Wipro Limited, BANGALORE V. Deputy Commissioner of Income Tax, International Taxation- Circle -2(1), Bangalore

ITA 581/BANG/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4903 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-10-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 22-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SRINIVASAN P V
• Keywords: Depreciation; Double taxation relief; Bonafide belief; Retrospective amendment; Permanent establishment; Non-deduction of tax; Revenue expenditure; TDS; Set aside
• Section: 40(a)(ia); 201(1); 80P; 195; 194J; 13

Judgement Text

ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 581/BANG/2019 ASSESSMENT YEAR: 2010-11 WIPRO LIMITED 76R AND 80P DODDAKANNELLI SARJAPUR ROAD BANGALORE-560 035 PAN NO : AAACW0387R VS. DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2(1) BANGALORE APPELLANT RESPONDENT APPELLANT BY : SHRI SRINIVASAN, P.V., A.R. RESPONDENT BY : SHRI PRADEEP KUMAR, D.R. DATE OF H EARING : 14.10.2020 DATE OF PRONOUNCEMENT : 15.10.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 03-05-2017 PASSED BY LD CIT(A)-12, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2010-11. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE DEMAND RAISED U/S 20 1(1) AND 201(1A) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] BY THE AO TREATING THE ASSESSEE AS AN ASSESSEE IN DEFAULT. 2. THE FACTS RELATING TO THE ISSUE ARE DISCUSSE D IN BRIEF. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR U NDER CONSIDERATION, THE ASSESSEE HAS PAID A SUM OF RS.6, 39,09,422/- ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 2 OF 13 TOWARDS SUBSCRIPTION CHARGES TO M/S GARTNER GROUP. IT IS NOTICED THAT M/S GARTNER GROUP IS ENGAGED IN THE BUSINESS O F GENERATING RESEARCH PRODUCTS, WHICH INCLUDE QUALITATIVE RESEAR CH AND ANALYSIS. THE SAID PRODUCTS ARE USEFUL FOR THE INFORMATION TE CHNOLOGY COMPANIES IN THEIR BUSINESS. M/S GARTNER GROUP ISS UES LICENSES FOR USING ITS DATA BASE. THE ASSESSEE HAS SUBSCRIBED T HE LICENSE AND ACCORDINGLY, IT HAS MADE THE ABOVE SAID PAYMENT TO M/S GARTNER GROUP. 3. THE AO TOOK THE VIEW THAT THE PAYMENT SO MAD E BY THE ASSESSEE FOR GETTING THE LICENSE TO USE DATA BASE OF M/S GAR TNER GROUP IS IN THE NATURE OF ROYALTY. IN THIS REGARD, THE AO TOOK SUP PORT OF THE DECISION RENDERED BY HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF CIT VS. INFOSYS TECHNOLOGIES LTD (ORDER DATED 15-10-2011 IN ITA NO.2988 OF 2005 ALONG WITH THE DECISION RENDERED IN THE CASE O F CIT VS. SAMSUNG ELECTRONICS CO LTD (2012)(345 ITR 494)), WHEREIN IT WAS HELD BY HON'BLE JURISDICTIONAL HIGH COURT THAT THE PAYMENTS MADE TO GARTNER GROUP TOWARDS SUBSCRIPTION CHARGES TO ACCESS DATA B ASE AND RESEARCH PRODUCTS IS IN THE NATURE OF ROYALTY BOTH UNDER THE PROVISIONS OF INCOME TAX ACT AND DTAA. ACCORDINGLY, THE AO HELD THAT THE ASSESSEE IS AN ASSESSEE IN DEFAULT IN VIEW OF THE FAILURE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS SO MADE. ACCORDINGLY, HE RAISED DEMAND OF RS.2,02,41,711/- U/S 201(1) OF THE ACT AND INTEREST DEMAND OF RS.1,94,32,043/- U/S 201(1A) OF THE ACT. THE LD CI T(A) ALSO CONFIRMED THE SAME. 4. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS BEEN MAKING IDENTICAL PAYMENTS YEAR AFTER YEAR. THE AO HAD RAI SED DEMAND U/S 201(1) AND 201(1A) OF THE ACT IN THE EARLIER YEARS ALSO AND THE SAME WAS CHALLENGED BY THE ASSESSEE IN AY 2001-02, 2002- 03 AND 2003- 04 BY FILING APPEALS BEFORE THE TRIBUNAL. HE SUBMI TTED THAT THE CO- ORDINATE BENCH, VIDE ITS ORDER DATED 30-12-2004 PAS SED IN ITA ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 3 OF 13 NO.152 TO 154/BANG/2004 (2005)(278 ITR (AT) 57)(BAN G.), HAS HELD THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SO URCE FROM THE PAYMENTS MADE TO M/S GARTNER GROUP IS NOT LIABLE FO R TAXATION IN INDIA AND HENCE THE ASSESSEE IS NOT LIABLE TO DEDUC T TAX AT SOURCE FROM THE PAYMENTS MADE TO M/S GARTNER GROUP U/S 195 OF THE ACT. ACCORDINGLY, THE TRIBUNAL HAS CANCELLED THE DEMAND RAISED U/S 201(1) AND 201(1A) IN THE ABOVE SAID YEARS. HENCE THE ASSESSEE, BACKED BY THE ORDER OF THE TRIBUNAL, WAS UNDER BONA FIDE BELIEF THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE TO GARTNER GROUP. 5. HE SUBMITTED THAT THE REVENUE CHALLENGED T HE ABOVE SAID DECISION RENDERED BY ITAT BY FILING APPEAL BEFORE T HE HON'BLE HIGH COURT OF KARNATAKA. THE JURISDICTIONAL HIGH COURT , VIDE ITS ORDER DATED OCTOBER 15, 2011 PASSED IN (2013) (355 ITR 28 4) (KAR), REVERSED THE DECISION OF THE TRIBUNAL AND HELD THAT THE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE FROM THE PAYMENT MAD E TO GARTNER GROUP. HE SUBMITTED THAT THE HON'BLE HIGH COURT HA S FOLLOWED THE DECISION RENDERED IN THE CASE OF CIT VS. M/S SAMSUN G ELECTRONICS CO. LTD (ITA NO.2808 OF 2005) (2012) (345 ITR 494) (KAR) AND HELD THAT THE PAYMENTS MADE TO M/S GARTNER GROUP TOWARDS SUBSCRIPTION CHARGES IS IN THE NATURE OF ROYALTY. THE HON'BLE H IGH COURT ALSO MADE A REFERENCE TO ITA NO.2988 OF 2005, WHICH IS A CASE PERTAINING TO M/S INFOSYS TECHNOLOGIES LTD AND THE SAID CASE WAS ALSO DISPOSED OF ALONG WITH M/S SAMSUNG ELECTRONICS CO. LTD (SUPRA). 6. THE LD A.R SUBMITTED THAT THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT IT IS NOT LIABLE TO DEDUCT TAX AT SOURC E FROM THE PAYMENTS MADE TO M/S GARTNER GROUP TOWARDS SUBSCRIPTION CHAR GES ON THE BASIS OF DECISION RENDERED BY CO-ORDINATE BENCH IN THE ASSESSEES OWN CASE. HOWEVER, THE LAW WAS CLARIFIED BY THE HON'B LE HIGH COURT BY ITS ORDER PASSED ON 15-10-2011. ACCORDINGLY, HE SU BMITTED THAT THE ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 4 OF 13 ASSESSEE SHOULD NOT BE TREATED AS AN ASSESSEE IN DE FAULT ATLEAST UPTO 15-10-2011, WHEN THE LAW WAS CLARIFIED BY HON'BLE J URISDICTIONAL HIGH COURT, IN VIEW OF THE BONAFIDE BELIEF ENTERTAI NED BY THE ASSESSEE ON THE BASIS OF DECISION RENDERED BY THE CO-ORDINAT E BENCH OF TRIBUNAL. HE SUBMITTED THAT AN IDENTICAL ISSUE WAS EXAMINED BY THE CO-ORDINATE BENCH IN THE CASE OF M/S ACER INDIA PRI VATE LIMITED VS. DCIT IN IT(IT)A NOS.107 TO 114/BANG/2018 DATED 5.10 .2020 AND IT WAS DECIDED IN FAVOUR OF THE ASSESSEE. 7. THE LD D.R, ON THE CONTRARY, SUBMITTED THAT T HERE IS NO DISPUTE THAT THE IMPUGNED PAYMENTS CONSTITUTE ROYALTY IN TH E HANDS OF THE ASSESSEE AND HENCE THE ASSESSEE SHOULD HAVE DEDUCTE D TAX AT SOURCE FROM THE ABOVE SAID PAYMENT. ACCORDINGLY, HE SUPPO RTED THE ORDER PASSED BY LD CIT(A). 8. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE CO-ORDINATE BENCH HAS EXAMINED AN IDENTICAL ISSUE I N THE CASE OF M/S ACER INDIA PRIVATE LIMITED (SUPRA) AND IT WAS DECID ED AS UNDER:- 4. THE LD A.R FURTHER SUBMITTED THAT HONBLE KARNATAKA HIGH COURT HAS RENDERED ITS DECISION HOLDING THAT THE PAYMENTS MAD E FOR PURCHASE OF LICENSE TO USE SOFTWARE IN THE CASE OF SAMSUNG ELECTRONICS CO LTD (SUPRA) ON 15.10.2011. PRIOR TO THE SAID DECISION OF JURISDICTIONAL HIGH COURT, THERE WERE DECISIONS HOLDING THAT THE PAYMENTS FOR SOFTWARE LICENSES DO NOT CONSTITUT E ROYALTY. ONE SUCH DECISION IS THE DECISION RENDERED BY THE TRIBUNAL IN THE CASE O F SONATA INFORMATION TECHNOLOGY LTD VS. ACIT (103 ITD 324). THE LD A.R SUBMITTED THAT THE PROCEEDINGS UNDER CONSIDERATION RELATED TO FAILURE TO DEDUCT TAX AT S OURCE AND THE ASSESSEE DID NOT DEDUCT TAX AT SOURCE UNDER BONAFIDE BELIEF, SINCE T HERE WERE DECISIONS HOLDING THAT NO TDS IS REQUIRED TO BE MADE FOR PAYMENTS MADE FOR PURCHASE OF SOFTWARE. HE SUBMITTED THAT THE COURTS HAVE HELD THAT THE LIABIL ITY TO DEDUCT TAX AT SOURCE CANNOT BE FASTENED ON THE BASIS OF RETROSPECTIVE AMENDMENT TO THE ACT OR A SUBSEQUENT RULING OF A COURT. HE SUBMITTED THAT, IN THE FOLLOWING CA SES, THE TRIBUNAL HAS HELD THAT THE ASSESSEE CANNOT BE FASTENED WITH THE TDS LIABILITY ON ACCOUNT OF SUBSEQUENT AMENDMENT OR SUBSEQUENT RULING OF THE COURT AND ACC ORDINGLY DISALLOWANCE MADE U/S 40(A)(I) OF THE ACT WAS DELETED. (A) TEEKAYS INTERIOR SOLUTIONS P LTD (ITA NO.400/ BANG/2017) (B) INFINEON TECHNOLOGIES INDIA P LTD (IT(TP)A NO .405/BANG/2015) (C) GE MEDICAL SYSTEMS INDIA P LTD (ITA 1368/BANG /2019) (D) WS ATKINS INDIA P LTD (2015)(41 ITR(T) 397)(B ANG. TRIB) ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 5 OF 13 THE LD A.R SUBMITTED THAT THE DECISION OF JURISDICT IONAL HIGH COURT WAS RENDERED ON 15.10.2011. ACCORDINGLY HE SUBMITTED THAT THE A SSESSEE SHOULD NOT BE FASTENED WITH THE TDS LIABILITY FOR THE PAYMENTS MADE PRIOR TO 15.10.2011. ACCORDINGLY HE PRAYED THAT THE DEMAND RAISED U/S 201(1) AND 201(1A ) FOR THE PAYMENTS MADE PRIOR TO 15.10.2011 BE DELETED. 5. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE CO-ORDINATE BENCH HAS EXAMINED THE ISSUE OF MAKING DISALLOWANCE U/S 40(A)(I) OF THE ACT FOR NON- DEDUCTION OF TAX AT SOURCE ON THE BASIS OF SUBSEQUE NT AMENDMENT/DECISION OF HIGH COURT IN THE CASE OF INFINEON TECHNOLOGIES INDIA P LTD (SUPRA). FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVAT IONS MADE BY THE CO-ORDINATE BENCH IN THE ABOVE CITED CASE:- 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE PAYMENT IN QUESTION WAS MADE TO THE NON-RESIDENT IN THE PREVIO US YEAR RELEVANT TO AY. 10-11. THEREFORE THE LAW AS ON 31.3.2010 THE LAST D ATE OF THE PREVIOUS YEAR WAS THAT PAYMENT FOR PURCHASE OF OFF SHELF SOFTWARE WAS NOT IN THE NATURE OF ROYALTY. IN SONATA INFORMATION TECHNOLOGY LTD. V. A CIT (103 ITD 324) DECISION RENDERED ON 31.1.2006, IT WAS HELD THAT PA YMENTS FOR SOFTWARE LICENSES DO NOT CONSTITUTE ROYALTY UNDER THE PROVIS IONS OF THE ACT AND HENCE DISALLOWANCE UNDER SECTION40(A) (IA) OF THE ACT WOU LD NOT BE APPLICABLE. THE CHANGE IN THE LEGAL POSITION ON TAXATION OF COMPUTE R SOFTWARE WAS ON ACCOUNT OF THE RULING OF THE KARNATAKA HIGH COURT IN CIT V. SAMSUNG ELECTRONICS CO. LTD . (320 ITR 209), WHICH WAS PRONOUNCED ON 15.10.11 T HAT IS MUCH LATER THAN THE CLOSURE OF THE FY 2010-11. SUBSEQUENTLY, T HE FINANCE ACT 2012 ALSO INTRODUCED, RETROSPECTIVELY, EXPLANATION 4 TO SECTION 9 (1 (VI) OF THE ACT TO CLARIFY THAT PAYMENTS FOR, INTER ALIA. LICENSE TO U SE COMPUTER SOFTWARE WOULD QUALIFY AS ROYALTY. DURING THE FY 10-11, THE ASSESS EE DID NOT HAVE THE BENEFIT OF CLARIFICATION BROUGHT BY THE RESPECTIVE AMENDMEN T. AS SUCH, FOR THE FY 2010-11, IN LIGHT OF THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT READ WITH JUDICIAL GUIDANCE ON THE TAXATION OF COMPUTER SOFTW ARE PAYMENTS, TAX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. GIVEN THE PR ACTICE IN PRIOR ASSESSMENT YEARS, THE ASSESSEE WAS OF THE BONA FIDE VIEW THAT THE PAYMENT OF SOFTWARE LICENSE FEE WAS NOT SUBJECT TO TAX DEDUCTION AT SOU RCE UNDER SECTION1941/195 OF THE ACT. LIABILITY TO DEDUCT TAX AT SOURCE CANNO T BE FASTENED ON THE ASSESSEE ON THE BASIS OF RETROSPECTIVE AMENDMENT TO THE ACT (FINANCE ACT 2012 AMENDMENT THE DEFINITION OF ROYALTY WITH RETROSPECT IVE EFFECT FROM 01.04.1976) OR A SUBSEQUENT RULING OF A COURT (THE KARNATAKA HC IT(TP)A NOS.405 & 474/BANG/2015 IN CIT V SAMSUNG ELECTRONIC S CO. LTD. (16 TAXMANN.COM 141) WAS PASSED ON OCTOBER 15,2011). CO URTS HAVE CONSISTENTLY UPHELD THIS PRINCIPLE AS SEEN IN: ITO V. CLEAR WATER TECHNOLOGY SERVICES (P .) LTD. (52 TAXMANN.COM 115) KERALA VISION LTD. V. ACIT (46 TAXMANN.COM 50) SONIC BIOCHEM EXTRACTIONS (P.) LTD. V. ITO (35 TAXMANN.COM 463) CHANNEL GUIDE INDIA LTD. V. ACIT (25 TAXMANN.COM 2 5) ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 6 OF 13 DCI V. VIROLA INTERNATIONAL (20 14(2) TMI 653) CIT V. KOTAK SECURITIES LTD . (20 TAXMANN.COM 846). 26. THE ABOVE DECISIONS HAVE BEEN CONSIDERED AND DI SCUSSED IN THE CASE OF INGERSOLL RAND (INDIA) LTD. (SUPRA) BY THE BANGALOR E BENCH OF THE ITAT AND IT WAS HELD THEREIN THAT PRIOR TO THE DECISION OF H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. SAMSUNG ELECTRONICS CO. LTD . (SUPRA) WHICH WAS PASSED ON 15.10.2011 TRANSACTIONS CARRIED OUT ON PU RCHASE OF OFF THE SHELF SOFTWARE ARE NOT LIABLE TO TDS AND HENCE THERE CAN BE NO DISALLOWANCE U/S.40(A)(IA) OF THE ACT BASED ON SUBSEQUENT DEVELO PMENT OF LAW AFTER THE DATE ON WHICH PAYMENTS ARE MADE. 27. WE ARE OF THE VIEW THAT IN THE LIGHT OF LAW AS LAID DOWN BY THIS TRIBUNAL IN THE CASE OF INGERSOLL RAND (I) LTD. (SUPRA), THE RE CANNOT BE A RETROSPECTIVE OBLIGATION TO DEDUCT TAX AT SOURCE AND THEREFORE AS ON THE DATE WHEN THE ASSESSEE MADE PAYMENTS TO THE NON-RESIDENT FOR ACQU IRING OFF-THE-SHELF SOFTWARE CANNOT BE REGARDED AS IN THE NATURE OF ROY ALTY AND THEREFORE THERE WAS NO OBLIGATION ON THE PART OF ASSESSEE TO DEDUCT TAX AT SOURCE. THE PAYMENT WOULD BE IN THE NATURE OF BUSINESS PROFITS IN THE HANDS OF NON- RESIDENT AND SINCE ADMITTEDLY THE NON-RESIDENT DOES NOT HAVE A PERMANENT ESTABLISHMENT IN INDIA, THE SUM IN QUESTION IS NOT CHARGEABLE TO TAX IN THE HANDS OF NON-RESIDENT. CONSEQUENTLY, THE DISALLOWAN CE MADE IT(TP)A NOS.405 & 474/BANG/2015 U/S. 40(A)(IA) OF THE ACT H AS TO BE DELETED. WE DIRECT ACCORDINGLY. GROUND NO.14 BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 6. IN THE CASE OF M/S TEEKAYS INTERIOR SOLUTIONS PVT LTD (SUPRA), THE CO-ORDINATE HAS CONSIDERED THE ISSUE OF MAKING DISALLOWANCE U/S 40(A)(IA) OF THE ACT ON THE BASIS OF SUBSEQUENT DECISION RENDERED BY HONBLE KARNATAK A HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS CO LTD (SUPRA). THE DECISION R ENDERED BY THE CO-ORDINATE BENCH IS EXTRACTED BELOW:- 9. THE NEXT ISSUE CONTESTED BY THE ASSESSEE RELATE S TO DISALLOWANCE OF EXPENDITURE CLAIMED TOWARDS SOFTWARE PURCHASE. THE ASSESSEE HAD PURCHASED A SOFTWARE NAMED AUTOCAD VERSION 2011 AT A COST OF RS.1,10,775 AND CLAIMED THE SAME AS REVENUE EXPENDITURE. THE A. O., HOWEVER, HELD THE SAME TO BE CAPITAL IN NATURE. THE A.O. ALSO NOTICED THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE U/S 194J OF THE ACT. ACCORDI NGLY, HE PROCEEDED TO DISALLOW THE DEPRECIATION BY INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT. IN THE APPELLATE PROCEEDINGS, THE LEARNED CIT(A) TOOK SUPPORT OF THE DECISION RENDERED BY THE HONBLE KARNATAKA HIGH COU RT IN THE CASE OF M/S.SAMSUNG ELECTRONICS COMPANY LIMITED [(2011) 203 TAXMANN.COM 477 (KAR.)] AND HELD THAT THE PAYMENT MADE FOR PURCHASE OF SOFTWARE IS IN THE NATURE OF ROYALTY. ACCORDINGLY, HE DIRECTED THE A.O . TO TREAT THE EXPENDITURE ON PURCHASE OF SOFTWARE AS REVENUE IN NATURE. SINCE THE ASSESSEE HAS FAILED TO DEDUCT TAX AT SOURCE ON THE SAID PAYMENT, THE LE ARNED CIT(A) CONFIRMED THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT. 10. SINCE THE REVENUE HAS NOT FILED ANY APPEAL CHAL LENGING THE ORDER PASSED BY LD CIT(A), THE ISSUE THAT REQUIRES CONSID ERATION IS WHETHER THE ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 7 OF 13 DISALLOWANCE OF COST OF SOFTWARE U/S 40(A)(IA) OF T HE ACT IS JUSTIFIED OR NOT. THE LD A.R SUBMITTED THAT THE DECISION HOLDING THA T THE PAYMENT MADE TOWARDS PURCHASE OF SOFTWARE IS IN THE NATURE OF RO YALTY ATTRACTING TDS PROVISIONS, WAS RENDERED BY THE HONBLE KARNATAKA H IGH COURT IN THE CASE OF SAMSUNG ELECTRONICS COMPANY LTD. (SUPRA) ON 15.1 0.2011, WHEREAS THE IMPUGNED TRANSACTION OF PURCHASE OF SOFTWARE HAS TA KEN PLACE BEFORE 31.03.2011. THE LD A.R SUBMITTED THAT THE LAW RELAT ING TO NATURE OF SOFTWARE PURCHASES WAS PRONOUNCED BY THE HONBLE HIGH COURT ONLY ON 15.10.2011, WHERE AS THE IMPUGNED TRANSACTION HAS TAKEN PLACE P RIOR TO THAT. SHE SUBMITTED THAT BEFORE THE DECISION OF HONBLE HIGH COURT, THE ASSESSEE WAS UNDER BONAFIDE BELIEF WITH THE SUPPORT OF CERTAIN C ASE LAWS THAT THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE FROM THE PAYMEN T MADE TOWARDS SOFTWARE PURCHASES. ACCORDINGLY, BY PLACING HER RE LIANCE ON THE DECISION RENDERED BY THE CO-ORDINATE BENCH IN THE CASE OF AL LEGIS SERVICES INDIA PVT. LTD. V. DCIT [(2017) 51 CCH 0083], THE LEARNED AR S UBMITTED THAT THE LIABILITY TO DEDUCT TAX AT SOURCE, IN THE FACTS OF THE PRESENT CASE, CANNOT BE FASTENED UPON THE ASSESSEE RETROSPECTIVELY. 11. WE HEARD THE LEARNED DR AND PERUSED THE RECORD. WE NOTICED THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO-ORDINAT E BENCH IN THE CASE OF ALLEGIS SERVICES INDIA PVT. LTD. (SUPRA) AND IDENTI CAL DISALLOWANCE MADE WAS DELETED BY THE CO-ORDINATE BENCH ON THE REASONING T HAT THE TDS LIABILITY CANNOT BE FASTENED UPON THE ASSESSEE RETROSPECTIVEL Y. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE OPERATING PORTION OF THE ORDER PASSED BY THE CO-ORDINATE BENCH:- 4. GROUND NOS.2 TO 5 ARE REGARDING DISALLOWAN CE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN S HORT 'THE ACT') OF PAYMENT TOWARDS SOFTWARE LICENSES TREATED BY THE AS SESSING OFFICER AS ROYALTY FOR WANT OF TDS. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS WHICH ARE AS UNDER : CORPORATE TAX MATTERS 21. WITHOUT PREJUDICE TO THE GROUNDS 2 TO 4, THE LEAR NED CIT(A) HAS FAILED TO APPRECIATE THAT DURING THE FIN ANCIAL YEAR 2008-09 RELEVANT TO THE ASSESSMENT YEAR 2009-10, TH E APPELLANT WAS NOT LIABLE TO WITHHOLD TAX ON THE PAYMENTS MADE AS THERE WAS NO PROVISION UNDER THE ACT MANDATING THE DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE ON PURCHASE OF COMPUTER SOFTWARE AND THERE WERE MANY FAVORABLE JUDICIAL PRECEDENCE INCLUDING T HE JURISDICTIONAL TRIBUNAL RULINGS. 22. WITHOUT PREJUDICE TO THE GROUNDS 2 TO 4, THE LEARNE D CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT EXPLANATION 5 TO SECTION 9(1)(VI) WAS INSERTED VIDE FINANCE ACT, 2012 WITH E FFECT FROM 1 JUNE 1976 AND WAS HIT BY THE DOCTRINE OF IMPOSSIBI LITY OF PERFORMANCE. THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE N OT NEW ISSUES BUT AN ADDITIONAL PLEA/ARGUMENT RAISED BY THE ASSES SEE REGARDING ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 8 OF 13 THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDE R SECTION 40(A)(IA) OF THE ACT. THEREFORE IN VIEW OF THE FA CT THAT THE SUBSTANTIAL ISSUE HAS BEEN RAISED IN THE MAIN GROUN D, THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ON THE SAME ISSUE AR E ADMITTED FOR CONSIDERATION AND ADJUDICATION ALONG WITH THE GROUN D NOS.2 TO 5. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT PRIOR TO THE DECISION OF HON'BLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. 320 ITR 209, THE ASSESSEE WAS UNDER THE BONA FIDE BELIE F THAT THE PAYMENT ON ACCOUNT OF SOFTWARE LICENSES DOES NOT FA LL UNDER THE DEFINITION OF ROYALTY AND THEREFORE THE ASSESSEE WA S UNDER NO OBLIGATION TO DEDUCT TAX AT SOURCE ON THE SAID PAYM ENT FOR SOFTWARE LICENSE. HE HAS FURTHER SUBMITTED THAT THERE WERE NUMBER OF JUDICIAL PRECEDENTS ON THIS ISSUE WHEREIN THIS T RIBUNAL HAS HELD THAT THE PAYMENT MADE FOR PURCHASE OF SOFTWARE DOES NOT FALL UNDER THE DEFINITION OF ROYALTY PROVIDED UNDER SECTION 9( 1)(VI) OF THE ACT. THUS HE HAS SUBMITTED THAT A SUBSEQUENT AMENDMENT O R A DECISION CANNOT BE THRUST UPON THE ASSESSEE FOR DEDUCTION OF TAX IN RESPECT OF A TRANSACTION COMPLETED MUCH PRIOR TO TH E SAID DECISION. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON DE CISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL DT.23.11.2016 IN TH E CASE OF ACIT VS. AURIGENE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED WHEN THERE WAS NO SUCH LAW OR DECLARATION OF LAW AT THE TIME OF PAYMENT MADE BY THE ASSESSEE TO CAST THE DUTY ON TH E ASSESSEE TO DEDUCT TAX. 6. ON THE OTHER HAND, THE LEARNED DEPARTME NTAL REPRESENTATIVE HAS SUBMITTED THAT THE DECISION OF HON'BLE JURISDICTION AL HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA) THOUGH WAS SUBSEQUENT TO THE TRANSACTION IN QUESTIO N HOWEVER, THE SAID DECISION HAS NOT BROUGHT INTO STATUTE ANY NEW LAW BUT IT IS ONLY A DECLARATION AND INTERPRETATION OF EXISTING LAW. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS A S WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE TRANSACTION IN QUESTION REGARDING PAYMENT OF PURCHA SE OF SOFTWARE WAS COMPLETED IN THE F.Y. 2008-09 WHEREAS THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA) WAS PASSED ON 15.10.2011 MUCH LATER THAN THE TIME OF TRANSACTION CARRIED OUT BY T HE ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT THIS ISSUE OF CON SIDERING THE PAYMENT FOR PURCHASE OF SOFTWARE AS ROYALTY IS A HIGHLY DEB ATABLE ISSUE AND VARIOUS HIGH COURTS HAVE TAKEN DIVERGENT VIEWS ON T HIS ISSUE. THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CAS E OF ACIT VS. AURIGENE DISCOVERY TECHNOLOGIES (P) LTD. (SUPRA) HAS CONSIDERED AN IDENTICAL ISSUE IN PARAS 3 TO 5 AS UNDER : ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 9 OF 13 03. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT ORDERS. THE ASSESSEE RESUBMITTED THE PLE A TAKEN BEFORE THE LOWER AUTHORITIES AND PLACED ON THE RULING OF THE HON'BLE BANGALORE ITAT IN SONATA INFORMATION TECHNOLOGY LTD V. ACIT (103 ITD 324) WHICH HAD HELD THAT PAYMENTS FOR SOFT WARE LICENSES DO NOT CONSTITUTE ROYALTY UNDER THE PROVI SIONS OF THE ACT AND HENCE DISALLOWANCE UNDER SECTION40(A) (IA) OF THE ACT WOULD NOT BE APPLICABLE. THE CHANGE IN THE LEGAL PO SITION ON TAXATION OF COMPUTER SOFTWARE WAS ON ACCOUNT OF THE RULING OF THE KARNATAKA HIGH COURT IN CIT V. SAMSUNG ELECT RONICS CO. LTD. (320 ITR 209), WHICH WAS PRONOUNCED ON 15.10.1 1 THAT IS MUCH LATER THAN THE CLOSURE OF THE FY 2010-11. SUBSEQUENTLY, THE FINANCE ACT 2012 ALSO INTRODUCED, RETROSPECTIVE LY, EXPLANATION 4 TO SECTION 9(1 (VI) OF THE ACT TO CLARIFY THAT PAYMENTS FOR, INTER ALIA. LICENSE TO USE COMP UTER SOFTWARE WOULD QUALIFY AS ROYALTY. DURING THE FY 10-11, THE ASSESSEE DID NOT HAVE THE BENEFIT OF CLARIFICATION BR OUGHT BY THE RESPECTIVE AMENDMENT. AS SUCH, FOR THE FY 2010-11, IN LIGHT OF THE PROVISIONS OF SECTION 9(1)(VI) OF THE ACT READ WITH JUDICIAL GUIDANCE ON THE TAXATION OF COMPUTER SOFTWARE PAYME NTS, TAX WAS NOT REQUIRED TO BE DEDUCTED AT SOURCE. GIVEN TH E PRACTICE IN PRIOR ASSESSMENT YEARS, THE ASSESSEE WAS OF THE BONA FIDE VIEW THAT THE PAYMENT OF SOFTWARE LICENSE FEE WAS NOT SU BJECT TO TAX DEDUCTION AT SOURCE UNDER SECTION194J/195 OF THE AC T. IT IS SUBMITTED THAT LIABILITY TO DEDUCT TAX AT SOURCE CANNOT BE FASTENED ON THE ASSESSEE ON THE BASIS OF RETROSPECTIVE AMENDMENT TO THE ACT (FINANCE ACT 2012 AMENDMENT THE DEFINITION OF ROYALTY WITH RETROSPECTIVE EFFECT FRO M 01.04.1976) OR A SUBSEQUENT RULING OF A COURT (THE KARNATAKA HC IN CIT V SAMSUNG ELECTRONICS CO. LTD. (16 TAXMANN.COM 141) WAS PASSED ON OCTOBER 15,2011). COURTS HAVE CO NSISTENTLY UPHELD THIS PRINCIPLE AS SEEN IN: ITO V. CLEAR WATER TECHNOLOGY SERVICES (P.) LTD. (52 TAXMANN.COM 115) KERALA VISION LTD V. ACIT (46 TAXMANN.COM 50) SONIC BIOCHEM EXTRACTIONS (P.) LTD V. ITO (35 TAXMANN.COM 463) CHANNEL GUIDE INDIA LTD V. ACIT (25 TAXMANN.COM 2 5) DCIV. VIROLA INTERNATIONAL (20 14(2) TMI 653) CIT V. KOTAK SECURITIES LTD. (20 TAXMANN.COM 846) . 04. THE RELEVANT PORTION OF THE CIT(A) ORDER IS EXTRACTED AS UNDER : DISALLOWANCE OF EXPENSES UNDER 40(A)(I) / 40(A)(I A) : 5.1. AS REGARDS DISALLOWANCE OF EXPENSES UNDER 40(A )(I)/40(A)(IA), IT HAS BEEN SUBMITTED THAT THE COMPANY HAD DETERMIN ED THE RATE OF TAX TO BE DEDUCTED AND FOLLOWING THE JUDGMENTS T HAT WERE ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 10 OF 13 PREVALENT AT THE TIME OF TAX DEDUCTION, SUPREME COU RT IN THE CASE OF TATA CONSULTANCY SERVICES AND JURISDICTIONAL TRI BUNAL IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD, THE APPELL ANT SUBMITTED THAT THE SAID JUDGMENT SHALL NOT BE APPLICABLE SINC E IT WAS PRONOUNCED ON 15/10/2011 AND VELANKANI MAURITIUS LT D., WHEREAS THE LIABILITY TO DEDUCT TAX FOR THE AP PELLANT WAS THE F.Y. 2010-11. THE APPELLANT HAS RELIED ON THE J UDGMENT OF COCHIN TRIBUNAL IN THE CASE OF KERALA VISION LTD AN D AGRA TRIBUNAL IN THE CASE OF VIROLA INTERNATIONAL, WHERE IN IT WAS HELD THAT 'THE LAW AMENDED WAS UNDOUBTEDLY RETROSPECTIVE IN N ATURE BUT SO FAR AS TAX WITHHOLDING LIABILITY IS CONCERNED , IT DEPENDS ON THE LAW AS IT EXISTED AT THE POINT OF TI ME WHEN PAYMENTS, FROM WHICH TAXES OUGHT TO HAVE BEEN WITHHELD, WERE MADE. THE TAX-DEDUCTOR CANNOT BE EXPECTED TO HAVE CLAIRVOYANCE OF KNOWING HOW THE LAW WILL CHANG E IN FUTURE.' FURTHER, SOFTWARE PAYMENT WAS INCLUDED IN DEFINITIO N OF ROYALTY ONLY VIDE EXPLANATION TO SECTION 9(1)(VI)IN SERTED RETROSPECTIVELY VIDE FINANCE ACT, 2012 AND WHEN THE PURCHASE WAS MADE, THE APPELLANT DID NOT HAVE THE BENEFIT OF CLARIFICATION BROUGHT BY THE RETROSPECTIVE AMENDMEN T. IT IS IMPOSSIBLE TO FASTEN LIABILITY FOR DEDUCTING TAX AT SOURCE RETROSPECTIVELY AS TAX IS TO BE DEDUCTED AT SOURCE AT THE TIME WHEN THE PAYMENT IS CREDITED OR MADE. THIS VIEW HAS BEEN UPHELD BY THE BANGALORE TRIBUNAL IN THE CASE OF DCI T VS M/S WS ATKINS INDIA PVT LTD (ITA NO 14671BANG12014 AND THE MUMBAI TRIBUNAL IN THE CASE OF CHANNEL GUIDE IN DIA LTD. VS ACIT ([2012] 25 TAXMANN.COM 25). 5.2 THE ITAT 'C' BENCH IN THE CASE M/S WS ATKINS I NDIA PVT. LTD AND IN THE CASE OF INFOTECH ENTERPRISES LT D OF THE HYDERABAD BENCH OF THE TRIBUNAL WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOULD NOT APPLY TO DISALLOW PAYMENTS WHEN TDS WAS NOT D O N E A N D S U B S E Q U E N T L Y B E C O M E T A X A B L E O N A C C O U N T O F A RETROSPECTIV E LEGISLATION. IT HAS ALSO REFERRED TO IN THE CASE OF SONIC BIOCHEM EXTRA CTIONS PVT. LTD. (SUPRA), IDENTICAL ISSUE WAS CONSIDERED AND DE CIDED BY THE MUMBAI TRIBUNAL. FOLLOWING WERE THE RE LEVANT OBSERVATIONS:- 'THE A SS ES S EE P UR C HAS ED SO FTWA RE, C API TA LI ZED THE P AYM ENT TO THE COMPUTERS ACCOUNT AS THE SO FTWARE CAME ALONG WITH THE HARDWARE OF COMPUTERS AND CLAIMED DEPRECIATION. ON THE GROUND THAT PURCHASE OF SOFT WARE IS ESSENTIALLY PURCHASE OF COPYRIGHT WHICH ATTRACTS TAX DEDUCTION AT SOURCE UNDER SECTION 194J, THE ASSESSI NG OFFICER ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 11 OF 13 INVOLVED THE PROVISIONS O F S ECTIO N 40(A) ( I A) AND DI SAL LO W ED THE D EPR ECIA TI O N CLA IM ED . THE COMMISSIONER (APPEALS), CONFIRMED THE ACTION OF THE ASSESSING OF FICER ON THE GROUND THAT THE PURCHASE OF SOFTWARE AMOUNTED T O ACQUISITION OF INTANGIBLE ASSET AND THEREFORE, THE PAYMENT WAS ROYALTY AND DISALLOWABLE. ON APPEAL: HELD, (I) THAT MERE PURCHASE OF SOFTWARE, A COPYRIG HTED ARTICLE, FOR UTILISATION OF COMPUTERS CANNOT BE CON SIDERED AS PURCHASE OF COPYRIGHT AND ROYALTY. THE ASSESSEE DID NOT ACQUIRE ANY RIGHTS FOR MAKING COPIES, SELLING OR ACQUIRING WHICH GENERALLY COULD BE CONSIDERED WITHIN THE DEFINITION OF 'ROYALTY'. EXPLANATION 2 TO SECTION 9(1)(VI) CANNOT BE APPLIED TO PURCHASE OF A COPYRIGHTED SOFTWARE, WHICH DOES NOT INVO LVE ANY COMMERCIAL EXPLOITATION THEREOF. THE ASSESSEE SIMP LY PURCHASED SOFTWARE DELIVERED ALONG WITH COMPUTER HA RDWARE FOR UTILIZATION IN THE DAY-TO-DAY BUSINESS.' 5.3 RELYING ON THE ABOVE DECISION, THE ITAT `CBENC H, BANGALORE UPHELD THE ORDER OF THE CIT(A) WHO HAD OBSERVED THAT THE ASSESSEE DID NOT HAVE THE BENEFIT OF THE CLARIFICATION BROUGHT BROUGHT ABOUT BY THE RETROSPE CTIVE AMENDMENT THAT THE PAYMENTS TANTAMOUNT TO PAYMENT F OR ROYALTY AND CONSEQUENTLY TAX WAS TO BE DEDUCTED U/S 194J. THE LAW AS EXTANT ON THE DATE WHEN THE PAYMEN T FOR OBTAINING THE SOFTWARE WAS MADE, HAS NOT CATEGORICA LLY LAID DOWN THAT TAX IS REQUIRED TO BE DEDUCTED. IT I S IMPOSSIBLE TO FASTEN LIABILITY FOR DEDUCTING TAX AT SOURCE RETROSPECTIVELY. 5.4 IN VIEW OF THE ABOVE DECISIONS, IT IS CORRECT TO SAY THAT I T I S NO T P O S S I B L E TO FA S T EN L I A B I L I T Y F O R D ED UC TI NG TA X A T SOURCE RETROSPECTIVELY AS TAX IS TO BE DEDUCTED AT SOURCE AT THE TIME WHEN THE PAYMENT IS CREDITED OR MADE. WHEN PURCHASE OF SOFTWARE WAS MADE THE ASSESSEE DID NOT HAVE THE BENEFIT OF T H E C L A R I F I C A T I O N B R O U G H T A B O U T B Y T H E R E T R O S P E C T I V E AMENDMENT. THE CONTE NTIO N OF THE APPELLANT IS CORR ECT THAT THE S O F TW AR E PAYMENT DISALLOWED BY THE AO DID NOT WARRANT WITHHOLDING O F THE TAX U/S 40(A) (IA) AND 40(A)(IA) (BY AN ORDER OF CORRI GENDUM DT 20.11.2015) O F THE AC T. THEREFORE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF SOFTWARE PAYMENT WANT OF WITHH OLDING OF TAX IS HEREBY DELETED. 05. THE CIT(A) FOLLOWED THE DECISION OF THIS TR IBUNAL IN M/S WS ATKINS INDIA PVT. LTD, SUPRA, WHICH REFERRE D THE DECISIONS OF HYDERABAD BENCH OF THE TRIBUNA L IN ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 12 OF 13 INFOTECH ENTERPRISES LTD IN ITA 115/HYD/201 1 WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) WOULD NOT APPLY TO DISALLOW PAYMENTS WHEN TDS WAS NOT D O N E A N D S U B S E Q U E N T L Y B E C O M E T A X A B L E O N AC C O U N T O F A RETROSPECTIVE LEGISLATION. IT HAS ALSO REFERRED TO THE DECISIONS OF THE DELHI & MUMBAI TRIBUNAL IN SMS DEMAG PVT LTD , 132 ITJ 498 & SONIC BIOCHEM EXTRACTIONS PVT. LTD. 23 ITR (TRIB) 4 47, RESPECTIVELY. WE UPHOLD THE DECISION OF THE CIT( A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. THUS IT IS CLEAR THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL WHILE DECIDING THIS ISSUE HAS TAKEN NOTE OF VARIOUS DECIS IONS IN FAVOUR OF THE ASSESSEE ON THE POINT THAT THE PAYMENT FOR PURCHASE OF SOFTWARE DOES NOT FALL IN THE DEFINITION OF ROYALTY. RESPECTFULL Y FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL, WE DELETE TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER. 12. CONSISTENT WITH THE VIEW TAKEN ON THE ABOVE CAS E, WE ALSO HOLD THAT THE ASSESSEE CANNOT BE FASTENED WITH THE LIABILITY TO DEDUCT TAX AT SOURCE RETROSPECTIVELY AND ACCORDINGLY, WE SET ASIDE THE O RDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE A.O. TO DELETE THE IMPUGNED ADDITION. 7. IN OUR CONSIDERED VIEW, THE PRINCIPLES SET OUT IN THE ABOVE SAID DECISIONS COULD BE APPLIED TO THE INSTANT CASES ALSO, EVEN THOUGH T HE ISSUE INVOLVED IN THESE CASES RELATE TO THE DEMAND RAISED U/S 201(1) AND CONSEQUE NT INTEREST CHARGED U/S 201(1A) OF THE ACT. IN THE INSTANT CASE ALSO, THE ASSESSE E WAS UNDER BONAFIDE BELIEF THAT THERE WAS NO REQUIRED TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE FOR PURCHASE OF SOFTWARE, SINCE THERE WERE CERTAIN DECISIONS HOL DING SO. HOWEVER, THE JURISDICTIONAL HIGH COURT HELD THAT THE PAYMENTS MA DE FOR PURCHASE OF SOFTWARE IS IN THE NATURE OF ROYALTY AND THE SAID DECISION CAME TO BE PRONOUNCED ON 15.10.2011. ACCORDINGLY, FOLLOWING THE PRINCIPLES LAID DOWN BY THE CO-ORDINATE BENCHES IN THE ABOVE CITED CASES, WE HOLD THAT THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT IN RESPECT OF PAYMENTS MADE FOR PURCHASE OF LICENSED SOFTWARE PRIOR TO 15.10.2011, BEING THE DATE OF PRONOUNCEMENT OF THE DECISION IN THE CASE OF SAMSUNG ELECTRONICS CO. LTD (SUPRA). ACCORDINGLY, THE DEMA ND RAISED IN THE HANDS OF THE ASSESSEE U/S 201(1) AND 201(1A) FOR ASSESSMENT YEAR S 2009-10 TO 2011-12 COULD NOT BE SUSTAINED AND THE DEMANDS RAISED IN RESPECT OF P AYMENTS MADE PRIOR TO 15.10.2011 IN ASSESSMENT YEAR 2012-13 COULD ALSO NO T BE SUSTAINED. 8. ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY LD CIT(A) FOR ASSESSMENT YEARS 2009-10 TO 2011-12 AND DIRECT THE AO TO DELETE THE DEMANDS RAISED U/S 201(1) AND 201(1A) OF THE ACT. WE ALSO MODIFY THE ORDER PASSE D BY LD CIT(A) FOR ASSESSMENT YEAR 2012-13 AND DIRECT THE AO TO DELETE THE DEMAND S RAISED IN RESPECT OF PAYMENTS MADE PRIOR TO 15.10.2011 IN THAT YEAR. 9. IN THE RESULT, THE APPEALS FILED BY THE ASS ESSEE FOR ASSESSMENT YEARS 2009-10 TO 2011-12 ARE ALLOWED AND THE APPEALS FILED FOR AY 20 12-13 ARE PARTLY ALLOWED. ITA NO.581 /BANG/2019 WIPRO LIMITED, BANGALORE PAGE 13 OF 13 9. IN THE INSTANT CASE ALSO, THE IMPUGNED PAYME NTS HAVE BEEN MADE PRIOR TO 15.10.2011, BEING THE DATE OF THE ORD ER OF THE HIGH COURT REFERRED ABOVE. SINCE THE FACTS ARE IDENTICA L, FOLLOWING THE ABOVE SAID DECISION, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) AND DIRECT THE AO TO DELETE THE DEMAND RAISED U/S 201(1 ) AND 201(1A) OF THE ACT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCT, 2020 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 15 TH OCT, 2020. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.