DCIT, International Taxation, Circle-1(1)(1), New Delhi V. Alcatel Lucent International, France

ITA 6272/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2242 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Keywords: Double taxation relief
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.6272/DEL/2017 ASSESSMENT YEAR: 2013-14 DCIT, INTERNATIONAL TAXATION, CIRCLE 1(1) (1) NEW DELHI VS ALCATEL LUCENT INTERNATIONAL FRANCE 3, AVENUE OCTAVE GREARD, PARIS (FRANCE) FRANCE (APPELLANT) (RESPONDENT) APPELLANT BY DR. PRABHA KANT, CIT RESPONDENT BY SH. KAMAL SHAWNEY, ADVOCATE SH. DIVYANSH SINGH, ADVOCATE DATE OF HEARING: 30/06/2021 DATE OF PRONOUNCEMENT: 30/06/2021 ORDER PER N. K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-42, NEW DELHI DATED 20.07.2017 PERTAININ G TO A.Y. 2013-14. 2 2. THE GRIEVANCE OF THE REVENUE READS AS UNDER :- 1.1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO, AND IN HOLDING THAT THE REVENUE RECEIVED BY THE ASSESSEE F ROM SUPPLY OF SOFTWARE IS NOT TAXABLE IN INDIA AS ROYALTY/S 9(L)( VI) OF THE INCOME TAX ACT, AS WELL AS ARTICLE 13(3) OF THE INDIA - FR ANCE. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , AND IN LAW, THE LD. CIT(A) ERRED DELETING THE ADDITION MADE BY THE AO, WITHOUT CONSIDERING EXPLANATION 5 AND G TO SECTION 9(L)(VI) , WHICH HAVE BEEN INSERTED BY CLARIFICATORY AMENDMENTS WITH RETROSPEC TIVE EFFECT. 1.3 THATIN THE FACTS AND IN CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A)ERREDIN DELETING THE ADDITION MADE BY THE AO, AFTER ERRONEOUSLY CONSIDERING THE CLAIMED ADEQUACY OF COM PENSATION OF ALCATEL LUCENT INDIA WHILE DETERMINING THE INCOME O F THE ASSESSEE, AND IN WRONGLY APPLYING THE RATIO OF MORGAN STANLEY 292 ITR416 (SC). 1.4 THAT IN THE FACTAND IN CIRCUMSTANCE OF THE CASE , AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY T HE AO BY ERRONEOUSLY STATING THAT HE HAS RELIED ON THE ASSES SEES OWN CASE, WHEREAS THE FIRST SCRUTINY ASSESSMENT OF ALCATEL LU CENT INTERNATIONAL WAS FOR 2013-14. THE APPELLANT CRAVES LEAVE TO ADD, MODIFY, AMEND OR ALTER ANY GROUND OF APPEAL AT THE TIME OF, OR BEFORE, THE HEA RING OF APPEAL. 3 3. AT THE VERY OUTSET, THE COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUES RAISED BY THE REVENUE ARE NOW WELL SETTL ED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESS EES OWN CASE WHICH WAS CONFIRMED BY THE HONBLE HIGH COURT OF DE LHI AND THE HONBLE SUPREME COURT IN A BUNCH OF APPEALS HAVE CO NFIRMED THE ORDER OF THE HONBLE HIGH COURT OF DELHI. 4. THE LD. DR FAIRLY CONCEDED TO THIS. 5. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW QUA THE DISPUTE UNDER APPEAL. WE HAVE ALSO GONE THROUGH THE JUDICIAL DECISIONS REFERRED BY THE COUNSEL 6. THE FINDINGS OF THE AO GIVEN IN THE ASSESSMENT O RDER DATED 24.05.2016 FRAMED U/S. 143 (3) R.W.S. 144 C OF THE ACT IS AS UNDER :- THE EQUIPMENT SUPPLIES MADE BY ASSESSEE INCLUDED B OTH HARDWARE AND SOFTWARE; HOWEVER, THE ATTRIBUTION OF PROFIT CAN ONLY BE APPLIED TO HARDWARE SUPPLIES AND NOT TO THE SOFT WARE SUPPLIES. IN THIS CONNECTION, ASSESSMENT ORDER OF ALCATEL-LUC ENT FRANCE FOR AY 2006- 07 IS BEING FALLOWED, WHEREIN AFTER CONSID ERING THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WAS HELD THAT CON SIDERATION TOWARDS SOFTWARE IS TAXABLE AS ROYALTY AS PER THE A CT AND UNDER 4 THE CORRESPONDING PROVISIONS OF THE INDIA FRANCE DT AA. IN THE PRESENT PROCEEDINGS ALSO, THE ASSESSEE FILED DETAIL ED SUBMISSIONS AS TO WHY THE SOFTWARE COMPONENT OF THE TELECOM EQU IPMENT SUPPLIES SHOULD NOT BE TREATED AS ROYALTIES BOTH UN DER THE IT ACT AS WELL AS THE INDIA-FRANCE DTAA. THE SUBMISSIONS O F THE ASSESSEE ARE CONSIDERED BUT CANNOT BE ACCEPTED FOR THE REASONS AS IN EARLIER YEARS AND AS SUCH IT IS HELD THAT SOF TWARE SUPPLIED BY THE ASSESSEE IS TAXABLE AS ROYALTY AS PER THE AC T AND ALSO UNDER THE CORRESPONDING PROVISIONS OF THE TAX TREAT Y. 7. FROM THE ABOVE IT CAN BE SEEN THAT THE AO HAS FO LLOWED THE ASSESSMENT ORDER OF ALCATEL LUCENT FRANCE FOR A.Y.2 006-07. IT WOULD BE PERTINENT TO MENTION HERE THAT ALCATEL LUC ENT FRANCE HAS MERGED WITH THE ASSESSEE W.E.F. 26.12.2013. 8. A SIMILAR QUARREL WAS DECIDED BY THIS TRIBUNAL I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE IN A BUNCH OF APPEALS IN ITA NOS.4866/DEL/2010 AND OTHERS VIDE ORDER DATED 04.04 .2014. THIS ORDER OF THE TRIBUNAL WAS CONFIRMED BY THE HON BLE HIGH COURT OF DELHI IN ITA NOS.119 TO 157/2015 VIDE ORDE R DATED 27.02.2015. THE RELEVANT FINDINGS OF THE HONBLE HI GH COURT OF DELHI READ AS UNDER :- 5 6 7 8 9 9. THIS ORDER OF THE HONBLE HIGH COURT OF DELHI HA S BEEN UPHELD BY THE HONBLE SUPREME COURT IN A BUNCH OF A PPEALS IN THE CASE OF ENGINEERING ANALYSIS CENTRE OF EXCELLEN CE PRIVATE LIMITED VIDE ORDER DATED 02.03.2021 AND IN THE BUNC H OF APPEALS 10 THE ASSESSEE IS AT CIVIL APPEAL NO.10674 OF 2016, 0 10673 OF 2016 AND SLP (C) NO.28868 OF 2016. THE RELEVANT FINDINGS OF THE HONBLE SUPREME COURT READ AS UNDER :- 11 10. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE DECISIONS MENTIONED HERE IN ABOVE WE DO NOT FIND ANY MERIT IN THIS APPEAL BY THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSE D. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. 12 12. DECISION ANNOUNCED IN THE OPEN COURT IN THE PRE SENCE OF BOTH THE REPRESENTATIVES ON 30.06.2021. SD/- SD/- (SUDHANSHU SRIVASTAVA) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTAN T MEMBER *NEHA* DATE:-30.06.2021 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGI STRAR ITAT NEW DELHI 13 DATE OF DICTATION 30.0 6 .2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.06.2021 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 30.06.2021 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS 30.06.2021 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 30.06.2021 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 30.06.2021 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER