IN THE INCOME TAX APPELLATE TRIBUNAL DELHI
BENCH `F', NEW DELHI
BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER
AND
SH. R. K. PANDA, ACCOUNTANT MEMBER
ITA No.7230/Del/2017
Assessment Year: 2013-14
Qualcomm Technologies Inc., DCIT
S. R. Batliboi & Co. Vs Circle 3 (1) (1),
Oval Office, 18, ILabs Centre International Taxation,
Hitech City, Madhapur, New Delhi
Hyderabad
PAN No. AAACQ3149D
(APPELLANT) (RESPONDENT)
Appellant by Shri Nishant Thakkar, Advocate
Ms. Jasmin Amalsadwala,
Advocate
Respondent by Shri Surender Pal, Sr. DR
Date of hearing: 27/05/2019
Date of Pronouncement: 01/07/2019
ORDER
PER R.K. PANDA, AM:
This appeal filed by the assessee is directed against the
order dated 21.09.2017 of the CIT(A)-23, New Delhi relating to A.
Y. 2013-14.
2. Grounds raised by the assessee are under :-
On the facts and in the circumstances of the case, the Learned Commissioner of Income
Tax (Appeals) 23, Delhi :-
Ground No. 1 - Revenue received by the Appellant under the BREW agreements is towards
sale of a copyrighted article and not for right to use copyright
Erred in upholding the application of provisions of section 9(l)(vi)(b) of the Income-
tax Act, 1961 (the 'Act') and Article 12 of India-US tax treaty ('tax treaty') for taxing
the income of the Appellant earned towards sale of copyrighted article i.e. BREW
operators in India.
2. Erred in principle in holding that the sale of a copyrighted article shall be governed by
the Sale of Goods Act, 1930 and the Indian Customs Act in case of import of an
article and considering the transaction under BREW Operator agreement is not subject
to Indian Customs Act, the sale of BREW software is not a copyrighted article.
3. Erred in comparing the transaction of sale of BREW software by QTI with grant of
right by an author to a publisher for printing and making of copies, without
appreciating the fact that there is no grant of right to use copyright by QTI to the
telecom operators. Whereas in the case of a publisher, the right to use copyright is
granted by the author for printing and making copies in exchange of royalty.
4. Grossly erred in concluding that QTI grants a right to use copyright to the telecom
operators under the BREW Operator agreement and by disregarding the fact that the
telecom operators are not permitted to make copies under the BREW agreement
except for the purposes of back-up and archival.
5. Erred in not following the principles of judicial discipline and disregarding the
judgement of the jurisdictional Hon'ble ITAT in the case of QUALCOMM
Incorporated on similar facts.
6. Erred in irrelevantly presuming that the Appellant has conceded to the taxability
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under the Act merely because the Appellant has sought to rely on the beneficial scope
of provisions under the Treaty.
Ground No.2 Erroneous levy of interest under section 234 C of the Act
7. Erred in holding that Appellant is liable to interest under section 234C of the
Act on the assessed income whereas the interest is calculated on returned income.
Ground No.3 Erroneous initiation of penalty under section 271 (1) ( c) of the Act.
8. Erred in confirming the action of the Assessing Officer for initiation of penalty
proceedings under section 271 (1) (c) of the Act.
3. Facts of the case, in brief, are that the assessee is a
company incorporated in United States of America and is a
wholly owned subsidiary of Qualcomm Incorporated
USA(Qualcomm). QTI is engaged in the business of design,
development and marketing of digital wireless
telecommunications products and services based on Code
Division Multiple Access (CDMA), Orthogonal Frequency Division
Multiple Access(OFDMA) and other technologies. During the
year, QTI has provided services to M/s. Sohamsaa Systems Pvt.
Ltd. (Sohamsaa), Sistema Shyam Tele Services Ltd. (Sistema),
Tata Tele Services Ltd (TTSL), Virgin Mobile India Ltd. (Virgin
Mobile) and Alcatel Lucent India Ltd. (Alcatel).
3.1 The assessee filed its return of income on 30.09.2013
declaring nil income. However, the assessee company offered an
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income of Rs.44,46,767/- as royalty taxable at special rate of
10% as per IT Act 1961. The assessee company has revised its
return of income on 31.03.2015 at the same income but the claim
of TDS was raised from Rs.17,36,237/- to Rs.19,41,897/-.
3.2 During the course of assessment proceedings the assessee
vide letter dated 12.2.2016 explained as under :-
"Effective as of October 1, 2012 QUALCOMM
incorporated completed an internal corporate
reorganization, and in connection with the internal
corporate reorganization Qualcomm transferred the
assets relating to certain of its businesses to its wholly-
owned subsidiary Qualcomm Technologies, Inc. The
Qualcomm Internet Services'(QiS) division is now part of
QTI. As a part of this transfer, QIS sent notice of
assignment letters to its BREW customers, including
Sistema Shyam Teleservices Limited and TATA Tele
Services Limited. As a result of this assignment, we
confirm, for the period of October 01, 2012 to March 31,
2013 (the applicable part for A.Y 2013-14) that:
· The BREW agreement is being operated with the
telecom operators (e.g, Sistema Shyam Teleservices
Limited and Tata Teleservices Limited) under the
same terms and conditions as were existent with
Qualcomm.
· Ail risks, rewards, rights and obligation under the
BREW agreements are vested with QTI on the same
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terms and conditions as were existent with
Qualcomm. "
4. The assessee company further explained that it does
not constitute the permanent Establishment (PE) as per
article 5(1) and 5(2) of the tax treaty between India and
USA.
5. Functions of the assessee (QTI):
i. QTI grants licenses to manufacturers of
wireless products for the right to Use portions of
QTS's intellectual property portfolio, which
includes certain software rights essential to
and/or useful in the manufacture and sale of
certain wireless products.
ii. The assessee submitted that Rs. 44,46,767/-
is received from Sohamsaa under AMSS and
QRDA agreements. If is submitted that the
consideration is for use of or right to use, alter,
modify, copy, translate or adopt the Source code
of AMSS and QRDA software. The assessee agrees
that this amount is taxable @ 10% under the
provision of IT Act, 1961.
» QTI provides technology to support and
accelerate the convergence of the wireless data
market, including in it BREW, QChat and
QPoint products and services;
6. Revenue streams of the assessee and revenue details
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4. The assessee gave the following details of taxable and non
taxable income relevant to AY 2013-14.
Amount
S.No Customer Nature of Services
Received
01 Sohamsaa Systems Royalty 44,46,767
Private Limited
02 Alcatel Lucent India Test tools 2,64,300
Ltd.
03 Sistema Shyafrt Test Tools 12,43,575
Teleservices Ltd.
Sistema Shyam License of BREW
04 Teleservices Ltd 74,47,372
software
Tata Teleservices License of BREW
05 Limited 46,31,570
software
Virgin Mobile India BREW License of
06 Pvt. Ltd 4,62,404
BREW software
*The assessee has only offered the income mentioned
in SI. No 1 to tax in India as royalty.
6.1 However, the assessee submitted that the
payments at SI. No 2 to 6 are not taxable in India. The
assessee submitted that the -payments made by Tata,
Sistema Shyam and Virgin Mobiles are not taxable in
India. Further, it was explained that the amount
received from Alcatel and Sistema Shyam on account of
test tools are also not taxable in India. According to the
assessee, based on the nature of services rendered by
assessee to Tata, Sistema and Virgin Mobiles and the
provisions of Article 12 of Indo-US DTAA, the revenues
received by assessee under the BREW agreements are
not in the nature of "royalty/fees for included services".
Therefore, the revenue received from Tata and Sistema
under BREW Operator agreement ("BOA") and BREW
Carrier Agreement is not liable to tax in India. Further,
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the assessee submitted that revenue received from
Sistema Shyam represents amount paid towards
BREW select alliance membership fees and such
payment does not fall under the definition of `royalty' or
`Fees for included services `under the purview of Article
12 of the India-USA Double Taxation Avoidance
Agreement (`treaty') and hence the same is not liable to
tax in India
5. The Assessing Officer during the course of assessment
proceedings asked the assessee to explain as :
a) Why the revenue received from Sistema Shyam (`Sistema
Shyam') should not be taxed in India?
b) Why the revenue received from M/s Tata
Teleservices Limited (`Tata') under
the BREW Operator Agreement (`BREW Agreement')
should not be taxed in India?
c) Why the revenue received from Virgin Mobiles India
Pvt. Ltd. (Virgin Mobile) under the BREW license of
BREW software (BREW Agreement) should not be taxed
in India.
d) Why the assessment may not be completed on the
basis of assessment for A Y 2012-13 in case of
Qualcomm incorporated as the assessee company is
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providing the services on the basis of same agreement
after reorganization of the group.
6. Rejecting the various explanation given by the assessee the
Assessing Officer held that the income of the assessee from
licensing of BREW software to Tata Teleservices, Sistems Shyam
and Virgin Mobile India Pvt. Ltd. is taxable under section 9 (1) (vi)
of the I. T. Act and under article 12 of Indo US-DTAA. The
Assessing Officer accordingly determined the total income of the
assessee at Rs.1,84,95,988/-.
7. In appeal, the ld.CIT(A) upheld the action of the Assessing
Officer holding that the payment under consideration received by
the assessee pursuant to the BREW Agreements is very much
taxable not only u/s 9(1)(vi) of the IT Act but also under Article 12
of the Indo-USA DTAA. So far as the payment received in
connection with Test Tools Agreement is concerned, he also
upheld the action of the Assessing Officer in holding that the Test
Tools Agreement formed part of the BREW Agreement and the
nature of transaction under Test Tools Agreement is akin to the
main transaction regarding supply of BREW system.
8. Aggrieved with such order of the CIT(A), the assessee is in
appeal before the Tribunal.
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9. The Ld. Counsel for the assessee at the outset did not press
ground of appeal No.2 for which the Ld. DR has no objection.
Accordingly the ground No.2 is dismissed as not pressed.
10. Ground No.3 of appeal being premature at this juncture is
not being adjudicated and is dismissed.
11. So far as ground of appeal No.1 is concerned, we find the
Tribunal in assessee's own case for A. Y. 2014-15 while
adjudicating identical issue has held that royalty from Brew
Operators agreement is not chargeable to tax in the hands of the
assessee u/s. 9 (i) (vi) b of the IT Act as well as article 12 of Indo-
US-DTAA. The relevant observations of the Tribunal from para-9
onwards read as under :-
"9. We have heard the rival submissions and perused the
relevant material available on the record. We find, the
Assessing Officer, in the instant case, following his order for
the earlier years, brought royalty from Brew Operators
Agreement to tax in the hands of the assessee u/s 9(1)(vi) of the
Act as well as Article 12 of the Indo-USA DTAA. The ld.CIT(A)
upheld the action of the Assessing Officer. We find the issue
stands decided in favour of the assessee by the decision of the
Tribunal in assessee's own case from assessment year 2005-06
to 2012-13. We find the Tribunal, in the consolidated order
dated 16th April, 2018 for assessment year 2009-10 to 2012-13,
vide para 46 of the order, has discussed the issue and held that
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the royalty from BREW Operators Agreement is not chargeable
to tax in the hands of the assessee u/s 9(1)(vi) of the Act as well
as Article 12 of the Indo-US DTAA. The relevant observations
of the tribunal from para 46 onwards read as under:-
"46. Now we come to ground No. 3 of the appeal of the assessee
with respect to revenue received by appellant under BREW operator
agreement and BREW carrier agreement what is taxed as Royalty`
income in India u/s 9(1)(vi)(c) of the Act and article 12 of the India-
US Treaty. This issue has been dealt with extensively by the
coordinate bench in second order for Assessment Year 2005-6 to
2008-09 dated 20thFebruary 2015 in paragraph No. 102 to 108 as
under:-
"102.That takes us to ground no. 4, as raised by the assessee,
against holding that the revenues received by the Appellant under
the BREW Operator Agreement and BREW Carrier Agreement is
taxable as royalty income in India under section 9(1)(vi) of the Act
and Article 12 of the India-USA tax treaty. The assessee contends
that in doing so, the AO has failed to appreciate that the provision of
BREW software to Tata and Tata Teleservices (Maharashtra)
Limited and Reliance Communications Infrastructure Limited results
in sale of 'Copyrighted Article' and not licensing of a 'Copyright'.
103.So far as this grievance of the assessee is concerned, only a few
facts are required to be taken note of. During the course of the
assessment proceedings, the Assessing Officer noted that the
assessee has invoiced an amount of Rs 2,52,70.569 to Tata
Teleservices Limited under BREW (Binary Runtime Environment
forWireless) agreement. It was noted that it is an application
development platform, developed by Qualcomm, for mobile phones
that enables users to download and run applications for playing
games, sending messages and sharing photos etc. It was also noted
that this platform runs between the application and wireless device's
chip operating system so that programmers can develop applications
for wireless device without the code for system interface or
understanding operating systems. It was also noted that end users of
BREW customers are the carriers who pay an enablement fees based
on device sales or a revenue share for application software that are
downloaded. On these facts, the Assessing Officer proceeded to
bring the same to tax by observing as follows:
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I have perused the submissions made by the assessee. However, this
hypothesis is not correct as Software is licensed and not sold.
Furthermore as per the terms of the BOA as reproduced above, the
assessee has given TATA Teleservices the license to reproduce and
install the copyrighted software. The license fee for the right to
reproduce and use the BREW Software cannot be anything else but
royalty. There is a distinction between sale and license since in a
sale no agreement is entered into between buyer and seller, however
in case of licensing of software an agreement is entered into between
copyright holder and the user.
Grant of license is granting the user a right to use the software. The
assessee's submission that in cases where rights acquired are limited
and necessary only to enable the user to operate the program and
allow the user to copy the program on the user's computer hard
drive, payments would not be treated as towards royalty but as
towards business income is not acceptable. The assessee itself
agrees that payment is made for only the right to use the software
and no other title or interest in the software is transferred to the
payer. There is no transfer of ownership rights. Various decisions of
the Supreme Courts and High Courts clarify that sales constitutes
out and out transfer, whereas in license there is only right to use.
Some of these decision are at 69 ITR 692 (SC), 236 ITR 314 (ASC),
811 ITR 243, 671 ITR227. Thus this reasoning of the assessee has no
legal or factual basis. In this case, the user only has a right and gets
a license to use the software.
Even in the OECD commentary it is mentioned that the character of
payments received in transactions involving the transfer of computer
software depends upon the nature of rights that the transferee
acquires under the particular arrangement, regarding the use and
exploitation of the program. The rights in computer programme are
in the form of intellectual property. It has further mentioned
"payments made for the acquisition of partial right inthe copyright
(without the transferor fully alienating the copyrights) will represent
a royalty, where the consideration is for granting of rights to use the
program in a manner, that would without such licenses constitute
the infringement of copyrights."Under the laws of the country, if the
software owned by the assessee is used without licenses, it becomes
infringement of the copyright. Therefore arguments of the assessee
regarding applicability of OECD commentary fail on this count as
well.
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104.The assessee did raise a grievance before the DRP but without
any success. The assessee is not satisfied and is in appeal before us.
105.We have heard the rival contentions, perused the material on
record and duly considered facts of the case in the light of the
applicable legal position.
106. We find that the payment in question is admittedly the payment
is for a software which is for a copyrighted article and not the
copyright itself. There is nothing on record to suggest that the
payment is for the copyright itself. In this view of the matter, the
issue is clearly covered, in favour of the assessee, by Hon'ble Delhi
High Court's judgment in the case of DIT v.Infrasoft Ltd. [2014] 220
Taxman 273/[2013] 39 taxmann.com 88wherein Their Lordships
have, inter alia, observed as follows:
'85. The Licensing Agreement shows that the license is non-
exclusive, non-transferable and the software has to be uses in
accordance with the Agreement. Only one copy of the software is
being supplied for each site. The licensee is permitted to make only
one copy of the software and associated support information and
that also for backup purposes. It is also stipulated that the copy so
made shall include Infrasoft's copyright and other proprietary
notices. All copies of the Software are the exclusive property of
Infrasoft. The Software includes a licence authorisation device,
which restricts the use of the Software. The software is to be used
only for Licensee's ownbusiness as defined within the Infrasoft
Licence Schedule. Without the consent of the Assessee the software
cannot be loaned, rented, sold, sublicensed or transferred to any
third party or used by any parent, subsidiary or affiliated entity of
Licensee orused for the operation of a service bureau or for data
processing. The Licensee is further restricted from making copies,
decompile, disassemble or reverse-engineer the Software without
Infrasoft's written consent. The Software contains a mechanism
which Infrasoft may activate to deny the Licensee use of the Software
in the event that the Licensee is in breach of payment terms or any
other provisions of this Agreement. All copyrights and intellectual
property rights in and to the Software, and copies made by Licensee,
are owned by or duly licensed to Infrasoft.
86. The Licensing Agreement shows that the license is non-exclusive,
non-transferable and the software has to be uses in accordance with
the agreement. Only one copy of the software is being supplied for
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each site. The licensee is permitted to make only one copy of the
software and associated support information and that also for
backup purposes. It is also stipulated that the copy so made shall
include Infrasoft's copyright and other proprietary notices. All
copies of the Software are the exclusive property of Infrasoft. The
Software includes a licence authorisat ion device, which restricts the
use of the Software. The software is to be used only for Licensee's
own business as defined within the Infrasoft Licence Schedule.
Without the consent of the Assessee the software cannot be loaned,
rented, sold, sublicensed or transferred to any third party or used by
any parent, subsidiary or affiliated entity of Licensee or used for the
operation of a servicebureau or for data processing. The Licensee is
further restricted from making copies, decompile, disassemble or
reverse-engineer the Software without Infrasoft's written consent.
The Software contains a mechanism which Infrasoft may activate to
deny the Licensee use of the Software in the event that the Licensee
is in breach of payment terms or any other provisions of this
Agreement. All copyrights and intellectual property rights in and to
the Software, and copies made by Licensee, are owned by or duly
licensed to Infrasoft.
87. In order to qualify as royalty payment, it is necessary to
establish that there is transfer of all or any rights (including the
granting of any licence) in respect of copyright of a literary, artistic
or scientific work. In order to treat the consideration paid by the
Licensee as royalty, it is to be established that the licensee, by
making such payment, obtains all or any of the copyright rights of
such literary work. Distinction has to be made between the
acquisition of a "copyright right" and a "copyrighted article".
Copyright is distinct from the material object, copyrighted.
Copyright is an intangible incorporeal right in the nature of a
privilege, quite independent of any material substance, such as a
manuscript. Just because one has the copyrighted article, it does not
follow that one has also the copyright in it. It does not amount to
transfer of all or any right including licence in respect of copyright.
Copyright or even right to use copyright is distinguishable from sale
consideration paid for "copyrighted" article. This sale consideration
is for purchase of goods and is not royalty.
88. The license granted by the Assessee is limited to those necessary
to enable the licensee to operate the program. The rights transferred
arespecific to the nature of computer programs. Copying the
program onto the computer's hard drive or random access memory
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or making an archival copy is an essential step in utilizing the
program. Therefore, rights in relation to these acts of copying,
wherethey do no more than enable the effective operation of the
program by the user, should be disregarded in analyzing the
character of the transaction for tax purposes. Payments in these
types of transactions would be dealt with as business income in
accordance with Article 7.
89. There is a clear distinction between royalty paid on transfer of
copyright rights and consideration for transfer of copyrighted
articles. Right to use a copyrighted article or product with the owner
retaining his copyright, is not the same thing as transferring or
assigning rights in relation to the copyright. The enjoyment of some
or all the rights which the copyright owner has, is necessary to
invoke the royalty definition. Viewed from this angle, a non -
exclusive and non-transferable licence enabling the use of a
copyrighted product cannot be construed as an authority to enjoy
any or all of the enumerated rights ingrained in Article 12 of DTAA.
Where the purpose of the licence or the transaction is only to restrict
use of the copyrighted product for internal business purpose, it
would not be legally correct to state that the copyright itself or right
to use copyright has been transferred to any extent. The parting of
intellectual property rights inherent in and attached to the software
product in favour of the licensee/customer is what is contemplated
by the Treaty. Merely authorizing or enabling a customer to have the
benefit of data or instructions contained therein without any further
right to deal with them independently does not, amount to transfer of
rights in relation to copyright or conferment of the right of using the
copyright. The transfer of rights in or over copyright or the
conferment of the right of use of copyright implies that the
transferee/licensee should acquire rights either in entirety or
partially co-extensive with the owner/ transferor who divests himself
of the rights he possesses pro tanto.
90. The license granted to the licensee permitting him to download
the computer programme and storing it in the computer for his own
use is only incidental to the facility extended to the licensee to make
use of the copyrighted product for his internal business purpose. The
said process is necessary to make the programme functional and to
have access to it and is qualitatively different from the right
contemplated by the said paragraph because it is only integral to the
use of copyrighted product. Apart from such incidental facility, the
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licensee has no right to deal with the product just as the owner
would be in a position to do.
91. There is no transfer of any right in respect of copyright by the
Assessee and it is a case of mere transfer of a copyrighted article.
The payment is for a copyrighted article and represents the purchase
price of an article and cannot be considered as royalty either under
the Income Tax Act or under the DTAA.
92. The licensees are not allowed to exploit the computer software
commercially, they have acquired under licence agreement, only the
copy righted software which by itself is an article and they have not
acquired any copyright in the software. In the case of the Assessee
company, the licensee to whom the Assessee company has
sold/licensed the software were allowed to make only one copy of the
software and associated support information for backup purposes
with a condition that such copyright shall include Infrasoft copyright
and all copies of the software shall be exclusive properties of
Infrasoft. Licensee was allowed to use the software only for its own
business as specifically identified and was not permitted to
loan/rent/sale/sub-licence or transfer the copy of software to any
third party without the consent of Infrasoft.
93. The licensee has been prohibited from copying, de -compiling,
de-assembling, or reverse engineering the software without the
written consent of Infrasoft. The licence agreement between the
Assessee company and its customers stipulates that all copyrights
and intellectual property rights in the software and copies made by
the licensee were owned by Infrasoft and only Infrasoft has the
power to grant licence rights for use of the software. The licence
agreement stipulates that upon termination of the agreement for any
reason, the licencee shall return the software including supporting
information and licence authorization device to Infrasoft.
94. The incorporeal right to the software i.e. copyright remains with
the owner and the same was not transferred by the Assessee. The
right to use a copyright in a programme is totally different from the
right to use a programme embedded in a cassette or a CD which
may be a software and the payment made for the same cannot be
said to be received as consideration for the use of or right to use of
any copyright to bring it within the definition of royalty as given in
the DTAA. What the licensee has acquired is only a copy of the
copyright article whereas the copyright remains with the owner and
the Licensees have acquired a computer programme for being used
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in their business and no right is granted to them to utilize the
copyright of a computer programme and thus the payment for the
same is not in the nature of royalty.
95. We have not examined the effect of the subsequent amendment to
section 9 (1)(vi) of the Act and also whether the amount received for
use of software would be royalty in terms thereof f or the reason that
the Assessee is covered by the DTAA, the provisions of which are
more beneficial.
96. The amount received by the Assessee under the licence
agreement for allowing the use of the software is not royalty under
the DTAA.
97.What is transferred is neither the copyright in the software nor
the use of the copyright in the software, but what is transferred is the
right to use the copyrighted material or article which is clearly
distinct from the rights in a copyright. The right that is transferred is
not a right to use the copyright but is only limited to the right to use
the copyrighted material and the same does not give rise to any
royalty income and would be business income.
98. We are not in agreement with the decision of the Andhra
Pradesh High Court in the case of Samsung Electronics Co.
Ltd.(supra) that right to make a copy of the software and storing the
same in the hard disk of the designated computer and taking backup
copy would amount to copyright work under section 14(1) of the
Copyright Act and the payment made for the grant of the licence for
the said purpose would constitute royalty. The license granted to the
licensee permitting him to download the computer programme and
storing it in the computer for his own use was only incidental to the
facility extended to the licensee to make use of the copyrighted
product for his internal business purpose. The said process was
necessary to make the programme functional and to have access to it
and is qualitatively different from the right contemplated by the said
provision because it is only integral to the use of copyrighted
product. The right to make a backup copy purely as a temporary
protection against loss, destruction or damage has been held by the
Delhi High Court in DITv. M/s Nokia Networks OY(Supra) as not
amounting to acquiring a copyright in the software.
99. In view of the above we accordingly hold that what has been
transferred is not copyright or the right to use copyright but a
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limited right to use the copyrighted material and does not give rise
to any royalty income.'
107.Learned Departmental Representative, even as he vehemently
relied upon and supported the stand of the authorities below, could
not point out any distinguishing feature in this case.
108.In view of the above discussions, and respectfully following the
esteemed views of Hon'ble jurisdictional High Court, we uphold the
grievance of the assessee and direct the Assessing Officer to delete
the impugned addition of Rs 2,52,70.569. The assessee gets the relief
accordingly."
47.Therefore, respectfully following the second order of the
coordinate bench we hold that royalty from BREW operator
agreement of Rs. 67848685/-and 15% thereof amounting to Rs.
10177303/-is not chargeable to tax in the hands of the assessee u/s
9(1)(vi) of the Act as well as Article 12 of the Indo-USA Tax Treaty.
Accordingly, ground No. 3 of the appeal of the assessee is allowed."
10. Respectfully following the order of the Tribunal in assessee's
own case and in absence of any distinguishable feature brought to
our notice by the ld. DR, we hold that the royalty from BREW
Operator Agreement is not chargeable to tax in the hands of the
assessee u/s 9(1)(vi) of the IT Act as well as Article 12 of the Indo-
USA DTAA. Following similar reasonings, we also hold that the
CIT(A) is not justified in upholding the action of the Assessing
Officer in bringing to tax the royalty from Test Tools Agreement.
The grounds raised by the assessee are accordingly allowed.
11. In the result, the appeal filed by the assessee are partly
allowed."
12. Respectfully following the order of the Tribunal in
assessee's own case for A. Y 2014-15 and in absence of any
distinguishable feature brought to our notice by the ld. DR
against the order of the Tribunal, we hold that the royalty from
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BREW Operator Agreement is not chargeable to tax in the hands
of the assessee u/s 9(1)(vi) of the IT Act as well as Article 12 of
the Indo-US-DTAA. Following similar reasonings, we also hold
that the CIT(A) is not justified in upholding the action of the
Assessing Officer in bringing to tax the royalty from Test Tools
Agreement. The grounds raised by the assessee are accordingly
allowed.
13. In the result, the appeal filed by the assessee is partly
allowed for statistical purpose.
Order pronounced in the open court on 01.07.2019.
Sd/- Sd/-
(H. S. SIDHU) (R.K PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
*Neha*
Date:- 01.07.2019
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Date of dictation
Date on which the typed draft is placed before the dictating
Member
Date on which the approved draft comes to the Sr.PS/PS
Date on which the fair order is placed before the Dictating Member
for Pronouncement
Date on which the fair order comes back to the Sr. PS/ PS
Date on which the final order is uploaded on the website of ITAT 01.07.2019
Date on which the file goes to the Bench Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant Registrar for signature
on the order
Date of dispatch of the Order
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