE HAD ALREADY BEEN DECIDED BY THE ITAT, CHENNAI B-BENCH IN THE CASE OF DASSAULT SYSTEMS SIM ULIA P. LTD (FORMERLY KNOWN AS ABACUS ENGINEERING PVT. L TD) THROUGH THEIR ORDER DATED 16 TH SEPTEMBER, 2011 (2011- TII-143-ITAT-MAD-ITNL). AFTER CONSIDERING THE ISSUE AND FOLLOWING THE DECISION OF ITAR, DELHI SPECIAL BENCH IN THE CASE OF MOTORALA INC. VS. DCIT(2005-TII-10-ITAT-DEL -SB- INTL), THE TRIBUNALHAS HELD THAT THE PAYMENT IS NOT IN ITA NO.1399/MDS/2014. :- 9 -: THE NATURE OF INCOME ARISING OR ACCRUING IN INDIA W ITHIN THE MEANING OF SECTION 9(1)(VI) AND THEREFORE, NO TAXABILITY ARISES IN INDIA ON SUCH PAYMENTS. THE T RIBUNAL HELD THAT IT IS A CASE OF OUTRIGHT PURCHASE AND NO INCOME ARISES IN INDIA. CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE B EFORE US IS THAT THERE WAS AN AMENDMENT TO SEC. 9(1) (VI) BY FINANC E ACT, 2012 WHICH RETROSPECTIVELY BROUGHT IN EXPLANATION 4 THEREBY EX PANDING THE MEANING OF THE TERM ROYALTY TO INCLUDE TRANSFER O F ANY RIGHT WHETHER IT WAS THROUGH A COPY RIGHTED SOFTWARE, OR A COPY R IGHT IN SOFTWARE. IN OTHER WORDS, AS PER LD. DEPARTMENTAL REPRESENTATIVE ROYALTY WOULD BE PAYABLE IRRESPECTIVE OF WHETHER THE ITEM SOLD WAS S HRINK WRAPPED SOFTWARE OR NOT. HOWEVER, WE FIND THAT CO-ORDINATE BENCH HAD IN ITS ORDERS FOR THE EARLIER YEARS RELIED ON THE DTAA BET WEEN INDIA AND USA FOR CONSTRUING THE MEANING OF THE TERM ROYALTY WHICH WAS AVAILABLE IN ARTICLE 12(3). IT IS NOT DISPUTED THAT THE SAID DE FINITION HAD NOT UNDERGONE ANY CHANGE DESPITE THE AMENDMENT TO SEC. 9(1)(VI) BROUGHT IN THROUGH FINANCE ACT, 2012. IT IS TRITE LAW THAT AN ASSESSEE CAN FALL BACK ON THE DTA WHEN IT IS MORE ADVANTAGEO US TO IT. HONBLE DELHI HIGH COURT IN THE CASE OF INFRASOFT LTD (SUPRA) HAD CLEARLY HELD THAT SUBSEQUENT AMENDMENT TO SEC. 9(1)(VI) OF THE A CT IN SO FAR AS IT RELATES TO DEFINITION OF ROYALTY WAS NOT RELEVANT W HEN AN ASSESSEE RELIED ON DTAA PROVISIONS WHICH WERE MORE BENEFICIA L TO IT. IN THE ITA NO.1399/MDS/2014. :- 10 -: CIRCUMSTANCES, FOLLOWING DECISIONS OF CO-ORDINATE B ENCH OF EARLIER YEARS, WE ARE OF THE OPINION THAT THE RECEIPTS OF T HE ASSESSEE FROM DSSPL COULD NOT HAVE BEEN CONSIDERED AS ROYALTY IN THE HANDS OF THE ASSESSEE LIABLE FOR TAXATION IN INDIA. ADDITION MA DE STANDS DELETED. 7. SINCE, WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE A SSESSEE IN MERITS, THE ADDITIONAL GROUND RAISED BY THE ASSESSE E QUESTIONING VALIDITY OF ASSESSMENT WITHOUT PASSING A DRAFT ASSE SSMENT ORDER HAS BECOME ACADEMIC AND NOT NECESSARY TO ADJUDICATE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATE D AS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 30TH DAY OF N OVEMBER, 2016, AT CHENNAI SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !'# . $%$& ) (ABRAHAM P. GEORGE) ' / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:30TH NOVEMBER, 2016 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF