Income Tax Appellate Tribunal - Delhi
Finastra International Financial ... vs Acit Circle 1(3)(1) International Tax, ... on 2 January, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D', NEW DELHI
Before Shri Challa Nagendra Prasad, Judicial Member
&
Dr. B. R. R. Kumar, Accountant Member
ITA No. 915/Del/2023 : Asstt. Year: 2020-21
Finastra International Financial Vs The ACIT(International Taxation),
Systems PTE Ltd., Circle-1(3)(1), Delhi
5, Shenton Way, 12-01/04, UIC
Building, Singapore 068808
(APPELLANT) (RESPONDENT)
PAN No. AAICM 2959 D
Assessee by : Sh. Suryanarayan, Sr. Adv.
Ms. Mansa, Adv.
Revenue by : Sh. Vizay B. Vasanta, CIT-DR
Date of Hearing: 01.01.2024 Date of Pronouncement: 02.01.2024
ORDER
Per Dr. B. R. R. Kumar:-
The present appeal has been filed by the as sessee against the order of Assessing Officer dated 30.01.202 3 for the A.Y. 2020-21.
2. The assessee has raised the following grounds of a ppeal are as under:-
" 1 . Th at t h e o rd e r of t h e R e sp on d en t/ As s e s si ng Of fi c e r ( 'A O ' f o r s h o rt) d at ed 3 0 .01 .2 0 2 3 , p a s s ed u n d e r s e ct i on 14 3 ( 3 ) r ea d w i th Se ct i on 1 4 4 C o f t h e I n co m e T a x Ac t, 1 9 6 1 ( th e A ct ) , p ur su a n t t o th e di r e c ti on s o f t h e l ea rn e d D i s pu t e R e s olu ti on Pa n e l ( ' t h e DR P ' f o r s h o rt) , is b a d in l a w , c ont ra r y t o t h e f a ct s a n d ci r cu m st a n c es o f th e c a s e , p r o v i s i on s o f th e A ct a n d th e I nd ia - Si ng a p o r e D ou bl e T a x a ti on Av oi d anc e Ag r e e m e nt ( " th e DT AA " ), a n d i s li a bl e to b e set a s i d e.
2 . T ha t t h e A O, c o nt r a r y t o t h e fa c t s o f t h e c a s e a n d m a t e ri a l on r e c or d, e r r ed in a s s e s si ng th e i n c o me o f t h e A pp e ll a n t a t Rs .2 ITA No. 915/Del/2023
Finastra International Financial Systems PTE Ltd.
2 3, 2 1 ,52 ,9 6 4/ - , by t r ea t i n g t h e r e c ei p ts t o b e in t h e na t u r e o f ' r oya lty ' u nd e r S e ct i on 9 (1 ) (v i ) o f th e Ac t a s w e ll a s A rt i cl e 12 (3 ) of th e D AA .
3 . Th at t h e A O e r r e d on fa ct s a nd in la w i n t r ea t in g t h e r e c eip t s f r o m s al e / di st rib u ti on of s o ftw a re i n t h e h a nd s o f t h e A p pel l a n t a s ' r oya lty ' w i t h out a p pr e c ia tin g th e s ett l ed p rin c ip l es la id d ow n b y th e H on 'bl e Su pr e m e C o urt in th e ca s e of E n gin e e r i ng An a l y s i s C ent r e o f E xc e l l en c e P ri v a t e Li mi t ed v . C I T a nd a no t h e r, ( 2 02 1 ) 1 2 5 ta x man n . com 4 2 ( S C ) , wh i ch i s s qu a r el y ap p li ca bl e t o t h e p r e s ent case 4 . Th a t t h e A O fa i l ed t o a pp r e c ia t e t ha t th e A pp ell a nt i s a m e r e di st ri bu t o r o f th e s oft w a r e a n d th a t ow n e r s hi p o f th e c o py rig h t c ont in u e s t o r e ma i n w it h t h e o ri gi n a l own e r o f th e s oft w a r e , th r ou gh ou t th e t er m of t h e a g r e em e n t. T h e r ef o r e , t h e A pp ell ant gran t s on ly t h e u s e o f th e s oft w a r e w i th li mi t ed , n o n - ex cl us i v e and n on- t r an sf e ra bl e rig ht t o t h i rd p a r ty a n d th us , in v ol v e s on l y th e sal e o f th e c op y r i gh t ed a rt i cl e .
5 . T ha t t h e A O, c o nt r a r y t o t h e fa c t s o f t h e c a s e a n d m a t e ri a l on r e c or d, g r o s s ly e r r e d in h ol d in g t ha t t h e I n d ia n A s s oc ia t ed Ent e rp r is e ( 'A E ' f o r sh o rt) h a s t h e a u th o ri ty t o r e pr od u ce th e s of tw a r e a nd h a s th e r e f o r e r e c eiv e d th e so u r c e c o d e, w hen i n f a ct , n o ri g h t in th e s oft w a r e , mu c h l es s th e s ou r c e c od e w a s p a rt ed w it h th e In d ia n di st ri bu t o r.
6 . Th at th e A O ou gh t t o h a v e a p pr e c ia t ed th a t t h e rig ht t o " r e p r od u ce" m e r el y p e rt a in s t o du pl i c a t ion o f s oft w a r e a n d d o e s n ot le ad t o th e c on c lu s ion th a t s ou r c e c o d e in th e so ft w a r e i s p a rt e d w it h .
7 . Th at t h e AO ou gh t t o h a v e a pp r e c ia t e d th a t th e Ap pel la n t i s me r el y t h e su b- li c e ns o r o f t h e s o ft wa r e a n d d o e s c on fe r t he A E/ th i rd pa rty a n y r i gh t s on th e s ou rc e c od e.
8 . Th at i n an y e v en t , t h e A O e r r ed in m is in t e rp r et in g t h e a gr e e m en t bet w e en th e A pp e ll a nt a n d i t s A E by mis c on st ru in g t h e AE t o b e a s ub -l ic en so r , wh en i n fa ct , t h e Ap p el l a nt is t h e su b- li c en s o r a n d A E is th e di st rib u t o r .
9 . T h at th e r ef o r e , p r o c e edin g on t h e a b ov e e r r on e ou s f o ot i n g, t h e A O e r r ed i n h ol di ng th a t ( i) th e A E i s p e rm i tt ed d ev el op m en t on th e s oft w a r e f o r fu rth e r sa le , t h er e by e x clu di ng i t f r om th e d e f i ni ti on o f s h ri nk w ra pp e d s o ft w a r e; (i i) t h e A E is r en d e ri ng r e v e rs e t ra i ni ng a n d ass o cia t ed s e rv ic e s , a n d c on s e qu en t ly a r ri v ed a t in co r r e ct c onc l u s i ons .
1 0. Tha t t h e A O g r o ss ly e r r ed i n mi si n te rp r et i ng cla u s e 1 2 of th e a gr e e m en t b et w e e n t h e A pp ell a nt a nd i t s A E a n d a ll egin g t ha t th e 3 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
c lau s e m en t i on s t h e co p i e s o f t h e s o ft w a r e f or on w a rd sa l e , w it h o u t a pp r e ciat in g t ha t th e c la u s e d o e s n ot c o nf e r a n y ri gh t to m a k e c op i e s a n d e xpl ic it l y s t a t es t h a t th e ow n e r sh i p r em a in s w it h t h e l i c en s o r. 1 1. Th at th e A O g r o s s ly e r r ed i n mi s in te r p r e ti ng t h e f a c ts of th i s c a s e an d c on c lu d i n g th a t th e Ap p e l la n t' s c a s e i s n ot c ov e r ed b y th e de ci si on o f t h e H o n 'bl e S u p r em e C ou rt in t h e c a s e of E n gi ne e r i ng An al y si s ( su p ra ).
1 2. T hat t h e AO , by r e f e r ri ng t o th e f ea t ur e s o f th e s of tw a r e , g r o s sl y e r r ed in con c lu d i n g t h a t t h e s of tw a r e di st rib u t ed b y th e Ap pel la n t i s n ot a sh rin k -w r a p ped s o ftw a r e, w it h out a p p r e ci a t i ng t h a t th e f eatu r e s or a p pli c a t i on s of t h e s oft w a r e ha v e n o b e a rin g o n w h e th e r th e r ec e ip t s a r e in t h e n a t u r e of ' r oy a lt y ' .
1 3. Th a t th e A O gr o s s ly e r r ed i n m i si nt e r p r e ti ng cl a u se s of th e a gr e e m en t b e tw e en t he A pp ell a nt a n d t h ird pa rt i e s , b y s t a t i n g t hat it a ll ow s d ec o mp il in g , d e ci p h e ri ng , d i s a ss em bly , r e v e r s e a s s e mb l y , mo dif i c ati on , t r a n s l a t i on , r ev e r s e eng i n e e rin g , a nd d e r iv a t ion of th e s ou rce cod e o f t h e s o ft w a r e a s p e r A rt i cl e 6 of th e C ou n ci l D e ri vat iv e 9 1/ 25 0 / EE C , w i th ou t a p p r e c ia t in g t ha t s uc h r igh t s of th e u s e rs , in te rm s o f A rt ic l e 5 o f th e a b o v e C ou n ci l, a r e r e s t ri c t ed t o on l y c o r r e ct e r r o rs th at a ff e c t s t he op e ra t io n o f th e s oft wa r e , a nd d o e s n ot g ran t rig ht s t o m odi f y t h e s ou r c e c o d e.
1 4. T hat th e A O fa i led t o a p p r eci a t e t h a t t h e p e r m i ssi on g ra n t ed t o th e a ffi l iat e s o f t h e su b - li c en s e e t o u se t h e s oft w a r e d o es n o t r es u lt in th e r ec e ipt s b ein g i n t h e n a tu r e of " r o y a lt y " .
1 5. T h at t h e A O fa il e d t o a p p r e cia t e t h a t t h e m od i fi ca t i on s a s s p e ci fi ed in t h e a g r e em en ts w i t h t h i r d p a rti e s m e r el y p e rt a in s t o mo dif i c ati on s t o su i t th e t h i rd p a rty ' s bu si n e ss o p e ra t i on s a n d d o e s n ot in v ol v e/ p e rmi t m o di f ic a ti on s t o t h e s ou r c e c o d e.
1 6. Th at th e A O o u g ht t o h a v e a pp r e ci a t e d th a t t h e cop ie s o f th e s oft w a r e a s s ta t ed i n th e a g r e e m en t s w it h th i rd p a r ti e s r e f e rs t o c r eati on o f d up li c a te s f o r t h e p u rp o s e of b a ck u p a n d n ot f o r c om m er ci al u s e .
1 7. Th a t t h e D i s pu t e R es ol u ti on Pa n el , con t r a r y t o t h e p r ov is i ons of Se ct i on 1 4 4C o f th e A ct , g r o s sl y e r r e d in r em a n din g th e m a tt e r t o th e A O f o r v e ri fi c a ti on .
1 8. T hat w it h o ut p r eju di c e a nd in a n y e v en t, t h e A O e r r ed i n n o t c ond u ct in g p r op e r v e ri fi ca ti on in li n e w i t h t h e di r e c ti on s o f th e D R P , a n d t h e r ef o r e th e im pu gn ed o rd e r p a s s e d by t h e A O i s w i th ou t j uri sd i ct io n a nd li a b l e t o b e s et a si d e.
1 9. Th at i n a n y e v e n t , t h e A O er r e d in tr ea t in g th e r ec e ipt s a s b ei ng in t h e nat u r e o f F T S un d e r S e cti on 9 ( 1 )( vi i) of th e A c t a n d u nd e r Art ic l e 1 2 (3 ) (b ) of t he I nd ia - I r el a n d D T AA .4 ITA No. 915/Del/2023
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2 0. That t h e A O er r ed in in it ia t in g p en a l ty p r oc e e di ng s un d e r S e ct i on 2 70 A of th e A ct ."
3. The Assessee is an entity incorporated under the local laws of Singapore and the Company receives inco me from sale/ distribution of computer software in India, from its subsidiary, Misys Trade & Risk Manage ment (India) Private L imited (formerly known as Turaz Tr ade & Risk Management India Private Limite d) ["MTRM"] and other thir d parties.
4. The software products so ld are generally used by the Banking and Financial Services Industry ["BFSI"] like banks and financial institutions. For the current AY , the Assessee received income amounting to INR 23,21,52,964 by w ay of sale of software to entities domiciled in India. For the AY under consideration, the Assessee filed its original return of income ["Rol'] on 12 February 2021 and filed its revised return of income on 23 March 2021, declaring to tal income as 'Nil' and claiming a ta x refund of INR 2,34,03,813 due to TDS credits. The income was declared 'Nil' due to the position adopted by the Assessee in light of the Hon'ble SC judgment in the c ase of Engineering Analysis Centre of Excellence Pvt. Ltd. vs CIT in CA Nos. 8735-8736 of 2018. The Assessing Office r treated the receipts earned by the assessee through sale of software as taxable u/s 9(1)(vi) of the Act as well as under Article 12 (3) of India-Singapore DTAA and accordingly proposed to c harge amount of Rs. 23,21,52,964/- as FTS taxable @ 10%. I n this connection the AO made the following observations in the contract of the assessee with its AE and tried to differentiate 5 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
the judgment of the Hon'ble Apex Court in the case of Analysis Centre of Exce llence Pvt. Ltd. (supra).
a. As per the c lause 5, the AE "undertakes to de ve lop and extend or to procure the de velo pme nt and extension of its SYSTEMS so far as it is co mme rc ially reasonable to do so and so fa r as it is able to do so us ing a ll reasonable e nde avo r, [..." there by allowing development on the so ftw are for fur the r sale, excluding it fro m the definitio n of shrink- wrappe d so ftw are .
b. Clause 6(a) a nd 6(b) a lso include compone nts o f reverse-training (sub- licensee training the personne l of the lice nsor) and assoc iate d services for the end use r to be pro vided by the A E. c. C lause 12 itse lf mentions the co pies of the so ftware made by the AB fo r o nward sale d. As per Sche dule 2 of the contract with the AE, the actual software being talked a bout is: The Kondor softw are suite , including Kondor Global Ris k which includes the following components:
Core Components:
Rea l T ime Date Aggregation Platform Asset C las s Agnostic Date Mode l Integration Api Distributed Archite cture Credit Risk And Limit M anagement Components Credit Ris k Analysis Engine Limits Rules Engine API Fo r Re al T ime Limit Manageme nt In T he From O ffice Co llatera l Manage ment Credit Line Management 6 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
Advanced S imula tion Credit Risk Manageme nt Credit Value at Risk Market Risk Man agement Compon ents Dyna mic R isk Dashboard and V isualization Too ls Integration API De dicated To Marke t Risk Rate Mana gement Module Thus, it is a real time credit a nd market r is k e valuation dashbo ar d and engine that converts billions of data po ints into insightful info rmation us ing APIs fo r inte gr atio n w ith third par ty and in house deve lo ped librarie s. Therefore, it is clear no t a shrink-wrappe d softw are .
e. C lause 16.4 a llows decompiling deciphering disassembly, re verse assembly modificatio n, translation, reverse engineering, and der ivation o f the source code of the software as per Article 6 o f Counc il D irec tive 91/250/EEC w hich is a statutory provis io n le gis lated by the C ouncil o f the European Union.
f. A s pe r c lause 7.2, the sub licensee can modify the software and retain a license to use that mo dification to its advantage g. As pe r c lause 1.27 multiple copies of the software can be installed, on theoretically infinite partitions ( lo gical co mputers') fro m a s ingle lice nse.
5. Aggrieve d, the assessee filed objections before the ld. DRP.
6. The ld. DRP held that, the AO after analyzing the nature of and characteristics of the software under consideration as well 7 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
as the contractual terms of agreement between the assessee and its AEs/ distributors has concluded that the facts of the instant case are differentiable on multiple accounts from the judgment of the Ho n'ble Supreme Court in the case of Engineering Analysis Centre of Exellence Pvt. Ltd.
7. Before the ld. DRP, the assessee has submitted that the facts of his case are squarely covered by the judgment of the Hon'ble Supre me Court in the case of Engine ering Analysis Centre of Exe llence Pvt. Ltd. It was submitted that as per the agreement between the assessee and the Indian entity (distributor, MTRM) there is only transfer of right to use software which is being granted. It is submitted tha t the assessee is merely licensee the software products to Indian end users without removing the name of the ultimate end user . It is further submitted that what is sold to the India n customers is only a softw are product along with the non-exclusive, non- transferable license to merely enable the use o f the product. The assessee has reiterated that the assessee is purchasing the software from its no n-reside nt supplier/owner and selling/ distributing to Indian e nd users either for their own business or for onward se lling and in the entire chain of eve nt there is no transfer of copyright, rather only copyr ighted ar ticle is getting transferred. I t was accordingly submitte d that the ruling in the aforementione d Supreme Court judgment is squa rely applicable in its case.
8 ITA No. 915/Del/2023Finastra International Financial Systems PTE Ltd.
8. With reference to the AO 's observations on the various clauses of the agreement between the assessee a nd Indian AEs, the assessee has submitted before the DRP the following rebuttal. This submission as extracted from the o rder of the ld. DRP.
"(A). Agreement between the Assessee and MTRM
1. W.r.t. clause 5 of the agreement:
It is s tated that the learned AO has grossly mis inte rpreted clause 5 of the agreement by concluding that the subsidiary i.e ., MTRM is the sub-licensor, whe reas the agreement cle arly defines that the assessee company is the sub- lice nsor. Furthe r, the A ssessee states that there are no develo pment/ update rights passed on to MTRM by is the Asses see who shall undertake to de velo p or procure develo pment to so ftw are including upda te to MTRM.
2. W.r.t clause 1 of the agreement:
With res pect to clause 1 o f the a greement, the ter m 'repro duce' include d in the de finition o f the term "USE" commonly refe rs to the right to make copies o f the work , w hich ge nerally includes storage o f such wo rk , fo r its own busine ss purpose. Hence , it is not a case that MTRM (i.e ., distributor) has acce ss to the source code and is repro duc ing the same for commercial use .
3. W.r.t clause 6 of the agreement:
Assessee s ubmits that clause 6(a) and (b) is again misinte rpreted by the learned A O by conside ring MTR M as the sub-lice nsor ins tead of the Assessee and stating that training is give n by MT RM to Finas tra Singapore . T he sub-lice nsor as clearly defined under the agreement is the Asse ssee (i.e., Finastra Singapore) and not M TRM (which the distributor) . Hence, on a re ading of the said clauses , it is c lear that, 9 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
Assessee is the o ne lia ble to provide tra ining to MTRM in order to enable it to solve the pro blems o f the end users.
4. W.r.t clause 12 of the a greeme nt:
The Assessee submits that clause 12 of the agreement talks about "copyright" and does not mention about "mak ing co pies". F urther, the ultima te o wne rship lies with the original o wner of the software and MTRM does not ha ve any right to remove, alter, amend or obliterate suc h no tices attache d with each so ftw are .
5. W.r.t feature of softw are:
Assessee puts fo rwar d the explana tion that fe atures/ applications o f the softwa re do not have a direct nexus w ith whether the same is shrink wrappe d softw are or not . It is stated that the features as noted by the lea rned A O mere ly indicates that the so ftware pe rfo rms the function o f co nverting data po ints into informatio n whic h c learly depic ts that this is a standa rd software which can be used by various third parties .
(B). Agreement between the assessee and IndusInd B ank Limited:
1. W.r.t clause 16.4 of the agreement:
Assessee subm its, that the actual terms of the agreement cle arly restricts actions such as decompiling, disassembling etc. except to the extent per missible under the afore said A rticle .A lawful purc hase r/acquire r of a computer program is entitle d to copy, translate and, ultimately, decompile that program without fear o f lia bility for co py right infringement where the same is in acco rdance with the Artic le 6 read with Article 5 of Directive 91/250.In the instant c ase, Indusind bank can be allowe d to decompile the so ftware but only within the statuto ry guidelines a nd he nce, if can be said 10 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
that there is no transfer of source code by the As sessee so as to make it vulner able to any copyr ight Infringements. The assessee has place reliance on the extracts o f cla uses 16.4, 1.9, 1.33 and 21.5 o f the agreement.
2. W.r.t clause 16.1 of the agreement:
Assessee dis agree s with learned A O's unders tanding and submits that as pe r clause 16.1.8, the te rm " named a ffiliate" is defined under clause 1.24 and under clause 1.3 of the agreement w herein it s tates that name affi liate would include holding/subsidiar y company o f the sub-licensee . He nce, it is only fo r inter nal use (by the group companies of Indusind Bank) against the contentio n of the Lea rned AO that the sub-lice nsee can allo w use by any thi rd party. The assessee has also made re ference to c lauses 17.1 a nd 17.4 in this regard.
3. W.r.t clause 7 of the agreement:
The Assessee submits tha t the te rm Modification us ed in the above mentioned c lause of the agreement merely means that Indus ind Bank Limited can modify the configurations implemente d through use of Finas tra applicatio n too lkit o r appro ved toolkit, and not through a source code change. As per cla use 7, Indusind Bank Limited can only hold license to use such Modificatio ns for as lo ng o riginal software license term.
4. W.r.t clause 1.27 of the agreement:
Assessee submits that clause 16.1 o f the agreement c learly pro vides that Indusind B ank Limited has rights to make Copies of the softw are , only for the limite d purpose of keeping back-ups . Owing to above explanations, it can be seen that there is no source code access given to Indusind Bank Limited by Finastra Singapore and hence, there is no pa rting with the copyr ights on the software . I t is 11 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
fur ther s ubmitted that there is no a ccess to source co de be ing give n up by Finas tra Singapo re to Indusind Bank Ltd.
(C). Agreement between the Assessee and IN G Vysya B ank Ltd/ Kotak M ahindra Bank Ltd "end user"] This agreement is entere d between the Assessee and I NG Vysya Bank Ltd/ Ko tak Mahindra Bank Ltd, which is the end user of the so ftware product. The Asse ssee is not only distributing the product but also earning receipts by directly se lling the software pro duct to Indian end users . The end user only acquires the right to us e' the so ftware product and s hall retain a non-exclusive l icense to us e the so ftwa re as long as the license agreement is in force . The asses see has place d reliance upon the extracts o f Para 7.2, 7.4 and par a 16 as we ll as the de finition of terms Computer so ftware , L icens e matrix and License te rm contained in pa ras 1.9, 1.19 and 1.21 o f the agreement in this rega rd.
(D). Agre ement between the Assessee and I DFC Limited ['en d user] The assessee submits that this agreement is ente re d between the Assessee and I DF C United, which is the end use r o f the softwa re product. The Asse ssee is not only distributing the product but also earning receipts by directly se lling the software pro duct to Indian end users . T he end use r o nly acquir es the right to us e the software product fo r its o wn business and canno t use the licensed software product for third parties.The end user has a perso nal non-e xclusive and non-transferable right. The end user does not have any right on the source co de of the software pro duct. The end use r does not own any right o n the c opyrights of the softw are.12 ITA No. 915/Del/2023
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9. Following the above, the assessee submitted tha t the Hon'ble SC Judgment squarely applicable , since the assessee is merely selling the software product to Indian end users for the purpose of its business for a determined period o f time which is agree d upon as per the agreements. After going through the submissions of the assessee, the ld. DRP direc ted the AO to verify the fac tual contentions o f the assessee with reference to clauses of the contract betwee n the assessee and distributors/ end user and ascertain if the terms of the contracts meet the criter ia laid down in the case o f Engineering Analysis Centre of Excellence (supra) and pass a speaking order in this regard. The Assessing Officer restated the contents of dra ft Asses sment Order in the final Assessment Order.
10. Aggrieve d, the assessee filed appeal before the ITAT.
11. Before us, the ld. AR relied on the arguments taken up before the ld. DRP whereas the ld. DR supported the or der of the Assessing Officer.
12. Heard the arguments of both the parties and peruse d the material available on record.
13. We find that the AO has read and interpreted the c lauses of the agreement wro ngly and selectively. While the AO has concluded tha t the agreements between the assessee and the end user/ distributor give credence to the fact that the ter ms of software sale s by the assessee to its distributor/ end users in India are clearly distinguishable from the case of Engineering 13 ITA No. 915/Del/2023 Finastra International Financial Systems PTE Ltd.
Analysis Centre of Exellence Pvt. Ltd., the assessee has contended that the AO has not read/ interpreted the agreements between the assessee and the distributor/ end user in the proper context. Having gone through the various c lauses of the distributor agreement, we hereby hold that the s ubject matter is squarely covered by the judgment of Ho n'ble Supreme Cour t in the case of Engineering Analysis Centre of Excellence Private Limite d vs. CIT 125 taxmann.com 42 (SC).
14. In the re sult, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 02/01/202 4.
Sd/- Sd/-
(C.N Prasad) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 02/01/2024
*NV, Sr. PS*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, DELHI