DASSAULT SYSTEMS SOLIDWORKS CORPORATION, CHENNAI V. DDIT (IT) 2(1)(2), MUMBAI

ITA 7027/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9066 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2015-2016
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: ANANTHA KRISHNAN N
• Keywords: Double taxation relief; Principle of natural justice; Retrospective amendment; Set aside
• Section: 201; 264; 192; 48; 115A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI G. MANJUNATHA , HON'BLE ACCOUNTANT MEMBER ITA NO. 7027 /MUM/201 8 (A.Y: 201 5 - 16) DASSAULT SYSTEMS SOLIDW ORKS CORPORATION C/O DELOITTE HASKINS AND SELLS LLP 7 TH FLOOR, ASV RA MANA TOWERS 52, VENKATNARYANA ROAD CHENNAI 600 017 PAN: AAFCS8787E V. DY. CIT (INTERNATIONAL TAXATION) 2 (1 )(2 ) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANANTHA KRISHNAN N DEPARTMENT BY : SHRI V. SREEKAR DATE OF HEARING : 26 .11.2019 DATE OF PRONOUNCEMENT : 1 0 . 01.2020 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE DISPUTE RESOLUTION PANEL - 1 , MUMBAI [HEREINAFTER FOR SHORT DRP] DATED 1 2.09.2018 FOR THE A.Y. 2015 - 16. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL: - 1.1. THE ORDER OF THE LEARNED ASSESSING OFFICER ('AO') IS CONTRARY TO CANONS OF EQUITY AND NATURAL JUSTICE, CONTRARY TO LAW AND FACTS INVOLVED, NOT BASED ON FA CTS AND CIRCUMSTANCES OF THE CASE, CONTRARY 2 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION TO MANDATORY PROVISIONS OF THE INCOME - TAX ACT, 1961 ('ACT'), LACKS JURISDICTION AND IS LIABLE TO BE STRUCK DOWN. 1.2. THE LEARNED AO HAS ERRED IN LAW AND ON FACTS IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE AT INR 45,12,52,910. 2. TAXABILITY OF RECEIPTS TOWARDS SALE OF SOFTWARE PRODUCTS 2.1. THE HONOURABLE DRP HAS ERRED IN UPHOLDING THE DRAFT ASSESSMENT ORDER AFTER REJECTING THE APPELLANT'S OBJECTIONS MERELY FOR THE REASON THAT THE ISSUE WAS DECIDED AGAINST THE APPELLANT BY THE DRP IN THE EARLIER YEARS, EVEN AS IT NOTED THAT THE BINDING DECISIONS OF THE JURISDICTIONAL MUMBAI BENCH OF THE INCOME TAX APPELLATE TRIBUNAL ON IDENTICAL ISSUE IN THE APPELLANT'S OWN CASE FOR THE EARLIER ASSESSMENT YEARS 2003 - 04, 2005 - 06 AND 2006 - 07, 2007 - 08, 2009 - 10 AND 2011 - 12 WERE CONCLUDED IN FAVOUR OF THE APPELLANT. 2.2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO AND DRP HAVE ERRED IN HOLDING THAT THE INCOME FROM SALE OF SHRINK - WRAPPED SOFTWARE IS TAXABL E IN INDIA, BEING IN THE NATURE OF ROYALTY UNDER THE PROVISIONS OF SECTION 9(L)(VI) OF THE ACT AS WELL AS ARTICLE 12(3) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT ('DTAA') BETWEEN INDIA AND USA. 2.3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, T HE LEARNED AO AND DRP HAVE ERRED IN NOT APPRECIATING THAT THE PAYMENTS RECEIVED ON SALE OF SHRINK - WRAPPED SOFTWARE IS FOR 'SALE OF COPYRIGHTED ARTICLE' AND NOT 'TRANSFER OF COPYRIGHT RIGHT' AS THE END USERS IN INDIA OBTAINED ONLY A RIGHT TO USE THE SOFTWAR E PRODUCTS AS AGAINST ANY COPYRIGHT RIGHT. 2.4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN HOLDING THAT SOFTWARE IS A PROCESS OR A PROPERTY SIMILAR TO PATENT, INVENTION, DESIGN, SECRET FORMULA, PROCESS, ETC AS DEFINED UNDER EXPLANATION 2 TO SECTION 9( 1 )(VI) OF THE ACT. 2.5. THE LEARNED AO HAS ERRED IN LAW IN STATING THAT THE RETROSPECTIVE AMENDMENT TO SECTION 9(L)(VI) OF THE ACT BY WAY OF INSERTION OF EXPLANATION 4 TO THE SAID SECTION THROUGH FINANCE ACT 201 2 IS APPLICABLE ALSO TO THE DEFINITION OF 'ROYALTY' UNDER ARTICLE 12 OF THE DTAA. 2.6. WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE LEARNED AO AND DRP HAVE ERRED IN COMPUTING THE TAX ON INCOME AT THE RATE OF 15 PERCENT AFTER RECOGNIZING THE INCOME OF THE ASSESSEE AS ROYALTY 3 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION INCOME, WHEREAS SECTION 115A OF THE ACT PRESCRIBES A RATE OF 10 PERCE NT UNDER THE ACT ON ROYALTY INCOME . 3. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO.2 OF GROUNDS OF APPEAL OF THE ASSESSEE IS RELATING TO TAXABILITY OF RECEIPTS ON SELLING SOFTWARE PRODUCTS IS TREATED AS ROYALTY UNDER THE PROVISIONS O F THE SECTION 9 ( 1 )(VI) OF THE ACT R.W. ARTICLE 12(3) TO THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND USA. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ITA NO. 319 & 320/MUM/2018 DATED 25.02.2019 FOR THE A.Y S . 2013 - 14 & 2014 - 15 BY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2011 - 12 ORDER DATED 28.02.2017 IN ASSESSEE'S OWN CASE. COPY OF THE ORDER IS PLACED ON RECORD. 4. LD. DR FAIRLY SUBMITTED THAT THIS ISSUE HAS BEEN DEC IDED IN FAVOUR OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF TH E AUTHORITIES BELOW AND THE DECISION OF THE COORDINATE BENCH. ON A PERUSAL OF THE ORDER OF THE TRIBUNAL FOR THE EARLIER ASSESSMENT YEAR WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL OBSERVING AS UNDER: - 3. AT THE OUTSET, LD. AR PLACED ON RECO RD SERIES OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2003 - 04 ORDER DATED 15/12/2009, A.Y. 2005 - 06 ORDER DATED 01/04/2010, A.Y.2006 - 07 ORDER DATED 08/02/2012, A.Y.2007 - 08 ORDER DATED 31/03/2016, 4 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION A.Y.2009 - 10 ORDER DATED 31/03/2016 AND A .Y.2011 - 12 ORDER DATED 28/02/2017 WHEREIN EXACTLY SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE AND IT WAS HELD THAT RECEIPTS TOWARDS SALE OF SOFTWARE PRODUCTS WAS NOT LIABLE TO TAX AS ROYALTY. THE PRECISE OBSERVATION OF THE TRIBUNAL FOR THE A.Y.2011 - 12 ORDER DA TED 28/02/2017 READS AS UNDER: - ISSUE NO.1 TO 7: - 4. ISSUE NO. 1 TO 7 ARE INTERCONNECTED, THEREFORE, ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES, IT IS TO BE DETERMINED THAT THE RECEIPT FROM THE SALE OF SOFTWARE PRODUCTS TO CLIENTS IN INDIA THROUGH ITS DISTRIBUTOR / RESELLER AMOUNTING TO USD 6.05 MILLIONS IS IN THE NATURE OF ROYALTY OR NOT. THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CASE OF THE ASSESSEE HAS DULY BEEN COVERED BY THE DECISION OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y.2002 - 03 IN ITA NO. 3095/MUM/2007 ORDER DATED 15TH DECEMBER 2009 AND FOR THE A.Y.2005 - 06 IN ITA NO.5097/MUM/2008 ORDER DATED 1ST APRIL 2010 AND FOR A.Y.2006 - 07 IN ITA NO.3219/MUM/2010 ORDER DATED 08.02.2012 AND FOR A.Y.2007 - 08 IN ITA NO.8721/MUM/201 0 ORDER DATED 31.03.2016 AND FOR A.Y.2009 - 10 IN ITA NO.7790/MUM/2012 ORDER DATED 31.03.2016. THEREFORE, IN THE SAID CIRCUMSTANCES, THE ORDER PASSED BY THE ASSESSING OFFICER ON THE DIRECTION OF THE DRP IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE AND THE RECEIPT IS NOT LIABLE TO BE TREATED AS ROYALTY. IT IS ALSO ARGUED THAT WHEN NO PATENT RIGHT WAS SOLD HOWEVER COMPUTER PROGRAMS WERE SOLD WHICH COULD NOT BE TAXED IN VIEW OF THE PROVISION U/S.9(1) OF THE ACT THEREFORE IN THE SAID CIRCUMSTANCES THE AMOUNT IN QUESTION IS NOT LIABLE TO BE TREATED AS ROYALTY. HOWEVER, ON THE OTHER HAND, THE LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS AND ARGUED THAT THE HONBLE KARNATAKA HIGH COURT HAS DECIDED THE ISSUE IN FAVOUR OF TH E REVENUE IN THE CASES OF CIT VS. SYNOPSIS INTERNATIONAL OLD LTD., 212 TAXMAN 0454 (KAR. HC), DATED 03.08.2010, CIT V. SAMSUNG ELECTRONICS CO. LTD. & OTHERS, (2011) 345 ITR 0494, KAR HC, DATED 15.10.2011, CIT V. WIPRO LTD. (2011), 355 ITR 0284 (KAR) / 203 TAXMAN 621 (KAR.) HC, DATED 15.10.2011 AND CIT VS. CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTANTS (P) LTD., (2014) 48 TAXMANN.COM 264 (KAR), DATED 09.06.2014. IT IS ALSO SPECIFICALLY ARGUED THAT THE JURISDICTIONAL TRIBUNAL IN CASE OF THE DIT(IT) VS. RE LIANCE INFOCOMM LTD. (MUM TRIB) DATED 06.09.2013 HAS FOLLOWED THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SYNOPSIS INTERNATIONAL OLD LTD., 212 TAXMAN 0454 (KAR. HC), DATED 03.08.2010 AND CIT VS. SAMSUNG ELECTRONICS CO. LTD. & OTHERS , (2011) 345 ITR 0494, KAR HC, DATED 15.10.2011. THEREFORE, IN THE SAID CIRCUMSTANCES THE ORDER PASSED BY THE 5 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION ASSESSING OFFICER IS JUSTIFIABLE WHICH IS NOT LIABLE TO BE INTERFERE WITH AT THIS APPELLATE STAGE. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE PARTIES AND PERUSED THE RECORD CAREFULLY, IT IS APPARENT ON RECORD THAT THE SAID ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y.2002 - 03 IN ITA NO. 3095/MUM/2007 ORDER DA TED 15TH DECEMBER 2009 AND FOR THE A.Y.2005 - 06 IN ITA NO.5097/MUM/2008 ORDER DATED 1ST APRIL 2010 AND FOR A.Y.2006 - 07 IN ITA NO.3219/MUM/2010 ORDER DATED 08.02.2012 AND FOR A.Y.2007 - 08 IN ITA NO.8721/MUM/2010 ORDER DATED 31.03.2016 AND FOR A.Y.2009 - 10 IN I TA NO.7790/MUM/2012 ORDER DATED 31.03.2016. ON APPRAISAL OF THE LATEST ORDER FOR THE A.Y.2009 - 10, WE FOUND THAT THE HONBLE INCOME TAX APPELLATE TRIBUNAL CONSIDERED THE ORDER PASSED BY THE HONBLE KARNATAKA HIGH COURT WHICH WAS FAVOUR OF THE ASSESSEE. IN T HE SAID ORDER, THE DISCUSSION IN THIS REGA RD IS HEREBY REPRODUCED BELOW: - 5. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. THERE IS NOTHING MUCH THAT WE CAN ADD TO SUCH A W ELL RESEARCHED AND ERUDIT E ORDER EITHER. THE DECISIONS OF NON JURISDICTIONAL HIGH COURTS, IN FAVOUR OF THE REVENUE ON THIS POINT, HAVE ALREADY BEEN DEALT WITH IN THIS ORDER. AS TO WHAT SHOULD BE DONE IN A SITUATION IN WHICH THERE ARE CONFLICTING VIEWS OF HONBLE NON JURISDICTIONAL HIGH COURTS AND IN WHICH WE DO NOT HAVE THE BENEFIT OF GUIDANCE FROM HONBLE JURISDICTIONAL HIGH COURT, WE CAN ONLY ADD, WITH RESPECTFUL CONCURRENCE, THE VIEWS EXPRESSED BELOW BY THE COORDINATE BENCHES: ..IT WILL BE WHOLLY INAPPROPRIATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PERCEPTIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINT, AS SUCH AN EXERCISE WILL BE DE FACTO AMOUNT TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COURTS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASI C PRINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO, WITH OUR HIGHEST RESPECT OF BOTH THE HONLE HIGH COURTS, ADOPT AN OBJECTIVE CRITERION FOR DECIDING AS TO WHICH OF THE HONBLE HIGH COURT SHOULD BE FOLLOWED BY US. 8. WE FIND GUIDANCE FROM THE JUDGM ENT OF HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PRODUCTS LTD. 1973 CTR (SC) 177 : (1972) 88 ITR 192 (SC). HONBLE SUPREME COURT HAS LAID DOWN A PRINCIPLE THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTR UCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED. THIS PRINCIPLE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HONBLE SUPREME COURT ITSELF. IN ANOTHER SUPREME COURT JUDGMENT PETRON ENGG. CONSTRUCTION 6 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION (P.) LTD. & ANR. VS. CBDT & ORS. (1998) 75 CTR (SC) 20: (1989) 175 ITR 523 (SC), IT HAS BEEN REITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. ITA NO.936/M/2015 A.Y.2011 - 12 8 HONBLE SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIAT E FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATUTE WHICH CAN BE CONSTRUED AS EXCEPTIONS TO THIS GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAX - PAYER DOES NOT APPLY TO DEDUCTIONS, EXEMPTIONS AND EXCEPTI ONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORIZED. THIS EXCEPTION, LAIN DOWN IN LITTMAN VS BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS DY. COMMR. OF CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS CCE & C 1994 (73) ELT 769 (SC), HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN, IN CASE OF AMBIGUITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX - PAYER DOES NOT APPLY TO A PROVISION GIVING TAX - PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARL Y IMPOSING LIABILITY. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APPLICATION. THE RULE OF RESOLVING AMBIGUITY IN FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAVOUR OF ASSESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL, AS HELD IN THE MATTER OF STATE OF M.P. VS DADABHOYS NEW CHIRMIRY PONRI HILL COLLIERY CO. LTD. AIR 1972 (SC) 614. [TEJ INTERNATIONAL PVT. LTD. VS. DCIT (2000) 69 TTJ 650 (DEL)] 52. EVEN OTHERWISE, THE REVENUE HAS NOT CITED ANY DIRECT CASE LAW OF THE JURIS DICTIONAL HIGH COURT OF BOMBAY BEFORE US. IN THE CASE LAWS CITED BY THE REVENUE OF THE HOMLE KARNATAKA HIGH COURT IN THE MATTER OF CIT VS. SAMSUNG ELECTRONICS COMPANY LTD. (SUPRA) AND CIT VS. SYNOPSIS INTERNATIONAL OLD LTD. (SUPRA) THOUGH A VIEW IN FAVOU R OF THE REVENUE HAS BEEN TAKEN, BUT, THE HONBLE DELHI HIGH COURT IN THE CASE OF DIT VS. INFRASOFT LTD. (SUPRA) WHICH IS A LATTER DECISION AND HAS DISCUSSED THE SAMSUNG CASE ALSO HAS TAKEN THE VIEW IN FAVOUR OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT H AS TAKEN THE IDENTICAL VIEW FAVOURING THE ASSESSEE IN THE CASE OF DIT VS. NOKIA NETWORK (SUPRA) AND IN THE CASE OF DIT VS. ERICSON A.B. (SUPRA) ALSO. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF THE ADDL. COMMISSIONER OF SALES TAX VS/ M/S. ANKIT INTERNATIO NAL, SALES TAX APPEAL NO.9 OF 2011 VIDE ORDER DATED 15TH SEPTEMBER, 2011 WHILE RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE COMMISSIONER OF INCOME TAX V. VEGETABLE PRODUCT LTD. (1973) 88 ITR 192 AND IN MAURI YEAST INDIA PVT. LTD. VS. STTE OF U.P. (2008) 14 VST 259 (SC) : (2008) 5 S.C.C. 680 HAS HELD THAT, IF TWO VIEWS IN REGARD TO THE INTERPRETATION OF A PROVISION ARE POSSIBLE, THE COURT WOULD BE JUSTIFIED IN ADOPTING THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE. RELIANCE CAN ALSO BE PLACED IN THIS REGARD ON THE 7 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION DECISION OF HONBLE SUPREME COURT IN BIHAR STATE ELECTRICITY BOARD AND ANOTHER VS. M/S. USHA MARTIN INDUSTRIES AND ANOTHER : (1997) 5 SSC 289. WE ACCORDINGLY ADOPT THE CONSTRUCTION IN FAVOUR OF THE ASSESSEE. [CAPGEMINI BUSINESS SERVI CES INDIA LTD. VS. ACIT (TS 100 ITAT 2016 (MUM)] 6. IN VIEW OF THE ABOVE DISCUSSION AND HAVING NOTED THAT THERE IS NO MATERIAL DIFFERENCE IN THE FACTS OF THE CASE FOR THIS YEAR VIS - - VIS THE FACTS OF THE ASSESSMENT YEAR 2006 - 07 AS DISCUSSED ABOVE, RESPECT FULLY FOLLOWING THE VIEWS OF THE COORDINATE BENCHES, WE UPHOLD THE GRIEVANCE OF THE ASSESSEE. IT IS, THEREFORE, HELD THAT THE RECEIPTS OF RS.19,20,14,000/ - ON ACCOUNT OF RECEIPTS FOR SOFTWARE ARE NOT EXIGIBLE TO TAX IN INDIA. THE ASSESSING OFFICER IS, THER EFORE, DIRECTED TO DELETE THE IMPUGNED ADDITION OF RS.19,20,14,000/. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT TODAY ON 31ST DAY OF MARCH, 2016. 5. HOWEVER, THE PRESENT CASE HAS BEEN DECIDED IN VIEW OF THE LATEST LAW SETTLED BY THE HONBLE DELHI HIGH COURT IN CASE OF ERICSSON AV (343 ITR 470) (DEL.) ON APPRAISAL OF THE ABOVE MENTIONED FINDING, IT CAME INTO THE NOTICE THAT THE HONBLE DELHI HIGH COU RT IN CASE OF DIT VS. INFRASOFT LTD. 264 CTR 329 (DEL.) AND IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD. 88 ITR 192 (SC) HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. SINCE, THE MATTER HAS ALSO BEEN CONSIDERED BY THE HONBLE INCOME TAX APPELLATE TRIBUNAL AND DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE SPECIFICALLY FOR THE A.Y.2002 - 03 IN ITA NO. 3095/MUM/2007 ORDER DATED 15TH DECEMBER 2009 AND FOR THE A.Y.2005 - 06 IN ITA NO.5097/MUM/2008 ORDER DATED 1ST APRIL 2010 AND FOR A.Y.2006 - 07 IN ITA NO.3219/MUM/201 0 ORDER DATED 08.02.2012 AND FOR A.Y.2007 - 08 IN ITA NO.8721/MUM/2010 ORDER DATED 31.03.2016 AND FOR A.Y.2009 - 10 IN ITA NO.7790/MUM/2012 ORDER DATED 31.03.2016 IN WHICH THE RECEIPT ON ACCOUNT OF SALE OF SHRINK - WRAP SOFTWARE IS NOT IN THE NATURE OF ROYALTY H ENCE IS NOT LIABLE ITA NO.936/M/2015 A.Y.2011 - 12 12 IN INDIA UN VIEW OF THE PROVISION OF SECTION 9(1)(IV) OF THE ACT AS WELL AS ARTICLE 12(3) OF THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA AND U.S.A. IN VIEW OF THE SAID CIRCUMSTANCES, WE ARE OF T HE VIEW THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE ABOVE MENTIONED DECISIONS AND THE FINDING OF THE ASSESSING OFFICER IS BASED UPON THE DRP DIRECTION IS WRONG AGAINST LAW AND FACTS AND IS HEREBY ORDERED TO BE SET ASIDE ON THIS ISSUE. IT IS THERE FORE HELD THAT RECEIPT TO THE TUNE OF RS.26,87,30,378/ - ON ACCOUNT OF THE RECEIPT FOR SALE OF SHRINK - WRAP SOFTWARE IS NOT LIABLE TO TAX IN INDIA. THEREFORE, THE ASSESSING OFFICER IS HEREBY DIRECTED TO DELETE THE FULL ADDITION. ACCORDINGLY, THESE 8 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. 4. WE HAVE GONE THROUGH THE ORDERS OF THE TRIBUNAL AS CITED BY LD. AR AND TRIBUNAL ORDER DATED 28/02/2017, WHEREIN THE TRIBUNAL HAVE HELD THAT RECEIPTS FROM SALE OF SHRINK - WRAP SOFTWARE IS NOT LIABLE TO TAX IN INDIA ACCORDINGLY, AO WAS DIRECTED TO DELETE THE ADDITION SO MADE ON ACCOUNT OF RECEIPTS FOR SALE OF SHRINK - WRAP SOFTWARE. FACTS AND CIRCUMSTANCES IN BOTH THE Y EARS UNDER CONSIDERATION ARE PARIMATERIA, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY JUSTIFICATION FOR TAXING THE RECEIPT AS TAXABLE AS ROYALTY. 6. NO DISTINGUISHING FACTS HAVE BEEN BROUGHT TO OUR N OTICE. THUS, F ACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE SAID DECISION WE ALLOW THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE. 7. GROUND NO.1 OF GROUNDS OF APPEAL IS GENERAL IN N ATURE AND NEED NO ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH JANUARY, 2020 SD/ - SD/ - ( G. MANJUNATHA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 10 / 01/2020 GIRIDHAR, SR.PS 9 ITA NO. 7027/MUM/2018 (A.Y: 2015 - 16) DASSAULT SYSTEMS SOLIDWORKS CORPORATION COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM