India Soft Technologies Private Ltd., Pune V. Deputy Director of Income-tax,

ITA 2355/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4314 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHWETA MISHRA
• Keywords: Double taxation relief; Opportunity of being heard
• Section: 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO S.2353 TO 2356 /P U N/201 6 / ASSESSMENT YEAR S : 20 0 8 - 09 TO 2011 - 12 INDIA SOFT TECHNOLOGIES PRIVATE LTD., NIRVANA, 2 ND FLOOR, COMMERCIAL 3, PLOT NO. 18, S. NO. 213/214/215, KALYANI NAGAR, PUNE 411006 PAN : AABCI0540H ....... / APPELLANT / V/S. DEPUTY DIRECTOR OF INCOME TAX, ( INTERNATIONAL TAXATION ) - 1, PUNE / RESPONDENT ASSESSEE BY : S HRI M.K. KULKARNI REVENUE BY : MRS. SHWETA MISHRA / DATE OF HEARING : 31 - 07 - 201 8 / DATE OF PRONOUNCEMENT : 03 - 0 8 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH ESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - IT/TP, PUNE DATED 17 - 07 - 2013 PASSED U/S. 201(1) & 201(1A) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) COMMON FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10, 2010 - 11 AND 2011 - 12. IN ALL THESE FOUR APPEALS THE ASSESSEE HAS 2 ITA NO S.2353 TO 2356/PUN/2016, A.YS. 2008 - 09 TO 2011 - 12 ASSAILED CHARGING OF INTEREST U/S. 201(1A) OF THE ACT FOR NON - DEDUCTION OF TAX A T SOURCE. SINCE, THE ISSUES INVOLVED IN ALL THESE APPEALS ARE IDENTICAL AND ARE ARISING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE BEING DISPOSED OF VIDE THIS COMMON ORDER. 2. SHRI M.K. KULKARNI APPEARING ON B EHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT INITIALLY THE ASSESSEE HAS FILED COMBINED APPEALS U/S. 201(1) & 201(1A) OF THE ACT. HOWEVER, TO COUNTER TECHNICAL DEFECT IN FILING OF APPEALS , THE ASSESSEE HAS FILED SEPARATE APPEALS ASSAILING CHARGING OF INTEREST U/S. 201(1A) OF THE ACT. THE LD. COUNSEL FOR ASSESSEE POINTED THAT THE CO - ORDINATE BENCH OF TRIBUNAL IN SET OF APPEALS FILED BY THE ASSESSEE IN ITA NOS. 1709 TO 1712/PUN/2013 FOR ASSESSMENT YEARS 2008 - 09 TO 2011 - 12 DECIDED ON 24 - 01 - 2018 AGAINST THE LIABILITY FOISTED UNDER THE PROVISIONS OF SECTION 201(1) HAS REMITTED THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER. SINCE, THE APPEALS OF ASSESSEE FILED U/S. 201(1) HAVE BEEN RESTORED TO ASSESSING OFFICER, THESE SET OF APPEALS HAVE TO BE DECIDED IN A SIMILAR MANNER. 3. MRS. SHWETA MISHRA REPRESENTING THE DEPARTMENT FAIRLY ADMITTED THAT THESE SET OF APPEALS FILED U/S. 201(1A) OF THE ACT AND THE EARLIER APPEALS FILED BY THE ASSESSEE IN ITA NOS. 1709 TO 1712/PUN/2013 (SUPRA) AGAINST THE ORDER PASSED U/S. 201(1) HAVE TO BE DECIDED IN SIMILAR MANNER. 4. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED THE ORDER OF CO - ORDINATE BENCH IN ASSESSEES OWN CASE IN 3 ITA NO S.2353 TO 2356/PUN/2016, A.YS. 2008 - 09 TO 2011 - 12 APPEALS FILED BY THE ASSESSEE IN ITA NOS. 1709 TO 1712/PUN/2013 (SUPRA). THE CO - ORDINATE BENCH HAS RESTORED THE APPEALS OF ASSESSEE IN PROCEEDINGS U/S. 201(1) TO THE FILE O F ASSESSING OFFICER BY FOLLOWING OBSERVATIONS : 14. WE HEARD BOTH THE PARTIES ON THE ISSUES, I.E. EXISTENCE OF PE, NATURE OF PAYMENTS AS ROYALTY, RIGHTS GIVEN BY THE SUPPLIERS TO THE DEALER, APPLICABILITY OF THE PROVISIONS OF SECTION 195 OF THE ACT ETC. O N HEARING BOTH THE SIDES, WE FIND THERE ARE SOME GAPS RELATING TO THE FACTS WHICH ARE REQUIRED TO BE COLLECTED BY THE REVENUE AUTHORITIES. (A) REGARDING THE RIGHT TO SUB - LEASE THE SOFTWARE PRODUCTS, NO FINDING OF FACT IS GATHERED BY THE AUTHORITIES THAT ASSESSEE HAS ACTUALLY SUBLEASED THE SOFTWARE PRODUCTS TO VARIOUS DEALERS/SUB - DEALERS. SAME IS THE CASE WITH REGARD TO THE RIGHT TO MODIFY THE EXISTING SOFTWARE RECEIVED FROM THE SUPPLIERS. SPECIFIC TO THE PRODUCTS RECEIVED BY THE ASSESSEE FOR THE CUSTOMERS IN INDIA, ONE NEED TO EXAMINE IF THESE PRODUCTS WERE INFACT SUBJECTED TO MODIFICATIONS IF ANY, TO MEET THE SPECIFIC REQUIREMENTS OF THE CUSTOMERS IN INDIA, BEFORE THE PAYMENTS ARE REMITTED TO THE SUPPLIERS. AO NEED TO EXAMINE SUBLEASING OF THE DEALERSHIP RIGHTS TO OTHERS AS AUTHORIZED BY THE AGREEMENT BETWEEN THE SUPPLIERS AND THE ASSESSEE. THERE IS NEED FOR REMANDING THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION. (B) REGARDING THE EXISTENCE OF PE FOR THE PAYEES ABROAD UK/USA, THIS ISSUE HAS COME U P FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE FACT ON THE EXISTENCE OF PE, ACCORDING TO LD. AR FOR THE ASSESSEE, IS A MATTER BOTH ON FACTS AND LAW. THEREFORE, THIS ISSUE IS RIGHTLY RAISED FROM THE LEGAL POINT OF VIEW AND PRAYED FOR ADMITTING THE SAME AND R EMANDING TO THE FILE OF AO FOR ADJUDICATION, IF REQUIRED. CONSIDERING THE FACT THAT THIS ISSUE IS ALSO PARTLY LEGAL IN NATURE, WE ARE OF THE OPINION THAT GROUND NO.3 AND OTHER RELATED LIMBS OF GROUNDS OF APPEAL ARE ADMITTED AND REMANDED TO THE FILE OF AO F OR A DECISION BEFORE INVOKING THE ARTICLE 12 AND 13 OF THE RESPECTIVE DTAAS. FURTHER, WE NOTICE THAT THE ABOVE REFERRED ISSUES RELATING TO PE ARE REQUIRED TO BE ADJUDICATED CONSIDERING THE JUDGMENTAL LAW IN EXISTENCE AS ON DATE. THERE IS NEED FOR REMANDING THE ISSUE TO THE FILE OF AO FOR FRESH CONSIDERATION. (C) REGARDING THE NATURE OF PAYMENTS, WHETHER IT CONSTITUTES ROYALTY OR OTHERWISE, THE SAME DEPENDS ON FACTS OF EACH CASE WHICH ARE TO BE GATHERED BY THE AO IN THE PROPOSED REMAND PROCEEDINGS. THERE ARE DIVERGENT DECISIONS IN LAW ON THE SAID ROYALTY. IF THE REMITTANCES ARE RELATABLE TO MERE RECEIVING THE SOFTWARE PRODUCTS FROM THE SUPPLIERS AND PASSING IT ON TO THE CUSTOMERS, PLAYING THE ROLE OF A DEALER, WE DO NOT FIND THERE IS ANY ROYALTY INVOLVED I N THESE REMITTANCES. HOWEVER, AS ARGUED BY THE LD. DR FOR THE REVENUE, RELYING ON THE ORDERS OF THE AO AND THE CIT(A), IF THERE IS EXPLOITATION OF THE SOFTWARE PRODUCTS OBTAINED FROM THE SUPPLIERS FOR COMMERCIAL BENEFITS OF THE ASSESSEE OR ITS CUSTOMERS TH ROUGH THE MECHANISM OF SUBLEASING OR THROUGH MECHANISM OF INCORPORATING THE MODIFICATION IN THE SAID SOFTWARE TO MEET THE DEMANDS OF THE CUSTOMERS, THE CONCLUSIONS MAY VARY DEPENDING ON THE FACTS. THEREFORE, WE ARE OF THE OPINION THAT THE AO SHOULD INVOKE THE REQUISITE VERIFICATION AND MODIFICATION AND APPLICATION OF LAW TO THE ABOVE REFERRED ISSUES AND DECIDE THE ISSUE AFRESH AS PER THE LAW. AO SHALL GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSE E FOR A.Y. 2008 - 09 ARE ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, APPEAL OF THE ASSESSEE FOR A.Y. 2008 - 09 IS ALLOWED FOR STATISTICAL PURPOSES. 4 ITA NO S.2353 TO 2356/PUN/2016, A.YS. 2008 - 09 TO 2011 - 12 5. WE AGREE WITH THE SUBMISSIONS OF LD. COUNSEL FOR ASSESSEE THAT THE FATE OF INTEREST CHARGED U/S. 201(1A) WILL DEPEND UPON THE OUTCOME OF THE PROCEEDINGS IN SECTION 201(1) OF THE ACT. ACCORDINGLY, WE DEEM IT APPROPRIATE TO RESTORE ALL THE FOUR APPEALS TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS AS IN ITA NOS. 1709 TO 1712/PUN/2013 (SUPRA) . THE ASSESSING OFFICER SHALL DECIDE ALL THESE ISSUES IN A COMPOSITE MANNER AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. 6. IN THE RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORD ER PRONOUNCED ON FRIDAY, THE 03 RD DAY OF AUGUST, 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO) ( / VIKAS AWASTHY ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 03 RD AUGUST, 2018 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - IT/TP, PUNE 4. THE DIT (TP/IT), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE