M/s. IBM Singapore Pte Limited , Bangalore V. Assistant Commissioner of Income Tax, International Taxation, Circle-1(1), Bangalore

MA 349/BANG/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8675 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 23-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Section: 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER M.P. NOS. 349 TO 351/BANG/2018 (IN IT(IT)A NOS. 2038 TO 2040 /BANG/2017 ) ASSESSMENT YEAR S : 20 0 6 - 07 TO 2008 - 09 M/S. IBM SINGAPORE PTE LIMITED, C/O IBM INDIA PVT. LTD., NO. 12, SUBRAMANYA ARCADE, BANNERGHATTA MAIN ROAD, BANGALORE 560 029. PAN: AACCI2917B VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 (1) (INTERNATIONAL TAXATION), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI SHARATH RAO, CA RESPONDENT BY : DR. P.V. PRADEEP KUMAR, ADDL. CIT (DR) DATE OF HEARING : 07 . 1 2 .2018 DATE OF PRONOUNCEMENT : 19 . 1 2 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER ALL THESE THREE M.PS. ARE FILED BY ASSESSEE CONTEND ING THAT AS PER THE IMPUGNED TRIBUNAL ORDER, THE ISSUE IN DISPUTE WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE BY FOLLOWING THE TRIBUNAL ORDER IN ASSESSE ES OWN CASE FOR ASSESSMENT YEAR 2011-12 IN IT (TP) A NO. 162/BANG/2016 DATED 0 4.04.2017 AS PER PARA NO. 4 OF THE IMPUGNED TRIBUNAL ORDER BUT WRONG PARA OF THE EARLIER TRIBUNAL ORDER IS REPRODUCED AND ISSUE WAS DECIDED ON THAT BASIS.. 2. HE SUBMITTED THAT THERE IS NO GRIEVANCE OF THE A SSESSEE ON THE MERIT BECAUSE AS NOTED BY THE TRIBUNAL IN PARA 3 OF THE I MPUGNED TRIBUNAL ORDER, THE LD. AR OF ASSESSEE HIMSELF HAS CONSIDERED BEFOR E THE TRIBUNAL THAT THE ISSUE IN DISPUTE IS COVERED AGAINST THE ASSESSEE BY THE SAME TRIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12. HE SUBMITTED THAT THE ASSESSEES CONTENTION REGARDING THE MISTAKE IN THE IMPUGNED TRIBUNAL ORDER IS THIS MUCH ONLY THAT IN THE IMPUGNED TRIBUN AL ORDER, IN PARA 4, THE TRIBUNAL HAS REPRODUCED PARA NO. 12 OF THE EARLIER TRIBUNAL ORDER IN WHICH M.P. NOS. 349 TO 351/BANG/2018 (IN IT(IT)A NOS. 2038 TO 2040/BANG/2017) PAGE 2 OF 4 THE ISSUE WAS DECIDED IN ASSESSMENT YEAR 2011-12 BU T IN THAT YEAR, THE ISSUE DECIDED AS PER THIS PARA WAS REGARDING THE RA TE OF TAX. BUT IN THE PRESENT YEARS, THE RATE OF TAX HAS BEEN ACCEPTED BY THE AO ALSO @ 10% AS PER ORDERS PASSED BY HIM U/S. 154 FOR THESE THREE Y EARS ON 26.10.2016 AND THEREFORE, THIS ASPECT OF THE MATTER IS NOT IN DISP UTE AND HENCE, REPRODUCTION OF THESE TWO PARAS I.E. PARA NOS. 12 AND 13 FROM TH E EARLIER TRIBUNAL ORDER FOR ASSESSMENT YEAR 2011-12 AND THEREAFTER DECIDING THE ISSUE BY RESTORING THE MATTER BACK TO THE FILE OF AO IS AN APPARENT MI STAKE AND IN FACT, THE APPEALS OF THE ASSESSEE SHOULD BE DISMISSED BY REPR ODUCING PARA NOS. 5 TO 7 OF THIS TRIBUNAL ORDER FOR ASSESSMENT YEAR 2011-1 2 AS PER WHICH IT WAS HELD BY TRIBUNAL IN THAT YEAR THAT THE ISSUE REGARD ING WHETHER OFF-THE-SHELF RECEIPT IS ROYALTY U/S. 9(1)(VI) OF IT ACT. HE SUB MITTED THAT IN THE PRESENT THREE YEARS ALSO, THE ISSUE SHOULD BE DECIDED AGAIN ST THE ASSESSEE BY FOLLOWING THE SAME JUDGEMENT OF HONBLE JURISDICTIO NAL HIGH COURT RENDERED IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. IN ITA NO. 2808/2005. AS AGAINST THIS, THE LD. DR OF REVENUE SUBMITTED TH AT THIS CANNOT BE SAID TO BE A MISTAKE APPARENT FROM RECORDING BECAUSE EVEN IF THE AO HAS APPLIED 10% OF RATE OF TAX AND THE MATTER IS RESTORED BY TH E TRIBUNAL TO THE FILE OF AO FOR DECIDING THE RATE ASPECT AFRESH, IT MAKES NO DI FFERENCE BECAUSE THE AO WILL BE BOUND TO APPLY THE SAME RATE WHICH HE HAS A DOPTED IN THE ORDER PASSED BY HIM U/S. 154. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT AS PER GROUND NO. 3 REPRODUCED BY THE TRIBUNAL ON PAGE NO. 2 OF THE I MPUGNED TRIBUNAL ORDER, THIS WAS THE GRIEVANCE OF THE ASSESSEE THAT LD. CIT (A) HAS ERRED IN UPHOLDING THE TREATMENT ADOPTED BY THEAO WHEREIN TH E ENTIRE CONSIDERATION RECEIVED FROM IBM INDIA TOWARDS SALE OF SHRINK WRAP PED SOFTWARE WAS CONSIDERED AS ROYALTY INCOME UNDER SECTION 9(1) (VI ) OF THE ACT AND ALSO UNDER ARTICLE 12 OF THE TREATY. THIS IS ALSO ADMIT TED POSITION THAT ONLY ONE ISSUE IS INVOLVED IN THIS APPEAL AND IT WAS SQUAREL Y COVERED BY THE TRIBUNAL ORDER AS NOTED BY THE TRIBUNAL IN PARA 3 OF THE IMP UGNED TRIBUNAL ORDER THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE T RIBUNAL ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 AND IN ASSESSMENT YEAR 2011-12, THE ISSUE AS TO WHETHER THE RECEIPT I S ROYALTY OR NOT HAS BEEN M.P. NOS. 349 TO 351/BANG/2018 (IN IT(IT)A NOS. 2038 TO 2040/BANG/2017) PAGE 3 OF 4 DECIDED BY TRIBUNAL AS PER PARAS 5 TO 7 OF THAT TRI BUNAL ORDER AND HENCE, WE FIND THAT IN FACT, THERE IS AN APPARENT MISTAKE IN THE TRIBUNAL ORDER IN DECIDING THE ISSUE ON THE BASIS OF PARAS 11 AND 12 OF THE EARLIER TRIBUNAL ORDER FOR AY 2011 12 AND RESTORING THE MATTER BAC K TO THE FILE OF AO TO DETERMINE THE APPLICABLE RATE AND HOLDING THAT GROU ND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. IN OUR CONSIDERED OPINION, G ROUND NO. 3 OF THE ASSESSEES APPEAL HAS TO BE DISMISSED IN LINE WITH PARA NOS. 5 TO 7 OF THE EARLIER TRIBUNAL ORDER FOR ASSESSMENT YEAR 2011-12 IN ASSESSEES OWN CASE. HENCE, WE SUBSTITUTE PARAS 4 TO 7 OF THE IMP UGNED TRIBUNAL ORDER BY FOLLOWING PARA NOS. 4 TO 7. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRS T OF ALL, WE REJECT GROUND NO. 2 IN EACH YEAR AS NOT PRESSED. R EGARDING GROUND NO. 3 IN EACH YEAR, WE FIND THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE TRIBUNAL ORDER IN ASSES SEES OWN CASE FOR ASSESSMENT YEAR 2011-12 AND HENCE,PARA NOS . 5 TO 7 OF THIS TRIBUNAL ORDER ARE REPRODUCED HEREINBELOW FOR THE SAKE OF READY REFERENCE. 5. FEELING AGGRIEVED BY THE ORDER OF THE AO, THE A SSESSEE FILED PROCEEDINGS BEFORE THE DRP AND THE DRP VIDE O RDER DATED 28/12/1015 HAS CONFIRMED THE ORDER PASSED BY THE AO. IN THIS REGARD THE LEARNED AR HAS SUBMITTED THA T THE ISSUE UNDER CONSIDERATION IS ALREADY ADJUDICATED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE O F CIT VS. SAMSUNG ELECTRONICS CO. LTD., IN ITA NO.2808/2005 AGAINST THE ASSESSEE. HOWEVER, THE CASE IS PENDING WITH THE HON'BLE SUPREME COURT FOR DECISION. 6. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THERE IS NO STAY GRANTED BY THE HON'BLE SUPREME COU RT IN THIS CASE AND, THEREFORE, THE ISSUE OF THE ASSESSEE SHOULD BE ADJUDICATED ON THE BASIS OF THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE PRESENT CASE. 7. WE HAVE GONE THROUGH THE ORDER PASSED BY THE JURISDICTIONAL HIGH COURT AND IN OUR VIEW, THE ISSU E IS SQUARELY COVERED BY THE JUDGMENT PASSED BY THE HON' BLE JURISDICTIONAL HIGH COURT. IN VIEW THEREOF, WE DISM ISS THIS GROUND NOS.2 TO 4.3 OF THE ASSESSEE. 5. FROM THE ABOVE PARAS REPRODUCED FROM THE TRIBUNA L ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12, IT COMES OUT M.P. NOS. 349 TO 351/BANG/2018 (IN IT(IT)A NOS. 2038 TO 2040/BANG/2017) PAGE 4 OF 4 THAT THE TRIBUNAL HAS HELD THAT THE IMPUGNED RECEIP T IS ROYALTY BY FOLLOWING THE JUDGEMENT OF HONBLE JURISDICTIONAL H IGH COURT RENDERED IN THE CASE OF CIT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA). HENCE, RESPECTFULLY FOLLOWING THE EARLIER TRIBUNAL ORDER AND IN TURN RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF C IT VS. SAMSUNG ELECTRONICS CO. LTD. (SUPRA), WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND ACCORDINGLY GROUND NO. 3 OF THE ASSESS EES APPEAL IS ALSO REJECTED IN EACH OF THREE YEARS. 6. GROUND NO. 4 IS REGARDING THE INITIATION OF PEN ALTY PROCEEDINGS U/S. 271(1) (C) OF IT ACT. THIS GROUND IS PREMATUR E AND HENCE REJECTED ACCORDINGLY IN EACH YEAR. 7. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE ASSESSEE ARE DISMISSED. 4. IN THE RESULT, ALL THE THREE M.PS. FILED BY THE ASSESSEE ARE ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH DECEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.