AUTOFORM SALES GMBH,HYDERABAD vs. ADIT (INTERNATIONAL TAXATION) - 1, HYDERABAD

ITA 498/HYD/2025Status: DisposedITAT Hyderabad16 October 2026AY 2022-2316 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Revenue failed to establish that the sale/distribution of software, including module selection/configuration and alleged training/assistance, resulted in the grant of rights in the copyright underlying the software. It also failed to establish that the impugned receipts represented consideration for managerial, technical, or consultancy services rendered by the assessee. The Tribunal noted that the lower authorities characterized the same receipts as royalty and FTS without identifying the specific rights in copyright granted or services rendered. The factual link for the Revenue's contention was not established, as no specific training, managerial, technical, or consultancy services were identified as actually rendered by the assessee for the impugned receipts, nor was any identifiable consideration attributable thereto. The Tribunal directed the Assessing Officer to delete the addition of Rs. 43,54,66,906/-. The same conclusion was applied mutatis mutandis to AY 2023-24.

What were the facts?

The assessee, M/s. AutoForm Sales GmbH, a Swiss company, is engaged in providing specialized software for the automobile industry. For Assessment Years (AY) 2022-23 and 2023-24, the assessee received Rs. 43,54,66,906/- from AutoForm Engineering India Pvt. Ltd. ('AutoForm India') for software sales/distribution. The assessee claimed these receipts were not taxable in India. The Assessing Officer (AO), however, treated the entire receipts as royalty and fees for technical services (FTS), proposing to assess the total income accordingly. The Dispute Resolution Panel (DRP) upheld the AO's view. The assessee appealed these orders, passed by the AO under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961, to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the receipts of Rs. 43,54,66,906/- from the sale/distribution of AutoForm software by the assessee to AutoForm India constitute royalty under the Income Tax Act, 1961, and the relevant Double Taxation Avoidance Agreement (DTAA), thereby being taxable in India? 2. Whether the receipts of Rs. 43,54,66,906/- from the sale/distribution of AutoForm software by the assessee to AutoForm India constitute fees for technical services (FTS) under the Income Tax Act, 1961, and the relevant DTAA, thereby being taxable in India? Assessee's Contentions: - The software supplied is a pre-existing product suite, and customers select modules, amounting to configuration, not custom development. - No right in the underlying copyright is transferred; only a copyrighted product is supplied. - Reliance on the Supreme Court decision in Engineering Analysis Centre of Excellence (P.) Ltd. Vs. CIT (2021) 432 ITR 471 (SC). - Audited financial statements of AutoForm India show nil training income, indicating no FTS was provided. Revenue's Contentions: - The software supplied is specialized/customized. - Technical/training services are associated with the software supply. - The receipts are taxable as royalty and FTS.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144C(1),Section 144C(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad

Before: Shri Ravish SoodShri Madhusudan Sawdia

Hearing: 17/08/2026

Per Madhusudhan Sawdia, A.M:. These two appeals are filed by M/s. AutoForm Sales GmbH (“the assessee”), feeling aggrieved by the separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (“the Act”) for A.Ys. 2022-23 & 2023-24, dated 22.01.2025 and 22/01/2026 as per the directions of the Learned Dispute Resolution Panel-1 Bengaluru (“Ld. DRP”) dated 23.12.2024

ITA Nos.498 and 486

The order continues below.

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