Symantec Asia Pacific Pte. Ltd. v. DCIT [ITA No.
1000/Del/2017, dt. 31-8-2020] : 2020 TaxPub(DT) 3506 (Del-Trib)
Software licence fees -- Whether royalty under
Indo-Singapore DTAA -- Unilateral taxation under IT Act without amending DTAA
provisions
Facts:
Assessee a non-resident of Singapore was in receipt of
software licence fees. It was claimed that they did not have any PE in India
thus the said software licence cannot be taxed as business income. Revenue
however claimed the software licence to be royalty as per the amended
provisions and subjected it to tax under section 9(1)(vi) which was upheld by
the DRP. Aggrieved assessee went in higher appeal to ITAT -
Held in favour of the assessee that the software licence
fee was not royalty within the definition of DTAA between India and Singapore.
The grounds raised by the assessee and the ITAT verdict are
-
1. The said software was sale of
a copyrighted article thus was not royalty.
2. It did not "make
available" any process or technology for further exploitation.
3. Licence was limited only to
end use.
4. Treaty definition of royalty
was much smaller than the IT Act.
5. Treaty override warrants that
the IT Act definition be limited to what is envisaged to be taxed within the
treaty and not more.
6. Amending only IT Act without
amending DTAA would mean a unilateral taxation without consenus of the other
state which is incorrect as per DTAA terms and conditions.
Applied :
DIT v. Infrasoft Ltd. (2014) 264 CTR 329 (Del.) : 2014
TaxPub(DT) 0079 (Del-HC)
Nagravision S.A. v. ACIT in ITA No. 9130/Del/2019 vide Order, dated 6-7-2020 : 2020 TaxPub(DT) 2999
(Del-Trib)
Delhi itself in DIT v. Ericsson A.B. (2012) 343 ITR 470
(Del) : 2012 TaxPub(DT) 0020 (Del-HC)
DIT v. Nokia Networks OY (2013) 358 ITR 259 (Del) : 2012
TaxPub(DT) 3208 (Del-HC)
MOL Corporation & Ors., in ITA Nos. 6089 to
6091/Del/2012, Order, dated 26-9-2016
John Deere India Pvt. Ltd. v. DDIT in ITA Nos. 905 &
906/PUN/2015 vide Order, dated 23-1-2019 : 2019
TaxPub(DT) 1721 (Pune-Trib)
Read into: Motorola
Inc. v. DCIT (2005) 147 Taxman 39 (Delhi) : 2005 TaxPub(DT) 1677
(Del-Trib)
Decision in Gracemac Corporation v. ADIT (2010) 134 TTJ
257 (Del.) : 2010 TaxPub(DT) 2316 (Del-Trib) is no longer good law.