Appeal details
Counselvise Citation
[2017] 128 COUNSELVISE.COM (IT) 8425 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 5 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-02-2017
Appeal Filed By
Department
Bench Allotted
L
Next Hearing Date
07-04-2016
Assessment Year
2009-2010
Appeal Filed On
05-09-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & C.N. PRASAD (JM) I.T.A. NO. 5606 /MUM/20 12 (ASSESSMENT YEAR 20 09 - 10 ) ACIT (IT) - 2(2) SCINDIA HOUSE BALLARD PIER N.M.ROAD MUMBAI - 400 038. VS. M/S. UFIS AIRPORT SOLUT IONS PTE LTD. C/O. SUDIT K. PAREKH & CO. BALLARD HOUSE 2 ND FLOOR, ADI MARZBAN PATH BALLARD PIER, FORT MUMBAI - 400 001. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABCU2329Q ASSESSEE BY SHRI VIJAY MEHTA DEPARTMENT BY S HRI M.V. RAJGURU DATE OF HEARING 3 . 2 . 201 7 DATE OF PRONOUNCEMENT 17 . 2 . 201 7 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 12.6.2012 PASSED BY THE LEARNED CIT(A) - 11, MUMBAI AND IT RELATES TO A.Y. 2009 - 10. 2. THE SOLITARY ISS UE URGED IN THIS APPEAL IS WHETHER THE LEARNED CIT(A) WAS JUSTIFIED IN HOLDING THAT THE PAYMENT RECEIVED BY THE ASSESSEE FOR SUPPLY OF SOFTWARE WAS NOT IN THE NATURE OF ROYALTY AND HENCE NOT LIABLE FOR TAXATION IN INDIA. 3. WE HAVE HEARD THE PARTIES AND P ERUSED THE RECORD. THE ASSESSEE - COMPANY IS INCORPORATED UNDER THE LAWS OF SINGAPORE AND TAX RESIDENT OF SINGAPORE. IT IS ENGAGED IN THE BUSINESS OF SUPPLY OF SOFTWARE FOR AIRPORT SECTOR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD AIRPORT IT SYS TEM SOFTWARE TO M/S. SIEMENS INFORMATION SYSTEMS LTD. (SISL), AN INDIAN COMPANY UFIS AIRPORT SOLUTIONS PTE LTD. 2 FOR A SUM OF EURO 4,10,000 (EQUIVALENT TO ` 2.76 CRORES). THE ASSESSING OFFICER TOOK THE VIEW THAT THE PAYMENT RECEIVED BY THE ASSESSEE FOR SUPPLY OF SOFTWARE IS ROYALTY AS PER ARTICLE 12 OF INDO - SINGAPORE TREATY AND ACCORDINGLY ASSESS ED THE SAME. THE LEARNED CIT(A), BY FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF DIT(IT) VS. M/S. ERICSSON A.B. (ITA NO. 504/MUM/2007 DATED 23.12.2011 ) (343 ITR 470) AND ALSO DECISION RENDERED BY THE COORDINATE BENCH OF THE ITAT IN THE CASE OF DDIT(IT) VS. M/S. SOLID WORKS CORPORATION (ITA NO.3219/MUM/ 2010) HELD THAT THE PROFIT DERIVED FROM SALE OF SOFTWARE WOULD FALL UNDER THE HEAD BUSINESS PROFIT AND NOT ROYALTY . THE LEARNED CIT(A) FURTHER HELD THAT BUSINESS PROFIT IS NOT TAXABLE IN INDIA AS THE ASSESSEE DID NOT HAVE PERMANENT ESTA BLISHMENT IN INDIA. ACCORDINGLY HE ALLOWED THE APPEAL FILED BY THE ASSESSEE. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. LEARNED AR PLACED RELIANCE ON THE DECISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF DDIT VS. RELIANCE INDUSTRIES LTD. (ITA NO. 1980 AND ORS./MUM/2008 DATED 18.5.2016) AND ALSO DECISION RENDERED BY HON'BLE DELHI HIGH COURT IN THE CASE OF DIT VS. INFRASOFT LTD. (264 CTR 329) AND SUBMITTED THAT THE VIEW TAKEN BY HON'BLE DELHI HIGH COURT IN THE CASE OF ERICSSON A.B. (SUPRA) HAS BEEN FOLLOWED IN THE ABOVE TWO CASES AND ACCORDINGLY HE SUBMITTED THAT THE DECISION TAKEN BY THE LEARNED CIT(A) DOES NOT CAL L FOR ANY INTERFERENCE. 5. LEARNED AR ALSO FURNISHED COP IES OF INVOICE S RAISED BY THE ASSESSEE ON SISL AND SUBMITTED THAT THE SOFTWARE SUPPLIED BY THE ASSESSEE FALLS IN THE CATEGORY OF SHRINK WRAPPED SOFTWARE AND BUYER DOES NOT HAVE RIGHT TO ACCESS TO T HE SOURCE CODE. 6. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO LT D . (345 ITR 494) IS IN FAVOUR OF THE REVENUE . UFIS AIRPORT SOLUTIONS PTE LTD. 3 7. HAVING REGARD TO THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE DECISION RENDERED BY THE LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE AS HE HAS FOLLOWED THE DECISION RENDERED BY HON'BLE DELHI HIG H COURT IN THE CASE OF ERICSSON A.B. (SUPRA). WE FURTHER NOTICED THAT HON'BLE DELHI HIGH COURT HAS REAFFIRMED ITS VIEW IN THE SUBSEQUENT DECISION RENDERED IN THE CASE OF INFRASOFT LTD. (SUPRA). THE CO - ORDINATE BENCH OF TRIBUNAL HAS CONSIDERED THE DECISION S RENDERED BY HONBLE KARNATAKA HIGH COURT AND HONBLE DELHI HIGH COURT AND HELD THAT THE PURCHASE OF SHRINK WRAPPED SOFTWARE WOULD NOT RESULT IN PAYMENT TOWARDS ROYALTY. IN VIEW OF THE ABOVE, WE AFFIRM THE ORDER PASSED BY THE LEARNED CIT(A). 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 17 . 2 .201 7. SD/ - SD/ - (C.N. PRASAD ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 17 / 2 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI
