DCIT INTL. TAX 1(2)(2), NEW DELHI vs. DASSAULT SYSTEMES BIOVIA K.K., JAPAN

ITA 1253/DEL/2023Status: DisposedITAT Delhi23 January 2024AY 2017-18Bench: DR. B.R.R. KUMAR (Accountant Member), SHRI ANUBHAV SHARMA (Judicial Member)5 pages
AI SummaryDismissed

What did the Tribunal hold?

The Income Tax Appellate Tribunal dismissed the Revenue's appeals, affirming the CIT(A)'s decision. It held that the issue of taxability of income from the sale of software licenses as royalty is settled by the Hon'ble Supreme Court's judgment in *Engineering Analysis Centre of Excellence Private Limited vs CIT*, and therefore, the receipts were not in the nature of royalty under Article 12 of the India-Japan DTAA.

What were the facts?

The assessee, a Japanese non-resident company distributing software products, received consideration from Indian end customers for the sale of software licenses. The Assessing Officer treated this income as royalty, but the Ld. CIT(A) held it was not royalty and deleted the addition, relying on previous judgments, including the Supreme Court's decision in Engineering Analysis. The Revenue appealed against this deletion.

What were the issues?

Whether the consideration received by the assessee for the sale of software products constitutes royalty income taxable under Article 12 of the India-Japan DTAA or falls under business profits, in light of the Supreme Court's ruling on software payments.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(3),Section 9(1)(vi)

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Income Tax Appellate Tribunal, DELHI BENCHES: D : NEW DELHI

Before: DR. B.R.R. KUMAR & SHRI ANUBHAV SHARMA

For Appellant: Shri Vishal Kalra, Shri S.S. Tomar, Shri Ankit Sahni &, Shri Yishu Goel, Advocates
For Respondent: Shri Sanjay Kumar, Sr. DR
Hearing: 11.01.2024Pronounced: 23.01.2024

PER ANUBHAV SHARMA, JM:

These are appeals preferred by the Revenue against the orders dated 20.02.2023 of the Commissioner of Income Tax (Appeals), Delhi-42 (hereinafter referred to as the Ld. First Appellate Authority or in short Ld. ‘FAA’) in appeals No.CIT(A), Delhi-42/10566/2019-20 and CIT(A), Delhi-

ITAs No.1252 & 1253/Del/2023

42/10002/2019-20 arising out of the appeals before it against the orders dated 17.02.2020 and 14.02.2019 passed u/s 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the ACIT, International Taxation, Circle

The order continues below.

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