ADIT (IT)-2(1), MUMBAI vs. M/S. RELIANCE COMMUNICATIONS LTD, NAVI MUMBAI

Order u/s.254(1)of the Income-tax Act,1961(Act) खंडपीठ के अनुसार Per Bench: खंडपीठ के अनुसार खंडपीठ के अनुसार खंडपीठ के अनुसार Challenging the orders of the CIT(A)-XXXI, Mumbai,of various dates,the Assessing Officers (AO.s)have filed above mentioned appeals.Issue involved in all the appeals is identical. Considering the commonness of the issue,we are adjudicating these appeals together. 1.Assessee-companies are part of Reliance(ADAG) Group.The group consists many an entities including Reliance Communication Ltd.(RCL),Reliance Telecom Ltd.,Reliance BPO Ltd., Reliance Communication Infrastructure Ltd.RCL is engaged in business of telecommunication. Other three entities were also connected with the business of wireless telecommunication net- work in India.For that purpose,they had entered into various contracts with non-resident-entities and made certain payments for purchase of softwares.The assessees made applications u/s.195 of

19 Appls-RCL(15)+RTL(4) the Act,requesting the AO.s to allow them to make payments to non-residents without deducting tax at source.However,the AO.s held that software payments made by them,to the non residents, were payments towards royalty,that the amounts in questions were taxable in India,that the assessees should deduct tax at source before making such payments.Accordingly,they deducted the taxes before making payments to the non-resident software-suppliers.

2.Aggrieved by the orders of the AO.s passed u/s.195(2)of the Act,the assessee filed appeals before the FAA.s,who allowed the same.In the meanwhile,in the cases of some of the recipients i.e.the non-resident entities,the matters travelled up to the Tribunal and the Tribunal decided the matters in their favour and against the AO.s.In the cases of Ericson AB Sweden and ZTE Corporation,the department challenged the orders of the Tribunal before the Hon’ble Delhi High Courts contesting that payments received by the non-residents were taxable in India.But,the Hon’ble Courts dismissed the appeals.

3.Before us,the Departmental Representative(DR)and the Authorised Representative(AR)agreed that considering the fact that in the case of recipients issue has been decided against the AO.s,there was no justification to argue the above mentioned matters.However,the DR stated that the matters have not attained finality,as the Department has approached the higher judicial forums in all the cases.

4.We have heard the rival submissions and perused the material before us.We find that in the hands of the above recipients,the Tribunal has held that payments received by them was not royalty and hence were not taxable.If the payments made by the assessees were not taxable,there would not be any liability to deduct tax at source.So,the appeal filed will be have to be rejected. We are summarising the factual position of the above appeals in a tabular form:

SN. of the assessee Name of the Recipient HC/Tribunal judgment/ orders deciding the issue in favour of the recipient 1 5093/Mum/2008 Reliance Telecom Ericsson AB Sweden (16 taxmann.com 371) Limited (Del.-HC) 2 5094/Mum/2008 Reliance Telecom Ericsson AB Sweden Limited 3 5095/Mum/2008 Reliance Telecom Ericsson AB Sweden Limited 4 5096/Mum/2008 Reliance Telecom Ericsson AB Sweden Limited 5 5080/Mum/208 Reliance Communications Ericsson AB Sweden (16taxmann.com371) (Del.- Limited 6 4901/Mum/2007 Reliance Communications Ericsson AB Sweden

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HC) Limited 7 4672/Mum/2007 Reliance Communications Ericsson AB Sweden Limited 8 5084/Mum/2008 Reliance Communications ZTE Corporation China 392 ITR 80 (Delhi) (HC) Limited 70 taxmann.com 1 9 4899/Mum/2007 Reliance Communications Alcatel USA International and 7300/ Limited Marketing Inc USA Mum/2010,order dated 25. 10 4927/Mum/2007 Reliance Communications Alcatel USA International 05.2017 and Limited Marketing Inc USA (43 SOT 31-(Mum- Trib.) 11 4255/Mum/2008 Reliance Communications Alcatel USA International Limited (URO) Marketing Inc USA 12 4309/Mum/2008 Reliance Communications Alcatel USA International Limited Marketing Inc USA 13 5469/Mum/2008 Reliance Communications Alcatel USA International Limited Marketing Inc USA 14 4675/Mum/2007 Reliance Communications Motorola Inc USA Limited 15 4878/Mum/2007 Reliance Communications Motorola Inc USA (95 ITD 269) (Del.) (SB) Limited 16 4908/Mum/2007 Reliance Communications Motorola Inc USA Limited 17 5078/Mum/2008 Reliance Communications Team Telecom (40SOT28-Mum-Trib) Limited International Ltd., Israel (URO) 18 5079/Mum/2008 Reliance Communications Team Telecom Limited International Ltd., Israel 19 5477/Mum/2008 Reliance Communications Nortel Networks India ITA No.3313 to 3315/ Limited International Inc. USA Del/2012,1087/Del/2014, Order dated 26.09.2017 In the matters of Ericsson and ZTE Corporation,China orders of the Tribunal have been confirmed by the judgments of the Hon’ble High Court of Delhi,as stated earlier.

Considering the fact that all the appeals,filed by the above referred recipients,have been allowed by the Tribunal and that the orders of the Tribunal in the two non-resident-entities have been confirmed by the Hon’ble Delhi High Court,we dismiss the above appeals,filed by the AO.s.

As a result,all the appeals(19)filed by the AO.s stand dismissed. फलतः िनधा�रती अिधका�रय� �ारा दािखल क� ग� सारी अपील�(19)नामंजूर क� जाती ह�. Order pronounced in the open court on 15th January, 2018. आदेश क� घोषणा खुले �यायालय म� दनांक 15 जनवरी , 2018 को क� गई । Sd/- Sd/- रिवश सूद /Ravish Sood) (राजे�� / RAJENDRA) (रिवश सूद रिवश सूद रिवश सूद �याियक सद�य / JUDICIAL MEMBER लेखा लेखा सद�य सद�य / ACCOUNTANT MEMBER लेखा लेखा सद�य सद�य मुंबई Mumbai; �दनांक/Dated :15 .01.2018. Jv.Sr.PS. आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : आदेश आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत 1.Appellant /अपीलाथ� 2. Respondent /��यथ� 3.The concerned CIT(A)/संब� अपीलीय आयकर आयु�, 4.The concerned CIT /संब� आयकर आयु� 3

19 Appls-RCL(15)+RTL(4)