THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -1 vs. DXC TECHNOLOGY SERVICES SINGAPORE PTE. LTD. ( FORMERELY KNOWN AS HP SERVICES (SINGAPORE) PVT. LTD.

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ITA/802/2023HC DelhiDLHC01050279202221 December 2023Bench: HON'BLE MR. JUSTICE RAJIV SHAKDHER,HON'BLE MR. JUSTICE GIRISH KATHPALIA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT had ruled correctly in favour of the respondent/assessee. The Court found that the statutory authority (ITAT) had returned a finding of fact that the respondent/assessee had not transferred the copyright in the software. Based on this factual finding and the enunciation of law by the Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT (432 ITR 471), the High Court was of the opinion that the impugned order of the ITAT did not require interference. Consequently, the Court concluded that no substantial question of law arose for consideration and the appeal was closed. The operative direction was to close the appeal.

What were the facts?

The appeal concerns Assessment Year 2009-10. The Commissioner of Income Tax (International Taxation)-1, the appellant/revenue, is challenging an order dated 31.03.2022 passed by the Income Tax Appellate Tribunal (ITAT). The dispute arises from a scrutiny assessment where the Assessing Officer (AO) treated consideration received by the respondent/assessee, DXC Technology Services Singapore Pte. Ltd. (formerly HP Services (Singapore) Pvt. Ltd.), for the off-the-shelf sale of software as royalty. The AO made an addition of Rs. 1,14,09,24,658/- on this basis. The ITAT ruled in favour of the assessee, holding that the amount was not royalty.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the ITAT is correct in holding that the consideration received by the Assessee from various entities on account of sale/supply of software is not royalty within the meaning of Article 12(3) of the Indo-Singapore Double Taxation Avoidance Agreement (DTAA)? Assessee's Contention: The ITAT ruled in favour of the assessee, holding that the amount received for off-the-shelf software sale was not royalty. The Tribunal relied on the Supreme Court's judgment in Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT 432 ITR 471. Revenue's Contention: The revenue, through the Commissioner of Income Tax, sought to assail the ITAT's order, proposing the aforementioned question of law. The specific arguments made by the revenue are not detailed in the judgment, beyond their challenge to the ITAT's finding.

Which sections of the Income-tax Act were involved?

Article 12(3)

AI-generated summary — verify with the full judgment below

ITA 802/2023

Page 1 of 2

$~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI %

Decision delivered on: 21.12.2023 + ITA 802/2023 & CM APPL. 66682/2023

THE COMMISSIONER OF INCOME TAX – INTERNATIONAL TAXATION -1

..... Appellant Through: Mr Ruchir Bhatia, Senior Standing Counsel.

versus

DXC TECHNOLOGY SERVICES SINGAPORE PTE. LTD. (FORMERELY KNOWN AS HP SERVICES (SINGAPORE) PVT. LTD.

..... Respondent Through: Mr Satyen Sethi and Mr Arta Trana Panda, Advocates.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MR. JUSTICE GIRISH KATHPALIA

[Physical Hearing/Hybrid Hearing (as per request)]

RAJIV SHAKDHER, J. (ORAL): 1. This appeal concerns Assessment Year (AY) 2009-10. 2. Via the instant appeal, the appellant/revenue seeks to assail the order dated 31.03.2022 passed by the Income Tax Appellate Tribunal [in short “Tribunal”]. 3. The appellant/revenue has proposed the following question of law for consideration by this court: “2.1 Whether on the facts and in the circumstances of the case and in law, the ld. ITAT is correct in holding that the consideration received by the Assessee from various entities on account of sale/supply of software is not royalty within the meaning of Article 12(3) of the Indo- Singapore -DTAA?”

4.

The record shows that the respondent/assessee was subjected to scrutiny-assessment which resulted in the consideration received qua off- Digitally Signed By:Vaishali Chauhan Signing Date:08.01.2024 01:03:19 Signature Not Verified

ITA 802/2023

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the- shelf sale of the software being brought to tax. 4.1. The addition made by the Assessing Officer (AO), in this regard, amounted to Rs.1,14,09,24,658/-. The AO construed the said amount received by the respondent/assessee as royalty. 5. The finding of fact returned by the statutory authority is that the respondent/assessee had not transferred the copyright it had qua the subject software. The Tribunal, with regard to the said issue, in our opinion, ruled correctly, in favour of respondent/assessee and concluded that the amount could not be treated as royalty within the meaning Article 12(3) of the India- Singapore Double Taxation Avoidance Agreement. 5.1. The Tribunal relied upon the judgment of the Supreme Court rendered in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. v CIT 432 ITR 471. 6. Having regard to the findings of fact and the enunciation of law by the Supreme Court in the aforementioned judgment, according to us, the impugned order does not require interference. 7. In our opinion, no substantial question of law arises for consideration. The appeal is, accordingly, closed. 8. Consequently, pending application is rendered infructuous.

RAJIV SHAKDHER JUDGE

GIRISH KATHPALIA JUDGE DECEMBER 21, 2023/MS Digitally Signed By:Vaishali Chauhan Signing Date:08.01.2024 01:03:19 Signature Not Verified

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