NortonLifelock Inc (earlier known as Symantec Corporation), Pune V. Assistant Commissioner of Income-tax, (IT), Circle - 2, , Pune

ITA 1405/PUN/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 8978 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-01-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 23-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Permanent establishment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ITA NOS.1603/PUN/2018 & 1405/PUN/2019 / ASSESSMENT YEARS : 2015-16 & 2016-17 NORTON LIFELOCK INC., (EARLIER KNOWN AS SYMANTEC CORPORATION, C/O. S.R.B.C & ASSOCIATES LLP, C-401, PANCHSHIL TECH PARK, NEAR DON BOSCO SCHOOL, YERWADA, PUNE - 411006 MAHARASHTRA PAN : AAQCS1868P VS. ACIT (IT), CIRCLE-2, PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE EMANATE FROM THE FINAL ASSESSMENT ORDERS DATED 13-07-2018 AND 26-07-2019 PASSED BY THE ASSESSING OFFICER (AO) U/S.144C(13) READ WITH SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER A LSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEARS 2015-16 & 2016-17 RESPECTIVELY. ASSESSEE BY SHRI NAGESWAR RAO REVENUE BY SHRI NAVIN GUPTA DATE OF HEARING 08-01-2021 DATE OF PRONOUNCEMENT 11-01-2021 ITA NOS. 1603/PUN/2018 & 1405/PUN/2019 NORTON LIFELOCK INC. 2 2. THE ONLY ISSUE RAISED IN THESE APPEALS THROUGH VARIOUS GROUNDS IS AGAINST TREATING THE AMOUNT ON SALE OF SOFTWARE PRODUCTS AS ROYALTY INCOME. 3. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE IS A NON-RESIDENT COMPANY INCORPORATED UNDER THE LAWS OF UNITED STATES OF AMERICA. IN INDIA, IT IS ENGAGED IN THE SALE OF SOFTWARE LICENSES RELATING TO INFORMATION SECURITY AND STORAGE TECHNOLOGY AS WELL AS PROVISION OF SUPPORT AND MAINTENANCE SERVICES WITH RESPECT TO THE ABOVE SOFTWARE. DURING THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSEE EARNE D REVENUE FROM SALE OF SOFTWARE LICENSE IN INDIA INCLUDING CERTIFICATION AND SOFTWARE FOR AUTHENTICATION BUSINESS, WHICH WAS CLAIMED AS NOT CHARGEABLE TO TAX IN INDIA BECAUSE OF IT NOT HAVING ANY PERMANENT ESTABLISHMENT (PE) IN INDIA. THE AO, BY MEANS OF DETAILED ORDERS, CAME TO HOLD THAT THE RECEIPTS DERIVED BY THE ASSESSEE FROM SALE OF SOFTWARE LICENSE WER E TAXABLE AS ROYALTY. HE FORTIFIED HIS CONCLUSION BY RELYING ON THE DIRECTION GIVEN BY THE DISPUTE RESOLUTION PANEL (DRP) IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2014-1 5. THAT IS HOW, THE AO MADE AN ADDITION OF RS.19.62 CRORE AND O DD ITA NOS. 1603/PUN/2018 & 1405/PUN/2019 NORTON LIFELOCK INC. 3 IN HIS ORDER FOR THE A.Y. 2015-16 AND RS. 19.69 CRO RE AND ODD IN HIS ORDER FOR THE A.Y. 2016-17. AGGRIEVED THEREBY, TH E ASSESSEE HAS APPROACHED THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH VIRTUAL COURT AND SCANNED THROUGH THE MATERIAL PLACED BEFORE US. THE CORE CONTROVERSY AROSE IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2014-15 (ITA NO. 2452/PUN/2017), WHICH WAS EXTENSIVELY ARGUED BY THE RIVAL SIDES. IN FACT, BOTH THE SIDES SIMPLY ADOPTED THEIR RESPECTIVE ARGUMENTS MADE FOR A .Y. 2014-15 INSOFAR AS THE INSTANT APPEALS ARE CONCERNED. THE TRIBUNAL VIDE ITS ORDER DATED 11-01-2021 HAS ADDRESSED THE ISSUE ALLOWING THE APPEAL OF THE ASSESSEE. SINCE THE FACTS A ND CIRCUMSTANCES OF THE APPEALS UNDER CONSIDERATION ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2014-15 AND FURTHER THAT THE AO HAS RELIED ON THE ORDER OF THE DRP FOR S UCH EARLIER YEAR, FOLLOWING THE PRECEDENT, WE OVERTURN THE IMPUGNED ORDERS AND DIRECT TO DELETE THE ABOVE ADDITIONS MA DE BY TREATING THE REVENUE FROM SALE OF SOFTWARE PRODUCTS IN INDIA, EITHER DIRECTLY TO END-CUSTOMERS OR INDIRECTLY THROUGH DISTRIBUTORS OR RESELLERS, AS ROYALTY INCOME. ITA NOS. 1603/PUN/2018 & 1405/PUN/2019 NORTON LIFELOCK INC. 4 5. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2021. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDE NT PUNE; DATED : 11 TH JANUARY, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13, PUNE 4. THE CIT (IT/TP), PUNE 5. , , / DR C, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NOS. 1603/PUN/2018 & 1405/PUN/2019 NORTON LIFELOCK INC. 5 DATE 1. DRAFT DICTATED ON 08-01-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11-01-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *