AUTODESK INDIA PVT LTD,BENGALURU vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), BENGALURU

This appeal of the assessee was initially disposed of by the Tribunal, vide its order dated 11.09.2020. Subsequently, the assessee moved a miscellaneous application numbered as MA No.50/Bang/2021 pointing out that Ground no.6 urged by the assessee has been omitted to be disposed of by the Tribunal, which constituted a mistake apparent from record. Accordingly, the above said order was recalled by the Tribunal, vide its order dated 23.7.2021 passed in the above said miscellaneous application, for the limited purpose of disposing of ground no.6 urge by the assessee.

The AO noticed that the assessee has paid a sum of Rs.22,93,527/- to M/s Northland Controls Pte Ltd without making TDS. The assessee explained that the above said payment was made to get Access Control Facility to be set up in assessee’s office premises. It was submitted that the access control system has alarms, enhanced by remote video verification equipped with end to end security system maintenance and management from the device level up through software administration. Accordingly, it was contended that the assessee is not required to deduct tax at source in terms of India-Singapore DTAA. The AO took the view that the impugned payment falls under the definition of ‘royalty’ under Explanation 4 to sec. 9(1)(vi) of the Act. He also took the view that the impugned payment is in the nature of royalty and Fee for Technical services under Article 12 of India-Singapore DTAA. Accordingly, the AO proposed to disallow the above said amount of Rs.22,93,527/- in the draft assessment order.

Before DRP, the assessee submitted that the assessee has deducted tax at source from a sum of Rs.8,86,365/-. Further, it was contended that the impugned payment is not in the nature of FTS

Before the AO, the assessee submitted copies of invoices and did not submit copy of any agreement. Since the assessee had deducted tax at source on Rs.8,86,365/-, the AO restricted the disallowance to Rs.14,07,162/-.

The Ld A.R submitted that the assessee has not entered into any agreement with M/s Northland Controls P Ltd and hence it did not furnish copy of agreement before the AO. He further submitted that the AO has taken the view that the impugned payment falls under the category of both Royalty and Fee for technical services. He submitted that the payment can fall in either of one category only. He further submitted that the issue regarding royalty payment is required to be examined in the light of decision rendered by Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence P Ltd and the issue of Fee for technical services is required to be examined in the light of decision rendered by the jurisdictional Karnataka High Court in the case of De Beers India Minerals (P) Ltd (2012 taxmann.com 214).

The Ld D.R submitted that the assessee has not furnished the relevant details before the AO. She submitted that the assessee is submitting that it did not enter into any agreement with M/s

We heard the parties and perused the record. From the rival submissions noted above, we are of the view that there is merit in the contentions of both the parties. Accordingly, we are of the view that this issue requires fresh examination at the end of AO in the light of rival contentions noted above. Accordingly, we set aside the order passed by the AO on this issue and restore the same to his file for examining it afresh. After hearing the assessee, the AO may take appropriate decision in accordance with law.

In the result, the ground no.6 urged by the assessee is treated as allowed.