Income Tax Appellate Tribunal - Pune
Bmc Software Asia Pacific Pte Ltd, ... vs Acit (International Tax) Circle-1, ... on 24 September, 2021
आयकर अपीऱीय अधिकरण "सी" न्यायपीठ पण
ु े में ।
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, PUNE
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
AND
SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER
आयकर अपीऱ सं. / ITA No.2040/PUN/2019
नििाारण वषा / Assessment Year : 2016-17
BMC Software Asia Pacific Pte Ltd.,
600, North Bridge Road,
20-01/10 Parkview Square,
Singapore - 188778
PAN : AAECB0642A
......अऩीऱाथी / Appellant
बिाम / V/s.
Assistant Commissioner of Income Tax
(International Taxation), Circle - 1, Pune
......प्रत्यथी / Respondent
आयकर अपीऱ सं. / ITA No.139/PUN/2021
नििाारण वषा / Assessment Year : 2017-18
BMC Software Asia Pacific Pte Ltd.,
600, Singapore,
20-01/10 Parkview Square,
Foreign, Singapore
PAN : AAECB0642A
......अऩीऱाथी / Appellant
बिाम / V/s.
Assistant Commissioner of Income Tax
(International Taxation), Circle - 1, Pune
......प्रत्यथी / Respondent
Assessee by : Shri Farrokh V. Irani
Revenue by : Shri Anurag Srivastava
सुनवाई की तारीख / Date of Hearing : 22-09-2021
घोषणा की तारीख / Date of Pronouncement : 24-09-2021
2
ITA Nos.2040/PUN/2019 & 139/PUN/2021,
A.Ys. 2016-17 & 2017-18
आदे श / ORDER
PER S.S. VISWANETHRA RAVI, JM :
Both the appeals by the assessee filed against the separate final assessment order dated 09-10-2019 and 07-01-2021 passed by the Assessing Officer (AO) u/s. 143(3) r.w.s. 144C(13) of the Act for assessment years 2016-17 and 2017-18.
2. We find that the issues raised in both appeals are similar, based on same identical facts. Upon hearing both the parties, we proceed to hear both the appeals together and to pass a consolidated order for the sake of convenience.
3. First, we shall take up the appeal in ITA No. 2040/PUN/2019 for A.Y. 2016-17.
ITA No. 2040/PUN/2019, A.Y. 2016-17.
4. The grounds raised by the assessee are as under :
"On the facts and in the circumstances of the case and in law, the Hon'ble DRP and consequentially the learned AO have:
I. Erred in considering the entire receipts on account of sale of software license and support, maintenance and allied services to its customers in India as liable to tax in India The learned Assessing Officer has erred on facts and in circumstances of the case and in law in considering the entire receipts of INR 1,30,20,15,830 from sale of software licenses to customers in India and support, maintenance and training services rendered in relation to such sale as royalty under the India-Singapore DTAA as well as under the Act and liable to tax in India.
II. Other grounds of appeal
I. Initiation of penalty proceedings under section 271(1)(c) of the Act
Erred in initiating penalty proceedings under section 271(1)(c) of the Act without appreciating the facts that the additions made to the taxable income of the Appellant is on account of difference of opinion and the Appellant has not filed any inaccurate particulars of income nor has concealed any particulars of income."3 ITA Nos.2040/PUN/2019 & 139/PUN/2021,
A.Ys. 2016-17 & 2017-18
5. Heard both the parties and perused the material available on record. The brief facts relating to the issue are that the assessee is a company incorporated under the laws of Singapore and is a tax resident of Singapore, therefore, the assessee is a non-resident from an Indian Income-tax perspective. We note that the assessee declared an amount of Rs.130,20,15,830/- from sale of software licenses and support, maintenance and training services.
6. Under scrutiny, the AO issued notice u/s. 143(2) and 142(1) of the Act. According to the AO, the said receipts are in the nature of Royalty and liable for tax as per the provisions of section 115 of the Act or as per the provisions of Article 12 of India Singapore DTAA. It was contended that the assessee is not the owner of the software licenses and no access to modify the source codes in the software programming techniques etc. The said support, maintenance and training services were rendered to in relation to such software licenses sold either directly or indirectly through third parties in India and it is only permitted to distribute such software licenses in the Asia pacific region. The AO did not accept the submissions of assessee and held receipts derived by the assessee from sale of software licenses is taxable as Royalty under Article 12 of DTAA between India- Singapore @ 10%.
7. The DRP by placing reliance in the case of Samsung Electronics Co. Ltd. & Ors. reported in 345 ITR 494 (Kar.) held that the payment made for purchase of software were in the form of royalty u/s. 9(1)(vi) of the Act.
8. A similar issue came up before this Tribunal in assessee's own case for A.Y. 2010-11 and the ld. AR placed the said order on record. On 4 ITA Nos.2040/PUN/2019 & 139/PUN/2021, A.Ys. 2016-17 & 2017-18 perusal of the said order, we note, the Co-ordinate Bench, by placing reliance in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT reported in (2021) 432 ITR 472 (SC) held the receipt derived by the assessee under the sale of software licenses and support services are not chargeable to tax in terms of section 9(1)(vi) of the Act r.w. Article 12 of DTAA. The ld. DR fairly conceded that the facts and circumstances in the year under consideration are similar to that of A.Y. 2010-11 in assessee's own case. Therefore, we hold the receipt of Rs.130,20,15,830/- received under sale of software licenses and support services are not chargeable to tax u/s. 9(1)(vi) of the Act r.w. Article 12 DTAA between India and Singapore. Thus, the final assessment order dated 09-10-2019 passed by the AO/ACIT (IT), Circle-1, Pune is set aside and sole issue raised by the assessee is allowed.
9. In ground No. II, the assessee has assailed initiation of penalty proceedings u/s. 271(1)(c) of the Act, in our opinion, challenge to penalty proceedings at this stage is pre-mature. Accordingly, ground No. II raised in the appeal is dismissed.
10. In the result, the appeal in ITA No. 2040/PUN/2019 is allowed. ITA No. 139/PUN/2021, A.Y. 2017-18
11. We note that this appeal was filed with a delay of 57 days. The assessee filed an affidavit explaining the reasons for delay. After hearing both the parties, we find that the reasons stated by the assessee are bonafide which really prevented the assessee to file the present appeal in time. Therefore, the delay of 57 days are condoned. 5 ITA Nos.2040/PUN/2019 & 139/PUN/2021,
A.Ys. 2016-17 & 2017-18
12. Both sides are unanimous in stating that the issues raised in the appeal and the facts in ITA No. 139/PUN/2021 are identical to ITA No. 2040/PUN/2019. Since, the facts in ITA No. 139/PUN/2021 are similar to ITA No. 2040/PUN/2019, the findings given by us while deciding the appeal of assessee in ITA No. 2040/PUN/2019 for A.Y. 2016-17 would mutatis mutandis apply to ITA No. 139/PUN/2021, as well. Thus, sole ground raised by the assessee is allowed.
13. To sum up, both the appeals of assessee are allowed.
Order pronounced in the open court on 24th September, 2021.
Sd/- Sd/-
(R.S. Syal) (S.S. Viswanethra Ravi)
VICE PRESIDENT JUDICIAL MEMBER
ऩुणे / Pune; ददनाांक / Dated : 24th September, 2021. RK आदे श की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to :
1. अऩीऱाथी / The Appellant.
2. प्रत्यथी / The Respondent.
3. The CIT(A)-13, Pune
4. The Pr. CIT-5, Pune
5. ववभागीय प्रतततनधध, आयकर अऩीऱीय अधधकरण, "सी" बेंच, ऩण ु े / DR, ITAT, "C" Bench, Pune.
6. गार्ड फ़ाइऱ / Guard File.
//सत्यावऩत प्रतत// True Copy// आदे शानुसार / BY ORDER, तनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune