TRIMBLE SOLUTIONS CORPORATION, MUMBAI V. DCIT (INTERNATIONAL TAXATION)-4(1)(2), MUMBAI

ITA 5340/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7364 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2016-2017
• Appeal Filed On: 14-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Double taxation relief; Permanent establishment; Wholly owned subsidiary
• Section: 143(3); 234B; 264; 13

Judgement Text

ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 1 OF 11 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI 'I' BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT), AND SAKTIJIT DEY (JUDICIAL MEMBER)] ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2016 - 17 TRIMBLE SOLUTIONS CORPORATION .APPELLANT (EARLIER KNOWN AS TEKLA CORPORATION) 14 TH FLOOR, THE RUBY, 29 TH SENAPATI BAPAT MARG, DADAR (W), MUMBAI 400028 [PAN: AADCT2639Q] VS. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION 4(1)(2), MUMBAI RESPONDENT APPEARANCES BY DIVESH CHAWLA FOR THE APPELLANT VIJAY KUMAR SUBRAMANIYAM FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : JANUARY 7, 2021 DAT E OF PRONOUNCEMENT : JANUARY 1 8 , 2021 O R D E R PER PRAMOD KUMAR, VP: 1. THIS APPEAL, FILED BY THE ASSESSEE, CALLS INTO QUESTION THE CORRECTNESS OF THE ORDER DATED 19 TH JUNE 2019 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2016 - 17 . 2. GRIEVANCES RAISED BY THE APPELLANT ARE AS FOLLOWS: GROUND NO. 1: INCO ME FROM CLOUD HOSTING SERVICES IS ERRONEOUSLY HELD AS ROYALTY WITHIN THE MEANING OF EXPLANATION 2 TO SECTION 9(L)(VI) OF THE INCOME TAX ACT, 1961 (THE ACT) AS WELL AS ARTICLE 12(3)(B) OF THE INDIA - US TAX TREATY 1.1. ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LEARNED AO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP ERRED IN HOLDING THAT CLOUD HOSTING SYSTEM IS COMBINATION OF HARDWARE, SOFTWARE AND NETWORKING ELEMENTS THAT CONSTITUTES INDUSTRIAL / COMMERCIAL / SCIENTIFIC EQUIPMENT AND TH E INCOME OF INR 6,23,14,703 EARNED BY THE APPELLANT FROM CLOUD HOSTING SERVICES IS FOR USE OF ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 2 OF 11 OR RIGHT TO USE INDUSTRIAL / COMMERCIAL / SCIENTIFIC EQUIPMENT WHICH WOULD CONS TITUTE ROYALTY UNDER SECTION 9(1 )(VI) OF THE ACT. 1.2. ON THE FACTS AND CIRCUMST ANCES OF THE CASE AND IN LAW, THE LEARNED AO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, ERRED IN HOLDING THAT THE INCOME EARNED BY THE APPELLANT IS FOR USE OF OR RIGHT TO USE INDUSTRIAL / COMMERCIAL / SCIENTIFIC EQUIPMENT AND CONSTITUTES ROYALTY UNDER ARTICLE 12(3)(B) OF THE INDIA - US TAX TREATY. 1.3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO, PURSUANT TO THE DIRECTION OF THE HON'BLE DRP, ERRED IN HOLDING THAT THE DEFINITION OF ROYALTY UNDER THE ACT (AS RETROSPECTIVELY A MENDED BY FINANCE ACT, 2012) CAN BE APPLIED EVEN FOR THE PURPOSES OF DETERMINATION OF ROYALTY INCOME UNDER ARTICLE 12 OF THE INDIA - US TAX TREATY IN THE ABSENCE OF ANY CORRESPONDING AMENDMENT IN THE INDIA - US TAX TREATY. 1.4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO, PURSUANT TO THE DIRECTIONS OF THE HON'BLE DRP, ERRED IN HOLDING THAT THE APPELLANT IS PROVIDING LICENSE TO CLIENTS FOR USE OF THIRD PARTY SOFTWARE AND THE INCOME EARNED THERE FRO M IS ALSO ROYALTY UNDER THE ACT AS WELL AS THE INDIA - US TAX TREATY. GROUND NO. 2: INCOME FROM CLOUD HOSTING SERVICES IS ALSO ERRONEOUSLY HELD AS FEES FOR TECHNICAL SERVICES W ITHIN THE MEANING OF SECTION 9(1 )(VII) OF THE ACT AS WELL AS FEES FOR INCLUDED SERVICES UNDER ARTICLE 12(4)(A) OF THE INDIA - US TAX TREATY 2.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO FURTHER ERRED IN HOLDING THAT THE INCOME FROM CLOUD HOSTING SERVICES IS IN THE NATURE OF FEES FOR TECHNICAL SERVICES WITHIN THE ME ANING OF EXPLANATION (2) TO CLAUSE (VII) OF SUBSECTION (1) OF SECTION 9 OF THE ACT. 2.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED AO ERRED IN HOLDING THAT THE INCOME FROM CLOUD HOSTING SERVICES ALSO QUALIFIES AS FEES FOR INCLUDED SERVICES WI THIN THE MEANING OF ARTICLE 12(4)(A) OF THE INDIA - US TAX TREATY. GROUND NO. 3: ERRONEOUS LEV Y OF INTEREST UNDER SECTION 234B OF THE ACT 3.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO ERRED IN LEVYING INTEREST OF INR 24,29,388 UNDER SECTION 234B OF THE ACT. 3. T HE ISSUES RAISED IN THIS APPEAL ARE ADMITTEDLY COVERED BY THE DECISION OF COORDINATE BENCH DATED 07 TH OCTOBER 2020, IN ASSESSEE OWN CASE FOR THE ASSESSMENT YEAR 2012 - 13 . WE HOWEVER SEE NO REASONS TO TAKE ANY VIEW OF THE MATTER THEN THE VIEW TAKEN BY THE COORDINATE BENCH IN THE AFORESAID DECISION WHEREIN THE COORDINATE BENCH HAS INTER ALIA OBSERVED AS FOLLOWS: - ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 3 OF 11 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2012 - 13 ON 30.11.2012 DECLARING TOTAL INCOME OF RS. NIL. THE ASSESSEE IS A TAX RESIDENT OF FINLAND. IT HAS ITS REGISTERED OFFICE AT METSANPOJANKUJA 1, FI - 02131 ESPOO, FINLAND. IT IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND MARKETING OF SPECIALIZED SOFTWARE PRODUCTS WHICH ARE USED IN INDUSTRIES LIKE BUILDING AND CONSTRUCTION, ENERGY DISTRIBUTION AND INFRASTRUCTURE MANAGEMENT. IN INDIA, THE ASSESSEE MARKETS AND DISTRIBUTES THE SPECIALIZED SOFTWARE PRODUCTS TO THE END - USER CUSTOMERS THROUGH A DISTRIBUTION CHANNEL CONSISTING OF SUBSIDIARY AND A THIRD PARTY DISTRIBUTOR. IN ORDER TO DISTRIBUTE ITS SOFTWARE IN INDIA, THE ASSESSEE APPOINTED TRIMBLE SOLUTIONS INDIA PRIVATE LIMITED (EARLIER KNOWN AS TEKLA I NDIA PRIVATE LIMITED) (HEREINAFTER REFERRED TO AS 'TRIMBLE SOLUTIONS INDIA'), ITS WHOLLY OWNED SUBSIDIARY, VIDE AGREEMENT DATED 28 JANUARY 2008 AND DOWCOMAX SERVICES INDIA LIMITED ('DCMIPL') VIDE AGREEMENT DATED, 23 JUNE 2008 (COLLECTIVELY REFERRED TO AS ' DISTRIBUTORS), AS ITS NON - EXCLUSIVE RESELLERS / DISTRIBUTORS FOR THE INDIAN TERRITORY. DURING THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE RECEIVED THE FOLLOWING PAYMENTS FROM THE DISTRIBUTORS: SR. NO PARTICULARS AMOUNT 1 PAYMENT RECEIVED FOR SALE OF OFF - THE SHELF SOFTWARE 10,61,12,437/ - 2 PAYMENT RECEIVED FOR MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES) 8,56,35,946/ - 3 PAYMENT RECEIVED FOR MANAGEMENT FEES 74,16,621 TOTAL 19,91,65,004/ - THE AO HELD THAT THE PAYMENTS RECEIVED FOR SALE OF SPECIALIZED SOFTWARE AND MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES) ARE IN THE NATURE OF ROYALTY AND THE PAYMENT RECEIVED FOR MANAGEMENT FEES IS IN THE NATURE OF FEES FOR TECHNICAL SERVICES VIDE INDIA FINLAND TAX TREATY. ACCORDINGLY, THE AO T AXED THE SAME AT 10% OF GROSS RECEIPTS, AS PER CLAUSE 2 OF ARTICLE 12, OF THE NEW INDIA - FINLAND TAX TREATY. WE ARE CONCERNED HERE WITH SL. NO. 1 AND 2 HEREINABOVE. 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ISSUES EMANATING FROM THE 2ND, 3RD, 4TH AND 5TH GROUNDS OF APPEAL HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2010 - 11 (ITA NO. 6481/MUM/2017) AND AY 2011 - 12 (ITA NO. 6482/MUM/2017). ALSO IT IS STATED BY HIM THAT THE ABOVE ISSUES HAVE B EEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2013 - 14 (ITA NO. 7410/MUM/2017), AY 2014 - 15 (ITA NO. 5271/MUM/2018). FACTS BEING IDENTICAL, THE LD. COUNSEL SUBMITS THAT THE SAID DECISIONS OF THE TRIBUNAL ARE APPLICABLE T O THE IMPUGNED ASSESSMENT YEAR. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTS THE ORDER PASSED BY THE AO U/S 144C(13) R.W.S. 143(3) OF THE ACT. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. T HE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. IN ORDER TO DISTRIBUTE ITS SOFTWARE IN INDIA, THE ASSESSEE HAS APPOINTED TRIMBLE SOLUTIONS INDIA, ITS WHOLLY OWNED SUBSIDIARY, AND DCMIPL AS ITS NON - EXCLUSIVE ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 4 OF 11 RESELLERS/DISTRIBUTORS FOR THE INDIAN TERRITORY. ( TRIMBLE SOLUTIONS INDIA AND DCMIPL ARE COLLECTIVELY REFERRED TO AS 'DISTRIBUTORS' AND THE AGREEMENTS ARE COLLECTIVELY REFERRED TO AS 'AGREEMENTS' FOR THE PURPOSES OF THIS DISCUSSION). THE KEY FEATURES OF THE AGREEMENTS WITH RESPECT TO THE DISTRIBUTION OF S OFTWARE PRODUCTS IN INDIA ARE AS FOLLOWS: THE DISTRIBUTORS HAVE BEEN GRANTED A NON - EXCLUSIVE LICENSE TO MARKET AND DISTRIBUTE THE SOFTWARE PRODUCTS DEVELOPED BY THE ASSESSEE; THE DISTRIBUTORS DO NOT HAVE A RIGHT TO THE SOURCE CODE OF SUCH SOFTWARE PRODUCTS; THE DISTRIBUTORS ARE NOT PERMITTED TO MODIFY, TRANSLATE OR RECOMPILE, ADD TO OR IN ANY WAY ALTER THE SOFTWARE PRODUCTS INCLUDING ITS DOCUMENTATION; THE DISTRIBUTORS ARE NO T PERMITTED TO CREATE THE SOURCE CODE OF THE SOFTWARE PRODUCTS SUPPLIED UNDER THE AGREEMENTS; THE DISTRIBUTORS ARE NOT EXPRESSLY PERMITTED TO REPRODUCE OR MAKE COPIES OF THE SOFTWARE PRODUCTS UNDER THE AGREEMENTS (EXCEPT A BACKUP COPY AS REQUIRED BY THE C USTOMER); NO RIGHT OF ANY NATURE WHATSOEVER HAS BEEN GRANTED TO THE DISTRIBUTORS IN THE INTELLECTUAL PROPERTY DEVELOPED AND OWNED BY THE ASSESSEE IN THE SOFTWARE PRODUCTS; ALL THE TRADEMARKS AND TRADE NAMES, WHICH THE DISTRIBUTORS USE IN CONNECTION WITH THE PRODUCTS SUPPLIED, REMAIN THE EXCLUSIVE PROPERTY OF THE ASSESSEE. THE ASSESSEE AT ALL TIMES HAS THE TITLE TO ALL RIGHTS TO INTELLECTUAL PROPERTY, SOFTWARE AND PROPRIETARY INFORMATION INCLUDING ALL COMPONENTS, ADDITIONS, MODIFICATIONS AND UPDATES; AND THE DISTRIBUTORS DO NOT HAVE ANY AUTHORITY TO NEGOTIATE OR TO CONCLUDE CONTRACTS ON BEHALF OF THE ASSESSEE COMPANY, ACT AS ITS AGENT OR IN ANY WAY REPRESENT THE ASSESSEE SO AS TO BIND IT UNDER ANY TRANSACTION THE MODUS OPERANDI OF THE DISTRIBUTION OF SOFTWARE PRODUCTS TRANSACTION IS SET OUT IN BRIEF AS FOLLOWS: THE TRANSACTION MAY BE INITIATED DUE TO THE MARKETING EFFORTS OF THE DISTRIBUTORS OR BY WAY OF CUSTOMERS APPROACHING THE DISTRIBUTORS FOR PURCHASE OF S OFTWARE PRODUCTS. UPON ACCEPTANCE OF THE ORDER BY THE CUSTOMER, THE DISTRIBUTOR ENTERS INTO A COSLA WITH THE CUSTOMER. COSLA IS AN AGREEMENT BETWEEN THE CUSTOMER AND THE DISTRIBUTOR, WHEREBY THE CUSTOMER ACCEPTS THE TERMS OF USE OF THE ASSESSEE'S SOFTWARE PRODUCTS. THE DISTRIBUTOR PREPARES AND FORWARDS A REPURCHASE ORDER ('REPO') TO THE ASSESSEE ON THE CENTRALIZED CUSTOMER RELATIONSHIP MANAGEMENT SYSTEM, THEREBY PLACING AN ORDER FOR THE SOFTWARE PRODUCT. THE CUSTOMER DOES NOT HAVE ANY KNOWLEDGE OF THE RE PO, SINCE IT IS AN ARRANGEMENT BETWEEN THE DISTRIBUTOR AND THE ASSESSEE. WHERE THE ASSESSEE ACCEPTS THE ORDER PLACED BY THE REPO, IT THEN SENDS A CD / DVD OR A TEMPORARY PASSWORD (IN THE CASE OF DIRECT DOWNLOAD FROM THE INTERNET) ALONG WITH ITS INVOICE TO THE DISTRIBUTOR, ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 5 OF 11 THE DISTRIBUTOR THEN FORWARDS THE CD / DVD OR THE TEMPORARY PASSWORD TO THE CUSTOMERS. THE DISTRIBUTOR RAISES ITS INVOICE ON THE CUSTOMERS. THE ASSESSEE, ON RECEIVING THE PAYMENT FOR THE SOFTWARE PRODUCTS SUPPLIED, SENDS THE PERMANENT P ASSWORD TO THE DISTRIBUTOR, WHO IN TURN FORWARDS IT TO THE CUSTOMER, ON THEIR FINAL PAYMENT. IN A CASE WHERE THE CUSTOMER DOES NOT PAY THE FINAL AMOUNT, THE DISTRIBUTOR HAS A RIGHT TO SELL THE LICENSED SOFTWARE TO OTHER CUSTOMER WITHOUT PAYING ANY FURTHER PRICE TO THE ASSESSEE. THE RESPONSIBILITY OF COLLECTION OF THE INVOICED AMOUNT FROM THE CUSTOMERS, I.E. CREDIT RISK FOR SALES MADE BY THE DISTRIBUTORS, REMAINS WITH THE DISTRIBUTORS 5.1 WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2010 - 11 AND 2011 - 12 HAS HELD THAT : 11. WE SHALL NOW ADVERT TO THE CONTENTIONS ADVANCED BY THE LD. A.R AS REGARDS THE MERITS OF THE CASE. AS OBSERVED BY US HEREINABOVE, THE ASSESSEE WHICH IS A FOREIGN COMPANY INCORPORATED IN FINLAND IS ENGAGED IN THE BUSINESS OF DE VELOPING AND MARKETING SPECIALIZED OFF - THE - SHELF SOFTWARE PRODUCTS WHICH ARE USED IN INDUSTRIES LIKE BUILDING AND CONSTRUCTION, ENERGY DISTRIBUTION AND INFRASTRUCTURE MANAGEMENT. THE ASSESSEE DURING THE YEAR HAD RECEIVED THE FOLLOWING PAYMENTS FROM ITS NO N - EXCLUSIVE RESELLERS/DISTRIBUTORS FOR THE INDIAN TERRITORY VIZ. (I). M/S TRIMBLE SOLUTIONS INDIA PRIVATE LIMITED (EARLIER KNOWN AS TEKLA INDIA PVT. LTD.); AND (II). M/S DOWCOMAX SERVICES INDIA LIMITED : SR. NO PARTICULARS AMOUNT 1 PAYMENT RECEIVED FOR SALE OF OFF - THE SHELF SOFTWARE 7,81,72,583/ - 2 PAYMENT RECEIVED FOR MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES) RS. 2,22,46,237/ - 3 PAYMENT RECEIVED FOR MANAGEMENT FEES 31,86,724/ - TOTAL 10,36,05,544/ - OBSERVING, THAT THE PAYMENTS RECEIVED BY THE ASSESSEE FROM ITS DISTRIBUTORS FOR SALE OF SPECIALIZED SOFTWARE AND MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES) WERE IN THE NATURE OF ROYALTY AS PER ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY, AND AL SO AS PER THE EXPLANATION 2 TO SEC. 9(1)(VI) OF THE ACT, THE A.O/DRP HAD INCLUDED THE SAME IN THE TOTAL INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 12. ON A PERUSAL OF ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY, WE FIND, THAT THE DEFINITION O F THE TERM ROYALTY THEREIN ENVISAGE PAYMENTS RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE CERTAIN SPECIFIC WORKS WHICH COULD INCLUDE INTELLECTUAL PROPERTIES (SUCH AS COPYRIGHT, PATENTS ETC.) BY THE OWNER OF SUCH INTELLECTUAL PROPERTIES FROM ANY OTHER PERSON. FOR THE SAKE OF CLARITY, ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY IS REPRODUCED AS UNDER : ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 6 OF 11 ARTICLE 12 ROYALTIES AND FEES FOR TECHNICAL SERVICES 1. ROYALTIES OR FEES FOR TECHNICAL SERVICES ARISING IN A CONTRACTING STATE AND PAID TO A RESIDENT OF THE OTHER CONTRACTING STATE MAY BE TAXED IN THAT OTHER STATE. 2. HOWEVER, SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES MAY ALSO BE TAXED IN THE CONTRACTING STATE IN WHICH THEY ARISE AND ACCORDING TO THE LAWS OF THAT STATE, BUT IF TH E BENEFICIAL OWNER OF THE ROYALTIES IS A RESIDENT OF THE OTHER CONTRACTING STATE, THE TAX SO CHARGED SHALL NOT EXCEED 10 PER CENT OF THE GROSS AMOUNT OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES. 3. (A) THE TERM 'ROYALTIES' AS USED IN THIS ARTICLE MEA NS PAYMENTS OF ANY KIND RECEIVED AS A CONSIDERATION FOR THE USE OF, OR THE RIGHT TO USE, ANY COPYRIGHT OF LITERARY, ARTISTIC OR SCIENTIFIC WORK INCLUDING CINEMATOGRAPH FILMS, AND FILMS OR TAPES FOR TELEVISION OR RADIO BROADCASTING, ANY PATENT, TRADEMARK, D ESIGN OR MODEL, PLAN, SECRET FORMULA OR PROCESS, OR FOR THE USE OF, OR THE RIGHT TO USE, INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT, OR FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EXPERIENCE, (B) THE TERM 'FEES FOR TECHNICAL SERVIC ES' AS USED IN THIS ARTICLE MEANS PAYMENTS OF ANY KIND, OTHER THAN THOSE MENTIONED IN ARTICLES 14 AND 15 OF THIS AGREEMENT AS CONSIDERATION FOR MANAGERIAL OR TECHNICAL OR CONSULTANCY SERVICES, INCLUDING THE PROVISION OF SERVICES OF TECHNICAL OR OTHER PERSO NNEL. 4. THE PROVISIONS OF PARAGRAPHS 1 AND 2 SHALL NOT APPLY IF THE BENEFICIAL OWNER OF THE ROYALTIES OR FEES FOR TECHNICAL SERVICES, BEING A RESIDENT OF A CONTRACTING STATE, CARRIES ON BUSINESS IN THE OTHER CONTRACTING STATE IN WHICH THE ROYALTIES OR F EES FOR TECHNICAL SERVICES ARISE, THROUGH A PERMANENT ESTABLISHMENT SITUATED THEREIN, OR PERFORMS IN THAT OTHER STATE INDEPENDENT PERSONAL SERVICES FROM A FIXED BASE SITUATED THEREIN, AND THE RIGHT OR PROPERTY IN RESPECT OF WHICH THE ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE PAID IS EFFECTIVELY CONNECTED WITH SUCH PERMANENT ESTABLISHMENT OR FIXED BASE. IN SUCH CASE THE PROVISIONS OF ARTICLE 7 OR ARTICLE 14, AS THE CASE MAY BE, SHALL APPLY. 5. ROYALTIES OR FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN A CONTRACTING STATE WHEN THE PAYER IS THAT STATE ITSELF, A POLITICAL SUBDIVISION, A LOCAL AUTHORITY, OR A RESIDENT OF THAT STATE. WHERE, HOWEVER, THE RIGHT OR PROPERTY FOR WHICH THE ROYALTIES ARE PAID IS USED WITHIN A CONTRACTING STATE OR THE FEES FOR TECHNICAL SERVICES RELATE TO SERVICES PERFORMED, WITHIN A CONTRACTING STATE, THEN SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN THE STATE IN WHICH THE RIGHT OR PROPERTY IS USED OR THE SERVICES ARE PERFORMED. WHERE, HOWEVER, THE PERSON PAYING THE ROYALTIES OR FEES FOR TECHNICAL SERVICES, WHETHER HE IS A RESIDENT OF A CONTRACTING STATE OR NOT, HAS IN A CONTRACTING STATE A PERMANENT ESTABLISHMENT OR A FIXED BASE IN CONNECTION WITH WHICH THE LIABILITY TO PAY THE ROYALTIES OR FEE S FOR TECHNICAL SERVICES WAS INCURRED, AND SUCH ROYALTIES OR FEES FOR TECHNICAL SERVICES ARE BORNE BY SUCH PERMANENT ESTABLISHMENT OR FIXED BASE, THEN SUCH ROYALTIES OR ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 7 OF 11 FEES FOR TECHNICAL SERVICES SHALL BE DEEMED TO ARISE IN THE STATE IN WHICH THE PERMANEN T ESTABLISHMENT OR FIXED BASE IS SITUATED. 6. WHERE, BY REASON OF A SPECIAL RELATIONSHIP BETWEEN THE PAYER AND THE BENEFICIAL OWNER OR BETWEEN BOTH OF THEM AND SOME OTHER PERSON, THE AMOUNT OF THE ROYALTIES, HAVING REGARD TO THE USE, RIGHT OR INFORMATION FOR WHICH THEY ARE PAID, EXCEEDS THE AMOUNT WHICH WOULD HAVE BEEN AGREED UPON BY THE PAYER AND THE BENEFICIAL OWNER IN THE ABSENCE OF SUCH RELATIONSHIP, THE PROVISIONS OF THIS ARTICLE SHALL APPLY ONLY TO THE LASTMENTIONED AMOUNT. IN SUCH CASE, THE EXCESS PART OF THE PAYMENTS SHALL REMAIN TAXABLE ACC ORDING TO THE LAWS OF EACH CONTRACTING STATE, DUE REGARD BEING HAD TO THE OTHER PROVISIONS OF THIS AGREEMENT. 13. AS IS DISCERNIBLE FROM THE RECORDS, WE FIND, THAT THE ASSESSEE COMPANY AS PER THE TERMS AND CONDITIONS OF ITS RESPECTIVE AGREEMENTS WITH ITS NON - EXCLUSIVE RESELLERS/DISTRIBUTORS FOR THE INDIAN TERRITORY, VIZ. (I). M/S TRIMBLE SOLUTIONS INDIA PRIVATE LIMITED, WOS OF THE ASSESSEE COMPANY; AND (II). M/S DOWCOMAX SERVI CES INDIA LIMITED, HAD MERELY GRANTED TO THE SAID DISTRIBUTORS THE RIGHT TO DISTRIBUTE THE COPYRIGHTED ARTICLE (I.E SOFTWARE PRODUCTS) AND NOT THE COPYRIGHT IN THE SAID ARTICLE. IN FACT, WE FIND THAT THE ASSESSEE EXCLUSIVELY OWNED ALL THE INTELLECTUAL PROP ERTY RIGHTS (IPRS) IN RELATION TO THE SOFTWARE, VIZ. TRIMBLE SOFTWARE. AS PER THE RESPECTIVE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH ITS RESELLERS/DISTRIBUTORS, WE FIND, THAT THE DISTRIBUTORS DID NOT USE OR HAD ANY RIGHT TO USE THE COPYRIGHT IN T HE SOFTWARE PROGRAMME. IN OUR CONSIDERED VIEW AS THE SOFTWARE PROVIDED BY THE ASSESSEE TO ITS RESELLERS/DISTRIBUTORS WAS ONLY FOR THE PURPOSE OF RESALE/DISTRIBUTION TO THE END USER CUSTOMER FOR USE AS A COPYRIGHTED ARTICLE (I.E. SOFTWARE PRODUCT) WITH NO RIGHT TO USE THE COPYRIGHT EMBEDDED IN THE SOFTWARE, THEREFORE, IT CAN SAFELY OR RATHER INESCAPABLY BE CONCLUDED THAT THE PAYMENTS RECEIVED BY THE ASSESSEE FROM ITS DISTRIBUTORS WERE IN THE NATURE OF SALES REVENUE AND NOT ROYALTY. ON A PERUSAL OF THE RE SPECTIVE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH ITS RESELLERS/DISTRIBUTORS THE RIGHTS WHICH WERE VESTED WITH THEM CAN BRIEFLY BE CULLED OUT AS UNDER : THE DISTRIBUTORS WERE GRANTED A NON - EXCLUSIVE LICENSE TO MARKET AND DISTRIBUTE THE SOFTWARE PROD UCTS DEVELOPED BY THE ASSESSEE COMPANY; THE DISTRIBUTORS DID NOT HAVE A RIGHT TO THE SOURCE CODE OF SUCH SOFTWARE PRODUCTS; THE DISTRIBUTORS WERE NOT PERMITTED TO MODIFY, TRANSLATE OR RECOMPILE, ADD TO OR IN ANY WAY ALTER THE SOFTWARE PRODUCTS INCLUDING ITS DOCUMENTATION; THE DISTRIBUTORS WERE NOT PERMITTED TO CREATE THE SOURCE CODE OF THE SOFTWARE PRODUCTS SUPPLIED UNDER THE AGREEMENTS; THE DISTRIBUTORS WERE NOT EXPRESSLY PERMITTED TO REPRODUCE OR MAKE COPIES OF THE SOFTWARE PRODUCTS UNDER THE AGREEM ENTS (EXCEPT A BACKUP COPY AS REQUIRED BY THE CUSTOMER); ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 8 OF 11 THE DISTRIBUTORS WERE NOT VESTED WITH ANY RIGHT OF ANY NATURE IN THE INTELLECTUAL PROPERTY DEVELOPED AND OWNED BY THE ASSESSEE COMPANY IN THE SOFTWARE PRODUCTS; THAT ALL THE TRADEMARKS AND TRADE NA MES WHICH THE DISTRIBUTORS USED IN CONNECTION WITH THE PRODUCTS SUPPLIED, REMAINED THE EXCLUSIVE PROPERTY OF THE ASSESSEE COMPANY WHICH AT ALL TIMES HAD THE TITLE TO ALL RIGHTS TO INTELLECTUAL PROPERTY, SOFTWARE AND PROPRIETARY INFORMATION INCLUDING ALL CO MPONENTS, ADDITIONS, MODIFICATIONS AND UPDATES; AND THE DISTRIBUTORS DID NOT HAVE ANY AUTHORITY TO NEGOTIATE OR TO CONCLUDE CONTRACTS ON BEHALF OF THE ASSESSEE COMPANY, ACT AS ITS AGENT OR IN ANY WAY REPRESENT THE ASSESSEE SO AS TO BIND IT UNDER ANY TRANS ACTION. AS IS BORNE FROM THE RECORDS, THE SOFTWARE PROVIDED BY THE ASSESSEE TO ITS DISTRIBUTORS WAS FOR THE PURPOSE OF RESALE/DISTRIBUTION TO THE END USER CUSTOMERS AND THERE WAS NO RIGHT TO USE THE COPYRIGHT EMBEDDED IN THE SAID COPYRIGHTED ARTICLE (I.E SOFTWARE PRODUCTS). IN OUR CONSIDERED VIEW, AS THE ASSESSEE HAD ONLY GRANTED THE RIGHT TO DISTRIBUTE THE SOFTWARE PRODUCTS AND NOT ANY RIGHT TO REPRODUCE OR MAKE COPIES OF THE SOFTWARE PRODUCT, THEREFORE, IN THE ABSENCE OF VESTING OF ANY RIGHT OF COMMERCIA L EXPLOITATION OF THE INTELLECTUAL PROPERTY CONTAINED IN THE COPYRIGHTED ARTICLE (I.E SOFTWARE PRODUCTS) WITH THE TRANSFEREE, THE AMOUNTS RECEIVED BY THE ASSESSEE FROM ITS DISTRIBUTORS WAS CLEARLY IN THE NATURE OF SALES REVENUE AND COULD NOT BE HELD AS RO YALTY IN ITS HANDS. IN SUM AND SUBSTANCE, WE FIND THAT AS THE RIGHT ACQUIRED BY THE TRANSFEREE FROM THE SALE OF THE SOFTWARE WAS TO USE THE COPYRIGHTED ARTICLE (I.E. SOFTWARE PRODUCTS) AND NOT THE RIGHT TO USE THE COPYRIGHT EMBEDDED IN THE SOFTWARE, THE REFORE, THE PAYMENTS RECEIVED BY THE ASSESSEE FROM ITS DISTRIBUTORS COULD NOT BE STAMPED AS ROYALTY IN THE HANDS OF THE ASSESSEE. WE ALSO FIND SUBSTANCE IN THE CLAIM OF THE LD. A.R THAT AS PER THE COPYRIGHT ACT, A TRANSFER OF THE COPYRIGHTED ARTICLE (I.E . THE SOFTWARE PRODUCT) WHICH IS THE SUBJECT OF COPYRIGHT WOULD NOT NECESSARILY INVOLVE A TRANSFER OF THE COPYRIGHT. AS CAN BE GATHERED FROM A PERUSAL OF THE AGREEMENTS BETWEEN THE ASSESSEE AND ITS DISTRIBUTORS, THE RIGHTS ACQUIRED BY THE TRANSFEREE ON T HE SALE OF THE COPYRIGHTED ARTICLE (I.E SOFTWARE PRODUCTS) IS TO USE THE COPYRIGHTED ARTICLE AND NOT THE RIGHT TO USE THE COPYRIGHT EMBEDDED IN THE SOFTWARE. ON THE BASIS OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT AS THE SALE OF THE COPYRIGHTED ARTICLE (I.E. SOFTWARE PRODUCTS) BY THE ASSESSEE COMPANY CANNOT BE REGARDED AS A SALE OF COPYRIGHT IN THE SOFTWARE, THEREFORE, THE PAYMENTS RECEIVED BY THE ASSESSEE ON SUCH SALE OF SOFTWARE WOULD BE ITS BUSINESS INCOME AND CANNOT BE REGARDED AS ROYALTY INCOME UNDER THE PROVISIONS OF INDIA - FINLAND TAX TREATY. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENTS OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF DIT VS. INFRASOFT LTD. (2014) 264 CTR 329 (DEL). IN THE SAID JUDGMENT THE HONBLE HIGH COURT HAD OBSERVED THAT THE CONSIDERATION RECEIVED BY THE ASSESSEE ON GRANT OF LICENCES FOR USE OF SOFTWARE IS NOT TAXABLE AS ROYALTY WITHIN THE MEANING OF ARTICLE 12(3) OF THE DTAA BETWEEN INDIA AND THE USA. ALSO, THE ITAT, MUMBAI L BENCH IN DDIT VS. RELIANCE COMMUNICATIONS LTD. (2018) 52 CCH 292 (MUM) HAD IN ITS RECENT ORDER HELD, THAT AS THE PAYMENT MADE BY THE ASSESSEE WAS FOR ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 9 OF 11 COPYRIGHTED ARTICLE I.E SOFTWARE AND THERE WAS NO TRANSFER OF COPYRIGHT OF THE SOFTWARE IN ANY MANNER, THUS THE SAME DID NOT AMOUNT TO ROYALTY WITHIN THE DEFINITION OF ARTICLE 12/13(3) OF THE RESPECTIVE TAX TREATIES AND RESULTANTLY THE ASSESSEE REMAINED UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE WHILE MAKING THE REMITTANCES. 14. WE SHALL NOW ADVERT TO THE OBSERVATIONS OF T HE A.O/DRP, WHEREIN THEY HAD THROUGH ARTICLE 3(2) OF THE INDIA - FINLAND TAX TREATY TRIED TO READ THE EXPLANATION 4, EXPLANATION 5 AND EXPLANATION 6 TO SEC. 9(1)(VI) AS HAD BEEN MADE AVAILABLE IN THE INCOME - TAX ACT, 1961 BY THE LEGISLATURE VIDE THE FIN ANCE ACT, 2012 W.E.F 01/04/1976, INTO THE DEFINITION OF ROYALTY CONTEMPLATED IN ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY. WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE AFORESAID VIEW OF THE LOWER AUTHORITIES. ARTICLE 3(2) OF THE INDIAFINLAND TAX TREATY PROVIDES THAT AS REGARDS THE APPLICATION OF THE AGREEMENT AT ANY TIME BY A CONTRACTING STATE ANY TERM NOT DEFINED THEREIN SHALL, UNLESS THE CONTEXT OTHERWISE REQUIRES, HAVE THE MEANING THAT IT HAS AT THAT TIME UNDER THE LAW OF THAT STATE FOR THE PURPOSES OF THE TAXES TO WHICH THE AGREEMENT APPLIES. AS SUCH, IF A PARTICULAR TERM HAS BEEN SPECIFICALLY DEFINED IN THE TAX TREATY, THEN THE AMENDMENT TO THE DEFINITION OF SUCH TERM UNDER THE ACT WOULD HAVE NO BEARING ON THE DEFINITION OF SUCH TERM IN TH E CONTEXT OF THE CONVENTION, UNLESS THE TAX TREATY IS ALSO CORRESPONDINGLY AMENDED. IN OUR CONSIDERED VIEW, A COUNTRY WHICH IS A PARTY TO THE TAX TREATY CANNOT UNILATERALLY ALTER ITS PROVISIONS. IN FACT, AN AMENDMENT TO THE PROVISION OF THE TREATY CAN BE M ADE BILATERALLY AFTER ENTERTAINING DELIBERATIONS FROM BOTH THE COUNTRIES WHO SIGNED IT. ACCORDINGLY, IF THERE IS NO AMENDMENT TO THE PROVISIONS OF THE TAX TREATY BUT THERE IS SOME AMENDMENT ADVERSE TO THE ASSESSEE IN THE ACT, WHICH PROVISION HAS BEEN SPECI FICALLY DEFINED IN THE TAX TREATY OR THERE IS NO REFERENCE IN THE TAX TREATY TO THE ADOPTION OF SUCH PROVISION FROM THE ACT, THEN SUCH AMENDMENT WILL HAVE NO EFFECT ON THE TAX TREATY. ON A PERUSAL OF THE INDIA - FINLAND TAX TREATY, WE FIND, THAT THE TERM RO YALTY HAS BEEN DEFINED IN ARTICLE 12(3)(A). SUCH DEFINITION OF THE TERM ROYALTY AS PER THE SAID ARTICLE IS EXHAUSTIVE. WE FIND THAT PURSUANT TO THE INSERTION OF EXPLANATION 4, EXPLANATION 5 AND EXPLANATION 6 BY THE FINANCE ACT, 2012 W.E.F 01/04/1976, NO CORRESPONDING AMENDMENT HAS BEEN MADE IN THE INDIA - FINLAND TAX TREATY TO BRING THE DEFINITION OF ROYALTY THEREIN ENVISAGED AT PAR WITH THAT PROVIDED UNDER SEC. 9(1)(VI) OF THE ACT. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE RETROSPECTIVE INSERT ION OF EXPLANATION 4, EXPLANATION 5 AND EXPLANATION 6 TO SEC. 9(1)(VI) OF THE ACT AS HAD BEEN MADE AVAILABLE ON THE STATUTE BY THE FINANCE ACT, 2012 W.R.E.F 01/06/1976 CANNOT BE READ INTO THE INDIA - FINLAND TAX TREATY. OUR AFORESAID VIEW IS FORTIFIED BY THE JUDGMENT OF THE HONBLE HIGH COURT OF DELHI IN DIT VS. NEW SKIES SATELLITE BV (2016) 382 ITR 114 (DEL). IN THE SAID CASE IT WAS OBSERVED BY THE HONBLE HIGH COURT THAT NO AMENDMENT TO THE ACT, WHETHER RETROSPECTIVE OR PROSPECTIVE CAN BE READ IN A MANNER S O AS TO EXTEND ITS OPERATION TO THE TERMS OF AN INTERNATIONAL TREATY. FURTHER, IT WAS OBSERVED THAT CLARIFICATORY OR DECLARATORY AMENDMENT, MUCH LESS ONE WHICH MAY SEEK TO OVERCOME AN UNWELCOME JUDICIAL INTERPRETATION OF LAW, CANNOT BE ALLOWED TO HAVE THE SAME ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 10 OF 11 RETROACTIVE EFFECT ON AN INTERNATIONAL INSTRUMENT EFFECTED BETWEEN TWO SOVEREIGN STATES PRIOR TO SUCH AMENDMENT. ALSO, SIMILAR VIEW HAD BEEN TAKEN BY A COORDINATE BENCH OF THE ITAT MUMBAI I BENCH, MUMBAI IN THE ACIT (IT) - 4(1)(1), MUMBAI VS. RELIANC E JIO INFOCOMM LTD. [ITA NO. 6331 TO 6334/MUM/2018, DATED 15/11/2019] AND THE ITAT DELHI BENCH B IN DATAMINE INTERNATIONAL LTD. VS. ADDL. DIT, RANGE 1, INTERNATIONAL TAXATION, NEW DELHI [2016] 158 ITD 84 (DELHI). IN THE BACKDROP OF OUR AFORESAID DELIBERA TIONS, WE ARE UNABLE TO PERSUADE OURSELVES TO SUBSCRIBE TO THE VIEW TAKEN BY THE LOWER AUTHORITIES THAT EXPLANATION 4, EXPLANATION 5 AND EXPLANATION 6 TO SEC. 9(1)(VI) AS HAD BEEN MADE AVAILABLE IN THE INCOME - TAX ACT, 1961 BY THE LEGISLATURE VIDE THE FINANCE ACT, 2012 W.R.E.F 01/06/1976, ARE TO BE READ INTO THE DEFINITION OF ROYALTY AS ENVISAGED IN ARTICLE 12 OF THE INDIAFINLAND TAX TREATY. 15. AS OBSERVED BY US HEREINABOVE, THE ASSESSEE IN ADDITION TO DISTRIBUTION OF SOFTWARE PRODUCTS IN INDIA HA D ALSO PROVIDED SOFTWARE UPGRADES, MAINTENANCE AND SUPPORT SERVICES WITH REGARD TO ITS SOFTWARE TO THE DISTRIBUTORS, WHO IN TURN PROVIDED THE SAME TO THE END USER CUSTOMERS WHO HAD ENTERED INTO A MAINTENANCE AGREEMENT WITH THE DISTRIBUTORS. THE ASSESSEE DU RING THE YEAR HAD RECEIVED AN AMOUNT OF RS.2,22,46,237/ - FROM ITS DISTRIBUTORS TOWARDS MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES). ON A PERUSAL OF THE RECORDS, WE FIND, THAT THE ASSESSEE WOULD GRANT TO ITS DISTRIBUTORS A RIGHT OF NEW OFFICIAL SU B - RELEASE I.E A MODIFICATION TO A LICENSED SOFTWARE PRODUCT WHICH WOULD INCORPORATE THE CORRECTNESS AND PROVIDE A FUNCTIONAL OR PERFORMANCE IMPROVEMENT. ALSO, THE ASSESSEE WOULD GRANT TO ITS DISTRIBUTORS A RIGHT OF NEW OFFICIAL MAIN RELEASE I.E AN UPDATE T O THE EXISTING SOFTWARE PRODUCT WITH ENHANCED FEATURES, WHICH THE CUSTOMERS WOULD PREFER INSTEAD OF BUYING NEW LICENSED SOFTWARE. ACCORDINGLY, THE END USER CUSTOMERS BY ENTERING INTO A MAINTENANCE AGREEMENT COULD ACCESS AND DOWNLOAD THE UPDATES OFFERED BY THE ASSESSEE. AS THE PAYMENTS RECEIVED BY THE ASSESSEE TOWARDS DISTRIBUTION OF SUB - RELEASES AND MAIN RELEASES WERE ALSO FOR A RIGHT TO PROVIDE A COPYRIGHTED ARTICLE I.E SOFTWARE UPDATES, WHICH WAS AKIN TO THE AMOUNTS RECEIVED FOR DISTRIBUTION OF THE SPECIA LIZED OFF - THE - SHELF SOFTWARE PRODUCTS, AND NOT FOR ANY RIGHT TO USE THE COPYRIGHT EMBEDDED IN THE SAID COPYRIGHTED ARTICLE (I.E SOFTWARE PRODUCTS), THEREFORE, THE SAME TOO IN OUR CONSIDERED VIEW CANNOT BE CONSTRUED AS ROYALTY INCOME, AND WOULD BE THE BU SINESS INCOME OF THE ASSESSEE. ON A SIMILAR FOOTING, WE FIND, THAT AS PER THE DISTRIBUTORS AGREEMENTS, IT WAS THE RESPONSIBILITY OF THE DISTRIBUTORS TO RESOLVE THE END USER CUSTOMERS QUERIES. IN CASE, THE DISTRIBUTORS WOULD REQUIRE ASSISTANCE ON ISSUES AS REGARDS FUNCTIONALITIES, TROUBLE SHOOTING AND VERIFYING ERROR SITUATIONS, THE ASSESSEE WOULD PROVIDE THE SAME. THE AFORESAID QUERIES WOULD BE RESOLVED VIA E - MAILS OR TELEPHONE CALLS BY THE EMPLOYEES OF THE ASSESSEE BASED IN FINLAND. IN OUR CONSIDERED VIEW , AS THE PAYMENTS RECEIVED BY THE ASSESSEE FROM RENDERING OF THE MAINTENANCE AND SUPPORT SERVICES DOES NOT FALL WITHIN THE SCOPE AND GAMUT OF THE DEFINITION OF ROYALTY IN ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY, THEREFORE, THE PAYMENTS RECEIVED BY THE ASSESSEE FOR PROVIDING SUCH SUPPORT SERVICES CANNOT BE HELD AS ROYALTY IN THE HANDS OF THE ASSESSEE. ITA NO. 5340 /MUM/2019 ASSESSMENT YEAR: 2011 - 1 2 PAGE 11 OF 11 16. IN TERMS OF OUR AFORESAID OBSERVATIONS, WE ARE OF THE CONSIDERED VIEW THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM ITS DISTRIBUTORS FOR SALE OF SP ECIALIZED SOFTWARE AND MAINTENANCE AND SUPPORT SERVICES (INCLUDING UPGRADES) CANNOT BE HELD AS BEING IN THE NATURE OF ROYALTY AS PER ARTICLE 12 OF THE INDIA - FINLAND TAX TREATY. 5.2 SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2013 - 14 AND 2014 - 15. FACTS BEING IDENTICAL, WE RESPECTFULLY FOLLOW THE ABOVE ORDERS OF THE CO - ORDINATE BENCH IN ASSESSEES OWN CASE FOR AYS 2010 - 11, 2011 - 12, 2013 - 14 AND 2014 - 15. ACCORDINGLY, WE ALLOW THE 2ND, 3RD, 4TH AND 5TH GROUNDS OF APPEAL. 6. THE LD. COUNSEL SUBMITS THAT THE ASSESSEE WOULD NOT PRESS THE 6TH AND 7TH GROUNDS OF APPEAL. ACCORDINGLY, THE 6TH AND 7TH GROUNDS OF APPEAL ARE DISMISSED AS NOT PRESSED. THE 8TH AND 9TH GROUNDS OF APPEAL BEING CHARGING OF INTEREST U/S 234A AND 234B AR E CONSEQUENTIAL IN NATURE. AS THE PENALTY HAS BEEN INITIATED ONLY, THE 10TH GROUND OF APPEAL IS PREMATURE. 7. IN THE RESULT, THE APPEAL IS PARTY ALLOWED. 4 . WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THEN THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE PLEA OF THE ASSESSEE IN THE TERMS INDICATED ABOVE. 5. IN THE RESULT, THE APPEAL IS ALLOWED IN THE ABOVE TERMS . PRONOUNCED I N THE OPEN COURT TODAY ON THE 1 8 TH DAY OF JANUARY, 2021. S D / - S D / - SAKTIJIT DEY PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT) MUMBAI, DATED THE 1 8 TH DAY OF JANUARY, 2021 N.V, SR.PS COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI