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| The Tax Publishers2020 TaxPub(DT) 4245 (Bang-Trib) INCOME TAX ACT, 1961
Section 201(1)/201(1A)
Assessee could not be treated as assessee-in-default under section 201(1)/201(1A) in respect of payments made for purchase of licensed software prior to 15-10-2011, being the date of pronouncement of decision in case of Samsung Electronics Co. Ltd. because prior to that assessee was under bona fide belief that there was no requirement to deduct tax from payments made for purchase of software, since there were certain decisions holding so.
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Tax deduction at source - Assessee-in-default under section 201(1)/201(1A) - Demand raised as per subsequent decision rendered by jurisdictional High Court -
Assessee made payment for getting license to use data base of M/s. Gartner group is in the nature of royalty. AO taking support of decision rendered in CIT v. Infosys Technologies Ltd. (Order, dated 15-10-2011 in ITA No. 2988 of 2005 : 2012 TaxPub(DT) 0078 (Karn-HC) along with decision rendered in CIT v. Samsung Electronics Co Ltd. (2012) 345 ITR 494), held that payments made to Gartner group towards subscription charges to access data base and research products was in the nature of royalty both under provisions of the Act and DTAA. Accordingly, AO treated assessee as assessee-in-default under section 201(1) / 201(1A). Assessee submitted that assessee was under bona fide belief that it was not liable to deduct tax from payments made to M/s. Gartner group towards subscription charges on the basis of decision rendered by co-ordinate Bench of ITAT in assessee's own case. However, law was clarified by High Court by its order passed on 15-10-2011 and accordingly, assessee could not be treated as assessee-in-default at least upto 15-10-2011, when law was clarified by jurisdictional High Court. Held: Clearly, assessee was under bona fide belief that there was no requirement to deduct tax from payments made for purchase of software, since there were certain decisions holding so. However, jurisdictional High Court held that payments made for purchase of software was in the nature of royalty and said decision came to be pronounced on 15-10-2011. Accordingly, assessee could not be treated as assessee-in-default in respect of payments made for purchase of licensed software prior to 15-10-2011, being the date of pronouncement of decision in case of Samsung Electronics Co. Ltd.. Accordingly, demand raised in the hands of assessee under section 201(1)/201(1A) could not be sustained in respect of payments made prior to 15-10-2011.
Applied:M/s. Acer India Private Limited v. DCIT in IT(IT)A Nos. 107 to 114/Bang/2018 dated 5-10-2020
REFERRED :
FAVOUR : in assessee's favour
A.Y. : 2010-11
IN THE ITAT, BANGALORE 'C'' BENCH
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