NORTONLIFELOCK INC (FORMERLY KNOWN AS SYMANTEC CORPORATION),PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, (INTERNATIONAL TAXATION), CIRCLE-2, PUNE

The only issue raised in these appeals through various grounds is against treating the amount on sale of software products as Royalty income.

The factual matrix of the case is that the assessee is a non-resident company incorporated under the laws of United States of America. In India, it is engaged in the sale of software licenses relating to information security and storage technology as well as provision of support and maintenance services with respect to the above software. During the assessment years under consideration, the assessee earned revenue from sale of software license in India including certification and software for authentication business, which was claimed as not chargeable to tax in India because of it not having any Permanent Establishment (PE) in India. The AO, by means of detailed orders, came to hold that the receipts derived by the assessee from sale of software license were taxable as Royalty. He fortified his conclusion by relying on the direction given by the Dispute Resolution Panel (DRP) in the assessee’s own case for the assessment year 2014-15. That is how, the AO made an addition of Rs.19.62 crore and odd

1405/PUN/2019 Norton Lifelock Inc. in his order for the A.Y. 2015-16 and Rs. 19.69 crore and odd in his order for the A.Y. 2016-17. Aggrieved thereby, the assessee has approached the Tribunal.

We have heard the rival submissions through Virtual Court and scanned through the material placed before us. The core controversy arose in the appeal of the assessee for the assessment year 2014-15 (ITA No. 2452/PUN/2017), which was extensively argued by the rival sides. In fact, both the sides simply adopted their respective arguments made for A.Y. 2014-15 insofar as the instant appeals are concerned. The Tribunal vide its order dated 11-01-2021 has addressed the issue allowing the appeal of the assessee. Since the facts and circumstances of the appeals under consideration are mutatis mutandis similar to those for the assessment year 2014-15 and further that the AO has relied on the order of the DRP for such earlier year, following the precedent, we overturn the impugned orders and direct to delete the above additions made by treating the revenue from sale of software products in India, either directly to end-customers or indirectly through Distributors or Resellers, as Royalty income.

In the result, both the appeals are allowed