GE Intelligent Platforms Asia Pacific Pte. Ltd., Gurgaon V. ACIT (International Taxation), New Delhi

ITA 630/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1463 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 03-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Keywords: Double taxation relief; Question of law; TDS; Set aside
• Section: 143(3); 195; 9(1); 9(1); 9(1); 194J; 13; 22; 90

Judgement Text

1 THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BENCH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUDHANSHU SRIVASTAV A, JUDICIAL MEMBER ITA NO. 630/DEL/2017 [ASSESSM ENT YEAR: 2013-14] ITA NO. 5814/DEL/2017 [ASSESSMENT YEAR: 2 014-15] GE INTELLIGENT PLATFORMS ASIA VS. THE A.C .I.T PACIFIC PTE LTD, 6 TH FLOOR, CIRCLE 1(3)1, 7A, STANDARD CHARTERED BUILDING NEW DELHI DLF CYBER CITY, PHASE III GURGAON, HARYANA PAN: AAECG 6481 G [APPELLANT] [RESPONDENT] DATE OF HEARING : 01.07.2021 DATE OF PRONOUNCEMENT : 01.07.2021 ASSESSEE BY : SHRI SACHIT JOLLY, ADV REVENUE BY : DR. PRABHA KANT, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGA INST THE TWO SEPARATE ORDERS OF THE ASSESSING OFFICER DATED 14.1 2.2016 AND 25.05.2017 FRAMED U/S 143(3) R.W.S 144C(13) OF THE INCOME TAX ACT, 2 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHOR T] FOR ASSESSMENT YEARS 2013-14 AND 2014-15 RESPECTIVELY. 2. SINCE THE UNDERLYING FACTS IN THE ISSUES ARE IDE NTICAL IN BOTH THE APPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. FOR THE SAKE OF OUR CONVENIENCE, WE ARE ADJUDICA TING ON THE FACTS OF ITA NO. 630/DEL/2017 ON THE AGREEMENT THAT THE UNDERLYING FACTS IN ITA NO. 5814/DEL/2017 ARE MUTAT IS MUTANDIS SAME. 4. GRIEVANCES RAISED BY THE ASSESSEE IN ITA NO. 630/DEL/2017 READ AS UNDER: 1. THAT THE ASSESSING OFFICER (AO) AND DISPUTE RESOLUTION PANEL (DRP) ERRED ON FACTS AND IN LAW IN COMPUTING THE INCOME O F THE APPELLANT FOR THE RELEVANT ASSESSMENT YEAR AT R S. 18,15,86,344/- AS AGAINST NIL INCOME RETURNED BY THE APPELLANT. 3 2. THAT THE AO AND DRP ERRED ON FACTS AND IN LAW IN ASSESSING THE REVENUES OF THE APPELLANT FROM OFFSHORE SUPPLY OF STANDARDIZED/SHRINK WRAPPED SOFTWARE AS INCOME IN T HE NATURE OF ROYALTY AND TAXING THE SAME UNDER THE PROVISIONS OF SECTION 9( 1 )(VI) OF THE INCOME-TAX ACT, 1961 (THE ACT) READ WITH ARTICLE 12 OF THE INDIA SINGAPORE DTAA ('THE TREATY). 3. THAT THE ASSESSING OFFICER AND DRP ERRED ON FACTS AND IN LAW IN AILING TO APPRECIATE THAT PURSUANT TO SECTION 90 (2) OF THE ACT, THE APPELLANT HAS OPTED TO BE GOVERNED BY THE MORE BENEFICIAL PROVISIONS OF THE TREATY, AND, ACCORDINGLY, THE PRO VISIONS OF SECTION 9(L)(VI) OF THE ACT ARE NOT APPLICABLE IN T HE PRESENT CASE. 4. THAT THE AOAND DRP HAVE ERRED ON FACTS AND I N LAW IN FAILING TO APPRECIATE THAT THE APPELLANTS REVENUES ARE DER IVED FROM THE SALE OF A COPYRIGHTED ARTICLE, NAMELY A COMPUTER PR OGRAM, AND AS SUCH THERE IS NO TRANSFER OF ANY RIGHT TO USE OF THE COPYRIGHTED IN SUCH ARTICLE, AND THEREFORE THE SAME OUGHT NOT CONS TITUTE ROYALTY UNDER THE PROVISIONS OF ARTICLE 12(3) OF THE TREATY . 5. THAT THE AOAND DRP ERRED ON FACTS AND IN LAW IN FAILING TO APPRECIATE THAT ARTICLE 12 OF THE TREATY PROVIDES F OR AN EXHAUSTIVE DEFINITION OF ROYALTY AND DOES NOT INC LUDE PAYMENTS FOR USE OR RIGHT TO USE A COMPUTER SOFTWARE, AND THEREF ORE THE REVENUES EARNED BY THE APPELLANT IN THE PRESENT CAS E OUGHT NOT TO BE TAXABLE IN INDIA. 4 THE GROUNDS OF APPEAL MADE HEREIN ABOVE ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND AND/OR W ITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL HEREIN OR ADD ANY FURT HER GROUNDS AS MAY BE CONSIDERED NECESSARY AND TO SUBMIT SUCH STAT EMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY WITHER BEFORE OR DURING THE TIME OF HEARING. 5. THE SUM AND SUBSTANCE OF THE ENTIRE GRIEVANCES I S THAT THE ASSESSING OFFICER AND THE DRP HAVE ERRED IN ASS ESSING THE REVENUES OF THE APPELLANT FROM OFF-SHORE SUPPLY OF STANDARDISED/SHRINK WRAPPED SOFTWARE AS INCOME IN T HE NATURE OF ROYALTY AND TAXING THE SAME UNDER THE P ROVISIONS OF SECTION 9(1)(VI) OF THE ACT R.W ARTICLE 12 OF TH E INDIA- SINGAPORE DTAA. 6. THE REVENUES STAND CAN BE UNDERSTOOD FROM THE FOLLOWING FINDINGS /OBSERVATIONS OF THE DRP: ARTICLE 16 SOFTWARE . THE SALE AND PURCHASE OF PRODUCTS HEREUNDER SHALL N OT BE CONSTRUED AS A SALE AND PURCHASE OF ANY PPROPRIETAR Y RIGHTS IN PRODUCTS WHICH ARE IN THE FORM OF SOFTWARE OR IN SO FTWARE WHICH 5 IS EMBEDDED IN PRODUCTS WHICH ARE IN THE FORM OF HA RDWARE. CONSISTENT WITH ARTICLE 20 BELOW, AND FOR THE SALES TERRITORY OF GE FANUC SYSTEMS, OE FANUC-NA HEREBY GRANTS GE FANUC S YSTEMS THE RIGHT TO DISTRIBUTE THOSE PRODUCTS WHICH ARE IN THE FORM OF SOFTWARE AND TO DISTRIBUTE ANY OTHER SOFTWARE EMBED DED IN PRODUCTS WHICH ARE IN THE FORM OF HARDWARE. AD SUCH DISTRIBUTIONS BY GE FANUC SYSTEMS SHALL BE ACCORDIN G TO TERMS AND CONDITIONS APPROVED BY GE FANUC-NA AND SUFFICIENT T O PROTECT THE PROPRIETARY RIGHTS OF GE FANUC-NA AND/OR ITS LICENS ORS IN SUCH SOFTWARE, WHICH TERMS AND CONDITIONS SHALL BE IN SU BSTANTIAL CONFORMANCE WITH THOSE UNDER WHICH GE FANUC-NA DIST RIBUTES THE SAME SOFTWARE. THE RIGHT TO DISTRIBUTE SOFTWARE PRODUCTS AND EMBED DED SOFTWARE DOES NOT INCLUDE THE RIGHTJO REPRODUCE SUC H SOFTWARE, AND ALL COPIES THEREOF ACQUIRED HEREUNDER SHALL BE ORDERED IN A