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Income Tax Appellate Tribunal, “L” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI RAVISH SOOD
O R D E R PER BENCH: There are three appeals under consideration. These three appeals are filed by the assessee involving the assessment years 2008-09, 2009-10 and 2010-11. Since, the issues raised in these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard combinedly and disposed of in this consolidated order. Appeal wise adjudication is given in the following paras of this order.
Since, assessee raised identical grounds in all the three appeals, therefore, for the sake of reference and adjudication purpose, grounds raised
in the assessee‟s appeal for the AY 2008-2009 are extracted as under:- “1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in confirming the action of the AO in treating the appellant as „assessee in default u/s 201 (1) of the Act on the alleged ground that the appellant has not deducted tax at source amounting Rs. 1,27,252/- for payment made on account of subscription fees for use of online database.
2. On the facts and in the circumstances of the case and in law, CIT (A) erred in confirming the action of the AO in holding that the payment made for supply of online software database to Omgeo Pte Ltd by the appellant is in the nature of Royalty which is subject to tax deduction at source u/s 195 of the Act thereby disregarding the provisions of Article 12 of the Indo-Singapore Double Taxation Avoidance Agreement (DTAA).
3. Without prejudice to Ground nos. 1 and 2, on the facts and in the circumstances of the case and in law, CIT (A) erred in not appreciating that the disallowance cannot be made u/s 201(1) of the Act on the basis of subsequent amendment brought into the Act with retrospective effect.
4. On the facts and in the circumstances of the case and in law, the CIT (A) erred in not appreciating that the disallowance cannot be made u/s 201(1) OF THE Act on the basis of subsequent amendment brought into the Act with retrospective effect.
On the facts and in the circumstances of the case and in law, the CIT (A) erred in confirming the action of the AO in levying the interest u/s 201(1A) of Rs. 58,382/- on the alleged non-deduction of tax at source u/s 195.”
The only issue raised in these three appeals relates to the chargeability of subjecting the payments to TDS provisions when the payments are aimed at the subscription fees for use of online database. Revenue considered the payment made by the assessee to Omgeo Pte. Ltd (Omgeo) is in the in the nature of „royalty‟ subject to TDS u/s 195 of the Act. However, it is the claim of the assessee that the said payments do not constitute „royalty‟ in view of the provisions of Article 12 of the India-Singapore DTAA.
Before us, Ld Counsel for the assessee brought our attention to the orders of the AO u/s 201 / 201(1A) of the Act as well as the orders of the FAA in these appeals and submitted that the said orders passed prior to the judgment of Hon‟ble Karnataka High Court in the case of CIT vs. Samsung Electronics Co. Ltd (345 ITR 494) (Kar.) as well as the judgment of the Hon‟ble Delhi High Court in the case of DIT vs. Infrasoft Ltd ( 220 Taxmann 273) (Delhi) and many others. These judgments have dealt with the core issue whether the payments made for copy righted article constitutes royalty or otherwise. For applying the said legal proposition, Ld Representatives of both the parties mentioned that all the grounds raised
in these appeals are required to be remanded to the file of the AO for fresh adjudication and decision.
5. On hearing both the parties, without going to the merits of the grounds, we are of the opinion, all the grounds raised in the present three appeals along with the grounds raised without prejudice are required to be remanded to the file of the AO for applying the cited judgments of the High Courts (supra) and decide the issue