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Income Tax Appellate Tribunal, MUMBAI BENCH “I”, MUMBAI
Before: SHRI G.S. PANNU & SHRI SANDEEP GOSAIN
PER G.S. PANNU, VICE PRESIDENT :
This appeal by the assessee is directed against the order dated 31.01.2017 passed by the Assessing Officer under Section 144C(13) r.w.s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) giving effect to the directions of Dispute Resolution Panel - 1, Mumbai (in short ‘the DRP’) dated 19.12.2016.
In this appeal, assessee has raised the following Grounds of appeal :-
“On the facts and in circumstances of the case and in law, the learned AO based on the directions of the Hon'ble DRP :
General Ground: erred in assessing the total income of the Appellant at `10,27,79,265 as 1. against Rs.4,87,91,250, reported by the Appellant in its Return of Income (‘ROI').
Supply of off the shelf software treated as ‘Royalty’ :
2. erred in holding that receipts from Reliance Industries Limited (‘RIL’) of Rs.5,39,88,015 on account of supply of off the shelf software to be ‘royalty’ under Section 9(1)(vi) of the Act and Article 12 of the Double Taxation Avoidance Agreement between India and Ireland (‘India-Ireland Tax Treaty’).
3. should have appreciated that in view of beneficial provisions of India-Ireland Tax Treaty, the impugned payment towards supply of off the shelf software, would not be regarded as ‘Royalty’ under the India-Ireland Tax Treaty and hence not chargeable to tax in India.
Non-granting of credit of Tax Deducted at Source (‘TDS’) :
erred in not granting the entire credit of TDS amounting to Rs.1,02,77,928, disregarding specific directions of the Hon'ble DRP.
Levying interest under Section 234B and 234C of the Act :
5. erred in leying interest amounting to Rs.47,27,834 and Rs.2,32,602 under Section 234B and 234C of the Act, respectively.
Initiating Penalty Proceedings under Section 271(1)(c) of the Act :
6. erred in initiating penalty proceedings under Section 271(1)(c) of the Act.”
At the time of hearing, the Learned Representative for the assessee pointed out that the substantive dispute in this appeal is manifested in Ground of appeal nos. 2 & 3 which relates to the characterisation of the amount of `5,39,88,015/- received from Reliance Industries Ltd. on account of supply of off-the shelf software. It has also been pointed out that the said dispute is no longer res integra inasmuch as the same has already been adjudicated by the Tribunal in assessee’s own case for the earlier Assessment Year of 2010-11 vide order in dated 08.01.2018. It is further pointed out that the said order of the Tribunal continues to hold the field inasmuch as it has not been altered by any higher authority. The Ld. DR has not disputed the factual matrix brought out by the Learned Representative. So however, in order to impart completeness to the order, the following discussion is relevant.
4. The appellant before us is a company incorporated and registered under the laws of Ireland and is a tax-resident of Ireland. It transpires that the assessee had entered into a Software Licence Agreement dated 26.02.2002 in terms of which assessee has, inter-alia, supplied billing software to Reliance Industries Ltd. It has been further pointed out that the said Software Licence Agreement was originally entered into between Reliance Industries Ltd. and Intec Billing, America, which is a group company of the assessee and was earlier known as ADC Software System, America. Subsequently, vide an Assignment Deed dated 08.04.2005, the agreement was assigned in entirety to Intec Billing, Ireland, which is the assessee before us. The stand of the assessee has been that what has been supplied to Reliance Industries Ltd. is an off-the shelf or, in other words, a Shrink- Wrapped software which enables the telecom companies to do their customer billing in an efficient and profitable manner. The claim of the assessee before the lower authorities as well as before us is that the software licenced to Reliance Industries Ltd. is a standardised product which is made available to other clients also, and has not been developed specifically for Reliance Industries Ltd. The Assessing Officer, at the stage of draft assessment order as well as after the directions of the DRP, has taken the stand that the supply of software in question involved granting of copyright in the software and, therefore, the receipts from Reliance Industries Ltd. are in the nature of ‘Royalty’ as understood for the purpose of Sec. 9(1)(vi) of the Act as well as in terms of Article 12 of the India-Ireland Double Taxation Avoidance Agreement (in short ‘the DTAA’). At this point, we may also notice that the DRP while considering the rival stands noted its earlier decision in the case of the assessee for Assessment Year 2010-11 wherein the stand of the Assessing Officer was upheld both in terms of Sec. 9(1)(vi) of the Act as well as Article 12 of the India-Ireland DTAA.
5. Pertinently, the dispute for Assessment Year 2010-11 came-up before the Tribunal, and vide its order dated 08.01.2018 (supra), the Tribunal did not approve the aforesaid stand of the Assessing Officer and, instead upheld the stand of the assessee to the effect that the impugned receipts were in nature of business profits, not liable to be taxed in India. We have perused the decision of the Tribunal dated 08.01.2018 (supra) and find that our co- ordinate Bench after making an elaborate discussion, inter-alia, relying on the judgments of the Hon'ble Delhi High Court in the case of (i) DIT vs Infrasoft Ltd., 264 CTR 0329 dated 22.11.2013; (ii) DIT vs Nokia Networks OY, 358 ITR 0259 dated 07.09.2012; and, (iii) DIT vs Ericson A.B, 343 ITR 0470 dated 23.12.2011 as well as the decision of our co-ordinate Bench in the case of Intec Billing America in dated 05.02.2010 for Assessment Year 2002-03 upheld the stand of the assessee that the receipts from Reliance Industries Ltd. for supply of the software were not in the nature of ‘Royalty’. We may reproduce hereinafter paras 57 to 67 of the order of Tribunal, which reads as under :-
“57. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied upon by both parties. The assessee is a company incorporated in Ireland and is a tax resident of Ireland. During the Assessment Year 2010-11 assessee had inter-alia supplied billing software to Reliance Industries Limited for the purpose of billing their customers. The software license agreement has been originally entered into between Reliance and Intec Billing, America a group Company of the assessee which was earlier known as ADC Software System, America. The said assessment has been subsequently assigned to Intec Ireland the Assessee in entirety by assignment letter dated 08.04.2005.
The key features of the said software provided by the assessee are that the software provided by Intec Ireland is a comprehensive business solution addressing transaction management, billing and customer care issues related to telecom industry players. It provides solution for efficiently managing high volumes of transactions and keeping audit trails for all the transactions, thus preventing data loss and frauds.It is a high- end integrated software comprising of number of functional modules/ packages targeted at specific business areas. These modules can be used independently or in conjunction with each other to address specific requirements of the user. These modules support invoice generation, product pricing, product rating accounts receivables and billing operations. Further, they also support localization of language, currency, calendar and regulatory and taxation framework of the user. In simple terms, the said software could be equated to 'Microsoft Excel' - wherein the user feeds the data/ information related to a particular customer or product in a blank worksheet. The data is processed by the modules in order to generate requisite output - an invoice, report, etc. The software‟s delivered to the users on physical electronic media, ex:compact disk, floppy, paragraph 6 'Deliver' clause of the Software Licence Agreement.
On perusal of the clauses of the above agreement, it is clear that Intec Ireland exclusively owns all the Intellectual Property Rights (IPR) in the software. Intec Ireland has merely granted a copyrighted article to Reliance and not the 'copyright in the article. Hence, Reliance does not use or have any right to use the copyright in the software products and lntec Ireland merely grants a right to use software for Reliance's own use in India.
60. The very same agreement and the Software supplied by the assessee to Reliance has been subject matter in dispute in the Assessment Year 2002-03 and Coordinate Bench of the Tribunal in ITA.No. 3196/Mum/2007 dated 05.02.2010 held that sale of Software by the assessee to the end customer does not involve any transfer of copyright either in part or inwhole and therefore consideration paid by the distributer cannot be said to be a payment for right of use copyright or transfer of use of copyright. In holding so the Coordinate Bench observed as under: - “3. The assessee is engaged in the business of providing software solutions across the globe. The assessee entered into a software licensing agreement on February 26,2002 with Reliance Industries Limited (RIL), a company incorporated under the laws of India. In pursuance of the agreement, the assessee provided certain software products for the business purpose of RIL during the financial year ended March 31, 2002. The software products so provided, was intended to be used by RIL to prepare invoices to be raised on its customers. During the financial year ended March 31,2002, the assessee earned gross revenues amounting to US$ 1,400,000 as consideration for supply of the software to RIL. The assessee filed its original return of income on October 30, 2002 and subsequently filed a revised return of income on November 20, 2002. Under both the returns, the assessee claimed the aforesaid fees as not taxable in India on the following basis: - • The assessee is a tax resident of US and is accordingly eligible to claim benefits of the double taxation avoidance agreement between India and USA (India-US tax treaty).
• Considering the restrictive and limited rights granted to RIL under the software licensing agreement, based on the OECD Model commentary and UN Model Commentary, fees earned by the assessee are in the nature of „business profits‟ and not „royalty‟. • The assessee does not have a fixed place of business in India and also has not undertaken any activity in India pertaining to licensing of software. Accordingly, the assessee does not have a Permanent Establishment (PE) in India in terms of Article 5 of India-US tax treaty.
• In absence of the assessee‟s PE in India, the business profits earned by the assessee cannot be taxed in India.
However, the Assessing Officer did not accept argument of the assessee and passed the assessment order taxing the income earned from Reliance at 15% on a gross basis as royalty under Article 12 of the IndiaUS tax treaty.
4. On appeal by the assessee, learned CIT(A) held that the payment in question was not in the nature of royalty and was payment for purchase of copyrighted article. It was in the nature of business profits; and since the assessee did not have a PE in India the same was not taxable, in view of Article-7 of the DTAA between India and USA. Addition made by the Assessing Officer was deleted by the learned CIT(A) giving rise to the present appeal by the revenue before the Tribunal.
We have heard the rival submissions. Agreement between the assessee and RIL provides only a license to use the software. Clause 2(a)(b) of the agreement provides for the terms of license and scope of permitted use. Clause (3) provides of confidentiality of information. Para 14.c provides that the software being supplied is a standard software provided to customers by the assessee. Perusal of para 2.a and 2.b of the Agreement clearly provide that RIL has only a perpetual, non-exclusive, irrevocable, non-transferable license to use the software and documentation. RIL is forbidden from modifying, adapting, translating, reverse engineering, decompiling, disassembling, or creating derivative projects based on the software supplied. Agreement also provides that the software can be used for internal training purposes and the processing of the RIL‟s own data and that of its affiliates. RIL was permitted to duplicate the software, but only for training, testing, and the development purposes and also for backup purposes. Para 2.b does provide that RIL can configure the software packages. However, configure has been defined to mean only to modify, to create interface, to load change or delete data and to tailor the software using the utility built into the software in order to optimize the software for customer in accordance with the agreement. Thus, configuration only means that the parameters in the software for making it suitable to the user can be set by the user. Configures does not mean that the user can change the software code. From the rights given to RIL as per agreement, it is apparent that RIL has no power either to decode the machine code of software or to make copies of software for commercial use other than for its internal use or backup purposes. It is therefore obvious that the RIL has right to use software only for its business or personal purposes and has obtained no other rights as per the agreement.
6. The Hon'ble Supreme Court in the case of Tata Consultancy Services Pvt. Ltd. Vs. State of Andhra Pradesh (2004) 271 ITR 401 has held as follows: - “A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sale tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (In case of painting) or computer discs or cassettes, and marketed would become „good‟. We see no different between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus, a transaction of sale of computer software is clearly a sale of goods within the meaning of the term as defined in the said Act.”
7. Thus computer software when it is put on to a media and sold has become goods like any other audio cassette or painting on canvas or a book. It is ceases to be transfer of intellectual property right. In fact, Bangalore Bench of the Tribunal in the case of Lucent Technologies Hindustan Ltd. Vs. ITO, 92 ITD 366 (Bang) has also taken the view that in such a situation there is no acquisition of any right in software. Definition of „royalty‟ is given in section (9)(1) Explanation (2) of the Act and the definition of Royalty in Article 12(3) of the Indo-US DTAA shows that definition of royalty under DTAA is more restrictive than what is provided in section (9)(1) of the Act. Under the definition as contained in DTAA, there should be a transfer of copyright. Sale of software by the assessee to the end user does not involve any transfer of copyright either in part or in whole; therefore consideration paid by the distributor cannot be said to be a payment for right of use copyright or transfer of use of copyright. It has been uniformly held in several decisions of the ITAT that sale of shrink-wrap software does not involve receipt of consideration, which can be said to be royalty. Decisions in this regard are as follows :-
• Samsung Electronics Co. Ltd. Vs. ITO, 93 TTJ 658 • Motorola Incorporation, 270 ITR (AT) 62 •Sonata Information Technologies Ltd., to 1580/Bang/2004 dated 31.1.2006.
8. Computer programme cannot also be treated as patent and invention. Computer programme cannot said to be an invention and therefore cannot be said to be covered by the Patient Act. Computer software cannot also be treated as process. End user of the software in the case of shrink-wrap software does not have any access to source code. He has only right to use the software for his personal or business use. For all the above reasons, we are of the view that learned CIT(A) was right in concluding that payment received by the assessee was not in the nature of royalty and cannot therefore be brought to tax. We uphold the order of learned CIT(A) on this issue and dismiss the appeal by the revenue.
Further, it is the finding of the DRP that in the present case the issue involved is that Shrink Wrapped/off the shelf software recently the Mumbai Tribunal in the case ofCapgemini Business Services (India) Ltd (supra) after considering all the decision available on the issue including the one relied on by the Assessing Officer and the Ld.DR in the case of Samsung Electronics Company Ltd. & Others (supra), Verizon Communication Singapore (supra), Reliance lnfocom Ltd. (supra) and Viacomm 18 Media Pvt. Ltd. (supra) held that where the payment is made for the copyrighted article the same cannot be considered as payment for the transfer of the copyright and cannot be taxed as royalty by observing as under:-
"49. The provisions of the Copyright Act, as discussed above are clear and unambiguous in this respect. If the assessee has purchased a copy of a computer software programme and he uses the said copy for his business purpose and if the said use falls within the scope and purview of the exceptions of section 52, such as the use of it for the purpose for which it is supplied and to make backup copies for temporary purpose as a protection against loss or damage and doing of any act necessary to obtain information essential for operating the software for the purpose for which it is purchased etc. as provided under section 52, then in that event it cannot be said to be an infringement of copyrights of the author or owner of the work. As held by the Hon‟ble Karnataka High Court in the case of "Samsung Electronics Company Ltd. & Others" (supra) while relying upon Article 3 sub section (2) of the DTAA with US as the identically worded article being there in almost all the tax treaties with other countries, that any term not defined in the convention shall, unless the context otherwise requires, have the meaning which it is under the laws of that 'State' concerning the tax to which the convention applies. In view of above, when we see the definition as per the statutory provisions/domestic law of the country i.e. Copyright Act, 1957 of India which is the taxing State in this case, it is apparent that the fair use of the work for the purpose of which it is being purchased and doing of such other acts including making of copy for protection from damage or loss cannot, in any case, said to be any infringement of copyright whether or not any license in this respect has been granted by the author/owner of the work. The right to use or for use of the product accrues to the purchaser by the operation of the statute and as held by the Hon'ble Delhi High Court in the case of "Infrasoft Ltd." (supra), the same would amount to the sale of a goods and the acts done such as downloading of the same to the computer or making backup copies etc. would be the necessary acts for enabling the use of the product and would not amount to the transfer of copyright or right therein, but only the transfer of the copyrighted product and thus will not be covered under the definition of royalty under DTAA. The consideration, thus, paid will be the business income of the non-resident and taxable in accordance with theprovisions of DTAA. We may clarify here that even in cases where the owner of the copyrighted work may restrict the use of or right to use the work by way of certainterms of the license/software agreement, the validity or the enforceability of the same may be subject matter in other laws such as Indian Contract Act 1872, Sale of goods Act 1930 or the Consumer Protection Act 1986 etc., but, the same in any way cannot be said to grant of or infringement of copyright in the light of specific statutory provisions of Copyright Act 1957. ……..
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Even otherwise, the Revenue has not cited any direct case law of the jurisdictional High Court of Bombay before us. In the case laws cited by the Revenue of the Hon'ble Karnataka High Court in the matter of "CIT vs. Samsung Electronics Company Ltd." (supra) and "ClT vs. Synopsis International Old Ltd." (supra) though a view in favour of the Revenue has been taken, but, the Hon'ble Delhi High Court in the case of “D1T vs. Infrasoft Ltd." (supra) which is a latter decision and has discussed the Samsung case also has taken the view in favour of the assessee. The Hon‟ble Delhi High court has taken the identical view favoring the assessee in the case of "D1T vs Nokia Network" (supra) and in the case of "DIT vs. Ericson A.B." (supra) also. The Hon'ble Bombay High gaud in the case of "The Addl. Commissioner of Sales Tax vs. M/s Ankit international," Sales Tax Appeal No.9 of 2011 vide order dated 15 September, 2011 while relying upon the decisions of the Hon'ble Supreme Court in "The Commissioner of Income Tax V. Vegetable Product Ltd." (1973) 88 ITR 192 and in "Mauri Yeast India Pvt. Ltd. V. State of UP." (2008) 14 VST 259(SC) (2008) 5 S.C. C. 680 has held that, if two views in regard to the interpretation of a provision are possible, the Court would be justified in adopting that construction which favours the assessee. Reliance can also be placed in this regard on the decision of Hon'ble Supreme Court in "Bihar State Electricity Board and another vs. M/s. Usha Martin Industries and another: (1997) 5 SCC 289. We accordingly adopt the construction in favour of the assessee. In view of our discussion made above, this issue is accordingly decided in favour of the assessee."
The Coordinate Bench in the case of Galatea Limited v. DCIT (supra) held that payment for the copyrighted article will not be taxed as "Royalty" as defined under the Article 12(3) of India-Israel tax treaty. The Bench observed as under: - "35. Thus, the status of the provisions in the treaty is kept same as was in the pre- amended law as contained in the provisions of the Act. According to these provisions of the treaty, as has been explained in various judgments, transfer of copyright is different from transfer of copyrighted article. Thus, in view of the facts before us, even if the payment for software is taxed separately from hardware, on a standalone basis, even then the same would not fall within the scope of Article 12(3) since there was merely transfer of a copyrighted article, and not the copyright or any rights contained therein.")
The Hon'ble Delhi High Court in the case of Nokia Networks OY (supra) held that the payment for copyrighted article does not fall within the purview of 'Royalty' under the DTAA. The Hon'ble Delhi High Court observed as under: - "59. Be as it may, in order to qualify as royalty payment, within the meaning of Section 9(1)(vi) and particularly clause (v) of Explanation –II thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copy right of a literary, artistic or scientific work. Section 2(o) of the Copyright Act makes it clear that a computer programme is to be regarded as 'literally work'. Thus, in order to treat the consideration paid by the cellular operator as royalty, it is to be established that the cellular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the present case, this has not been established. It is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act, 1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply Contract. Distinction has to be made between the acquisition of a 'copyright right" and a "copyrighted article.
60.......We also find force in the submission of Mr. Dastur that even assuming that the payment made by the cellular operator is regarded as payment made by way of royalty as defined in Explanation 2 below Section 9(1)(vi), nevertheless, it can never be regarded as royalty within the meaning of the said term in article 13, para 3 of the DTAA. This is so because the definition in the DTAA is narrower that the definition in the Act. Article 13(3) brings within the ambit of the definition of royalty a payment made for the use of or the right to use a copyright of a literary work. Therefore, what is contemplated is a payment that is dependent upon user of the copyright and not a Lumpsum payment as is the position in this case.”
The Hon'ble Delhi High Court in the case of Ericsson Radio Systems AB (supra) observed as under: - "Be as it may, in order to qualify as royalty payment, within the meaning of Section 9(1) (vi) and particularly clause (v) of Explanation- 11 thereto, it is necessary to establish that there is transfer of all or any rights (including the granting of any license) in respect of copy right of a literary, artistic or scientific work. Section 2(o) of the Copyright Act makes it clear that a computer programme is to be regarded as a 'literary work'. Thus, in order to treat the consideration paid by the cellular operator as royalty, it is to be established that the cellular operator, by making such payment, obtains all or any of the copyright rights of such literary work. In the presence case, this has not been established, it is not even the case of the Revenue that any right contemplated under Section 14 of the Copyright Act, 1957 stood vested in this cellular operator as a consequence of Article 20 of the Supply Contract. Distinction has to be made between the acquisition of a "copyright right" and a "copyrighted article".
The Coordinate Bench in the case of DDIT v. Solidworks Corporation (supra) following the decision of Hon‟ble Delhi High Court in the case of Ericsson AB held that the receipts from supply of software are not taxable as Royalty'
The Hon'ble Delhi High Court in the case of New Skies Satellite BV & Ors. (supra) held as under: - "59. On a final note, India's change in position to the OECD Commentary cannot be a fact that influences the interpretation of the words defining royalty as they stand today The only manner in which such change in position can be relevant is if such change is incorporated into the agreement itself and not otherwise. A change in executive position cannot bring about a unilateral legislative amendment into a treaty concluded between two sovereign states. It is fallacious to assume that any change made to domestic law to rectify a situation of mistaken interpretation can spontaneously further their case in an international treaty. Therefore, mere amendment to Section 9(1)(vi) cannot result in a change. It is imperative that such amendment is brought about in the agreement as well. Any attempt short of this, even if it is evidence of the state's discomfort a letting data broadcast revenues slip by, will be insufficient to persuade this Court to hold that such amendments are applicable to the DTAAs.
Consequently, since we have held that the Finance Act, 2012 will not affect Article 12 of the DTAAs, it would follow that the first determinative interpretation given to word "royalty" in Asia Sate/Ills, when the definitions were in fact pari materia (in the absence of any contouring explanations), will continue to hold the field for the purpose of assessment years preceding the Finance Act, 2012 and in all cases which involve a Double Tax Avoidance Agreement, unless the said DTAAs are amended jointly by both parties to incorporate income from data transmission services as partaking of the nature of royalty, or amend the definition in a manner so that such income automatically becomes royalty. It is reiterated that the Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no Double Tax Avoidance Agreement."
As rightly submitted by the Ld. Counsel for the assessee that the definition of Royalty under the Indo-Ireland Tax Treaty is pari-materia as that under Indo-US Tax Treaty and the Coordinate Bench of the Tribunal had already decided the issue of taxability of supply of software under the same agreement in favour of the Intec- Ireland with reference to the Indo- US Tax treaty for the Assessment Year 2002-03, wherein it has been held that receipts from supply of software are not taxable in the hands of Intec- Ireland as Royalty. Therefore, since both the treaties are pari-materia with each other, we hold that the receipts from supply of software are not taxable in the hands of Intec–Ireland as Royalty under new Ireland tax treaty. Intec-Ireland does not have PE in India and accordingly amounts received by Intec-Ireland towards supply of software are not liable to tax in India. Therefore, in view of the above discussion and respectfully following the said decisions, we hold that payment received by the assessee was not in the nature of Royalty and cannot be therefore brought to tax.”
Pertinently, the Tribunal noted that for Assessment Year 2002-03, when similar issue cropped-up with reference to the agreement for supply of software entered by Reliance Industries Ltd. and Intec Billing America (earlier known as ADC Software System, America), the then Bench of the Tribunal, vide order dated 05.02.2010 (supra) held that the receipts could not be treated as ‘Royalty’; of course, in that case the provisions of India- USA DTAA were relevant. However, the Bench in its order dated 08.01.2018 (supra) has specifically noted that the provisions of India-Ireland DTAA, which governs the position of the instant year before us also, were similar to the provisions of the India-US DTAA considered by the earlier Bench for Assessment Year 2002-03 vide order dated 05.02.2010 (supra).
Therefore, in our considered opinion, the aforesaid precedents fully cover the controversy before us, and since the precedents continue to hold the field, as it has not been altered by any higher authority, the Ground of appeal nos. 2 and 3 raised by the assessee deserve to be allowed. We hold so. The Assessing Officer is directed to rework the income accordingly.
Insofar as the Ground of appeal no. 4 with regard to non-granting of credit for TDS is concerned, the same has not been pressed as assessee has been allowed the necessary relief. The Ground is accordingly dismissed.
Ground of appeal no. 5 is relating to levy of interest under Section 234B & 234C of the Act, which is also not pressed as necessary relief has been allowed to the assessee.
Ground of appeal no. 6 relates to initiation of penalty proceedings under Section 271(1)(c) of the Act, which is premature and is dismissed.
In the result, appeal of the assessee is partly allowed, as above.
The above order is dictated and pronounced in the presence of both the parties at the conclusion of the hearing on 19th March, 2019.