Deputy Commissioner of Income Tax Circle-1(1)(1), Bangalore , Bangalore V. M/s Allegis Services India Pvt Ltd , Bangalore

ITA 325/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4687 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Double taxation relief; Rule of consistency; Permanent establishment; Question of law; Non-deduction of tax; Difference of opinion; Revised return; Unabsorbed depreciation; Capital expenditure
• Section: 43B; 10B

Judgement Text

ITA.325/BANG/2018 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'B', BENGALURU BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.325/BANG/2018 (ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1(1)(1), BENGALURU .. APPELLANT V. M/S. ALLEGIS SERVICES INDIA LTD, COMMERCE @ MANTRI LEVEL -3, BANNERGHATTA ROAD, BENGALURU 560 076 .. RESPONDENT PAN : AAFCA0825M ASSESSEE BY : SHRI. CHAVALI NARAYAN, CA REVENUE BY : MS. NEERA MALHOTRA, CIT - DR HEARD ON : 30.05.2018 PRONOUNCED ON : 13.06.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A) I, BENGALURU, DT.12.12.2017, FOR T HE ASSESSMENT YEAR 2011-12 ON THE FOLLOWING EFFECTIVE GROUNDS : 2. THE LD. CIT (A) ERRED IN ALLOWING THE ASSESSEE COMPANYS APPEAL ON THE ISSUE OF DISALLOWANCE U/S.4 0A(I) OF THE ACT IN RESPECT OF NON-DEDUCTION OF TDS ON SO FTWARE ITA.325/BANG/2018 PAGE - 2 EXPENSES AND NOT FOLLOWING THE JUDGMENT OF KARNATAK A HIGH COURT IN THE CASE OF CIT V. SAMSUNG ELECTRONIC S CO. LTD., 320 ITR 209. 3. THE LD. CIT (A) ERRED IN DELETING THE ADDITION O F RS.3,66,020/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI UNDER SECTION 43B AND 2(24) READ WITH SECTION 36(1) (VA) AS THE MATTER HAS NOT REACHED ITS FINALITY AND AN S LP OF THE REVENUE IN THE CASE OF CIT V. SAMSUNG INDIA ELECTRO NICS LTD. IS PENDING FOR CONSIDERATION BEFORE THE HONBL E APEX COURT. 02. BRIEF FACTS OF THE CASE ARE AS FOLLOWS. THE AS SESSEE HAD FILED THE ORIGINAL RETURN OF INCOME ON 30.11.2011 AND SUB SEQUENTLY REVISED RETURN WAS FILED ON 27.02.2012 DECLARING TO TAL TAXABLE INCOME AS NIL AS PER THE NORMAL PROVISIONS OF THE A CT. THE ASSESSEE HAS DECLARED BUSINESS INCOME OF RS.3,36,50,563/- AN D INCOME FROM OTHER SOURCES OF RS.80,569/-. THE ASSESSEE COMPUTE D THE BOOK PROFIT U/S.115 JB FOR AN AMOUNT OF RS.6,63,574/- AN D THE TAXABLE LIABILITY SHOWN AT RS.1,23,026/- UNDER THE MAT PROV ISION. THE ASSESSEE HAS ALSO CLAIMED THE REFUND OF RS.5,08,11, 992/-. CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. WHILE GOIN G THROUGH THE DETAILS FURNISHED BY THE ASSESSEE IT WAS NOTED BY T HE AO THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.8,82,74,266/- TOWARDS PURCHASE OF SOFTWARE LICENCE RESOLD AND RS.2,36,87, 914/-, AS SOFTWARE MAINTENANCE /LICENCES UNDER SCHEDULE 12 AN D GENERAL AND ADMINISTRATION EXPENSES. IT WAS INFORMED BY THE AS SESSEE THAT IT HAS DEDUCTED THE TDS ON DOMESTIC PURCHASE OF SOFTWARE A ND HOWEVER THE ASSESSEE HAS NOT DEDUCTED THE TDS ON THE SOFTWA RE PURCHASED IN FOREIGN CURRENCY. AS SUCH, THE AO DISALLOWED AN AM OUNT TOTALLING ITA.325/BANG/2018 PAGE - 3 TO RS.10,07,64,509/-, U/S.40(A)(I) OF THE ACT FOR N ON-DEDUCTION OF TAX AT SOURCE. THE AO IN THE ASSESSMENT ORDER AFTE R RELYING UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE MATTER OF SAMSUNG ELECTRONICS CO. LTD [16 TAXMANN.COM 141] , WHEREIN IT WAS HELD THAT THE CONSIDERATION PAID BY THE ASSESSE E FOR IMPORTING OF SOFTWARE WAS IN THE NATURE OF ROYALTY PAYMENT AND T HEREFORE CONSTITUTE INCOME CHARGEABLE UNDER THE INCOME-TAX A CT, IN TERMS OF SECTION 9(1)(VI) OF THE ACT R.W. THE RELEVANT ARTIC LES OF DTAA. IT WAS FURTHER NOTICED BY THE AO THAT AS THE ASSESSEE HAS DEDUCTED TDS ON PAYMENT MADE ON PURCHASE OF DOMESTIC SOFTWAR E. THEREFORE APPLYING THE SAME RATIO THE ASSESSEE WAS DUTY BOUND TO DEDUCT TDS RELATING TO PURCHASE OF IMPORTED SOFTWAR E. AS THE ASSESSEE HAS NOT DONE THE NEEDFUL THEREFORE, THE PR OVISIONS OF SECTION 40(A)(I) IS ATTRACTED AND HENCE DISALLOWED THE AMOUNT OF RS.10,07,64,509/-. FEELING AGGRIEVED BY THE ORDER PASSED BY THE AO, THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). 03. THE CIT (A) HAD ALLOWED THE APPEAL OF THE ASSES SEE BY RECORDING THE FOLLOWING FINDING : HAVING CONSIDERED THE SUBMISSIONS MADE BY THE APPEL LANT, IT IS THAT THE GROUND NO. 3 TO 6, 15 & 16 ARE REGAR DING DISALLOWANCE OF RS. 10,07,64,509 U/S 40A(I) FOR NON DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER H AS DISCUSSED THIS ISSUE IN PARA 4.23 OF THE ASSESSMENT ORDER AT LENGTH AND I AM IN COMPLETE AGREEMENT WITH THE FINDINGS OF THE ASSESSING OFFICER MADE IN THE ASSES SMENT ORDER. THE ISSUE IS SQUARELY COVERED BY THE JUDGEME NT OF THE JURISDICTIONAL HIGH COURT OF K ARNATAKA IN THE CASE OF CIT VS. SAMSUNG ELECTRONIC COMPANY LTD (2012) REPORTED IN 345 ITR 494 (KAR). ITA.325/BANG/2018 PAGE - 4 HOWEVER, IT IS SEEN THAT THE APPELLANT HAS RELIED O N THE DECISION OF THE HON'BLE BANGALORE INCOME TAX APPELL ATE TRIBUNAL IN ITS OWN CASE FOR THE ASST. YEAR 200910 IN ITA NO.1370/BANG/2014 WHEREIN IN PARA 7 OF THE ORDER TH E HON'BLE TRIBUNAL, RELYING ON THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF AURIGENE DISCOVERY TECHNOLOGIES PVT. LTD IN ITA NO. 1479/BANG/2013, HA S HELD THAT THE SOFTWARE PAYMENT WOULD NOT BE TAXABLE AS ROYALTY IN CONSIDERING THE IMPOSSIBILITY OF PERFORMANCE AS THE JUDGEMENT IN THE CASE OF SAMSUNG ELECTRONIC COMPANY LTD WAS PRONOUNCED ON 15.10,2011 MUCH AFTER THE CURRENT FINANCIAL YEAR RELEVANT TO T HE ASST. YEAR 2011-12. RESPECTFULLY FOLLOWING THE HON' B LE INCOME TAX APPELLATE TRIBUN ALS ORDER IN THE CASE OF THE APPELLANT'S OWN CASE FOR THE ASSESSMENT YEAR 2009-10 (SUPRA). I DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THIS REGARD. THEREFORE THE REVENUE IS IN APPEAL BEFORE US WITH RESPECT TO GROUND NO.2 FOR WRONG DELETION OF THE DISALLOWANCES MADE BY THE AO TO THE EXTENT OF RS.10,07,64,509/- U/S.40A(I) OF THE ACT. 04. THE SR. DR WHO APPEARED BEFORE US HAD SUBMITTED THAT THOUGH THE HONBLE JURISDICTIONAL HI GH COURT IN THE MATTER OF SAMSUNG ELECTRONIC CO. LTD (SUPRA) HAD HELD THAT THE CONSIDERATION PAID FOR PURCHASE OF SOFTWARE IS ROYALTY, HOWEVER THE HONBLE JURISDICTIONAL HIGH COURT HAS NOT BROUGHT INTO THE STATUTE BOOK ANY NEW LAW, BUT HAS ONLY GIV EN THE INTERPRETATION OF THE EXISTING LAW. THEREFORE IT WAS SUBMITTED BY THE LD. DR THAT IT IS THE DUTY OF THE ASSESSEE TO DEDUCT THE TAX AT THE TIME OF MAKING TH E PAYMENT FOR PURCHASE OF THE SOFTWARE. AFTER THE ITA.325/BANG/2018 PAGE - 5 CATEGORICAL FINDING RECORDED BY THE HONBLE JURISDICTIONAL HIGH COURT ON 15.10.2011, THE ASSESS EE CAN VERY WELL DEDUCT THE TAX IN THE SUBSEQUENT PAYMENTS MADE BY THE ASSESSEE, IF THE ASSESSEE FAIL ED TO DEDUCT THE TAX AT THE TIME OF MAKING THE PAYMENT , IT SHOULD SUFFER THE CONSEQUENCES AS PER PROVISION. T HE LD. DR HAS DRAWN OUR ATTENTION TO PARA 6 OF THE TRIBUNAL ORDER IN ITA.595/BANG/2016 (WHERE JUDICIAL MEMBER WAS THE AUTHOR OF THE ORDER), TO THE FOLLOWI NG EFFECT : 06. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE COORDINATE BENCH IN THE M ATTER OF INTERTEC SOFTWARE PVT. LTD., VS ITO, DT.13.10.2017, WHEREIN THE AUTHOR OF THIS ORDER WAS THE CO-AUTHOR, AFTER RELYING UPON THE JUD GMENT OF THE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT (INT L.TAXN) V. SAMSUNG ELECTRONICS CO. LTD [(2011) 203 TAXMAN 477] AND DIS TINGUISHING THE LATER JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN WIPRO LTD. VS. DCIT AS REPORTED IN 382 ITR 179, HAS HELD AS UNDER : 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST, WE EXAMINE THE APPLICABILITY OF THE FIRST JUDGMENT OF HON'BLE KARN ATAKA HIGH COURT RENDERED IN THE CASE OF WIPRO LTD. VS. DCIT (SUPRA) RENDERED ON 25.08.2010. IN THIS CASE, THE SUBSTANTIAL QUESTION OF LAW RAISED AS PER PARA 37 WAS AS UNDER:- 'WHETHER THE TRIBUNAL IS CORRECT IN ALLOWING EXPEND ITURE ON IMPORTED SOFTWARE WHEN THE EXPENDITURE PER SE IS CA PITAL IN NATURE AND IS NOT ALLOWABLE?' 5. FROM THIS SUBSTANTIAL QUESTION OF LAW, IT COMES OUT THAT IN THAT CASE, THIS WAS NOT A DISPUTE BEFORE HON'BLE KARNATA KA HIGH COURT AS TO WHETHER THE IMPORT OF SOFTWARE IS ROYALTY OR NOT? THE DISPUTE IN THAT CASE WAS THIS THAT THE IMPORT OF SOFTWARE I S CAPITAL EXPENSE IN THAT CASE AND THEREFORE, HOW THE SAME CAN BE ALL OWED AS DEDUCTION. IN THAT CASE ALSO, THE A.O. HELD THAT TH E PAYMENT FOR SOFTWARE IS ROYALTY AND SINCE TDS WAS NOT DEDUCTED, IT IS TO BE ITA.325/BANG/2018 PAGE - 6 DISALLOWED U/S 40 (A) (I) BUT WHEN THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE CIT (A), HE HELD THAT IT IS NOT ROYAL TY AND THEREFORE, CANNOT BE DISALLOWED U/S 40 (A) (I). THE REVENUE FI LED APPEAL BEFORE THE TRIBUNAL BUT THE DISPUTE RAISED WAS NOT THIS TH AT IT IS ROYALTY OR NOT? THE DISPUTE RAISED WAS THIS THAT IT IS CAPITAL EXPENDITURE AND THEREFORE, CANNOT BE ALLOWED. THE TRIBUNAL HELD THA T THE TRIBUNAL CANNOT GO INTO THIS QUESTION AS THIS IS NOT WHAT WA S URGED BEFORE THE LOWER AUTHORITIES. THE REVENUE FILED APPEAL BEFORE HON'BLE KARNATAKA HIGH ITA NO. 1388/BANG/2013 COURT AND THE TRIBUNAL ORDER WAS CONFIRMED. HENCE, THIS IS SEEN THAT AS PE R THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, THE DECISION IS NO T ON THIS ASPECT THAT IT IS ROYALTY OR NOT AND THEREFORE, THIS JUDGM ENT IS NOT RELEVANT IN THE PRESENT CASE. 6. NOW, WE EXAMINE THE APPLICABILITY OF THE SECOND JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F WIPRO LTD. VS. DCIT (SUPRA) RENDERED ON 25.03.2015. AS PER THI S JUDGMENT, IN PARA 171, IT WAS HELD THAT IN EARLIER JUDGMENT DATE D 25.08.2010, SIMILAR QUESTION WAS DECIDED IN FAVOUR OF THE ASSES SEE AND AGAINST THE REVENUE AND THEREFORE, IN THOSE APPEALS ALSO, T HE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. WE HAVE ALREADY SEEN THAT THE DECISION DATED 25.08.2010 IS NOT ON THIS ASPECT THA T IT IS ROYALTY OR NOT AND THEREFORE, THIS JUDGMENT IS NOT RELEVANT IN THE PRESENT CASE. ACCORDINGLY, THIS LATER JUDGMENT DATED 25.03.2015 I S ALSO NOT RELEVANT. 7. THERE IS NO DISPUTE THAT THE PRESENT ISSUE IS CO VERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA ) AND LEARNED AR OF THE ASSESSEE HAS MERELY CITED T HESE TWO JUDGMENTS RENDERED IN THE CASE OF WIPRO LTD. (SUPRA ) AND NO OTHER ARGUMENT WAS MADE TO THE EFFECT THAT THIS ISS UE IS NOT COVERED AGAINST THE ASSESSEE BY THIS JUDGMENT OF HON'BLE KA RNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA ). SINCE, THESE TWO JUDGMENTS CITED BY HIM ARE NOT APPLICABLE AS PER ABOVE DISCUSSION; ITA NO. 1388/BANG/2013 WE RESPECTFULLY FOLLOW THE J UDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA ) AND DECLINE TO INTERFERE IN THE ORDER OF CIT (A). ITA.325/BANG/2018 PAGE - 7 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA) AND THAT OF THE ORDER OF THE COORDINA TE BENCH (SUPRA), ON IDENTICAL FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDERS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE TRIBUNAL HAS NOT GIVEN EF FECT TO THE PRINCIPLE OF IMPOSSIBILITY OF PERFORMANCE A ND IN FACT HAS RELIED UPON THE JUDGMENT OF SAMSUNG ELECTRONIC CO. INDIA LTD (SUPRA) FOR BRING HOME THA NON DEDUCTION OF TDS UNDER SECTION.40(A)(I) OF THE ACT. 05. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE RELIES UPON THE ORDER PASSED BY THE COORDINATE BENC H IN THE ASSESSEES OWN CASE IN ITA.1370/BANG/2014, FOR A. Y. 2009-10, DT.15.09.2017, AND ALSO IN ITA NO.10/BANG/2014, DT.20.09.2017, FOR AY 2010-11, WHERE THE TRIBUNAL HAD DECIDED THE ISSUE IN THE FOLLOWING LINES IN APPEAL NO 1370/B/2014 (SUPRA): THUS IT IS CLEAR THAT THE COORDINATE BENCH OF THIS TRIBUNAL WHILE DECIDING THIS ISSUE HAS TAKEN NOTE OF VARIOUS DECISIONS IN FAVOUR OF THE ASSESSEE ON THE POINT THAT THE PAYMENT FOR PURCHASE OF SOFTWARE DOES NOT FALL IN THE DEFINITION OF ROYALTY . RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL, WE DELETE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT IT IS IMPOSSIBLE FOR THE ASSESSEE TO DEDUCT THE TAX AT TH E TIME OF MAKING THE PAYMENT AND THEREFORE THE DOCTRI NE OF IMPOSSIBILITY WAS INVOKED BY THE ASSESSEE BEFORE ITA.325/BANG/2018 PAGE - 8 THE CIT (A) AND THEREFORE THE CIT (A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE. THE LD. AR HAD FURTHER DRAWN OUR ATTENTION TO THE ORDER PASSED BY THE COORDINATE BENCH IN THE MATTER OF ACIT V. AURIGENE DISCOVERY TECHNOLOGIES LTD, [ITA 1479/BANG/2015, DT.23.11.2016, FOR A.Y. 2012-13] WHEREIN AT PARA 5 IT WAS HELD BY THE COORDINATE BENCH AS UNDER : 05. THE CIT(A) FOLLOWED THE DECISION OF THIS TRIBU NAL IN M/S WS ATKINS INDIA PVT. LTD, SUPRA, WHICH REFERRED THE DECISIONS OF HYDERABAD BENCH OF THE TRIBUNAL IN INFOTECH ENTERPRISES LTD IN ITA 115/HYD/2011 WHEREI N IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOULD NOT A PPLY TO DISALLOW PAYMENTS WHEN TDS WAS NOT DONE AND SUBSEQUENTLY BECOME TAXABLE ON ACCOUNT OF A RETROSPECTIVE LEGISLATION. IT HAS ALSO REFERRED TO THE DECISIONS OF THE DELHI & MUMBAI TRIBUNAL IN SMS DEM AG PVT LTD , 132 ITJ 498 & SONIC BIOCHEM EXTRACTIONS P VT. LTD. 23 ITR (TRIB) 447, RESPECTIVELY. WE UPHOLD THE DECISION OF THE CIT(A) AND DISMISS THE GROUNDS RAIS ED BY THE REVENUE. LASTLY THE LD. AR HAS SUBMITTED THAT THE PRINCIPLE OF CONSISTENCY AND DISCIPLINE REQUIRED THAT THE TRIBUN AL SHOULD FOLLOW THE DECISION OF THE THIRD MEMBER DECISION OF THE ITAT COCHIN BENCH IN AND FOR THAT PURPOSES, OUR ATTENTION WAS DRAWN TO PARA 15.7, 15. 8 AND 16, TO THE FOLLOWING EFFECT : 15.7 NEXT, WE SHALL DISCUSS THE QUESTION OF OUR ORDER F OR THE CURRENT YEAR BEING CONTRARY TO OR INCONSISTENT WITH THE TRIBUNAL'S ORDER FOR THE IMMEDIATELY PRECEDING YEAR (ASSESSMENT YEAR 2005-06) WITH REFERENCE TO WHICH T HE ASSESSEE PLEADS ITS CASE AS COVERED IN ITS FAVOUR. IN THIS REGARD, WE FIND IT AS NOT SO, EVEN AS THE ORDERS MA Y LEAD TO A DIFFERENCE IN RESULTS. FOR THAT YEAR, THE ISSUE CON SIDERED AND ADJUDICATED BY THE TRIBUNAL WAS WHETHER THE YEARS T O WHICH ITA.325/BANG/2018 PAGE - 9 THE CLAIM FOR UNABSORBED DEPRECIATION ALLOWANCE RELATES, I.E., AROSE FOR THE FIRST TIME, QUALIFY TO BE 'THE RELEVANT ASSESSMENT YEARS', AS DEFINED UNDER SECTION 10B, AN D WHICH IT FOUND AS NOT, AFTER EXAMINING THE LANGUAGE OF THE P ROVISION. AS PER THE SAID ORDER, THE SAID TERM SIGNIFIES ANY OF THE SEVEN (EXTENDED FROM FIVE) CONSECUTIVE ASSESSMENT YEARS F ALLING WITHIN THE BLOCK OF TEN (EXTENDED FROM EIGHT) SUCCE SSIVE YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR, FOR WHI CH THE CLAIM UNDER SECTION 10B STOOD MADE AND ALLOWED. THIS, AS, IF THE ASSESSEE'S CLAIM UNDER THE SECTIONS SPECIFIED IN SE CTION 10B(6)(I) DOES NOT RELATE TO THE YEARS TO WHICH DED UCTION UNDER SECTION 10B RELATES, THE SAME WOULD NOT FALL WITHIN THE AMBIT; OF SECTION 10B(6)(I) SO AS TO BE DENIED CONSIDERATI ON WHERE NOT ADJUSTED IN THAT YEAR ITSELF. WE ARE IN RESPECTFUL AGREEMENT WITH THE SAID ORDER, I.E., IN PRINCIPLE, WHICH EXTE NDS, IN OUR VIEW, ONLY TO THE SCOPE OF THE RELEVANT ASSESSMENT YEARS AS DEFINED UNDER EXPLANATION 2(I) TO SECTION 10B. THE SAID ORDER DOES NOT IN ANY MANNER DWELL ON THE SCOPE OR OPERAT ION OF SECTION 32(2); IN FACT, IT NOWHERE DISCUSSES OR DIL ATES ON THE SAID PROVISION, AND REFERENCE THERETO IS CONSPICUOU S BY ITS ABSENCE. THE TRIBUNAL PROCEEDED ON THE PREMISE THAT THE CLAIM RELATES TO THE YEARS STATED, I.E., IN WHICH IT FIRS T AROSE FOR CONSIDERATION, AND WHICH IT FOUND TO BE NOT THE REL EVANT ASSESSMENT YEARS SO AS TO BE IMPACTED BY THE NON OBSTANTE CLAUSE OF SECTION 10B(6)(I). ON THE OTHER HAND, IN THE PRESENT CASE, WE HAVE ONLY FOUND IT RELEVANT AND IN CUMBENT, FOR ADJUDICATING THE ISSUE ARISING FOR OUR CONSIDER ATION, TO SEE IF THE CLAIM COULD INDEED BE SAID TO RELATE TO THE STATED YEARS, GIVEN THE PROVISION OF SECTION 32(2), A SUBSTANTIVE PROVISION, ON THE MANDATORY NATURE OF WHICH THERE IS NO DISPUT E. AS SUCH, THE CLAIM FOR DEPRECIATION FOR ANY YEAR, IRRESPECTI VE OF IT BEING A RELEVANT ASSESSMENT YEAR OR NOT, TO THE EXTENT EF FECT THERETO COULD NOT BE GIVEN IN THAT YEAR, BY VIRTUE OF THE D EEMING FICTION OF SECTION 32(2), IS DEEMED TO BE DEPRECIATION FOR THE YEAR NEXT FOLLOWING, AND SO ON, SO AS TO IN EFFECT 'TRANSFER' THE UNABSORBED DEPRECIATION SEQUENTIALLY TO THE FIRST O F THE RELEVANT ASSESSMENT YEARS, BEING ASSESSMENT YEAR 19 97-98 FOR UNIT 'A' AND ASSESSMENT YEAR 2000-01 FOR UNIT 'B' ( REFER PARA 15.4). SECTION 10B(6)(I) WOULD THEN APPLY (UNIT 'A' ), DEEMING ITS ALLOWANCE FOR THAT YEAR ITSELF, PRECLUDING ITS CARRY FORWARD. IT MAY BE APPRECIATED THAT BUT FOR THE DEEMING EFFE CT OF SECTION 32(2), THERE IS NO QUESTION OF THE CLAIM BEING CONS IDERED, IN WHOLE OR IN PART, AS OF ANOTHER YEAR AND, THUS, THE ASSESSEE (OR ITA.325/BANG/2018 PAGE - 10 THE ASSESSEES IN GENERAL) BEING NOT ENTITLED TO A H IGHER DEDUCTION WHERE IT PERTAINS TO A RELEVANT ASSESSMEN T YEAR NOT SPECIFIED IN SECTION 10B(6)(I), I.E., FROM ASSESSME NT YEAR 2001- 02 ONWARDS. NOT SO CONSIDERING, AS ALSO NOTED EARLI ER, WOULD AMOUNT TO NOT APPLYING SECTION 32(2) EVEN TO YEARS WHICH ARE NOT THE (SPECIFIED) RELEVANT ASSESSMENT YEARS, AS A SSESSMENT YEARS 1994-95 TO 1996-97 AND ASSESSMENT YEAR 1997-9 8 FOR UNIT 'A' AND 'B' RESPECTIVELY, AND FOR WHICH THERE IS NO MANDATE IN LAW. IN FACT, THAT WOULD IN EFFECT BE AP PLYING THE FICTION OF SECTION 10B(6)(I) TO SUCH YEARS AND THER EBY ACCORDING AN INTERPRETATION AND WORKING JUST OPPOSI TE TO WHAT STANDS ADVOCATED AND HELD BY THE TRIBUNAL IN THE AS SESSEE'S CASE FOR ASSESSMENT YEAR 2005-06. 15.8 WE, THEREFORE, FIND NO INCONSISTENCY OR DISHARMONY BETWEEN THE TRIBUNAL'S ORDER FOR THE IMMEDIATELY PR ECEDING YEAR AND THE ADJUDICATION PER THE PRESENT ORDER. WE HAVE, IT MAY BE APPRECIATED, ONLY PROCEEDED TO APPLY THE LAW , BEING UNAMBIGUOUS, WHILE EXPRESSING OUR AGREEMENT WITH TH E RATIO OF THE SAID ORDER BY THE TRIBUNAL. FURTHER, WITHOUT DOUBT, EVEN IF IT WERE TO BE CONTENDED THAT THE TWO ORDERS ARE INCONSISTENT TO EACH OTHER, THE SAME, AS EXPLAINED, IS ONLY ON A CCOUNT OF THE FACT THAT WE HAVE PROCEEDED TO FIRST ADDRESS THE IS SUE WHETHER THE ASSESSEE'S CLAIM FOR UNABSORBED DEPRECIATION, S TATED TO BE FOR THE ASSESSMENT YEARS 1994-95 TO 1996-97 (UNIT ' A') AND ASSESSMENT YEAR 1997-98 (UNIT 'B'), COULD, IN VIEW OF SECTION 32(2), BE IN DEED SAID TO RELATE TO THOSE YEARS, AN D FOUND IT AS NOT, A QUESTION NOT ADDRESSED BY THE TRIBUNAL'S ORD ER FOR ASSESSMENT YEAR 2005-06, BEING NOT DIRECTLY BEFORE IT, TAKING THE YEARS AS STATED AS A GIVEN, SO THAT WE FIND NO REASON FOR NOT APPLYING THE SETTLED LAW IN THE MATTER; THE BOUNDED DUTY OF ANY COURT BEING TO DECIDE THE MATTER BEFORE IT IN ACCOR DANCE WITH THE LAW. THE VERY FACT THAT IT LEADS TO A DIFFERENC E IN RESULT, WHILE THE LAW IN THE MATTER ADMITS OF NO DIFFERENCE , ITSELF EXHIBITS IT TO BE A RELEVANT FACTOR, SO THAT IT WAS REQUIRED TO BE CONSIDERED SO AS TO BE ABLE TO DECIDE THE ISSUE AT HAND IN ITS PROPER PERSPECTIVE. RATHER, AS POINTED OUT ABOVE, W E HAVE ONLY APPLIED THE RATIO AS LAID DOWN IN THE SAID ORDER. T HERE IS, AS SUCH, NO DIFFERENCE OF OPINION BETWEEN THE VIEWS EX PRESSED IN THE SAID TWO ORDERS AND THE DICHOTOMY BETWEEN THE T WO IS INCIDENTAL. TOWARD THIS WE DRAW SUPPORT FROM THE OR DER BY THE TRIBUNAL IN THE CASE OF ITO V. BAKER TECHNICAL SERV ICES (P.) LTD. [2009] 126 TTJ (MUM.) 455 (TM) , WHEREIN THE PRINCIPLE ITA.325/BANG/2018 PAGE - 11 OF ADOPTION OF A DIFFERENT VIEW, I.E., FROM THAT OF THE COORDINATE BENCH OF THE TRIBUNAL, UNDER CERTAIN CIRCUMSTANCES, STANDS RECOGNIZED. FURTHER, THIS IS ONLY SUBJECT TO OUR CO NSIDERED VIEW OF THE PRESENT ORDER BEING ONLY SUPPORTIVE OF THE S AID ORDER, AND NOT IN CONTRADICTION TO WHAT STANDS CONSIDERED AND LAID OUT THEREIN (REFER PARAS 15.3 AND 15.7 OF THIS ORDE R). 16. THE ONLY CONSEQUENCE OF THE FOREGOING, INCLUDING T HE DECISIONS CITED, WOULD BE THAT THE ENTIRE DEPRECIAT ION BEING CLAIMED WOULD BE IN LAW THE DEPRECIATION FOR OR ALL OWABLE FOR THE FIRST OF THE RELEVANT ASSESSMENT YEARS, AND BEI NG AN ASSESSMENT YEAR(S) PRIOR TO ASSESSMENT YEAR 2001-02 , PRESCRIBED FOR CARRY FORWARD UNDER THE PROVISIONS O F SECTION 10B(6)(I). WE DECIDE ACCORDINGLY. 06. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL. AT THE TIME OF HEARING THE LD. AR WAS DIRECTED BY THE BENCH TO PRODUCE THE FOLLOWING DOCUMENTS / CLAR IFY : I) WHETHER THE ASSESSEE CONTINUED ITS BUSINESS WITH THE SAME COMPANY IN THE SUBSEQUENT YEARS ; II) WHEN THE ASSESSEE HAS ACTUALLY MADE THE PAYMENT TOWARDS THE CONSIDERATION FOR PURCHASE OF SOFTWARE PERTAINING TO AY 2011-12 ; III) WHETHER THE ASSESSEE HAS DEDUCTED THE TDS FROM THE PAYMENT MADE FOR AY 2011-12 IN THE SUBSEQUENT ASSESSMENT YEAR, I.E., AY 2012-13. DESPITE THE SPECIFIC DIRECTION DURING THE COURSE OF HEARING, THE ASSESSEE HAS NOT PRODUCED THE ABOVE DOCUMENTS. 07. THE CIT (A) IN PARA 7 AT PAGE 6, HAD AGREED TO THE DECISION OF THE AO TO THE EXTENT THAT THE CONSIDERATION PAID FOR PURCHASE OF SOFTWARE IS IN T HE ITA.325/BANG/2018 PAGE - 12 FORM OF ROYALTY AND THEREFORE NON-DEDUCTION OF TAX AT SOURCE ATTRACTS THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT AND FOR THAT PURPOSES, THE LOWER AUTHORITIE S RELIED UPON THE HONBLE JURISDICTIONAL HIGH COURT JUDGMENT IN SAMSUNG ELECTRONICS (SUPRA). AGAINST T HE FINDING RECORDED BY THE LOWER AUTHORITIES THE ASSES SEE IS NOT IN APPEAL, I.E., THE ASSESSEE HAS NOT CHALLE NGED THE NON-DEDUCTION OF TDS WILL ATTRACT THE DISALLOWANCE U/S.40(A)(I) IN RESPECT OF PURCHASE OF SOFTWARE. 08. AS POINTED OUT BY THE LD. AR THE CIT (A) HAS GRANTED RELIEF TO THE ASSESSEE ON ACCOUNT OF IMPOSSIBILITY OF PERFORMANCE ON THE PREMISE THAT JUDGMENT WAS RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT ON 15.10.2011 AND THE RETURN OF INCOME WAS FILED ON 30.11.2011 AND THE REVISED RETURN WAS FILED ON 27.02.2012. THEREFORE IT WAS NOT POSSIBLE FOR THE ASSESSEE TO DEDUCT THE TAX AT THE TIME OF MAKIN G THE PAYMENT. 09. SECTION 40(A)(I) PROVIDES AS UNDER : (I) 5 ANY INTEREST (NOT BEING INTEREST ON A LOAN ISSUED FOR PUBLIC SUBSCRIPTION BEFORE THE 1ST DAY OF APRIL, 1938 ), R OYALTY, FEES FOR TECHNICAL SERVICES OR OTHER SUM CHARGEABLE UNDER TH IS ACT, WHICH IS PAYABLE OUTSIDE INDIA, ON WHICH TAX HAS NO T BEEN PAID OR DEDUCTED UNDER CHAPTER XVII- B: PROVIDED THAT WH ERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN PAID OR DEDUC TED UNDER CHAPTER XVII- B IN ANY SUBSEQUENT YEAR, SUCH SUM SH ALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF T HE PREVIOUS ITA.325/BANG/2018 PAGE - 13 YEAR IN WHICH SUCH TAX HAS BEEN PAID OR DEDUCTED. E XPLANATION.- FOR THE PURPOSES OF THIS SUB- CLAUSE,- (A) ' ROYALTY' SHALL HAVE THE SAME MEANING AS IN EXPLA NATION 2 TO CLAUSE (VI) OF SUB- SECTION (1) OF SECTION 9; (B) ' FEES FOR TECHNICAL SERVICES' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE (VII) OF SUB- SECTION (1) OF SECTION 9;] FROM THE BARE READING OF THE AFORESAID PROVISION IT IS ABUNDANTLY CLEAR THAT IF THE ASSESSEE IS MAKING THE PAYMENT EITHER ON ACCOUNT OF INTEREST, ROYALTY, FEE S FOR TECHNICAL SERVICES OR OTHER SUMS CHARGEABLE UND ER THIS ACT WHICH IS CHARGEABLE OUTSIDE INDIA OR IN IN DIA TO A NON-RESIDENT, NOT BEING A COMPANY OR A FOREIGN COMPANY ON WHICH TAX IS DEDUCTIBLE AND TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED, THEN THE SAME SHALL NOT BE DEDUCTED WHILE COMPUTING THE INCOME CHARGED UNDER THE HEAD PROFIT S AND GAINS OF BUSINESS OR PROFESSION. 9.1 FURTHER THE PROVISO TO SECTION 40(A)(I) PROVIDE S THAT WHERE ON ANY SUCH SUM TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF SECTION 139, SUCH SUM SHALL BE ALLOWED AS DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TAX HAS BEEN PAID. 10. IT IS THUS CLEAR THAT FOR THE PURPOSES OF ATTRA CTING THE PROVISIONS OF SECTION 40(A)(I) OF THE ACT, THE ITA.325/BANG/2018 PAGE - 14 PAYMENT MADE BY THE ASSESSEE SHOULD BE IN THE FORM OF ROYALTY OR IN ANY OTHER FORM AND IT SHOULD HAVE BEEN PAID EITHER OUTSIDE INDIA OR PAID TO A NON- RESIDENT IN INDIA, FOR WHICH THERE IS AN OBLIGATION TO DEDUCT TDS. IF TAX DEDUCTION WAS NOT MADE AT THE TI ME OF MAKING THE PAYMENT, AND THEN SUCH AMOUNT SHALL NOT BE ELIGIBLE FOR DEDUCTION. 10.1 THE BENCH IS NOT ABLE TO APPRECIATE THE CONTENTION OF THE LD. AR THAT ONCE THE CIT (A) HELD THAT THE PROVISIONS OF SECTION 40(A)(I) ARE APPLICA BLE AS THE PAYMENTS MADE BY THE ASSESSEE WAS IN THE NATURE OF ROYALTY, WHERE IS THE OCCASION FOR DELETI NG THE DISALLOWANCE MADE BY THE AO, LD CIT(A) . THERE IS NO SUCH POWER U/S.40(A)(I) WITH CIT(A) TO DISALLOW THE DISALLOWANCE MADE BY THE AO FOR NON- COMPLIANCE OF SECTION 40(A)(I), AS IN THE CONSIDERA TION OF BENCH THE DISALLOWANCE IS AUTOMATIC IF SUCH AMOU NT HAS NOT BEEN DEDUCTED. THERE IS NO AMBIGUITY IN T HE PROVISIONS OF THE ACT MENTIONED HEREIN ABOVE. FURTHER THE CIT (A) HAS NO POWER TO MAKE OUT A CASE OF IMPOSSIBILITY OF PERFORMANCE. THE PROVISO TO SECTION 40(A)(I) RELEVANT TO THE IMPUGNED ASSESSMEN T YEAR PROVIDE AS UNDER : 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 16 [ 38 ], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PRO FITS AND GAINS OF BUSINESS OR PROFESSION, 17 ( A ) IN THE CASE OF ANY ASSESSEE ITA.325/BANG/2018 PAGE - 15 18 [( I ) ANY INTEREST (NOT BEING INTEREST ON A LOAN ISSUE D FOR PUBLIC SUBSCRIPTION BEFORE THE 1ST DAY OF APRIL, 19 38), ROYALTY, FEES FOR TECHNICAL SERVICES OR OTHER SUM CHARGEABLE UNDER THIS ACT, WHICH IS PAYABLE, ( A ) OUTSIDE INDIA; OR ( B ) IN INDIA TO A NON-RESIDENT, NOT BEING A COMPANY OR TO A FOREIGN COMPANY, ON WHICH TAX IS DEDUCTIBLE AT SOURCE UN DER CHAPTER XVII-B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, HAS NOT BEEN PAID DURING THE PREVIOUS YE AR, OR IN THE SUBSEQUENT YEAR BEFORE THE EXPIRY OF THE TIM E PRESCRIBED UNDER SUB-SECTION (1) OF SECTION 200 : PROVIDED THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR OR, HAS BE EN DEDUCTED IN THE PREVIOUS YEAR BUT PAID IN ANY SUBSE QUENT YEAR AFTER THE EXPIRY OF THE TIME PRESCRIBED UNDER SUB- SECTION (1) OF SECTION 200 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS Y EAR IN WHICH SUCH TAX HAS BEEN PAID. FROM THE READING OF THE ABOVE, IT IS ALSO CLEAR THA T IF THE ASSESSEE FAILED TO DEDUCT THE TAX IN THE YEAR O F ASSESSMENT, THE SAME CAN BE DEDUCTED IN A SUBSEQUEN T YEAR AND SUCH SUM SHALL BE ALLOWED IN THE SUBSEQUEN T YEAR. IF WE LOOK INTO THE VARIOUS DECISIONS AND TH E FINDING RECORDED BY THE CIT (A), WE HAVE TO SEE WHETHER IT IS IMPOSSIBLE FOR THE ASSESSEE TO DEDUCT THE TAX IN THE YEAR UNDER CONSIDERATION OR IN THE SUBSEQUENT YEAR I.E., FOR A Y. 2012-13. 11. FIRSTLY, WE ARE OF THE OPINION THAT THE JUDGMEN T PASSED BY THE SUPERIOR COURT WAS DECLARATORY IN NAT URE OF THE LAW WHICH FINDS PLACE IN THE STATUTE BOOK. THE COURTS DO NOT LAY DOWN THE FRESH OR NEW LAW, THE ITA.325/BANG/2018 PAGE - 16 COURT ONLY AUTHORITATIVELY PRONOUNCES AND INTERPRET S THE LAW ALREADY EXISTING IN THE STATUTE BOOK. FURT HER WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN SAMSUNG ELECTRONICS (SUPRA) IN PARA 3 RECORDS IMPORTANT FACTS WHICH ARE TO THE FOLLOWING EFFECT : 3. BEING AGGRIEVED BY THE SAID ORDER PASSED BY THE ASSESSING OFFICER, AN APPEAL WAS FILED BEFORE THE C OMMISSIONER OF INCOME TAX (APPEALS)-V IN APPEAL NO. ITA 17/TDS/CIT(A)V/2001-02 WHEREIN THE APPELLATE AUTHOR ITY CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER HOLDING THAT PAYMENT MADE TO THE NON RESIDENT COMPANIES WAS TAXA BLE IN INDIA AND THEREFORE NON DEDUCTION OF TDS UNDER SECTION 19 5(1) OF THE ACT WOULD MAKE LIABLE THE RESPONDENT TO TREAT THE S AME AS INCOME AND THEREFORE THE RESPONDENT WOULD BE LIABLE FOR DE FAULT FOR NON DEDUCTION OF TAX AT SOURCE AND DISMISSED THE APPEAL BEING AGGRIEVED BY THE SAID ORDER, THE RESPONDENT FILED A N APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. BANGALORE (HEREI NAFTER CALLED THE TRIBUNAL) IN ITA NOS. 264 TO 266/BANG/2002 AND THE TRIBUNAL BY ORDER DATED 18-12-2005 ALLOWED THE APPEAL BY SET TING ASIDE THE ORDER PASSED BY THE APPELLATE AUTHORITY CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER AND HELD THAT PAYME NT MADE BY THE RESPONDENT TO THE NON-RESIDENT COMPANY WOULD NO T AMOUNT TO ROYALTY WITHIN THE MEANING OF SECTION 9(1)(VI) OF T HE ACT OR UNDER CLAUSES OF DTAA AND IT WAS A PURCHASE OF SHRINK WRA P SOFTWARE AND SINCE THERE WAS NO PERMANENT ESTABLISHMENT OF N ON-RESIDENT COMPANY IN INDIA, THE PAYMENT WAS NOT LIABLE TO BE DEDUCTED. BEING AGGRIEVED BY THE SAME, ITA NOS. 2808/2005 AND OTHER APPEALS WERE FILED AGAINST THE SAID ORDER OF THE TR IBUNAL AND DIVISION BENCH OF THIS COURT BY ORDER DATED 24-9-20 09 SET ASIDE THE ORDER OF THE TRIBUNAL BY HOLDING THAT ALL PAYME NTS MADE TO THE NON-RESIDENT COMPANY SHOULD BE DEDUCTED AT SOUR CE UNLESS CERTIFICATE IS OBTAINED BY MAKING AN APPLICATION UN DER SECTION 195(2) OF THE ACT THAT THERE IS NO LIABILITY TO DED UCT TAX AT SOURCE AND ACCORDINGLY ALLOWED THE APPEALS FILED BY THE RE VENUE BY SETTING ASIDE THE ORDER PASSED BY THE TRIBUNAL. THE RESPONDENT AND OTHERS WHO ARE AGGRIEVED BY THE COMMON ORDER DA TED 24-9- 2005 PASSED BY THIS COURT IN ITA NO. 2808/2005 AND CONNECTED CASES FILED CIVIL APPEAL NOS.7541-7542/2010 AND CON NECTED MATTERS BEFORE THE HON'BLE SUPREME COURT AND THE HO N'BLE ITA.325/BANG/2018 PAGE - 17 SUPREME COURT BY ORDER DATED 9-9-2010 SET ASIDE THE ORDER PASSED BY THE DIVISION BENCH OF THIS COURT BY ANALY ZING THE PROVISIONS OF SECTION 195 OF THE ACT AND REMITTED THE MATTER TO THIS COURT FOR ANSWERING THE SUBSTANTIAL QUESTIONS OF LAW FRAMED BY IT AS REFERRED TO ABOVE. ACCORDINGLY, THESE APPE ALS ARE POSTED FOR HEARING BEFORE US FOR ANSWERING THE AFOREMENTIO NED SUBSTANTIAL QUESTION OF LAW. (EMPHASIS SUPPLIED) FROM A READING OF THE ABOVE IT IS CLEAR THAT THE DIVISION BENCH OF THE JURISDICTIONAL HIGH COURT VID E ITS JUDGMENT DT.24.09.2009 [185 TAXMANN 313] HAD REVERSED THE FINDING RECORDED BY THE TRIBUNAL IN ITA.2808/BANG/2005. HOWEVER SUBSEQUENTLY THE HONBLE SUPREME COURT VIDE ITS JUDGMENT DT.09.09.2010 HAD REMANDED THE MATTER BACK TO THE FILE OF THE DIVISION BENCH FOR FURTHER APPRECIATION OF THE DECISION. HOWEVER IN BETWEEN I.E., FROM 24.09.2009 AND 09.09.2010, THE DECISION RENDERED BY THE DIVISION BENCH IN 185 TAXMANN.313 WAS HOLDING THE FIELD WITH RESPECT TO PAYMENT MADE FOR PURCHASE OF SOFTWARE. THEREFORE THERE WAS A JURISDICTIONAL HIGH COURT JUDGMENT AUTHORITATIVELY PRONOUNCING THA T PAYMENT MADE OR CONSIDERATION PAID FOR ACQUIRING TH E SOFTWARE WERE IN THE NATURE OF ROYALTY. INCIDENTAL LY THIS WAS PERIOD WHEN PAYMENTS WOULD HAVE BEEN MADE BY THE ASSESSEE TO A FOREIGN ENTITY FOR PURCHASE OF SOFTWARE WITHOUT DEDUCTING THE TDS. IRONICALLY, DESPITE DIRECTION ASSESSEE HAD FURNISHED DETAILS AS TO WHEN EXACT PAYMENTS FOR PURCHASE OF SOFTWARE WERE ITA.325/BANG/2018 PAGE - 18 MADE AND WHETHER THE ASSESSEE CONTINUED ITS BUSINES S IN THE SUBSEQUENT YEARS OR NOT. FURTHER THE ASSESS EE WAS HAVING ANOTHER CHANCE TO DEDUCT THE TDS IN THE SUBSEQUENT YEAR AS THE ASSESSEE WAS CONTINUING ITS BUSINESS WITH THE SAME SUPPLIER, BUT HOWEVER FOR TH E REASONS BEST KNOWN TO IT, ASSESSEE HAD NOT PRODUCED THE RECORD AS NOTED HEREIN ABOVE. 11.1 THEREFORE WE CAN DRAW ADVERSE INFERENCE AGAINS T ASSESSEE, THAT THE ASSESSEE EVEN IN THE SUBSEQUENT YEARS HAD NOT DEDUCTED TDS OTHERWISE IT WOULD HAVE PRODUCED RECORD FOR DEDUCTION OF TAX IN SUBSEQUENT YEARS. FURTHER IN OUR VIEW WHEN DEDUCTION OF TDS CA N BE DEDUCTED IN SUBSEQUENT YEAR AND FURTHER ASSESSEE IS CONTINUING ITS BUSINESS IN SUBSEQUENT YEAR, CONCLUS ION RECORDED BY THE CIT (A) WAS WRONG AS THERE WAS NO IMPOSSIBILITY OF PERFORMANCE. 11.2 THE LD. AR DURING THE COURSE OF ARGUMENT HAD R ELIED UPON THE DECISIONS OF THE TRIBUNAL IN AURIGENE DISCOVERY TECHNOLOGIES LTD, [ITA 1479/BANG/2015, DT.23.11.2016, FOR A.Y. 2012-13], IN THE ASSESSEES OWN CASE IN ITA.1370/BANG/2014, FOR A. Y. 2009-10, DT.15.09.2017, AND ALSO IN ITA NO.10/BANG/2014, DT.20.09.2017, FOR AY 2010-11. 11.3 THE TRIBUNAL IN PARA 5 OF AURIGENE DISCOVERY TECHNOLOGIES LTD (SUPRA) HAS HELD AS UNDER : ITA.325/BANG/2018 PAGE - 19 5. THE CIT (A) FOLLOWED THE DECISION OF THE TRIBUNA L IN M/S. WS ATKINS INDIA P. LTD, SUPRA, WHICH REFERR ED THE DECISIONS OF HYDERABAD BENCH OF THE TRIBUNAL IN INF OTECH ENTERPRISES LTD IN ITA 115/HYD/2011 WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOULD NOT APPLY TO DISA LLOW PAYMENTS WHEN TDS WAS NOT DONE AND SUBSEQUENTLY BECOME TAXABLE ON ACCOUNT OF A RETROSPECTIVE LEGISL ATION. IT HAS ALSO REFERRED TO THE DECISIONS OF THE DELHI & MUMBAI TRIBUNAL IN SMS DEMAG PVT LTD, 132 ITJ 498 & SONIC BIOCHEM EXTRACTIONS P. LTD 23 ITR (TRIB) 447, RESPECTIVELY. WE UPHOLD THE DECISION OF THE CIT (A ) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. FROM THE READING OF THE DECISION OF AURIGENE (SUPR A), IT IS CLEAR THAT THE TRIBUNAL HAD RELIED UPON A DECISION OF THE HYDERABAD BENCH IN THE MATTER OF M/S. WS ATKINS INDIA P. LTD, FOR THE PROPOSITION THAT AS THE AMENDMENT WAS BROUGHT INTO THE STATUTE BY FINANCE ACT 2012 RETROSPECTIVELY U/S.40(A)(IA), THEREFORE THE ASSESSEE CANNOT BE ASKED TO DEDUCT TDS . IN OUR VIEW DECISION OF AUR IGENE DISCOVERY TECHNOLOGIES LTD (SUPRA), IS NOT APPLICABLE TO THE FACTS OF THE CASE AS THE HONBLE JURISDICTIONAL HIGH COURT IN THE MAT TER OF SAMSUNG ELECTRONICS CO. (SUPRA) BY AN EARLIER AND SUBSEQUEN T JUDGMENTS HAD HELD THAT THE CONSIDERATION PAID FOR ACQUIRING THE SOFTWARE WAS IN THE NATURE OF ROYALTY AND THEREFORE THE TDS IS RE QUIRED TO BE DEDUCTED. FURTHER WE OBSERVE THAT THE DECISION IN AURIGENE DISCOVERY TECHNOLOGIES LTD (SUPRA) WAS FOR AY 2012- 13, WHEREAS THE AMENDMENT WAS BROUGHT INTO THE SECTION 9(1)(VI) RETROSPECTIVELY VIDE THE FINANCE ACT, 2012, WHEREAS THE OBLIGATION TO DEDUCT THE TDS U/S.40(A)(I) SO FAR AS THE STATE OF KARNATAKA I S CONCERNED WAS THERE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IN VIEW OF THE PROVISIONS OF SECTION 9(1)(VI) R.W. THE JURISDICTIO NAL HIGH COURT IN ITA.325/BANG/2018 PAGE - 20 THE MATTER OF SAMSUNG ELECTRONICS CO. (SUPRA). THE REFORE, RATIO OF AURIGENE DISCOVERY TECHNOLOGIES LTD (SUPRA) DECISI ON RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO THE PRESENT CA SE. 11.4 THE SECOND DECISION OF THE TRIBUNAL RELIED UPO N BY THE ASSESSEE WAS IN ITS OWN CASE IN ITA.1370/BANG/2014 (SUPRA). HOWEVER WHEN WE LOOK INTO THE FINDING RECORDED BY T HE TRIBUNAL IN PARA 7, WE NOTICE THAT THE TRIBUNAL HAS NOT GIVEN A NY FINDING WITH RESPECT TO THE ISSUE OF 40(A)(IA) AND IT HAS ONLY M ENTIONED THAT IN VIEW OF THE COORDINATE BENCH DECISION THE PURCHASE OF SOFTWARE DOES NOT FALL WITHIN THE DEFINITION OF ROYALTY, WHERE AS THE CHARACTERISTIC OF THE PAYMENT MADE BY THE ASSESSEE WHETHER ROYALTY OR NOT IS NOT IN DISPUTE IN THE PRESENT APPEAL. TH EREFORE THE DECISION IS NOT APPLICABLE TO THE PRESENT CASE. 11.5 LASTLY, THE ASSESSEE RELIES AGAIN UPON THE DEC ISION OF THE COORDINATE BENCH IN ITS OWN CASE IN ITA NO.10/BANG/ 2014, DT.20.09.2017, WHEREIN THE TRIBUNAL HAS RELIED UPON ITS EARLIER ORDER IN ITA.1370/BANG/2014 (SUPRA) AND HAD ALLOWED THE I SSUE. IN OUR OPINION THE DECISION RENDERED BY THE TRIBUNAL IN IT A.10/BANG/2014 IS ALSO NOT APPLICABLE TO THE PRESENT FACTS AS THE TRIBUNAL HAD HAD MERELY HELD THAT PURCHASE OF SOFTWARE DOES NOT FALL WITHIN THE DEFINITION OF ROYALTY, WHEREAS THE PRESENT DISPUT E PERTAINS TO SECTION 40(A)(I) AND THE DOCTRINE OF IMPOSSIBILITY OF PERFORMANCE. 11.6 WE CAN THEREFORE SUMMARIZE THAT IT IS NOT IMPOSSIBLE FOR THE ASSESSEE TO DEDUCT THE TAX AT SO URCE AT THE TIME OF MAKING THE PAYMENT IN THE ASSESSMENT